If you're committed to finishing up your 1040 by April 15, then you'll want to check out these March 2014 Daily Tax Tips.
And if you've already finished your annual tax filing task, stick around, too. You'll also find some tax planning moves that could help reduce your 2014 tax bill.
Many of the tips posted throughout filing season are part of Bankrate's annual tax guide. Others are original Don't Mess With Taxes advice.
Regardless of the source, you'll find a featured tip in the upper right corner of the the ol' blog through the tax return due date.
Or you can bookmark this page, where you can catch up with the 31 Daily Tax Tips for March 2014 at your leisure, as well as follow the links at the end of the page to the filing season's earlier advice.
- Keeping good business records -- Administrative tasks are a major hassle for many small business owners, but they are critical to your company's success. And one of the most important areas is record keeping. You have leeway in choosing a record keeping system, but it should include a summary of your business transactions. This generally includes your books, such as accounting journals and ledgers. You also need to keep supporting documents that substantiate the entries in your books. You can find more on business record keeping in IRS Publication 583, helpfully named Starting a Business and Keeping Records. (March 1, 2014)
- Maximize your business meals and entertainment deductions -- Entertaining clients, current and potential, is a time-honored business tradition. It's also something that the Internal Revenue Service watches closely. Here are five ways to get the most out of these write-offs. (1) Talk business. (2) Don't be too outrageous in entertaining. (3) Know what type of entertaining fits your business. (4) Note the tax-deduction limits. (5) Document, document, document. IRS Publication 463 has more on deductible meal and entertainment expenses. Check it out, then enjoy your IRS-approved deductible business outings. (March 2, 2014)
- Properly defined dependents pay off -- Tax dependents offer several ways for filers to save tax money, such as exemptions and certain tax deductions and credits. Most of the time we think kids when we hear dependents. In order to claim a child as your dependent, the youngster must now meet four key tests: (1) relationship, that is be your kid; (2) residency, that is live with you for more than half of the year; (3) age, that is the child must be younger than 19 at the end of the year; and (4) support, that is the youngster doesn't provide more than half of his or her own support during the year. There are a few more things to take into account, such as citizenship. And an adult relative could qualify as your dependent, too, as long as he or she meets certain Internal Revenue Service conditions. (March 3, 2014)
- Child and dependent care credit -- Most working parents are well aware of how expensive child care is. During the school year, the care is in after-class programs. During the summer, it could be a day camp or two (or more!). Regardless of how the care is provided, you might be able to use some of the costs to claim the child and dependent care tax credit. While the credit will reduce your tax bill dollar-for-dollar, note that it likely won't cover all your child care costs. You can claim only up to $3,000 for the care of kid and $6,000 for two or more youngsters. Then based on your income, you can only claim a percentage -- 20 percent to 35 percent -- of your allowable child care expenses. That means the maximum possible child care credit is $1,050 if you are paying for care of one kid or twice that if your care costs are for two or more youngsters. And remember that the credit is true to its full name; it also applies to care for qualifying dependents other than children. (March 4, 2014)
- Tax credits help with higher education -- College costs go up every year. The American Opportunity and Lifetime Learning tax credits offer many students (and their parents!) help in meeting these expenses. The American Opportunity credit is an enhanced version of the previous Hope educational assistance credit and is available through the 2017 tax year. It's worth $2,500 to cover college costs and up to 40 percent of the American Opportunity credit is refundable, meaning you could get up to $1,000 back from the Internal Revenue Service. The Lifetime Learning credit lives up to its name. Up to $2,000 can be claimed for undergraduate, graduate and post-school professional degree courses. And remember, while these cover only a portion of your overall schooling costs, they are credits, which mean they directly reduce your tax bill. (March 5, 2014)
- Deducting private mortgage insurance -- If you couldn't come up with a down payment of at least 20 percent of your home's purchase price when you got your mortgage, you're probably paying for private mortgage insurance, or PMI. A PMI policy is coverage that you, the home buyer, pay for, but it protects your lender in case you default on your loan. But some PMI payers can at least use those insurance payments as a tax deduction when they file this year. PMI has counted as added deductible interest since the 2007 tax year. But the 2013 return may be the last one on which it can be claimed. The deduction expired at the end of last year and must be reauthorized by Congress. (March 6, 2014)
- 10 common filing mistakes -- Nobody's perfect, but it pays to try to be at tax time. An error on your 1040 could cost you. The most common filing mistake is messing up your math. Errors in computing such things as taxable income or the amount of credits or deductions also is high on the list. Also look out for misspelled or different names, direct deposit entries, adding (or not) additional income, improper filing status, Social Security number oversights, incomplete charitable deduction claims, unsigned forms and missing the filing deadline. Any of these errors could mean a bigger tax bill or a delayed or reduced refund. (March 7, 2014)
