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Category Archives: Tax Central

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Commonly Asked Tax Questions

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on March 28, 2023 by Lake Wylie Tax Services StaffMarch 28, 2023

Do you have tax questionsThose dealing with income taxes only once a year when involved with their own personal tax return often have questions related to tax terminology. The following is a compilation of questions frequently asked by individuals:

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Posted in Tax Central | Tagged Tax Planning

Don’t Ignore Household Employee Payroll Tax Rules

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on March 13, 2023 by Lake Wylie Tax Services StaffMarch 13, 2023

Household Employee Payroll Tax RulesIf you hire a domestic worker to provide services in or around your home, you probably have a tax liability that you don’t know about – or one that you do know about but are ignoring. Either situation can come back to bite you. When the worker is your employee, your liability includes both withholding and paying payroll taxes as well as issuing a W-2 after the close of the year.

Sure, it is a lot easier simply to pay your worker in cash so as to avoid federal and state payroll taxes – and all the paperwork that goes with them. Your domestic worker will likely be fully cooperative with a cash deal because he or she can also avoid paying taxes. However, if the IRS or your state employment department finds out about these payments, the result could be very unpleasant for you.

Some families may be paying their household help via a third-party payment processor such as PayPal, Venmo, etc. Beginning for the 2023 tax year these payment processors must begin reporting those payments (on Form 1099-K) when the total for the year exceeds $600.

Not everyone who performs services in or around your home is classified as an employee. For instance, a plumber or electrician who makes repairs in your home will generally be a licensed contractor; the government does not classify contractors as employees.

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Posted in Tax Central | Tagged Employee, Paycheck

Should You Be Keeping Home Improvement Records?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on March 7, 2023 by Lake Wylie Tax Services StaffMarch 7, 2023

Keep Records of your Home improvementsMany taxpayers don’t feel the need to keep home improvement records, thinking the potential gain will never exceed the amount of the tax code’s exclusion for home gains explained as follows.

Under the current version of the tax code, you are allowed an exclusion of up to $250,000 ($500,000 for married couples) of gain from the sale of your primary residence if you owned and lived in it for at least 2 of the 5 years before the sale. You also cannot have previously taken a home-sale exclusion within the 2 years immediately preceding the sale. There is no limit on the number of times you can use the exclusion if you meet these time requirements; however, extenuating circumstances can reduce the amount of the exclusion. The home-sale gain exclusion only applies to your main home, not to a second home or a rental property.

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Posted in Tax Central | Tagged Home and Mortgage

Are You Caring for a Disabled Family Member?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on March 1, 2023 by Lake Wylie Tax Services StaffMarch 1, 2023

Caring for a Disabled Child or Family MemberMany taxpayers prefer to care for ill or disabled family members in their homes as opposed to placing them in nursing homes, but doing this can be expensive, time-consuming, and exhausting. The government also recognizes home care as a means of reducing the government’s costs in terms of caring for individuals who otherwise would be institutionalized (because they require the type of care that is normally provided in a hospital, nursing facility, or intermediate care facility).

To promote home care and reduce the government’s institutional care expenses, Medicaid (through state agencies) pays home caregivers a small amount of compensation, referred to as a Medicaid waiver payment, to care for an individual in the care provider’s home.

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Posted in Tax Central | Tagged Medical
Lake Wylie Tax Service | Bookkeeping | Payroll Service

Tax Credit for Used Electric Vehicle2023 brings with it a whole new set of rules related to qualifying for a tax credit for purchasing a used electric vehicle. This is the first time that used electric vehicles have qualified for a tax credit, and although considerably less than the credit for purchasing a new electric vehicle, it does provide an incentive for lower income taxpayers to acquire an electric vehicle. However, this new credit – officially termed the Previously-Owned Clean Vehicle Credit in the tax code – also comes with some rules that limit the vehicles that qualify, and essentially bars the credit to higher income taxpayers. Here are the details.

