Home Energy Tax Credits Save You Money at Tax Time

Certain energy-efficient home improvements can cut your energy bills and save you money at tax time. Here are some key facts that you should know about home energy tax credits:

Non-Business Energy Property Credit

• Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
• The other part of the credit is not a percentage of the cost. This part of the credit is for the actual cost of certain property. This may include items such as water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
• This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
• Your main home must be located in the U.S. to qualify for the credit.
• Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
• You must place qualifying improvements in service in your principal residence by Dec. 31, 2016.

Residential Energy Efficient Property Credit

• This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
• Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
• Qualified wind turbine and fuel cell property must be placed into service by Dec. 31, 2016. Hot water heaters and solar electric equipment must be placed in to service by Dec. 31, 2021.
• The tax credit for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity. The amount for other qualified expenditures does not have a limit. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return. • The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.

Use Form 5695, Residential Energy Credits, to claim these credits. You can get IRS forms on http://www.abataxaccounting.com/taxpublications.php anytime.

ABA Tax Accounting offers tax help on various topics. Also, if you'd like to learn more about our CFO Services please feel free to contact me.

Amare Berhie, Senior Accountant       

CEO, ABA Tax Accounting & AB Tax Online

CFO Services http://youtu.be/EYJdQtbPZAI

amare@abataxaccounting.com                          

(651) 300-4777

What to Expect at Tax Time if You Rent Out Your Vacation Home

Accounting Services for Small Businesses - Renting out a vacation property to others can be profitable. If you do this, you must normally report the rental income on your tax return. You may not have to report the rent, however, if the rental period is short and you also use the property as your home. Here are some tips that you should know:

Vacation Home.  A vacation home can be a house, apartment, condominium, mobile home, boat or similar property.

Schedule E.  You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net Investment Income Tax.

Used as a Home.  If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received. For more about these rules, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).

Divide Expenses.  If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between rental use and personal use. To figure how to divide your costs, you must compare the number of days for each type of use with the total days of use.

Personal Use.  Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also considered personal use.

Schedule A.  Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.

Rented Less than 15 Days.  If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income. In this case you deduct your qualified expenses on Schedule A.

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

Amare Berhie, Senior Tax Accountant

ABA Tax Accounting

amare@abataxaccounting.com

(651) 300-4777

Moving Expenses Can Be Deductible

Experienced Small Business Accountant -  Did you move due to a change in your job or business location? If so, you may be able to deduct your moving expenses, except for meals. Here are the top tax tips for moving expenses.

In order to deduct moving expenses, your move must meet three requirements:

The move must closely relate to the start of work.  Generally, you can consider moving expenses within one year of the date you start work at a new job location. Additional rules apply to this requirement.

Your move must meet the distance test.  Your new main job location must be at least 50 miles farther from your old home than your previous job location. For example, if your old job was three miles from your old home, your new job must be at least 53 miles from your old home.

You must meet the time test.  After the move, you must work full-time at your new job for at least 39 weeks in the first year. If you’re self-employed, you must meet this test and work full-time for a total of at least 78 weeks during the first two years at your new job site. If your income tax return is due before you’ve met this test, you can still deduct moving expenses if you expect to meet it. If you would like any additional information please feel free to contact me.

Amare Berhie, Senior Tax Accountant

ABA Tax Accounting

amare@abataxaccounting.com

(651) 300-4777

Small Business Accounting

Small Business Accounting - Accurate accounting is just as essential for the mom-and-pop as it is for the big-box store. Meaningful financial records set a firm foundation for any

successful business, and sloppy methods can harm you in more ways than you think. If you don't have time to deal with your own small business accounting requirements, you'll need the help of trusted accounting consulting services.

At the accounting and bookkeeping service of ABA Tax Accounting, you'll find small business accounting and bookkeeping professionals who are willing to build the close relationships you need to add to your company's long-term value. Not all small business accounting firms or accounting consulting firms will offer such affordable bookkeeping.

Each accountant at our tax accounting company will:

·         Assure the solidity of your financial records.

·         Evaluate your financial procedures.

·         Fashion the strategies you need to plan and execute your business.

·         Perform an objective analysis to increase efficiency while controlling costs.

·         Keep you abreast of fluctuating tax laws and accounting standards.

Since 1989, our accounting company has successfully responded to the financial concerns of entrepreneurs just like you. Our small business accounting and bookkeeping professionals are aware of the issues you face and will happily use their expertise to minimize your worries and maximize your gains.

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

Amare Berhie, Enrolled Agent (EA)

AB Tax Online

ABA Tax Accounting

amare@abataxaccounting.com                          

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

Tax Implications of Retiring Overseas

Are you approaching retirement age and wondering where you can retire to make your retirement nest egg last longer? Retiring abroad may be the answer. But first, it's important

to look at the tax implications because not all retirement country destinations are created equal. Here's what you need to know.

Taxes on Worldwide Income

Leaving the United States does not exempt U.S. citizens from their U.S. tax obligations. While some retirees may not owe any U.S. income tax while living abroad, they must still file a return annually with the IRS. This would be the case even if all of their assets were moved to a foreign country. The bottom line is that you may still be taxed on income regardless of where it is earned.

Unlike most countries, the United States taxes individuals based on citizenship and not residency. As such, every U.S. citizen (and resident alien) must file a tax return reporting worldwide income (including income from foreign trusts and foreign bank and securities accounts) in any given taxable year that exceeds threshold limits for filing.

The filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the foreign earned income exclusion or the foreign tax credit, that substantially reduce or eliminate U.S. tax liability.

Note: These tax benefits are not automatic and are only available if an eligible taxpayer files a U.S. income tax return.

Any income received or deductible expenses paid in foreign currency must be reported on a U.S. return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.

In addition, taxpayers who are retired may have to file tax forms in the foreign country in which they reside. You may, however, be able to take a tax credit or a deduction for income taxes you paid to a foreign country. These benefits can reduce your taxes if both countries tax the same income.

Nonresident aliens who receive income from U.S. sources must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens is generally April 15 or June 15 depending on sources of income.

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

Amare Berhie, Senior Tax Accountant

AB Tax Online

ABA Tax Accounting

amare@abataxaccounting.com                          

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