ABA Tax Accounting

(651) 300-4777, (612)424-1540, (651) 621-5777

Thursday, February 18, 2016

Change Your Name? It Can Affect Your Taxes

A name change can have an impact on your taxes. All the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund.

Here’s what you should know if you changed your name:

Report Name Changes. Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.
Make Dependent’s Name Change. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.

If you adopted a child who does not have a Social Security number, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS.

· Get a New Card. File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on SSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.

· Report Changes in Circumstances when they happen. If you enrolled in health insurance coverage through the Health Insurance Marketplace you may receive the benefit of advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace when they happen throughout the year. Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit.

If you would like any additional information please feel free to contact me.

Amare Berhie, Senior Tax Accountant

(651) 300-4777, (612)424-1540, (651) 621-5777

Wednesday, February 17, 2016

Wondering to Itemize or Use the Standard Deduction

Income Tax Service For Individuals - Most people claim the standard deduction when they file their federal tax return, but you may be able to lower your tax bill if you itemize. You can find out which way saves you the most by figuring your taxes both ways.

1. Figure Your Itemized Deductions. Add up deductible expenses you paid during the year. These may include expenses such as:

· Home mortgage interest

· State and local income taxes or sales taxes (but not both)

· Real estate and personal property taxes

· Gifts to charities

· Casualty or theft losses

· Unreimbursed medical expenses

· Unreimbursed employee business expenses

Special rules and limits apply.

2. Know Your Standard Deduction. If you don’t itemize, your basic standard deduction for 2015 depends on your filing status:

· Single $6,300

· Married Filing Jointly $12,600

· Head of Household $9,250

· Married Filing Separately $6,300

· Qualifying Widow(er) $12,600

If you’re 65 or older or blind, your standard deduction is higher than these amounts. If someone can claim you as a dependent, your deduction may be limited.

3. Check the Exceptions. There are some situations where the law does not allow a person to claim the standard deduction. This rule applies if you are married filing a separate return and your spouse itemizes. In this case, you can’t claim a standard deduction. You usually will pay less tax if you itemize.

If you would like any additional information please feel free to contact me.

Amare Berhie, Senior Tax Accountant

(651) 300-4777, (612)424-1540, (651) 621-5777

Tuesday, February 16, 2016

U.S. Citizens and Resident Aliens Abroad - Head of Household

Experienced Tax Accountant – If you are a U.S. citizen married to a nonresident alien you may qualify to use the head of household tax rates. You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year

and you do not choose to treat your nonresident spouse as a resident alien. However, your spouse is not a qualifying person for head of household purposes. You must have another qualifying person and meet the other tests to be eligible to file as a head of household.

Although your nonresident alien spouse cannot qualify you as a head of household, you can qualify if (1) or (2) applies:

1. You paid more than half the cost of keeping up a home that was the principal home for the whole year for your mother or father for whom you can claim an exemption (your parent does not have to have lived with you), or

2. You paid more than half the cost of keeping up the home in which you lived and in which one of the following also lived for more than half the year:

· Your unmarried child, grandchild, stepchild, foster child, or adopted child. A foster child will qualify you for this status only if you can claim an exemption for the child

· Your married child, grandchild, stepchild, or adopted child for whom you can claim an exemption, or for whom you could claim an exemption except that you signed a statement allowing the noncustodial parent to claim the exemption, or the noncustodial parent provides at least $600 support and claims the exemption under a pre-1985 agreement

· Any relative listed below for whom you can claim an exemption:

§ Parent Father-in-law

§ Grandparent or other direct ancestor Brother-in-law

§ Brother Sister-in-law

§ Half-brother Half-sister

§ Sister Son-in-law

§ Stepbrother Daughter-in-law

§ Stepsister Mother-in-law

§ Stepmother Eligible Foster Child or descendent

§ Stepfather Son or daughter or their descendents

If related by blood:

· Uncle Aunt

· Nephew Niece

If your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien, then you are treated as unmarried for head of household purposes. You must have another qualifying relative and meet the other tests to be eligible to file as head of household.

It may be advantageous to choose to treat your nonresident alien spouse as a U.S. resident and file a joint income tax return. Once you make the choice, however, you must report the worldwide income of both yourself and your spouse.

If you would like any additional information please feel free to contact me.

Amare Berhie, Senior Tax Accountant

(651) 300-4777, (612)424-1540, (651) 621-5777

Friday, February 12, 2016

Report of Foreign Bank and Financial Accounts (FBAR)

Federal, State, Local and International Taxes - If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account,

mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).

If you would like any additional information please feel free to contact me.

Amare Berhie, Senior Tax Accountant