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Posted in Tax Central | Tagged Automotives

Tax Benefits for Grandchildren

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on February 8, 2023 by Lake Wylie Tax Services StaffFebruary 8, 2023

Tax Benefits for GrandchildrenIf you are a grandparent there are several things you can do to teach your grandchildren financial responsibility and set aside money for their future education and retirement. Before we get into actual suggestions, it is important that you understand the gift tax rules. You can give anyone, every year, an amount up to the annual gift tax exclusion. The gift tax exclusion is inflation-adjusted and is currently $17,000, which means that, in 2023, you can give any number of recipients up to $17,000. Thus, you can give each grandchild $17,000per year; and, if you are married, both you and your spouse can each give $17,000 for a total of $34,000 per year. Gifts in excess of $17,000 per donee can certainly be made, but doing so will mean the grandparent must file a Gift Tax Return (Form 709) and pay gift tax on taxable gifts in excess of a lifetime gift and estate tax exclusion $12.92 Million for 2023).

Of course, just handing out money to your grandchildren will not teach financial responsibility or meet specific goals you might have in mind for the money. The following are some suggestions.

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Posted in Tax Central | Tagged Tax Planning

Who Claims the Children’s Tax Benefits You or Your Ex-Spouse?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on January 31, 2023 by Lake Wylie Tax Services StaffJanuary 31, 2023

How Divorce Impacts your Tax ReturnIf you are a divorced or separated parent, a commonly encountered but often misunderstood issue is who claims the child or children for tax purposes. This is sometimes a hotly disputed issue between parents; however, tax law includes some very specific but complicated rules about who profits from the child-related tax benefits. At issue are a number of benefits, including the children’s dependency, child tax credit, child care credit, higher-education tuition credit, earned income tax credit, and, in some cases, even filing status.

This is actually one of the most complicated areas of tax law, and inexperienced tax preparers or taxpayers preparing their own returns can make serious mistakes, especially if the parents are not communicating well. If parents will cooperate with each other, they often can work out the best tax result overall, even though it may not be the best for them individually and compensate for it in other ways.

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Posted in Tax Central | Tagged Divorce, Tax Credit

Common Family Tax Mistakes

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on December 27, 2022 by Lake Wylie Tax Services StaffDecember 27, 2022

Common Family Tax MistakesWhen it comes to transactions between family members, the tax laws are frequently overlooked, if not outright trampled upon. The following are some commonly encountered situations and the tax ramifications associated with each.

These are not the only examples of the tax complications that can occur in family transactions. It is recommended that you contact this office before completing any family financial transaction. It is better to structure a transaction within the parameters of tax law in the first place than suffer unexpected consequences afterwards.

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Posted in Gastonia Tax Preparation, Lake Wylie Tax Preparation, Steele Creek Tax Preparation, Tax Central, York SC Tax Preparation | Tagged Tax Planning

Understanding Tax-Deferred Investing

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on December 21, 2022 by Lake Wylie Tax Services StaffDecember 21, 2022

Understanding Tax-Deferred InvestmentsWhen you are attempting to defer the taxability of a capital gain, save money for your children’s future education or plan your retirement finances, you may do so in several ways, including investing in the stock market, buying real estate for income and appreciation, or simply putting money away in education savings accounts or retirement plans. Knowing how these various tax savings vehicles and income deferral opportunities function is important for choosing the ones best suited to your circumstances.

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Posted in Tax Central | Tagged Investment, Retirement, Tax Planning

IRS Finds a Cure for the Family Glitch

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on December 13, 2022 by Lake Wylie Tax Services StaffDecember 13, 2022

Affordable Care Act RevisionsBackground – The Affordable Care Act (ACA) – also referred to as Obamacare) was enacted over 12 years ago, and one of its main features was the creation of government marketplaces (sometimes called exchanges) where Americans could purchase their health insurance if not covered by an affordable employer’s plan. Also included in the ACA was a new tax credit, the Premium Tax Credit (PTC), that could be used to offset some or all of the premiums for policies obtained through the marketplace.

However, that law also contained what some have referred to as “the family glitch” that prevented some families from having access to a health insurance marketplace or taking advantage of the PTC. After more than a decade, the IRS has come up with regulations that will allow, in some cases, these family members to be eligible for the PTC.

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Posted in Tax Central | Tagged Medical, Tax Planning

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