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Personal Finance

We are dedicated to keeping clients abreast of the latest developments and tax-saving strategies. This section includes a library of hundreds of timely articles about business, taxes, finances, trends and the like. The articles are categorized by subject matter, which can be accessed from the links. Click on your topic of interest and find a wealth of information.

GENERAL TAX TOPICS

These articles discuss topics that apply to the average taxpayer.  You will find information about refunds, the child credit, the AMT and much more.  If you have a tax-related issue that is not covered in this section, please call this office for more information.

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Can’t Pay Your Tax Liability?
If you are unable to pay your tax liability, there are some things you need to know. Most importantly, don't let your inability to pay your tax liability in full keep you from filing your tax return properly and on time.  Why?  Because there is a “failure to file” penalty that accrues at the rate of 5% per month or part of a month (to a maximum of 25%) on the amount of tax your return shows that you owe.  The tax ramifications, penalties and possible solutions are included in the article.

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Understanding AGI Limitations & Phase Outs
AGI is the acronym for Adjusted Gross Income. It is generally the sum of a taxpayer's gross income less adjustments that are permitted by law (but before deductions and exemptions). Those who file Form 1040 can find their AGI at the bottom of page 1 of the tax return. Many tax benefits and allowances, such as credits, deductions, exemptions, etc., are limited by a taxpayer's AGI. There is also the term MAGI which is the acronym for Modified Adjusted Gross Income. Although MAGI may have a different definition for certain limitations and phase-outs, it is generally the taxpayer’s AGI with certain excluded income added back.

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Get a Big Refund this Year?
The IRS estimates that approximately 70 million Americans annually receive tax refunds averaging around $1,700. If you are among those who received a refund, you are probably celebrating. While some consider a large refund cause for celebration, it's actually a financial mistake that becomes particularly costly for those who get refunds year after year.

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Child Credit
The Child Credit was first introduced in 1998, when taxpayers were allowed to claim a $400 tax credit for their qualified children who were under the age of 17 at the end of the tax year. Per prior tax law changes, the child credit has increased to $1,000, and the $1,000 credit was made permanent by the American Taxpayer Relief Act of 2012.

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Years of Inflation and the AMT Pose a Growing Tax Threat
Your tax will be the higher of the tax computed the regular way or the Alternative Minimum Tax. Anticipating when the AMT will affect you is difficult, because it is usually the result of a combination of circumstances.

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Keep a Low Audit Profile
According to a recent news article in a large metropolitan newspaper, the IRS may be auditing fewer returns but they are getting smarter about choosing those they do audit. Their goal, of course, is to focus scrutiny on the most "audit worthy" returns-those with potential for big adjustments. As taxpayers, all of us would like to avoid an audit. But how does one avoid being "chosen"? While there's no sure way, experts do offer advice on what to look for to help cut audit risk.

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Understanding Your Marginal Tax Rate
Ever wonder what the term “tax bracket” means? It refers to the top marginal tax rate that individuals are being taxed, not the average. Knowing your marginal rate is important, because any increase or decrease in your taxable income will affect your tax at your top marginal rate.

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Keeping Old Tax Records
Taxpayers often question how long records must be kept and the amount of time IRS has to audit a return after it is filed.

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Transform Nondeductible Interest to Deductible Interest
The only interest that is still deductible as an itemized deduction is home mortgage interest and investment interest. If you are like so many others with large consumer debt such as credit cards, car payments etc. you are paying interest that is not deductible. If the amount of consumer interest you pay each year is substantial and you itemize your deductions, you may want to consider converting that non-deductible interest into deductible interest by paying off the consumer debt with a home equity line of credit. Generally, current law allows individual taxpayers to borrow up to $100,000 of home equity and deduct the interest on that loan as home mortgage interest. This would also apply to planned large consumer purchases such as a car or motor home. Using a home equity line to purchase these items will make the interest deductible.

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Avoiding Underpayment Penalties
Congress considers our tax system as a "pay-as-you-go" system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the "pay-as-you-go" requirement.

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Is Your Withholding Enough?
Our "pay-as-you-go" tax system requires that you make payments of your tax liability evenly throughout the year. If you don't, it's possible you could owe an underpayment penalty. Some taxpayers meet the "pay-as-you-go" requirements by making quarterly estimated payments.

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