international tax lawyers

Higher Education Tax Credits

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This is an education tax credit update from a Minneapolis tax lawyer.  American Opportunity Tax Credit and the Lifetime Learning Tax Credit are two federal tax credits designed to help eligible taxpayers offset their higher education expenses.

To qualify for either credit, a taxpayer must pay postsecondary tuition and fees for himself, spouse or dependent. The credit may be claimed by the parent or the student, but not by both. If the student was claimed as a dependent, the student cannot file for the credit.

Only one of the credits is available in a single tax year per each student. This means that, in a given tax year, a taxpayer cannot claim both credits for the same student’s college expenses. If a taxpayer pays college expenses for two or more students in the same year, then he can choose to take credits on a per-student, per-year basis. For example, the taxpayer can claim the American Opportunity Credit for a sophomore daughter and the Lifetime Learning Credit for a senior son.

Let’s look closer at some of the key facts about American Opportunity Tax Credit and Lifetime Learning Tax Credit.

The American Opportunity Credit

The credit is available for students enrolled in a post-secondary education program in pursuit of an undergraduate degree or other recognized educational credential, but only for the first four years. The student must be enrolled at least half time for at least one academic period. Qualified expenses include tuition and fees, coursed related books supplies and equipment.

The credit can be up to $2,500 per eligible student. The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return. Moreover the credit is refundable; this means that a taxpayer may be able to receive up to $1,000 in refund even if he owes no taxes.

Lifetime Learning Credit

Unlike the American Opportunity Credit, the Lifetime Learning Tax Credit is available for all years of postsecondary education and for courses to acquire or improve job skills. This also means that the student does not need to be studying in pursuit of a degree or other recognized education credential. Qualified expenses include tuition and fees, course related books, supplies and equipment.

The credit can be up to $2,000 per eligible student. The full credit is generally available to eligible taxpayers who make less than $60,000 or $120,000 for married couples filing a joint return. This tax credit, however, is not refundable and is limited to the amount of tax a taxpayer must pay on his return.

If you have questions with respect to any tax credits, contract us NOW to discuss your case with an experienced Minneapolis tax attorney.

Small Business Health Care Tax Credit

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This is a Small Business Health Care Tax Credit update from a tax attorney in Minneapolis.

Generally, the Small Business Health Care Tax Credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees. It is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

The credit can be claimed by small businesses during the tax years starting 2010 through 2013 and for any two years after that. The maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will increase to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible tax-exempt organizations.

The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 or more FTEs or that pay average wages of $50,000 or more per year. Since the eligibility rules are based in part on the number of FTEs, not the number of employees, employers that use part-time workers may qualify even if they employ more than 25 individuals.

Eligible small businesses should first use Form 8941 to figure the credit and then include the amount of the credit as part of the general business credit on its income tax return.

If you have any questions with respect to eligibility or calculation of your small business health care tax credit, contact Sherayzen Law Office to discuss your case with an experienced Minneapolis business tax attorney!

Reduce Your Self Employment Tax with a New Health Insurance Deduction

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Due to the enactment of the Small Business Jobs Act of 2010, self-employed taxpayers who pay their own health insurance costs can now reduce their net earnings from self-employment by these costs. Previously, the self-employed health insurance deduction was allowed only for income tax purposes. For tax year 2010, however, self-employed taxpayers can also reduce their net earnings from self employment subject to self-employment taxes on Schedule SE by the amount of self-employed health insurance deduction claimed on line 29 on Form 1040.

Taxpayers can claim the self-employed health insurance deduction if the insurance plan is established under their business and if any of the following are true:

a) They were self-employed and had a net profit for the year,
b) They used one of the optional methods to figure net earnings from self-employment on Schedule SE, or
c) They received wages from an S corporation in which the taxpayer was a more-than-2-percent shareholder.

Contact Mr. Sherayzen at Sherayzen Law Office Minneapolis tax lawyer who can help you properly plan your tax strategy to take advantage of the Internal Revenue Code.

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Tax Lawyers St Paul: Tax Filing Deadline Extended to April 18, 2011

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On January 4, 2011, IRS extended the tax filing and tax payment deadline for individual taxpayers until April 18, 2011.  The extension is made due to the Emancipation Day, a holiday observed in the District of Columbia, which falls this year on Friday, April 15, 2011.

Taxpayers who request an extension will have until October 17, 2011, to file their 2010 tax returns.

This year, the IRS expects to receive more than 140 million individual tax returns this year, with most of those being filed by the April 18 deadline.

The IRS also cautioned taxpayers with foreign accounts to properly report income from these accounts and file the appropriate forms on time to avoid stiff penalties. IRS Commissioner Doug Shulman stated earlier that the IRS “will continue to focus on offshore tax compliance and people with offshore accounts need to pay taxes on income from those accounts.”

Sherayzen Law Office is an experienced tax law firm that has helped numerous clients in Minnesota and across the United States to bring their affairs, including proper reporting of foreign financial accounts, into full compliance with the U.S. tax laws.

Contact Sherayzen Law Office NOW to discuss your case with an experienced St Paul tax lawyer!

Tax Attorney St Paul | Who Must Wait to File 2010 Tax Return

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While for most taxpayers, the 2011 tax filing season starts on schedule. Due to tax law changes enacted by Congress in December, however, some taxpayers need to wait until mid – to late February of 2011 to file their 2010 tax returns in order to give the IRS time to reprogram its processing systems. This is mostly due to the renewal of the three tax provisions that expired at the end of 2009 and were renewed by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act Of 2010 on December 17, 2010.

The IRS will announce a specific date in the near future when it can start processing tax returns impacted by the recent tax law changes. Meanwhile, the affected taxpayers should not submit their returns until IRS systems are ready to process the new tax law changes; however, the affected taxpayers can start working on their tax returns. For taxpayers who must wait before filing, the delay affects both paper filers and electronic filers.

The most common types of taxpayers who may need to wait to file their tax returns include:

1. Taxpayers Claiming Itemized Deductions on Schedule A

Due to the tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction that was also extended and which primarily benefits people living in areas without state and local income taxes.

2. Taxpayers Claiming the Higher Education Tuition and Fees Deduction

This is primarily concerns those taxpayers who claim their deduction on Form 8917. The deduction, which covers up to $4,000 of tuition and fees paid to a post-secondary institution, can be claimed by parents and students.

Note, however, that this delay does not concern those taxpayers who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.

3. Taxpayers Claiming the Educator Expense Deduction

This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.

Sherayzen Law Office can help you deal with and take advantage of the recent tax law changes. Call or e-mail Sherayzen Law Office to discuss your case with an experienced St Paul tax attorney!