The ‘child and dependent care” in the tax system are applicable if the taxpayer paid expenses for the qualifying dependents during a financial year.  The eligibility criteria are listed separately.  This tax credit can be claimed in tax filing by taxpayers under the applicable situations.  

If the taxpayer is a parent or caretaker of a disabled dependent or spouse, they can save the expenses while claiming in this tax filing 2021. For the tax year 2021, the credit is fully refundable. This means that an eligible family can get it, even if they owe no federal income tax. 

Eligibility of Child and Dependent Care Credit

• Taxpayer’s dependent who is under age 13 when the care is provided,
• The spouse who is physically or mentally incapable of self-care and lived with the taxpayer for more than half the year, or
• A person who is physically or mentally incapable of self-care, lived with the taxpayer for more than half the year and either: 

1. 1. is your dependent; or 
   2. Could have been your dependent except that 
      • he or she is over the gross income limit of $4300 
      • or files a joint return, 
      • or you (or your spouse, if filing jointly) could have been claimed on another taxpayer’s return.

Qualifying Claim Amount of Claim and Child and Dependent Care Credit

For 2021, taxpayers can claim the credit for up to $8,000 of expenses for one qualifying person or $16,000 for two or more people. The percentage of expenses you can claim ranges from 0% to 50%, depending on your adjusted gross income (AGI). You can claim the maximum percentage (50%) of expenses if your AGI is $125,000 or less. So, for example, if your AGI is $75,000 and you had $8,000 of expenses for one qualifying person, the tax credit would be worth $4,000 (50% of $8,000). The tax credit starts to phase out if your AGI is above $125,000 and disappears entirely at AGIs above $438,000. For more details, refer to IRS official website below

https://www.irs.gov/newsroom/irs-highlights-importance-of-child-and-dependent-care-credit-can-help-families-others

How to Claim Child and Dependent Care Credit

To claim the credit, taxpayers must fill out Form 2441 and include it with the federal tax return. Further, a valid taxpayer identification number (TIN) for each qualifying person, as well as the names, addresses, and TINs for the people and organizations that provided care for your child, spouse, or dependent must also be included.

According to the IRS, since the advance child tax credit payments cannot be counted as income, federal, state, or local agencies can’t use the amount when determining if you or your family are eligible for other benefits or assistance.

Advance Child Tax Credit payments

Advance Child Tax Credit payments provide an option to claim the credits early from the estimated amount of the Child Tax Credit. Taxpayers can claim up to 50% of the estimated credit that you may properly claim on your 2021 tax return during the 2022 tax filing season. 

Going through different forms and documents is always a hassle for taxpayers especially when the deadlines are nearing. IRS Audit Group in Los Angeles facilitates your tax filing through its certified IRS attorneys. Get a free consultation with one of our staff members to help us understand your needs. Call us on 1- -888-300-6670 or email us at [email protected].

IRA or the Individual Retirement Account will help lower your taxable income for the tax season 2022. IRA is easy to set up, and it allows to save for retirements with tax-free benefits. One can open a traditional IRA from a bank, brokerage, mutual fund, or insurance company. The money saved in this account can be used to invest in stocks, bonds, mutual funds, exchange-traded funds, and other approved investments.

As we know, IRA is an individual-owned account that provides more flexible benefits than the 401(K) plans.  The 401(K) plans are sponsored by employers.    The employer has the right to change the plan or limit the investment options.

Traditional IRA vs. Roth IRA

These are two common IRAs that an individual can set up to contribute to their retirement savings. The important difference between these two is traditional is tax-deferred and Roth is tax-free.

Traditional IRA: The contribution is deductible from your tax return. The earnings grow tax-deferred until you withdraw them upon retirement. But the withdrawals are taxable as income after age 59½. There is also a 10% IRS penalty tax in addition to current income tax if the withdrawal is made before 59½. Individuals with a low tax bracket at the time of retirement or taking withdrawals can use a traditional IRA.

Roth IRA: Savings for Roth IRA is contributed after the tax is paid. But the withdrawal is penalty-free and tax-free after the age of 59½. Still, one needs to wait at least five years to withdraw the savings from Roth IRA.

What has been changed for the tax year 2022?

