It’s Not Too Late To Claim Your $1,200 Stimulus Payment

Earlier this year, the government issued roughly 160 million Economic Impact Payments — or stimulus checks — to eligible Americans. The problem is, some people have fallen through the cracks and are still awaiting the first much-needed COVID payment.

If you are in this category and have yet to receive your check, you can claim it on your 2020 taxes. Claiming the payment you were eligible for will lower your tax bill and may result in a cash refund. You will receive it in the form of a Recovery Rebate Credit on your taxes.

Qualifications For A Recovery Rebate Credit

Individuals who are a U.S. or permanent citizen, have a social security number, make less than $99,000 a year and are not claimed as a dependent on someone else’s tax return in 2018 or 2019 likely qualify for the Recovery Rebate Credit.

The exact amount depends on your adjusted gross income. If you are filing single with an average gross income of $75,000 or are a single parent with an adjusted gross income of $112,500, you are eligible for the full amount. Also entitled to the full amount are married couples with a combined adjusted gross income of $150,000 or less.

For every $100 more than the adjusted gross income, the payment is reduced by $5 until it reaches a threshold of $99,000 for single users, $136,000 for heads of household and $198,000 for married couples filing jointly.

So it’s possible that single filers would have been eligible for $1,200 plus $500 for each qualifying dependent; and married couples filing jointly could have been eligible for $2,400 plus $500 for each qualifying dependent.

How To Claim Your Money

According to the IRS, you can claim your Recovery Rebate Credit on your 2020 Form 1040 or 1040-SR. If you received a partial payment, you will need to reference the IRS’s calculated amount from the “Notice 1444 Your Economic Impact Payment” letter when you file. You can also claim any missing payments for a dependent child.

Depending on the amount of stimulus money you’re eligible to receive, your money will either show up on the 2020 tax return as an additional refund, or the amount of tax you owe will be lowered.

We understand that most individuals find the details and nuances of tax season confusing, particularly during unprecedented years like 2020. When you are ready to file your 2020 tax return, reach out to Donohoo Accounting Services. Working with our tax professionals will save you time, frustration and headaches. We would be happy to schedule a complimentary consultation to help you get the cash relief you are entitled to. Give us a call today at 513-528-3982! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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6 Tips For Homeowners To Maximize Their Tax Deductions

Owning a home is one of the biggest investments most people make in their lifetime. Being aware of tax deductions and other credits available will give this big purchase every opportunity to pay you back a little come tax time. Here are six tips for homeowners to maximize your tax deduction:

Tip #1: Be Organized

Keep detailed records of your home-related expenses, financial documents and receipts. Most federal income tax deductions and credits require a paper trail, so the more organized your records are, the easier the process will be and the more likely it is that nothing will be missed or forgotten.

Tip #2: Deduct Your Mortgage Interest

If your mortgage is less than $750,000, you can deduct the interest you pay on the loan for no more than two residences. This could be your primary residence, summer home, or even a boat if it has plumbing or a bathroom. You can also include interest you may have paid when you closed on your home.

If you own more than two properties, be sure to use the deductions from the property that will give you the largest tax deduction — it may not necessarily be the property with the biggest mortgage payment.

Tip #3: Deduct Your Home Office Space

If you work from home in a dedicated space, you can deduct that space on your taxes. The current tax law allows you to deduct $5 for each square foot of office space, up to 300 square feet. This law has been taken advantage of by some, which is why it has earned a reputation of being an audit trigger. Make sure the space you deduct is exclusively used for your business or side hustle.

Tip #4: Deduct Your Property Taxes

With the Tax Cuts and Jobs Act of 2017, deducting your property taxes is still possible but not as flexible as it once was. You can now deduct up to $10,000, and that includes a combination of state and local tax deductions and state and local property tax deductions.

Tip #5: Consider Energy Efficient Upgrades

Tax incentives have changed for these types of upgrades, but some are worth looking into. Purchases for electric and water heating equipment, solar panels, rain barrels and drought tolerant landscaping may apply. Make sure to do your due diligence and triple check the specific requirements and deadlines for these green projects.

Tip #6: Age-In-Place Deductions

If you plan to live in your residence as you get older, you may be able to deduct expenditures for home improvement projects that will assist you as you age. Upgrades such as wheelchair ramps, lowering cabinets and electrical fixtures, and installing bathtub grab bars may qualify.

Donohoo Accounting Services is here to help you understand the IRS rules and determine the types of tax deductions you may be eligible for. With more than 20 years of experience in the business, we can help you reduce your tax burden by finding every deduction possible. If you would like to set up a free consultation, contact us at 513-528-3982. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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4 Personal Finance Tips To Start The New Year Right

2020 is quickly coming to a close, and many of us will be glad to see it go. Now is the time to get ahead of the game and get your money in order for 2021. Don’t know where to begin? No worries! Here are some helpful tips.

