Paldino Company CPA - "Success Starts with a Handshake"

Welcome to my blog page the purpose of which is to provide you with timely and relevant tax and accounting information. I intend to bring you information which you can use now to assist you in lowering you income taxes. I will when appropriate give you links to tax related web-sites, worksheets and check-list to assist you in meeting you recording keeping requirements and provide you with the information you need to prepare an accurate return and pay the least amount of tax you are legally required to pay. Please check back often and feel free to post your questions and comments

Tuesday, September 19, 2017

Alternatives to the College Tuition Deduction

Alternatives to the College Tuition Deduction

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Now that college students are settling into their first weeks of school, it's important for parents and students to recall that the $4,000 tuition and fees deduction they may have relied on in past years is no longer available in 2017. The good news is that there are alternatives. Here are two of the more popular education credits:

Alternative No. 1: The AOTC

The American Opportunity Tax Credit (AOTC) is a credit of up to $2,500 per student per year for qualified undergraduate tuition, fees and course materials. The deduction phases out at higher income levels, and is eliminated altogether for married couples with a modified adjusted gross income of $180,000 ($90,000 for singles).

Alternative No. 2: The Lifetime Learning Credit

The Lifetime Learning Credit provides an annual credit of 20 percent on the first $10,000 of qualified tuition and fees, for either undergraduate or graduate level classes. There is no lifetime limit on the credit, but only couples making less than $132,000 per year (or singles making $66,000) qualify. Unlike the AOTC, this deduction is per tax return, not per student.

Credits usually beat deductions

Both the AOTC and the Lifetime Learning Credit are generally more valuable than the expired tuition and fees deduction, because as credits they reduce your income tax directly, while the deduction merely reduced how much of your income is taxed.
In addition to the two alternative education credits, there are many other tax benefits that reduce the cost of education. This includes breaks for employer-provided tuition assistance, deductions for student loan interest, tax-beneficial college savings options, and many other tax-planning alternatives.
Please call if you'd like an overview of the alternatives available to you.

Saturday, February 4, 2017

Rejeted e-filed returns

180 E. Boston Post Road  | Mamroneck, NY 10543
Phone:  (914) 253-6857 |
What to do if your e-filed tax return is rejected by the IRS
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More than 90% of individual tax returns are now filed electronically, and usually the process goes smoothly. However, when an e-filed tax return is rejected, e-filing can become more complicated.

Common causes for rejected tax returns

Simple filing errors. Most rejections are caused by things such as misspellings, typos on Social Security numbers, or missing forms. When an e-filed tax return is rejected the IRS e-filing system sends back reject codes. These codes are specific to lines on the tax return and descriptions of the problem are readily available. Most of these errors can easily be corrected.
Dependent Errors. This error occurs when someone else has claimed a dependent on a previously filed tax return. This often occurs with divorced and unmarried couples each claiming the same child on their tax return. The IRS does not take sides in this situation, they simply take the earlier filed return and reject any subsequent returns.
Identity Fraud. Someone else has already filed a tax return using your Social Security number.

What to do

Most errors are simple, are easily corrected, and your tax return is resubmitted for e-filing without much additional delay. However there are two instances that require your immediate attention. When either of these occur, you will need to file your tax return via the mail and work to correct the error for future tax filings.
1. Dependent Errors. A dependent can only be claimed on one tax return. If a dependent is already claimed on another individual's tax return you will need to provide proof that the dependent belongs on your return. If this happens, contact the other party who claimed your dependent and ask them to amend their return. Let them know that you’re filing your tax return correctly claiming the dependent. Your filing will target both tax returns for a potential IRS audit. This audit risk often is enough motivation to correct the problem.
2. Identity Fraud. Criminals using stolen information submit tax returns electronically in an effort to steal your tax withholdings. Fraudulently claimed refunds are then automatically deposited into thieves' bank accounts. Unfortunately, you may discover the theft when your e-filed tax return is rejected. If this happens to you:
File a paper tax return.
Include form 14039: Identity Theft Affidavit with your tax return.
Confirm your identity using the IRS Identity Verification Service or by calling the IRS.
Mail your tax return using Certified Mail with Return Receipt Requested so you are certain of timely delivery.
Immediately take steps to protect your financial information. The following link will take you to the Federal Trade Commission's identity theft area for recommended steps to protect yourself.