- 5 tax tips for tip recipients -- If you're in a business where tips are common, remember to report all of them. The Internal Revenue Service considers tips taxable income. Here are five things to remember when it comes to tips. (1) All tips, large or small, are taxable. (2) All types of tips, cash or non-cash, are taxable. (3) Report tips to your employer when you receive $20 or more in tips in any one month. (4) Keep a daily log of tips via IRS Publication 1244. (5) Include your tip amount with your wages on your tax return (line 7 on Form 1040; line 7 on Form 1040A; line 1 on Form 1040EZ; line 8 on Form 1040NR; and line 3 on Form 1040NR-EZ). (March 8, 2014)
- Fuel excise taxes pump up the price of gas -- Daylight Saving Time means an extra hour of sunshine. For many of us, that means more driving. And that means we'll owe federal and especially state tax collectors more since they tack on excise taxes and other fees to each gallon of fuel we pump. Uncle Sam collects a federal excise tax of 18.4 cents on each gallon we put into our tanks. The 50 state tax collectors, plus Washington, D.C., who add their own fuel taxes and fees to our pump prices. It's those ancillary state taxes and fees that drive up the cost of gas. They include, among other things, state and local sales taxes, environmentally-safe disposal fees, storage tank charges and inspection fees. There are, however, ways to find cheaper gasoline. (March 9, 2014)
- Maximizing medical deductions -- It's tougher to claim itemized medical deductions nowadays, but there are ways to clear the 10 percent deduction threshold. Often-overlooked medical deductions include travel expenses to and from treatments, uninsured medical treatments, costs of alcohol- or drug-abuse treatments and any other medically necessary costs prescribed by a physician. This could be a humidifier added to your home's heating and air-conditioning system to relieve your chronic breathing problems upon the advice of your doctor. Check out all the possible medical cost write-offs listed in IRS Publication 502. They could save you some tax dollars. (March 10, 2014)
- Tax break bait and switch -- We've all heard the pitch: This tax break will cut your tax bill. Sometimes, though, great-sounding tax breaks aren't always as advertised. There are requirements you must meet to claim them, such as charitable donations. Yes, gifts to your favorite charity can be deducted, but only if you itemize on Schedule A. If like most taxpayers you claim the standard deduction, your donations won't do you any tax good. So make sure you get the full story on promised tax breaks. (March 11, 2014)
- Alternative Minimum Tax eased -- The parallel Alternative Minimum Tax, usually referred to as the AMT, has its own set of rates (26 percent and 28 percent) and requires a separate set of computations that could substantially boost your tax bill. Basically, it's the difference between your regular tax bill, figured using ordinary income tax rates, and your AMT bill, figured by filling out more IRS paperwork. It was created in 1969 to ensure that wealthy taxpayers didn't use loopholes to escape paying their fair share of taxes. Because it wasn't indexed for inflation, over the years it caught millions of middle-class filers. But thanks to the American Taxpayer Relief Act of 2012, it now takes inflation into account annually and fewer folks should face the AMT now. But if you're still subject to this added tax, here's what to watch for. (March 12, 2014)
- 6 tax terrors and how to overcome them -- Taxes are inherently scary, but tax time terrors don't have to be debilitating. What terrifies you most about your taxes? Afraid you can't do your taxes yourself? Afraid you'll overlook a tax break? Afraid you'll make a costly mistake? Afraid your tax adviser is incompetent or a crook? Afraid you'll get audited? Afraid to file because you can't pay? Those six concerns are common tax fears, but there are ways to overcome them -- for example, vet your tax pro, work out a payment plan with the Internal Revenue Service -- and get your taxes done accurately and on time. (March 13, 2014)
- 12 small business deductions -- If your business is booming, you'll want to check out these 12 deductions that could help reduce what you'll owe the IRS. They range from the home office deduction to supplies and items that furnish it to meals and mileage and retirement contributions. Heck, even hiring your kid could pay off at tax time. Make sure you take as many business tax breaks as you're entitled to claim. Just be sure follow the rules. Your company's bottom line, as well as your tax accountant, will thank you. (March 14, 2014)
- Writing off cell phone costs -- A phone is crucial to a company's success. And today's smartphones that let you text customers, map your route to a business meeting and check your office email while away from your desk are even more business friendly. So if you use your cell phone for business, be sure to deduct the costs when you file your tax return. The easiest way to pass Internal Revenue Service tax deduction muster is to use your cell phone exclusively for business. But even if you occasionally call your mom (good for you!), you still can deduct the percentage of time you use it for work. If 70 percent of your call time is for business, you can deduct 70 percent of your phone bill. The key, as with all things taxes, is good business record keeping. (March 15, 2014)
