Latest News on Denver Accounting & Taxes

It seems that taxes go up every year, putting an even bigger squeeze on the taxpayer. Bloch, Rothman, and Associates tax specialists will do everything we can to lessen your burden, but you need to share as much information with them as you can about possible deductions. This kind of personalized service is the greatest advantage of using a professional accountant versus an online software aid. Many overlook health-related deductions because they have to be a large percentage of your income to qualify, but things can add up quickly if you know what to look for.
IRS Section 502 is a comprehensive list of things that can be deducted from your taxes. These are some examples:

• Some are more obvious, such as out of pocket doctor visits and prescriptions.
• Did you quit smoking this year? If you did, congratulations! Money that you spent on tobacco cessation is deductible. This includes prescription pills, but not over the counter aids such as patches or nicotine gum. Support program fees can be deducted.
• Transportation expenses to the doctor or hospital are deductible. If you took a cab, train, or bus to get a flu shot or have a check-up, you can deduct that expense. This expense can also be deducted for a caregiver who transported a child or dependent to medical care.
• For those with mobility issues, wheelchairs, canes, or other mobility aids can be used as a tax deduction. If you have had to install any special features in your home, such as ramps, hand rails, or other specific mobility aids, these can also be deducted.
• Any expenses related to vision correction can be deducted. Eye exams, glasses, contacts, and vision correction surgery all fall into this category. Items such as contact lens solution can also be used as a deduction.
• Some alternative medical treatments may also be tax deductible. For instance chiropractic care and acupuncture treatments are both deductible.
• If you have had to purchase any medical equipment this year that uses electricity such as an oxygen concentrator, or a CPAP or BiPAP machine for sleep apnea, you can deduct the power usage. Be sure to bring an electric bill with you that shows how much you are being charged per kilowatt hour. You will also need to bring the manual of your device so that we can figure out how many kilowatts per hour it is estimated to use.
• If you were advised by a doctor to lose weight to treat a specific condition such as high blood pressure, hypertension, heart disease, or diabetes, you can deduct certain expenses of joining a weight loss program. Fees to support programs are deductible but special food is usually not deductible unless it is for the specific illness you have, ie no sodium for blood pressure etc. Gym fees are not deductible but if you participated in specific classes geared toward weight loss at the advice of your doctor, you can deduct those fees.
• If you purchased any items to monitor a condition such as a blood pressure cuff, blood sugar tester, or pulse oximeter, you can deduct the cost of the device as well as the batteries and supplies required to use them.

These are just a few health related deductions to which you may be entitled. If you have other questions, please don’t hesitate to ask. The more information your tax preparer has, the more easily they can help you find every deduction to which you are entitled. Be sure to check out our Tax Preparation Checklist for 2015 Taxes for items that you should bring to your appointment. Call 303-321-7160 today!

The price of college continues to skyrocket while wages have remained stagnate over the past several years. In 1976-1977 it is estimated that a student who worked full time during the 12 weeks of summer could afford to pay for 100% of their tuition, and in most schools have some left over for books and spending money. This is not the case today. It is estimated that a summer’s worth of full time work will cover less than 25% of tuition and fees at the average university. Most college students are forced to take out loans to cover that gap. It is estimated that the class of 2015 graduated with an average of more than $35,000 in student loan debt. If you are among those striving to pay back school debt or are still in school, consult a Denver tax specialist to be sure that you’re receiving all the tax credits and deductions to which you are entitled.

Tax Tips for Current Students:
Education expenses are eligible tax deductions. You can deduct expenses you pay for yourself or any person that you claim as a dependent. Students keep in mind that your deduction may be limited if your parents are still claiming you as a dependent. Schedule a conference to meet with a tax consultant to see which filing status would be most beneficial to your family. Also be sure to ask about the American Opportunity Credit.

Expenses that qualify:

• Books
• Supplies
• Equipment Required for Coursework
• Tuition
• School Fees

Expenses that do not qualify:

• Transportation
• Room and Board
• Living Expenses
• Insurance
• Medical Expenses
• Activity and Sport Fees

Tips for Those Paying Off Student Loans
Student loan interest can provide you with up to $2500 less taxable income. To qualify, you must be making less than $65,000 if filing single, or $130,000 if married and filing jointly. This deduction is available for the borrower who signed for the loan and is repaying it so it can be either the student or their parent. Look for an interest statement, or 1098-E from your loan servicer if you paid more than $600 in interest in the past tax year.

