If you are planning to continue to work after you start collecting social security, be aware that some of your social security may be taxable. Each situation is different but up to 85% of your social security could be taxed if you continue to work. Contact us and we can evaluate your situation
Much confusion remains regarding the Premium Tax Credit (PTC) and health insurance. The PTC is calculated based on an ESTIMATE of your gross income for the year. When you actually file your tax return for the year the PTC is re-calculated based on your ACTUAL gross income. The difference between estimated and actual could result in an additional refund of PTC or you could owe tax to repay PTC. Contact us if you have questions regarding how the Premium Tax Credit impacts your tax return.
A SIMPLIFIED HOME OFFICE DEDUCTION
Do you work at home or have a home-based business? If so, you should be aware that the IRS has created a simpler option for calculating the deduction for the business use of your home. The new option makes record keeping easier because, instead of maintaining records of specific home office expenses, you can use a standard rate per square foot. The rate is $5 per square foot (up to a maximum of 300 sq. feet or $1,500) for qualifying business use space in place of taking a pro rata percentage of items such as mortgage interest, taxes and repairs.
Keep in mind there are good and bad aspects to this “simpler” method. The new method gives you back your full interest and tax deduction on schedule A, but you will lose your depreciation and loss carryover deductions. Of course, you must still use your home office regularly and exclusively for business. This may be a welcome relief for some taxpayers, but it might not be the best choice for others. Is it the right choice for you? Please contact us for answers to all your financial questions.