Wang Solutions

Have Someone Else Do All the Work for You…For Free!

So maybe you know somebody who’s about as sharp as a marble when it comes to doing anything on the computer (here’s to you keyboard hunt-and-peckers). If telling them to take advantage of IRS Free File would be sending them to their doom, instead direct them to free tax preparation with the VITA and TCE programs.  

VITA sites in neighborhoods across America provide free tax return preparation and e-filing to people who earn $52,000 or less. But folks already over the hill will want to check out their local TCE site, as it’s geared towards people 60 and up, with volunteers specializing in tax issues unique to seniors.

The VITA and TCE programs come with all kinds of amenities. Some sites provide bilingual help so nothing important gets lost in translation. Even better, VITA provides free tax assistance to all military members and their families. Finally, going to VITA or TCE for tax preparation means no tax credit or deduction gets left behind:  volunteers make sure you claim every credit for which you’re eligible. Finally, now is the best time to start learning how to have no fear of technology. Some VITA sites let you prepare your tax returns using free web-based software and volunteers are on site to guide you if you feel faint with confusion.

Thousands of VITA and TCE sites are opening up this month. To find one nearest you, visit the “Free Tax Return Preparation for You by Volunteers” page on IRS.gov or pick up that good ole’ telephone and call 800-906-9887. 

Sufen Wang, M.S.Accountancy

Still sitting on the fence about whether you should file a tax return or not to file a tax return??? Here are some thoughts to help you with your decision…

It’s easy to get caught up in the frenzy that is tax filing season. Lady Liberty wannabees and Uncle Sam look-a-likes are shakin’ their stuff outside every strip mall, waving you in to have your taxes filed by ahem, professionals. Before you get ahead of yourself, take a step back and use the Interactive Tax Assistant to see if you actually need to submit a federal tax return this year. If you discover that you’re not required to, here’s a checklist of why you still might want to file.

-Maybe your boss withheld federal income tax from your check and you missed a pretty chunk of change each pay period. Or maybe you made estimated tax payments. Or perhaps you overpaid last year. If you want your refund for any of these things this year, you’ll have to file a return.

-A nice and shiny Earned Income Tax Credit could be waiting for you on the other side. Everybody wants this extra credit, but only those who do their homework will find out if they qualify. Here’s a quick hint: if you earned less than $51,567, you could be eligible to receive EITC as a tax refund. Use the EITC Assistant to find out more.

-Speaking of homework, the American Opportunity Credit is for students in their first four years of higher education and the people who support those students. Unofficial signs of being a college student supporter include doing their dirty laundry while they’re home and bribing them to talk to and visit you by paying their phone bill and transportation costs. Students may be eligible for as much as $2,500 with this credit and even those who owe no tax could get up to $1,000 refunded per student. You can find out all of the official rules and regulations here.

-If you try and don’t succeed, you could be rewarded with the Additional Child Tax Credit. It’s given to those who didn’t get the full Child Tax Credit amount for a qualifying child. To claim your prize, file Schedule 8812 with your tax return.

-This one’s boring, but important: anyone who received Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation may qualify for the Health Coverage Tax Credit. This credit pays 72.5 percent of qualified health insurance premiums. Visit IRS.gov for more on this credit, and bring coffee.

The bottom line is that all of the above benefits are only available to you if you file. If you’re on the fence about filing, remember that you can only access all of those green bills in the grass by submitting that tax return.

Good for Your Health, Good for Deductions

Staying healthy and beautiful is not easy – on your wallet, that is. Luckily, those filled cavities and x-rays may be cheaper than you think. You can actually get a tax deduction for medical or dental expenses not covered by insurance.

There’s just one catch: you must itemize deductions on your tax return. Okay, there’s one more catch: deduction is limited. You can only deduct medical and dental expenses that are more than 7.5 percent of your adjusted gross income.

Still, that’s better than nothing. And you can include pretty much any medical or dental costs that you paid for yourself, your spouse, and your dependents. This means everything from expenses for diagnosing, treating, easing or preventing disease, to prescription drugs and insulin, to medical, dental and some long-term care insurance. 

It gets even better. As long as the expenses were paid in 2013, you can deduct the cost of services received in a previous year. So procrastinating on your bills might just pay off. 

You might be asking, can I get a break on the money I spent driving back and forth to the doctor’s? The icing on the cake is that the cost of travel to obtain medical care is included. You can deduct the actual costs, including gas and oil, or you can deduct the standard mileage rate for medical travel (24 cents per mile for 2013). Travel also includes the cost of public transportation or an ambulance, as well as tolls and parking fees. 

Finally, be aware that you can’t double dip. Funds from Health Savings Accounts or Flexible Spending Arrangements used to pay for medical or dental costs are already tax-free, so you can’t deduct expenses paid with funds from those plans. For more on deductions, check out IRS Publication 502, Medical and Dental Expenses.

Going the Extra Mile on the Job? Now it’s Worth a Little Less: Mileage Rates Decrease For 2014

Los Angeles is a city of knotted freeways, frayed nerves, and two hour commute cushions – both ways – to account for traffic. In an area like Southern California, where running a simple errand for the boss can easily be the hardest part of the job, every driving-related cent counts. That’s why it’s big news that the 2014 optional standard mileage rates will be half a penny less than the 2013 rates.

This change in change applies both to business miles driven and for moving or medical purposes. We’re looking at 56 cents/mile for business miles driven and 23.5 cents/mile for medical or moving purposes. The decrease goes hand-in-hand with the drop in average gas prices, so things should ultimately even out in your wallet. Since the 14 cents/mile rate in service of a charitable organization is determined by statute, it will remain the same.

The keyword here is “optional.” Taxpayers can always choose to calculate the actual costs of using their vehicle rather than using the standard mileage rates. If you break the bank trying to keep your vehicle from breaking down, this might be the way to go. But it’s a lot of work to keep track, so you have to decide if the time you invest in doing this arithmetic is worth it.

The rate change won’t have an effect if you use any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. That’s because you can’t use the business standard mileage rate under those circumstances. Notice 2013-80, the official IRS release, has more on this and other stipulations. Take a look at it so you can navigate the new year with a clear sense of the financial road ahead.