To help ease the burden of large student loans there have been several programs set up to accelerate payback and arrange for some balance forgiveness. Some income-driven payback programs adjust your payments to your income and will forgive the balance of your loan after you have made payments for a specified amount of time, usually 20 or 25 years. These are great programs that will eliminate a lifelong payment burden, but do keep in mind that balance forgiveness could mean a larger tax bill for the year the balance is disbursed. The borrower must claim any forgiven balance income.

There are many reasons to use Bloch, Rothman & Associates, LTD as your tax professional as opposed to online software. We have a better understanding of your situation and can help you develop a plan to minimize tax burden and maximize deductions. Call 303-321-7160 to consult with us today!

It seems like every year, tax rules change. If you only have one job, one necessary document, and everything basically spelled out for you in your W-2, you can easily file your own 1040EZ document and send it in with few worries at all. However, if you have more than one job, or had multiple jobs throughout the year, things can be a little more tricky. There are a few things you need to make sure you attach to your 1040 tax return. If it seems overwhelming, you may want to consider getting an expert to do your Denver tax return.

• Each W-2 you received if you had or have multiple jobs throughout the tax year needs to be attached to your tax return.
  • Make sure you add the correct numbers together to represent your overall income and amount of taxes paid.
• If you claim a deduction, make absolutely sure you provide the supporting documents that prove you deserve that tax deduction (e.g. if you claim the American Opportunity Tax Credit, make sure you have the document from your university that proves the payments you made on tuition).
  • Carefully read the instructions for any deductions you may be able to claim. Do not try to claim a credit you are not 100% qualified for.
• If you have a 1099 for work performed from home, you need to make sure that you calculate the self-employment taxes owed, unless you paid taxes quarterly. You must attach each 1099 as proof of income, even if you also had one or more W-2s from the same year. (Note: If your refund due from your W-2 taxes paid is greater than the tax you owe, you will still get a refund. If not, you will owe money to the IRS.)
  • Remember: You will only get a 1099 for work performed as an independent contractor if you made more than $600 from that company/client. Consult a local accountant if you are unsure how to add income for which you did not receive a 1099.
  • Tip: Keep an Excel spreadsheet of all the income you made as an independent contractor so you know how much income to report. If you are not sure which types of income you are required to report, consult an accountant.
• Proof of year-long health insurance coverage is now something you may need to attach to your tax return. Your employer, your health insurance provider, or the state (if you receive Medicaid or some branch of it) is required to provide you with a document stating that you were covered for each month. If you were covered by multiple mediums, you will need to attach all the documents to prove you were covered the whole year.
  • If you were not covered by health insurance the whole year, you will owe a tax for each month you were not covered. Consult an accountant if you are unsure.

In general, you should keep a copy of all tax documents in the event you have made a mistake or end up being audited. These documents may include a copy of the tax return you filed, a copy of your W-2s and/or 1099s, a printed copy of any self-made spreadsheets, a copy of any supporting documents for your tax deductions, and copies of any receipts that are relevant to any deductions that you claimed. The IRS can audit you up to five years back, so keep these documents safe. Once the 5-year mark has passed for each document, make sure you shred the document in a shredder. Most of these documents contain your social security number, bank account information, and other sensitive information that could result in identity theft or unauthorized charges/withdrawals.

If all of these rules seem a little overwhelming, we recommend you hire a professional accounting firm to handle your state and federal taxes. Not only can an accountant ensure you have all the necessary documents attached, they can also let you know what tax credits you can claim.

At Bloch, Rothman & Associates, LTD, we can make sure you get all the deductions and prevent delays from mistakes or missing documents. We're your local go-to firm with expertise in personal tax preparation. Call us at 303.321.7160 to schedule an appointment and get a free consultation. Our tax experts will get started right away on your hassle-free road to a great refund.

Occasionally we all make a mistake on our taxes if we are accustomed to doing them ourselves. Sometimes our employment circumstances change, we make a typo on the return, we miscalculate something, we get confused by the directions, or we have to use a form we’ve never used before - basically, there are a ton of ways any one of us could make a mistake on our tax return. Generally the IRS simply fixes small mistakes for us, though it can take them quite some time. Other times, the IRS expects us to fix our mistakes ourselves, and we must file an amended tax return. Filing an amended tax return can be a tricky process, and some of us may not feel comfortable doing the paperwork ourselves and risk making another mistake. The best Denver tax specialists can help you filing an amended tax return.

