Same sex couples who were legally married in a place where there was a ceremony performed after September 1, 2013 MUST file a joint return.

This will apply to Federal Tax Returns only!

Room in your house used EXCLUSIVELY for home office

Cannot have an actual office locally.

Computation annual maximum of 300 sq ft times $5.00

Alternative Minimum Tax

If your taxable income is above this, AMT could kick in!

Earned Income Credit

If you qualify for EIC, you must bring all documentation to prove relationship, support, and time the child lived in the home.

If you claim head of household, your income should be enough to pay more than half the support of the household. If your income doesn’t appear to be enough to pay these expenses, we need to know what other forms of support you receive. If you are audited, the IRS will want to see rent receipts, utility receipts and other household expenses in your name. Only one member of the household can claim this.

To claim a child, the child must be your son, daughter, stepson or stepdaughter, grandchild, brother, sister, stepbrother or stepsister, or a descendant of such person.

These dependents have to live with you for more than half the year and you must have provided more than half their support, unless the custodial parent has given you a signed form to claim the child anyway. THIS DOES NOT INCLUDE WEEKENDS ONLY!

To claim a non-blood relative, that dependent must live with you the entire year and you must have paid more than half their support and have proof of such with you.

This year you need to bring documentation such as school records, medical records etc that show the child you claim actually lives with you.

If you are NOT the custodial parent, we will need a signed form 8832 completed by the custodial parent releasing the dependency exemption to you.

To claim a foster child, that child has to be placed in the home by an agency.

Even if you claim the child as a dependent and received the child tax credit, the custodial parent claims the child for earned income credit. If the child lives with each parent half the year, the parent with the higher income claims the child for EIC.

IRS IS INVESTIGATING THOUSANDS OF RETURNS WITH EIC AGAIN THIS YEAR. MAKE SURE YOU ARE THE QUALIFIED PERSON TO CLAIM THIS CREDIT!

Child Tax Credit will remain at $1000 per dependent child under the age of 17.

American Opportunity Credit is extended through 2017 and can be used for 4 years of post-secondary education. The maximum credit is $2500, equal to the first $2000 of qualified expenses, plus 25% of the next $2000 in qualified expenses. Qualified expenses are tuition and required fees, plus books. The student must be in their first 4 years of college, be at least a part-time student, and not be convicted of a felony.

Lifetime Learning Credit can be claimed for an unlimited number of years. The Lifetime credit is 20% of the first $10000 of qualified expenses, for all eligible students, for a $2000 limit per tax return per year. Qualified expenses are limited to tuition and related fees that must be paid to the educational institution.

Qualified Tuition Deduction for up to $4000 of tuition and fees paid for attendance at any level of post-secondary education is exteded to 2014.

$250 Educator Expense is reinstated for 2013 for all elementary and high school employees.

If you are claiming tuition expense, we MUST have the 1098-T from the institution. It is best if the student will print out a detailed list of their financial account. Usually this can be done by logging into their student account and printing.

If you received $400 or more in self-employment income, you have to file a return. Be sure you have some form of record to show how you arrived at that figure. Also, if you have expenses in earning that income, we need to know that. For instance, mowing income should include cost of mower for depreciation, gas for mower, repairs etc. or an explanation of why you had no expenses in earning this money! An additional .9% of Self Employed income in excess of the threshold amounts, will be added this year as part of the Additional Medicare Tax.

A 3.8% net investment income tax goes into effect starting in 2013 for individuals, estates, and trusts that have investment income above the threshold amounts.

We have had training in the Affordable Health Care Act. We will be able to help you calculate the Shared Responsibility Payment and figure your Premium Assistance Credit. We will also be able to give you a link to provide enrollment service.

W2’s and 1099’s

• Social Security Statements
• Interest Income Statements
• Retirement Statements
• IRA Distributions
• Dividend Statements
• Property Taxes paid
• Mortgage Interest Statements
• Advalorem taxes paid on your vehicle
• Child care for your child, to whom paid, federal ID #, amount pd per child
• Education expenses: 1098-T
• Charity and charity mileage
• Student loan interest
• Medical bills paid in 2013

BUSINESS CLIENTS

• Business Income and Expenses
• New Equipment purchased? Date? Amount?
• Year End Inventory
• Do we need to file tangible returns?
• We need to know what counties you worked in and how much earned in each county for Net Profits Tax
• Business loan balances and interest paid for the year
• Business mileage or unreimbursed employee mileage
• Number of nights spent away from home for business
• Do we need to file 1099’s for you?

Remember to let us know if you got married, divorced, or dependents changed. Has your banking information changed from last year? New address? New phone? Give us your email so you can know when your federal return is accepted.

A taxpayer who installs a qualified energy efficient product shall be eligible for a nonrefundable tax credit against Kentucky taxes. 30% of the installed costs subject to limitations shall apply in the tax year that installation is completed. Examples of energy efficient products that may qualify for the credit are upgraded insulation, energy efficient windows, qualified energy property, active and passive solar heating systems, qualified solar water-heating systems, qualified wind turbine or wind machines and qualified solar photovoltaic systems. Kentucky’s credit extends to tax year ending 12-31-2015.

For tax years beginning 1-1-2009, Kentucky is allowing the same residency benefits permitted to military personnel under the Service members Civil Relief Act to also apply to a military spouse’s nonmilitary income. This relief is available if the spouse is not a resident or domiciliary of the state when the spouse is in the state solely to be with a service member serving under military orders. Schedule C (self-employed) income would still be taxed to Kentucky.

Be sure to file the annual $15 report due June 20th of each year. Otherwise, your entity will not be in good standing and you loose your benefits of being this type entity.

Also, these entities need to file their reports with Kentucky and pay the minimun fee of $175 with their return.

A qualifying homeowner who sells his main home can still exclude from gross income up to $250,000 of gain ($500,000 MFJ). This exclusion can be claimed for only one sale in a two year period. The homeowner must own and use the property as his residence for two out of the five years ending on the date of the sale.

Beginning in 2010, taxpayers with modified adjusted gross income in excess of $100,000 are no longer prohibited from rolling a traditional IRA to a Roth IRA. Taxpayers who exceed the phase-out threshold for making a Roth contribution can make a non-deductible contribution to a traditional IRA and then roll the funds from the traditional IRA into a Roth IRA.

Direct transfers between trustees do not count as rollovers, although the net effect is the same. Rollovers from SIMPLE IRAs to other types of IRAs are not permitted during the first two years after the SIMPLE IRA is established.

The Hope Credit is no longer an option. The American Opportunity Credit can be taken for up to $2,500 per eligible student. The Lifetime Learning Credit is up to $2,000 per return.

The American Opportunity Credit is available for the first 4 years of postsecondary education and for students pursuing an undergraduate degree or other recognized education credential. Student must be enrolled at least half time and have no felony drug convictions. Qualified expenses are tuition and required enrollment fees. Course-related books, supplies, and equipment do not need to be purchased from the institution in order to qualify.

The Lifetime Credit is limited to the amount of tax you pay on your return and is available for an unlimited number of years. Students do not have to be pursuing a degree or other recognized education credential. This is available on one or more courses. Felony drug convictions are permitted. Tuition and required enrollment fees, including amounts required to be paid to the institution for course-related books, supplies, and equipment.

You can call to check on possible offsets of your refund by calling Financial Management Services at 1-800-304-3107.

The first $14,000 of gifts made by a donor to each donee in 2013 is excluded from the amount of the donor\’s taxable gifts.

This amount remains at $14,000 for 2014 as well!