 If Benjamin Franklin were alive today, his famous quote Nothing is certain, except death and taxes might include a third item — paying medical expenses. Fortunately a health savings account (HSA) is a great way to cut your spending on medical expenses.
A major tax break If you have a high deductible health insurance plan (a plan with a deductible of at least $1,500 for an individual or $3,000 for a family), you can add an HSA to pay for medical expenses with pre-tax income. Contributions to an HSA can be made via payroll deduction or directly to the account and deducted as an adjustment on your tax return. This approach effectively reduces your medical bills by as much as 37 percent! Tips to maximize your HSA Once your HSA is established, here are four ideas you can use to take full advantage of this tax-savings vehicle:
So knowing you will always have medical expenses, prioritize your HSA contributions to take advantage of its additional tax benefits. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA
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How to get more money without reducing need awards Beginning in 2023 there is a new way to save money for college that won't impact your student’s ability to qualify for financial aid. This change is in the 529 college saving program and is a change that every parent, grandparent, or friend of a future scholar should know.
Simply put, grandparents can now open up 529 savings plans without hurting the student’s ability to get financial aid! Background 529 college savings plans provide a way to contribute after-tax money into an account designated for a beneficiary (the student). The plan is controlled by the account holder on behalf of the student, so there is little risk that the funds won't be used as intended for education. As the deposits grow over time, any gains on the deposits are tax-free as long as they are used for qualified educational expenses. Even better, these funds can be used for both college and K through 12 qualified expenses. Funds not used for education will be subject to ordinary income taxes AND a 10% penalty. The problem While anyone can open a 529 savings plan for a future student, any time a distribution was made to the student from a non-parent account, that distribution used to be treated as untaxed income to the child. Up to 50% of this distribution could impact the student’s ability to receive other aid through the Free Application for Federal Student Aid (FAFSA). On the other hand, if the account is in the parent’s name, the reduction in aid eligibility is maxed out at 5.64%! The new opportunity It appears now that a grandparent (or potentially any non-custodial parent or friend) can open up a 529 savings plan without it hurting the future student’s ability to get federal aid. In the eyes of the new FAFSA, this funding is now virtually invisible to them as they calculate a student’s financial needs because they are no longer asking the questions about the grandparent’s contributions. So not only will the assets in the 529 account be ignored, but the distributions from the 529 account will also not influence the FAFSA results. Considerations If you are considering this option to help fund the ever-increasing cost of college, here are some considerations and ideas:
Given the ever-increasing cost of college, now is a great time to have more advocates helping to save for future educational expenses. These extra savings could make a big difference in reducing your student’s future debt obligations. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA  Whether you receive a big refund or pay your taxes on tax day, taking action now can ensure next year’s tax bill is optimized by not paying a dollar more than necessary.
Most of us want to forget the hassle of tax season as soon as the form is filed, but the savvy taxpayer uses this time to prepare and plan for a better tax result next year. Please call if you’d like assistance. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA  As a busy working parent, you may be concerned about what activities are available for your kids this summer. There may be a solution that’s also a tax break: summer camp!
Using the Child and Dependent Care Credit, you can be reimbursed for part of the cost of enrolling your child in a day camp this summer. Am I eligible?
Tip: If your spouse doesn’t work but is either a full-time student, or is disabled and incapable of self-care, you can still qualify for the credit. How much can I save? You can claim a minimum credit of $600 for one child on up to $3,000 in expenses, or $1,200 for two or more children on up to $6,000 in expenses, if your adjusted gross income (AGI) is greater than $43,000. If your AGI is less than that, the credit per child scales up to $1,050 and $2,100, respectively. What kind of camps? The only rule is: no overnight camps. The credit is designed to help working people care for their kids during the work day, so summer camps where kids stay overnight aren’t eligible for this credit. Other than that, it doesn’t matter what kind of camp: soccer camp, chess camp, summer school or even a simple day care. All of them are eligible expenses for this credit. Other ways to use this credit While summer day camp costs are a common way to use this credit, any cost to provide care for your children while you are working may be eligible. For example, if you pay a day care center, a housekeeper or a babysitter to take care of your child while you are working, that qualifies. You can even pay a relative to care for your child and claim the credit for that expense, as long as the relative isn’t your dependent, minor child or spouse. This is just one of many possible tax breaks related to children and dependents. Call if you have questions about this credit, or if you’d like to discuss any other tax savings ideas. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA Sometimes the line between having a hobby and running a business can be confusing, but knowing the difference is important because hobbies and businesses are treated differently when it’s time to file a tax return. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation.
Whether someone is having fun with a hobby or running a business, if they accept more than $600 for goods and services using online marketplaces or payment apps, they could receive a Form 1099-K. Profits from the sale of goods, including personal items, and services is taxable income that must be reported on tax returns. There are a few other things people should consider when deciding whether their project is a hobby or business. No single thing is the deciding factor. Taxpayers should review all of the factors to make a good decision. How taxpayers can decide if it’s a hobby or business These questions can help taxpayers decide whether they have a hobby or business:
Whether taxpayers have a hobby or run a business, good record keeping is always key when it’s time to file taxes. More information: Publication 535, Business Expenses Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C) Small Business and Self-Employed Tax Center at IRS.gov Understanding Your Form 1099-K "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA  Your kids are getting older. Before you know it they’ll be dating, driving and entering college (if they aren't already!). Tax breaks drop dramatically as your children grow up, but you may be able to offset the losses with some timely tax planning. Consider the following tax events based on the age of your child:
Tax move: Now that your child is a teenager, hire him or her to work at your business. Typically, the child will owe little or no income tax on the wages, and might even be able to claim an exemption from withholding.
Tax move: Claim a nonrefundable $500 credit for a dependent who isn’t a qualifying child for the CTC. This is typically available to parents of high school seniors and college students.
Tax move: As your child exits exposure to the kiddie tax, it may be time for a planning session. Long-held stocks with capital gains in a child's name can now be sold with little to no federal tax obligation. As you watch your children grow up and begin gaining their independence, remember to plan ahead for changes to your tax situation. Please call if you have questions about these child tax breaks or to schedule a planning session to discuss what other tax breaks may be available to you. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA |
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