To get an idea of whether or not you would like to do it yourself, here are several steps and tips that you need to take in order to file an amended tax return:

1. You need a form 1040X if you filed a 1040, 1040A, or 1040EZ. It is available for download on the IRS website. It can be modified on your computer and printed at home.
2. If you download the tax return form and want to take a break while filling it out, do not close the document. Saving it to your computer only saves the blank document, not your changes.
3. You cannot submit amended tax returns online, so you have to check for the address to send your return to according to where you live in your state. Make sure you send it to the correct address, or there will be a serious delay in getting your return.
4. You generally do not need to file an amended tax return over a simple math error, because the IRS will fix them for you, even though it could result in requiring a little extra time to get your return. Check the status of your refund on the IRS website.
5. If your error was that you forgot to attach your W-2, 1099, or other tax documents, you don’t have to rush to file an amended tax return. The IRS will contact you with a request for the documents and the address you can send it to.
6. Make sure you write the year that you are filing the amended tax return form for, not the present year. You must do this within three years of filing or two years of paying a tax, whichever is later.
7. If you are amending more than one tax return, you must fill out a separate 1040X for each year you are amending. You must mail these in separate envelopes.
8. The 1040X instructions provide the list of addresses that you will need to mail your forms to depending on where you live.
9. If the changes require another schedule or a different form, you must attach those to your 1040X before you mail them in.
10. If you owe money on your taxes, make sure that you calculate how much you owe correctly.
11. If possible, submit payment for any owed taxes with the 1040X.
12. If you are unable to make the full payment, arrange a payment plan with the IRS so your taxes do not go into collections.
13. You must pay the full amount by the due date unless you work out a different plan with an IRS agent.
14. If in doubt about any part of the 1040X or submission process, consult an accountant or contact an IRS agent to make sure that you do everything correctly.

If you decide to have a Denver accountant file an amended tax return for you, we suggest viewing the 1040X, identifying which parts need amending, and compiling everything together before your accounting visit. This will make the process much faster and smoother for your accountant. Bloch, Rothman & Associates will be able to get you back on track with the IRS in no time if you don’t feel confident in your own abilities. Contact us today!

Education tax credits are a great way to make sure that you get a tax refund as a student, whether or not you earned a lot of money last year while you were in school. Before you go to a Denver accountant, make sure that you understand the different tax credits and ask about each of them and whether or not they apply. A local accountant will understand all the ins and outs of how to use each credit, but it helps to understand the documentation you will need to provide to earn each credit before you go to your accounting appointment.

1. The American Opportunity Tax Credit -
   This tax credit can be applied to education costs for four post-secondary education years, meaning it could be used all four years while you are pursuing your Bachelor’s Degree. It is available to all taxpayers who make $80,000 or less annually. Unlike other credits, it covers costs of attendance beyond tuition, including books and school supplies. This credit only applies to those who paid for expenses out of their own pocket, and is not applicable to students who used financial aid to cover all of their expenses. Additionally, if you claimed the Hope credit in previous years, those years count toward the 4 years you can claim the AOTC for.
2. Lifetime Learning Credit -
   The Lifetime Learning Credit, unlike the AOTC, can be claimed each year the student is in school. This credit can reduce the tax you owe down to $0, but it will not earn you a refund. This credit, like the AOTC, can only be claimed if you paid for tuition and fees out of your own pocket, and is not applicable to years covered entirely by financial aid. You can, however, claim costs that were paid with a loan, rather than a grant or scholarship. This credit does not include books and other school costs like the AOTC does. Additionally, you cannot use the credit if you file a tuition and fees deduction the same year.
3. Student Loan Interest Deduction -
   If you paid interest on your student loan in cash, and your income is less than $80,000 annually, you can deduct the dollar amount you paid in student loan interest. A student loan is a loan that is used solely for tuition, room and board, and fee expenses, with no allowance for personal spending. It includes required as well as voluntary payments on your student loan interest. This deduction applies to graduate and undergraduate students, like the Lifetime Learning Credit. You must keep track of exactly how much you paid in order to file this deduction, with documentation.
4. Tuition and Fees Deduction -
   This deduction can be claimed for any year you paid tuition and fees, including tuition paid for by student loans rather than financial aid. This deduction is not applicable if you claimed the AOTC or Lifetime Learning Credit. This deduction reduces your taxable income, and you qualify only if you earned less than $80,000 the year you are filing taxes for. The definition of student loan in this case is the same as the Student Loan Interest deduction.

Now that you are familiar with the most common credits and deductions you may apply for come tax time, consult your accountant or view this PDF on on Tax Benefits for Education on the IRS website so you can gather the necessary paperwork in preparation for your appointment with a Denver accountant.