- Residential rental income reporting issues -- You skipped town when then annual music festival started and rented your residence to those kids who came in for the shows. Not only did you escape the crowds and craziness, you also pocketed a nice chunk of change since your house is so close to the major stage. Even better, since you leased your house for less than 15 days during the tax year, you don't owe any federal income taxes on the rent payments. But the Internal Revenue Service knows you got the money because the third-party rental agency you used to handle the details sent you a 1099-K. Now what? You have some options, from simply not reporting the payments to including an explanatory statement with your Form 1040 to waiting for the IRS to ask about it later. (March 16, 2014)
- Cut your taxes without itemizing -- Don't itemize? Don't worry. A wide variety of tax breaks is available without the added work of keeping track of all your yearly expenses. They're known as above-the-line deductions. Most are found at the bottom of the long Form 1040. A few also are on the shorter Form 1040A. Such things as contributions to a traditional IRA to alimony payments made to certain health care coverage costs to moving costs can reduce your gross income to your adjusted gross income amount. If you're self-employed, your retirement plan contributions and even part of your self-employment taxes count here, too. And if you do itemize, that's not a problem. If you qualify for any of these deductions you can take them even if you also fill out Schedule A. (March 17, 2014)
- Deducting your moving costs -- Uncle Sam will help pay some of your moving costs if you relocate for work and follow Internal Revenue Service rules. The key work requirement is that your new job be at least 50 miles farther from your previous residence than your last office was. Another bonus is that you don't have to itemize to claim your moving costs. Just enter your allowable expenses on Form 3903 and transfer the final tax-deductible amount from it to line 26 of your Form 1040. (March 18, 2014)
- Taking advantage of the tuition and fees deduction -- If you're facing higher education expenses, you might want to study up on the tuition and fees deduction. It could help you write off up to $4,000 of college costs without having to itemize. You'll find this adjustment to income, also known as one of the above-the-line deductions, in the last section of both Form 1040A and Form 1040A. Note the tax break's name; only payments for tuition and fees count. The money must go toward college-level courses for legitimate educational reasons, i.e., generally required as part of a degree program. And be careful not to double dip in the tax-break pool. You can't claim the tuition and fees deduction if you also take the Lifetime Learning or American Opportunity credit for the same student in the same tax year. (March 19, 2014)
- Educators can deduct some expenses -- Teachers and other school employees who spend their own money for classroom projects can claim some of those costs. Eligible school employees can subtract up to $250 from their gross income to get to a lower adjusted gross income (AGI). Lower AGI generally leads to lower taxes. Yes, $250 is not much considering the amount of money many teachers nowadays spend out of their own pockets to make sure their students get the most out of class. But since it's one the many above-the-line deductions, they don't have to itemize and meet the miscellaneous deduction threshold of costs being more than 2 percent of their AGI. Of course, if they have substantially more than $250 in classroom expenditures, the teachers can claim the extra on Schedule A, too, for more tax breaks there. (March 20, 2014)
- Deducting student loan interest -- Did you take out a loan to pay for college? You might be able to deduct up to $2,500 of the loan interest without itemizing. Find the amount you paid on the Form 1098-E (or a similar document) you receive from the lender and enter it on line 18 of your Form 1040A or line 33 if you file the long Form 1040. Just make sure the loan is for a student who is enrolled at least half-time at a college, university, vocational school or other post-secondary establishment in a program that leads to a degree, certificate or other educational credential. Note, though, that the interest amount you can claim is reduced if your income as a single filer is between $60,000 and $75,000 or between $125,000 to $155,000 for married couples filing jointly. (March 21, 2014)
- Control your retirement by contributing to your retirement plans -- Steady saving is key to retiring on your own terms. There are several tax-favored retirement plans that can help make your post-work years truly golden. Just make sure you know the rules and the limits. Amounts you can contribute are adjusted for inflation each year. If you're age 50 or older, you also can add more money, known as a catch-up contribution. For Roth or traditional IRAs, the 2013 and 2014 contributions amounts, which can be made until the April 15 filing deadline of the following year, are $5,500 with $1,000 catch-up contributions each year. But some accounts limit or reduce contributions if you make more than a certain amount. Make sure you follow them. They'll help your avoid problems with the Internal Revenue Service as you save enough for a comfortable retirement. (March 22, 2014)
- 4 tax breaks for older filers -- Getting older has its pros and cons. One of the pros is some tax advantages not available to younger filers. You can contribute more to retirement accounts, both workplace and individual retirement accounts. You can claim a larger standard deduction. You can claim the tax credit for the elderly. And you can claim itemized medical deductions without spending as much as younger filers. (March 23, 2014)
