Dear Tax Client,

Summer is well behind us / coming to an end bringing us closer to that time of year again - TAX SEASON! This brings to mind income tax. Take a look at the following simple yet important tips. These useful tips will answer your questions and save valuable time and money. Be organized and one step ahead for the 2008 TAX SEASON!

Do you have dependents?

If you have or had unemployed relatives or friends living with you for at least six months during the year, consider gathering information such as SOCIAL SECURITY NUMBERS, PROOF OF RESIDENCY, RELATIONSHIP and SUPPORT. Your parents need not live with you to qualify. NOTE: Apply to the Social Security Administration for dependent children social security numbers. (I.R.S. Says A MUST)

Are you self-employed?

You should have a current travel ledger for your business mileage and related expenses. In addition to direct business expenses incurred.

If you use your home for business, it's essential to keep track of business usage, e.g. square footage, rooms etc. Also important are indirect home costs such as:

      Utilities

      Repairs

      Insurance

      Improvements

Are you moving this summer?

If your move is closely related to the start of a new job location, you may be able to deduct unreimbursed moving expenses on your federal tax return. You must also meet certain tests relating to distance and time.

Are you a first-time home buyer?

Moving can also mean selling or buying a home. If you’re a first-time home buyer, you should know that mortgage interest “points” paid to obtain the mortgage and real estate taxes are expenses that you may be able to itemize and deduct to help reduce the amount of taxes owed.

Will you be selling your main home?

If you sell your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return when it’s time to do your taxes. To be eligible for this exclusion, your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale.

Are you purchasing a home or refinancing?

If you purchased a HOME or 2nd HOME, points may be FULLY DEDUCTIBLE in the year of purchase. If you refinanced your home and made improvements you may not have to amortize the points over the life of the loan. NOTE: undeducted points of a previous refinance are fully deductible in the year of the new refinance. It's very important to keep your escrow closing statement.

Change of address

Don’t forget to report your change of address to the U.S. Postal Service and to the IRS, so you can continue to get your tax refunds. 

Summer day camp

Many working parents must arrange for care of their children during the school vacation. A popular solution — with favorable tax consequences — is a day camp program. Unlike overnight camps, the cost of day camp counts as an expense toward the child and dependent care credit. Of course, even if your child care provider is a sitter at your home, you'll get some tax benefit if you qualify for the credit.

Tips for working students

All employees have income tax withheld from their pay, right? Not necessarily. You or your child may be exempt from withholding if:

      You can be claimed as a dependent (usually on a parent's return),

      Your total 2005 income will not be over $5,000, 

      Your unearned income (interest, etc.) will not exceed $250, and

      You had no income tax liability for 2004.

You'll still have to pay Social Security and Medicare taxes, but skipping unnecessary income tax withholding will put more money in your pocket now.

Individual or self employed IRA/KEOGH

Consider setting up an Individual Retirement Account (IRA). IRA'S can be opened and funded at anytime before APRIL 15th or before the due date of an extension. Deduction is limited to a maximum of $3500.00 for qualified individuals. KEOGHS must be opened before December 31st. However, funding is timely if deposited by April 15th. Deduction is limited to the lesser of 15% of modified business income or $30,000.00.

NOTE: Keoghs are only available to business owners or self -employed individuals.

From http://www.irs.ustreas.gov/newsroom/article/0,,id=110411,00.html