FTC Identity Theft Assistance

While solving the cause for a rejected e-filed tax return can be a headache, the sooner the problem is addressed the sooner your refund can be received.

Monday, January 16, 2017

There's Still Time to Fund Your IRA


Category: Retirement
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Remember that you have until you file your tax return to make a contribution to a Traditional IRA or Roth IRA for the 2016 tax year. The annual maximum contribution amount is $5,500 or $6,500 if you are age 50 or over.
However, if you or your spouse are an active participant in an employer's qualified retirement plan, you may not be able to contribute the maximum amount. It depends on whether your modified adjusted gross income (MAGI) exceeds certain income thresholds. The limits for both Traditional and Roth IRAs are:


2016 IRA
Note: Married IRA limits depend on whether either you, your spouse or both of you participate in a qualified employer provided retirement plan. If married filing separate and either spouse participates in an employer's qualified plan, the income phaseout to contribute is $0 - $10,000.
How does the phase out work?
If your income is below the "full contribution" amount noted above, you can contribute up to the maximum annual contribution. If your income is above the "phase out complete" amount, you cannot make tax-advantaged contributions separate from your employer plan.
If your income falls between these ranges, this is how you calculate the reduced amount you can contribute:
  1. Subtract your income from the higher (phase out complete) amount to get your contribution income potential.
  2. Next calculate the phase-out range.
  3. Divide your contribution income potential by the phase-out range.
  4. Take the result times your maximum annual contribution amount.
Example: Roth IRA contribution limit for a single person, age 40 with MAGI of $122,000; $10,000 contribution income potential (132,000-122,000); divided by phase-out range of $15,000 ($132,000 – 117,000); 10,000/15,000= .666 x $5,500 = $3,663 2016 ROTH IRA contribution limit. Rounding rules apply.
If it's too late for you to make a 2016 contribution, it’s not too late to plan for 2017. Here are the limits for 2017.


2017 IRA Contributions
A final thought
If your income is too high to take advantage of these IRAs you can always make non-deductible contributions to a retirement account. While the contributions are taxed, tax on the earnings is deferred until they are withdrawn.

Monday, August 15, 2016

Justice in the Name of Caleb

I have become so affected by the story of this little puppy. No creature should have to had endure the suffering he went through. I am pleading with all of you please sign the petition that the Fulton county DA's office investigate this and give us justice for the poor boy. Please don't let him die in vain.

Friday, May 13, 2016

IRS Confirms Audit Notification Policy

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It was revealed in a recent Taxpayer Advocate Forum in Iowa that in some cases the IRS initiates contact with taxpayers via a phone call. This initial phone call is causing confusion and potential identity theft scam concerns with taxpayers. It is now being reported that the IRS will no longer be making initial taxpayer contact via phone.

Phone Scams

While the vast majority of IRS notifications are via mail notice, in a few cases the IRS auditor was calling to set up an appointment. The conversation would include the scope of the audit and a request for records to have available for the auditor. The IRS would then send a follow-up confirmation of the interview via mail.
Because of the increase in the number and sophistication of IRS phone scams, the telephone contact practice is being stopped.

What you need to know

Assume initial calls are scams. If you receive a phone call from the IRS without prior notice, treat it as a scam. Never give or confirm your personal information over the phone.
Hang up and initiate independent contact. If someone representing the IRS calls you, get their information (name, ID number, and location) and then hang up.Then call for assistance. Consider contacting the IRS directly so you can determine if there is audit activity on your tax account with the IRS. Remember, do not use the contact information provided to you by the person calling you.
Never ignore mail notices. If you receive a mailed notice of an audit from the IRS, open the envelope and determine what they are requesting. Immediately call for assistance.
While this policy change at the IRS only impacts a few taxpayers, the mail notification consistency helps all of us more readily identify potential scams.