Joseph Group's Tax Tips

For the current tax year, there are no significant changes in taxes and credits. The changes that have occurred are simply adjustments to the inflation rates and have resulted in increased limits or deductions. Accounting and Tax Services

  • Start gathering your records: Round up any documents or forms you’ll need when filing your taxes: receipts, canceled checks and other documents that support an item of income or a deduction you’re taking on your return.
  • Be on the lookout: W-2s and 1099s will be coming soon from your employer; you’ll need these to file your tax return.
  • Try e-file: When you file electronically, the software will handle the math calculations for you. If you use direct deposit, you will get your refund in about half the time it takes when you file a paper return. E-file is now the way the majority of returns are filed. In fact, last year, 2 out of 3 taxpayers used e-file.
  • Consider Direct Deposit: If you elect to have your refund directly deposited into your bank account, you’ll receive it faster than waiting for a paper check.
  • If someone else claims you as a dependent, you may still be required to file your own tax return: Whether or not you must file a return depends on several factors, including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and, any advance Earned Income Tax Credit payments you received.
  • Exemptions reduce your taxable income: There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2009 tax return. Exemption amounts are reduced for taxpayers whose adjusted gross income is above certain levels, depending on your filing status.
  • If you are a dependent, you may not claim an exemption: If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.
  • Your spouse is never considered your dependent: On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
  • Some people cannot be claimed as your dependent: Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children.
  •  Federal Income Tax Withheld: If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year's tax.
  •  Government Retiree Credit: You may be eligible for this credit if you received a government pension or annuity payment. However, the amount of this credit reduces any making work pay credit you receive.
  • Earned Income Tax Credit Increased for 2012:  You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refund able tax credit; which means you could qualify for a tax refund.  It applies to wage earners aged between 25 and 55
  • Child Tax Credit:  The 2010 Tax Relief Act extended the credit of $1,000 per eligible child through 2012.
  • Additional Child Tax Credit: This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
  • Refundable American Opportunity Credit: This education tax credit is available for students who received a 1098 T from their educational institutions. The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
  • Retirement Contribution Limits: Contribution limits for 401k as well as 403b plans increased by $500 to $17,000 in 2012.  Catch up contributions remain at $5,500.  Contribution limits to SIMPLE retirement plans remain at $11,500, as does the catch up contribution limit of $2,500.  Although this contribution limit can be adjusted for inflation, it has not increased over the last three years.