- Simplified home office deduction -- There's a new way to claim a deduction for your home office, but it's not necessarily right for all who work from their houses. This filing season, instead of filling out the 43-line Form 8829 to claim a deduction for your home office, you have the option to claim up to $1,500 by using a significantly streamlined work sheet in the Schedule C instructions. This six-line page (with a few sublines for some entries) allows you to deduct the square footage of your home office at $5 per square foot up to a maximum $1,500. If your work space is less than the maximum 300-square-foot area covered under the simplified method, your deduction will be less. The appeal the simplified method requires no record keeping, although tax experts say it's still a good idea to keep track of all your business expenses. But if you have a larger office and more expenses related to your home office, you might be better off using the original and more complicated home office deduction method. (March 24, 2014)
- IRA distribution deadline is April 1 -- Tax law requires some retirement account owners -- those who turn 70½ -- to withdraw a minimum amount of their nest egg each year. This required minimum distribution, or RMD, applies to accounts such as traditional IRAs or 401(k) workplace plans. The reason why is simple. The Internal Revenue Service has watched you sit on such accounts years, the earnings tantalizingly out of reach as they accrued tax-deferred earnings. But when you celebrate that special septuagenarian half birthday, you must make RMDs; the IRS even provides calculation tables you can use. And for some, the withdrawal deadline is April 1. No joke. (March 25, 2014)
- 5 higher taxes for rich taxpayers -- It's tough being rich at tax time. Tax rates are higher, some tax breaks are limited and there not even any agreement on how much income makes you rich! A couple of the new, higher taxes targeting the wealthy are part of Affordable Care Act, popularly (or unpopularly, depending on your political persuasion) known as Obamacare. They are the additional 0.9 percent Medicare payroll tax and the 3.8 percent tax on investment income. Then there are the new taxes in American Taxpayer Relief Act of 2012, aka the fiscal cliff bill. These include a top ordinary income tax rate of 39.6 percent, a top capital gains tax rate of 20 percent and a reduction in wealthier filers' personal exemptions and itemized deductions. It's almost enough to make you not want to be rich. Almost. (March 26, 2014)
- The many capital gains tax rates -- If you've been a patient investor, Uncle Sam gives you a break at tax time. Some filers, those in the 10 percent and 15 percent tax brackets, can even escape capital gains taxes on profits they make when they sell assets. Most of us middle-income investors will continue to pay a top capital gains tax rate of 15 percent on assets we held for more than a year before selling at a gain. And while higher-income taxpayers still will pay lower rates on their long-term investment earnings than their ordinary tax rates, they still will pay higher tax rates for their profitable portfolios. The top capital gains rate for richer investors now is 20 percent. Plus, there are 25 percent and 28 percent capital gains tax rates for specific investing situations. (March 27, 2014)
- Tax benefits of capital losses -- If your portfolio has underperformed, you might be able to use some of your losing stocks to cut your tax bill. The first use of any capital losses is to offset any capital gains. If you have any capital losses left, you can use up to $3,000 to reduce your ordinary income. If you have more than three grand in capital losses, you can carry the excess amount forward to use in future tax years. And be sure to get yourself another investment adviser! (March 28, 2014)
- Tax scams continue to pop up -- It's no secret that tax filing season is tax scam season. It starts in January as the first group of taxpayers, eager for their refunds, flood Internal Revenue Service offices with their returns. And as the Internal Revenue Service's annual list of the Dirty Dozen tax scams underscores, crooks employ many creative schemes to steal our identities and our tax dollars. This year has been particularly scam worthy. We've had the largest ever telephone tax scam. And now a phishing scam is using the Taxpayer Advocate Service as bait. Yeah, really scummy. So be careful out there. Don't become a tax scam victim. (March 29, 2014)
- Selfies as tax filing, audit defense tool -- Selfies have become at best a joke or at worst a derisive symbol of self-absorption. Taxes may change that perception. One man has famously turned a series of selfies into a tax-filing and audit defense tool. Philadelphia architect Andrew Jarvis sometimes stays in the Big Apple when he visits his firm's New York City office. He hopes his time-and-date-stamped photos will convince New York tax officials that he spends most of his time at his primary residence in the Keystone State; that way, he won't have to pay the Empire State's much higher tax rates. And sometimes residency also is a factor in federal tax claims. So keep good records for all the tax collectors, including those selfies that support your tax claims. (March 30, 2014)
- Reporting and figuring taxes on investment income -- You've put your money to work via investments. At tax time, however, you are going to have to do some extra work to let the Internal Revenue Service know about your portfolio's earnings and the taxes due. All types of unearned income, from interest on savings accounts to dividends on mutual funds to capital gains on stocks you sold, have tax consequences. The paperwork and calculations for some filers is relatively simple and requires no additional tax forms. Those who pocketed a bit more from their investments will have to give the IRS details via extra forms and, for richer filers, more money. The extra filing work, though, is worth it since the tax rates on the earnings are in many cases lower that ordinary income tax rates. (March 31, 2014)