Get Organized

You can file taxes after the new year, so now’s a good time to get all your ducks in a row. In January and early February, you’ll be receiving important documents in the mail including your W2, mortgage interest statement (1098), or student loan interest statement (1098-E.) Most companies, by law, have until January 31 to mail statements, so keep an eye out.

Designate a single location where you’ll keep these documents so they are easily accessible when you’re ready to file taxes. You can use a folder, drawer, box or other container. Put a large “taxes” label on it and use the container for tax-related documents only, not other mail or bills. But you may want to keep it near where you sort mail, so you can immediately put the documents in their home.

Then start gathering other items you’ll need for filing taxes, including charitable contribution and expense receipts. Qualified expenses depend on your situation, but could include expenses related to childcare, medical, work (mileage, supplies, relocation) and education.

Donohoo Accounting Services can help you navigate the complicated tax structure. In addition to income tax preparation, we handle payroll tax prep, tax levies and liens, back taxes, end tax penalties, estate tax return preparation and more.

Make Year-End Charitable Contributions

Many charities do a final fundraising push at the end of the year, so you’ll probably receive solicitations asking for support. If you want to help non-profit organizations while also possibly reducing your taxable income, make your donations by December 31. Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of the year will count in that year – even if the credit card bill isn’t paid until later. You’ll want to make sure the charity is eligible. Many times, the charity will note its “501c3” status, which is IRS speak for tax-exempt. You can also use the IRS Tax Exempt Organization Search. If you live in the Greater Cincinnati area, check out our blog for four great local non-profit organizations.

Take an Assessment of Where You Stand Financially

Now’s a good time to take a hard look at your income, debt, expenses, retirement funds, college and emergency savings. Are you on track to meet financial goals? If yes – great! If no – why are you falling short? To properly move forward into the next year, you need a realistic picture of where you are now. Put pen to paper and write down all the numbers. It helps to see everything in black and white.

Make a Financial New Year’s Resolution (Or Better Yet – Create A Plan You’ll Stick With All Year)

Once you know where you stand currently, you can create a plan for 2021. Perhaps you want an emergency savings fund. You never know when the furnace is going to go out, someone in your family has a medical issue or there’s a company layoff. Experts say you should have enough emergency savings to cover three to sixth months of expenses. Maybe you have all your financial bases covered but want to take an exotic vacation? Set the goal, create a plan and start saving for that overseas beach trip.

Although it’s a busy holiday season, set aside time to get your money in order for the new year. Once you’re ready to file taxes, turn to Donohoo Accounting Services, locally owned and operated by Cincinnati native, Duane Donohoo. Give us a call at 513-528-3982 to arrange your complimentary consultation to see how we can help find the most deductions possible for your personal taxes. And don’t forget to check us out on Facebook, Twitter or LinkedIn for our latest updates!

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Four Tips To Save For College

Depending on grades a great score on the ACT or SAT, your future college student could have a big scholarship in his or her future. If you – and your student – haven’t been saving for college, how can you save as much as possible before the first tuition bill arrives? Whether you have a short amount of time or a decade, these four tips will give you a start on how to save for college.

Start with a goal

A college savings goal consists not only of a dollar amount but also includes a date or deadline. The most common way to compute a college savings goal is to divide the total dollar amount needed by the number of years you have to save. Another popular goal-setting method is to multiply the student’s age by $2,000. This will give you roughly the amount you should have in savings to cover 50 percent of the student’s college expenses.

Use the 10 percent rule

Could you live on 90 percent of your household income for a period of time? Probably so. Most people could, simply by looking for ways to reduce their spending. While you budget to live on 90 percent of your take-home pay, the other 10 percent goes into an educational savings account (ESA), 529 college savings account or even an interest-bearing savings account (or some combination of these). Depending on your total household income, 10 percent a year could add up to quite a bit between now and the start of college.

Save income from part-time or summer jobs

Even better than the 10 percent rule is the 100 percent rule – but only make it apply to income earned from part-time or summer jobs that your student works. A student earning $8 an hour working year-round in a part-time job can earn up to $8,000 during a single year. That’s a sizeable contribution toward college expenses! Parents can double that amount by offering to match dollar-for-dollar the amount their student saves each year.

Sell unused and unwanted items

Collectibles, antiques and even used appliances have the potential to bring in a handsome sum when sold online or in yard sales. Put your family and relatives to work scouring their attics, basements, and garages for anything of value that can be sold to add to your college savings account. The more unused or unwanted items you can sell – even for small dollar amounts – will eventually add up to help meet college expenses.

Need help developing your college savings plan? Donohoo Accounting can get you started. Contact us today to schedule your free consultation or call 513-528-3982.

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