The contribution limit for tax season 2022 is not changed from the previous year for the IRA, but the adjusted gross income (AGI) has been increased like every year. One can contribute a maximum of $6,000 in the tax year 2022 if you are below the age of 50. An additional contribution of $10,00 is allowed for individuals older than 50. But the contributions for the 401(k)s and 403(b)s plans that are provided by employers for the tax season 2022 have been increased. For the retirement savers younger than 50, the maximum contribution limit has been set as $20,500 in 2022, an increase of $1,000 from 2021. Those 50 and older can add an extra $6,500 (same as 2021) — for a maximum contribution of $27,000 in 2022.

The AGI limits for the tax year 2022 on Traditional IRA tax deduction are summarized below

The AGI limits for the tax year 2022 on Roth IRA tax contribution are summarized below

The savings on an IRA can help build sizable retirement savings. It gives more investment options and choices while having benefits like tax-deductible and tax deferral. Take advantage of this terrific opportunity and jump-start your IRA account. Taxpayers can contribute to an IRA for the 2021 Tax Year until the tax deadline (April 18, 2022).

Call our consultants with IRS Audit Group, Los Angeles at (888) 300-6670 for more information and to find out if you are eligible to contribute. Let us help you establish your retirement funding plan today.

When you get a notice from IRS for State Audit, it evokes a mix of responses and you may get frightened.  If this is the first sales tax audit your business has experienced, your first reaction may be to panic, and wonder why you were chosen.  If you have previous tax audit experience, you may be a bit more relaxed, but the inconvenience and disruption caused by tax audit may have you looking for ways to delay the audit until a better time.

Regardless of your reaction, there are important steps to be taken while preparing for sales tax audit.  There are also serious things for you to avoid as you deal with the tax auditor.  When it comes to sales tax audit preparation, and audit management it is different.  It depends on each business and each state audit and these suggestions need to be evaluated in light of your specific situation and the types of transactions your business conducts.

States Audit

State sales tax audits are conducted for a number of reasons.  First and foremost, the states will tell you that the audit is to make sure that the state sales tax laws are being followed by the businesses.  In reality, the tax audit is a significant and effective way to increase tax collections and state revenue.  Although auditors are not generally evaluated or compensated on the number of audit collections they generate, the unspoken expectation is that they will collect enough unpaid tax to cover a multiple of their salary.  Tax Audits improve state revenue straight through the valuations of tax, interest, and penalties paid by the taxpayer. It will also result in future increased tax payments of the business once the errors have been identified and corrected.

In addition to generating immediate tax revenue, sales tax audits also provide productive and valuable information for future audit leads.  As auditor gathers more information on untaxed purchased made by from out-of-state companies, this information is further evaluated.  This often leads to link inquiry from being sent to these out-of-state businesses that may be audited if it can be proved that they have the connection with the state

Finally, audits provide a very clear picture as to what types of transactions are occurring in the marketplace.  States laws and regulations delay significantly from realities of the marketplace.  As auditors see new sales transactions and new types of products/services being sold that do not neatly fit into the existing tax framework, they often give this data to the tax policy folks.  This will further result in the change of regulations to better define the tax treatment of the transactions.

To sum it up to states audit in order to:

• Collect revenue for the state
• Make sure businesses within the state are collecting sales tax (and in the right amounts)
• Generate future revenue for the state as businesses become compliant
• Find out-of-state trades that may possibly have connection in-state
• Find out what types of transactions are occurring in the marketplace in order to make new tax laws.

Despite of all these things, the first step you need to do is to avail the service of qualified and experienced auditors.  IRS – Audit- Group is a team of Tax Professionals, CPA’s and Enrolled Agents who major in in Tax Audit Representation & Resolution.  Besides the IRS, agencies such as the California State Tax Audit and the Board of Equalization can also inquire about the taxes you filed.  Complete the Audit process with ease and stress-free with IRS AUDIT GROUP.

If you’ve requested a six-month extension to submit your taxes then your deadline is coming up quick! October 16, 2017 is the last day to file your individual or corporation return. This includes the 1040, 1040A and 1040EZ or 1120 tax forms. Beware of penalties for late payments or filing.

Don’t let this extra time go to waste. Be sure that you file your return immediately and see if you qualify for common credits and deductions. Low and moderate income families may be eligible for special tax benefits as well.

According to the IRS, you could also receive credit if you’ve paid college tuition or fees in the last year. Same goes for those that have made their homes energy efficient.

E-filing will reveal guides and tips to help you complete your return, but you can also call us for a one-on-one consultation with a tax professional. If you’ve missed important deadlines in the past or fear you won’t get the paperwork done in time for the upcoming deadline please give IRS Audit Group a call to learn how we can help resolve your tax issues ASAP.