Flint's Five Facts On

• There are 4 kinds of IRA's -
  

Traditional, Roth, SIMPLE, and SEP

• Roth distributions are tax free.
  

• Contribution limit for traditional and Roth IRA's is $5,000 or $6,000 for ages 50+.
  

• At age 70 1/2 you can no longer contribute to a traditional IRA.
  

• You can contribute to a Roth IRA as long as you have earned income.
  

Individual Retirement Accounts

Dependents

• Usually can claim a child from age 19 to 23 if they are a full-time student.
  

• Dependent must have less than $3,650 of gross income, unless they are a full-time student under age 24, or under age 19.
  

• Gross income does not include Social Security benefits.
  

• You must provide more than one-half of their support for the year.
  

• Related persons do not need to be a member of the taxpayer's household in order to qualify as a dependent.
  

• Taxpayer must be unmarried or considered unmarried at the end of the year.
  

• Taxpayer must have paid more than 1/2 the cost of keeping up a home, and a qualifying person must have lived in the home for more than 1/2 of the year.
  

• Foster children must live with the taxpayer the entire year.
  

• You can claim head of household status for a child even if you have released the right to claim the exemption deduction to the noncustodial parent.
  

• A parent does not need to live in the taxpayer's home for the taxpayer to qualify as head of household.
  

Head of Household

• Mortgage interest on up to $1,000,000 in acquisition debt is deductible, and interest on up to $100,000 of home equity debt is deductible.
  

• If you refinance your home, only the acquisition balance due upon refinancing qualifies as acquisition indebtedness in the new loan, unless the loan proceeds are used for improvements.
  

• In order to deduct the interest, the taxpayer must be legally liable on the mortgage, or have an equitable interest in the property.
  

• If a homeowner borrows money on a personal residence for business purposes, the homeowner is required to report the interest as home equity interest on Schedule A.
  

• The above rules can be changed if the taxpayer elects to not have the home residence rules apply by attaching an election to the tax return for all years affected.
  

Home Mortgage Interest

• If you are under your full retirement age, benefits will be reduced by $1 for each $2 earned over $14,160.
  

• For the year you reach your full retirement age, benefits will be reduced $1 for each $3 earned over $37,680 (only for months up to the full retirement age).
  

• In most cases, a worker needs 40 credits or 10 years of work to be eligible for Social Security retirement benefits.
  

• A retiree receiving a pension from work not covered by Social Security, such as federal civil service or public school teachers, may have their Social Security benefits reduced.
  

• Domestic employees in a private household are covered by Social Security if they are paid at least $1,700.
  

Social Security

Business Autos

• 2011 mileage rates:
  

January 1 - June 30       $0.51

July 1 - December 31    $0.55

• You can switch from taking mileage allowance to actual expenses.
  

• Mileage to a temporary work location is always deductible.
  

• If you are self-employed, you can deduct interest on a car loan, even if you are taking the mileage allowance.
  

• You should keep a mileage log whether you are taking actual expenses or mileage allowance, in order to document business usage.
  

Earned Income Credit

• Taxpayers with investment income of more than $3,100 do not qualify.
  

• A qualifying child must have lived with the taxpayer for more than half the year.
  

• The support test for dependents does not apply for purposes of the EIC.
  

• Tax preparers are subject to a $100 penalty for each failure to take steps to verify a client's eligibility.
  

• Filing status may not be 'married filing separately.'
  

Do I qualify for the MO Property Tax Credit?

• Renters or part-year owners
  

Single- your total household income equals $27,500 or less

Married filing a combined return- your total household income equals $29,500 or less

If a 100% service connected disabled veteran, do not include VA payments

OR

• Owned and occupied your home the entire year
  

Single- your total household income equals $30,000 or less

Married filing a combined return- your household income equals $34,000 or less

If a 100% service connected disabled veteran, do not include VA payments

OR

• Paid real estate taxes or rent house, apartment, assisted
  

  living/nursing home, etc.

• If you rented from a facility that does not pay property tax, you are not eligible.
  

• You or your spouse are 65 years or older and a Missouri resident the entire year
  

OR

  You or your spouse are 100% disabled as a result of military        service

OR

  You or your spouse are 100% disabled

OR

  You are 60 years or older and received surviving spouse social           security benefits

What are itemized deductions?

• Medical Expenses- out of pocket payments made
  

Deductible or co-pay you paid to any of the following: physician, surgeon, clinic,                       hospital, dentist, chiropractor, optomitrist, psychiatrist

Medical testing- lab work, x-ray, etc.

Medical equipment- oxygen, inhalation therapy, etc.

Over the counter diabetic supplies

Out of pocket health, dental, optical, or long-term care that insurance paid after tax

(Do not include withholding from wages pre-tax)

Mileage or transportation fees to and from medical facility

• Taxes Paid
  

State income taxes or sales tax

Real estate taxes

Personal Property taxes

• Interest Paid
  

Mortgage interest on your main home and second home

Home equity loan up to $100,000

Qualified investment interest

Personal interest does not qualify for deductions

*Such as: vehicle financing, credit card interest, or personal loan interest

• Charitable Donations- to 501(c)(3) charitable organizations
  

Cash payments

Household items

Charitable mileage

Your personal time to volunteer does not qualify

• Miscellaneous Deductions
  

Safe deposit box rental

Tax preparation fees

Investment expenses

Gambling expenses- only up to the amout of gambling winnings

Employee business expenses

               

NOTE: These are only the most common allowed deductions,

consult your tax preparer for others.

What are employee business expenses?

• The expense must be incurred in relationship to your job and not reimbursed in full by your employer.
  

Vehicle Expenses:

Mileage from your regular job site to temporary work site

(must maintain a written record of the mileage).

Mileage from home to your regular work site does not qualify.

NOTE: If you are reimbursed for these expenses they are not deductible.

• Travel Expenses
  

Meals or entertainment expenses

Travel expenses- airfare, lodging, road tolls, parking, rental car, etc. (Must provide a                      business purpose)

• Business use of home expenses
  

Area must be used exclusively for business and convenience of employer

Computer on the percentage of area used for business: home mortgage interest or                      rent, utilities, real estate taxes, home insurance, or home repairs and                              maintenance

• Professional dues and licenses
  

• Tools and protective clothing used for work
  

NOTE: Special rules apply for those in the transportation industry or working extended length of time at a temporary work site.

If this applies to you, provide your tax preparer with the number of days you are                   away from home and/or the location(s) of your temporary work site(s) and the     

              number of days at each site.

NOTE: These are only the most common allowed deductions,

consult your tax preparer for others.

Does my dependent need to file a tax return?

• If they have unearned income over $950
  

Interest

Dividends

Stock sales

• If they have earned income over $5,700
  

W-2 wages

• If they have earned income under $5,700 with federal and/or state withholding
  

• If they have 1099-MISC non-employee compensation over $400
  

• If they have wages from church or related organizations over $108.28
  

Before you sign your tax return

• Preparer should have signed the return- paid preparers are required by law to sign the completed tax return
  

• Review the return's tax information, your name, address, and social security number for everyone listed in the return. Also, make sure they are accurate and complete, with no blanks.
  

• Review the return and make sure you understand the entries and are comfortable with the accuracy.
  

• Never sign a blank return or sign with a pencil.
  

• Third party authorization check box- this allows you to designate your paid preparer to speak to the IRS concerning how your return was prepared.