For many kids, heading off to camp is the highlight of their summer vacation but for parents it can mean a big out-of-pocket expense. Fortunately, there’s good news for some parents who pay for summer camp or daycare to keep kids occupied. These expenses may qualify you to receive a credit that could significantly lower your tax bill.

How the Child and Dependent Care Credit Works

The Child and Dependent Care Credit is designed for taxpayers who are responsible for paying expenses towards the care of a child or a disabled dependent. The credit effectively reduces the amount of federal income tax you owe, which could add up to big savings at tax time. The amount of the credit varies based on your earned income and the amount of child or dependent care expenses you pay. Read more »

The annual tax filing deadline has come and gone and if you haven’t filed yet, you’ll need to act fast. The IRS begins assessing penalties and interest against late filers right away, which can easily inflate your tax bill. Whether you owe taxes or you’re expecting a refund, you need to know what your rights and responsibilities are if you’re filing a late return.

Late Filing Penalties

The IRS assesses two kinds of penalties against late-filers: a failure-to-file penalty and a failure-to-pay penalty. As of 2013, the failure-to-file penalty is five percent of any unpaid taxes for every month your return is late, up to a maximum of 25 percent. If you’re filing more than 60 days late, the minimum failure-to-file penalty is $135 or 100 percent of the unpaid taxes due. Read more »

Shopping online is a convenient way to save on just about anything but great deals may soon be harder to come by. Congress is currently considering the passage of the Marketplace Fairness Act, which would impose a sales tax on a significant majority of Internet purchases. While the bill doesn’t necessarily represent a tax hike, it could mean shoppers may see an increase in prices at their some of their favorite retailers. If you regularly make purchases online, you should be aware of how the proposed sales tax could impact your bottom line. Read more »

President Obama’s proposed budget for 2014 is projected to boost revenues and reduce the federal budget deficit by $1.8 trillion over the next decade. The budget plan includes significant cuts to key federal programs, including Medicare and Social Security, but it also features several new tax measures. The proposals, which are expected to bring in more than $800 billion in revenue alone, primarily affect the wealthy but a new study suggests that some middle-class workers will also see an increase in their tax bill.

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For the 2012 tax year, taxpayers are receiving an average refund of $2,900 according to the IRS. If you’re on the receiving end of a substantial tax refund, you may be tempted to splurge a little. While you may be dreaming of a new flat-screen TV or a trip to a tropical destination, there are betters ways to put your tax money to work. Before you blow your tax refund on luxuries, consider these smart spending strategies. Read more »

In an effort to tackle the national debt and overhaul the tax code, Congress has proposed a number of measures that could potentially impact millions of taxpayers. Among the topics currently up for debate include making changes to the mortgage interest deduction, which allows homeowners to deduct any and all interest paid on up to $1 million dollars in first or second mortgage debt. The deduction reportedly costs the federal government anywhere from $70 to $100 billion in tax revenue each year. There are several alternatives Congress is considering and each of them could have significant consequences for homeowners.

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Each year, the IRS issues its “Dirty Dozen” list of tax scams in an effort to raise awareness and prevent consumers from falling victim to tax fraud. These scams can come in many forms and taxpayers may not be aware they’ve been targeted until it’s too late. With the tax filing deadline fast approaching, millions of taxpayers across the country are still scrambling to get their returns in order. If you haven’t filed your taxes yet, you need to be on the lookout for the following tax-related schemes. Read more »

Owing back taxes to the IRS can be an overwhelming and stressful situation, particularly if you’re facing fines, penalties or liens. The IRS created the Fresh Start Program in 2011 in an effort to aid struggling taxpayers to resolve their back tax issues. The program has since been expanded, resulting in more help to taxpayers and a reduced need for collection actions.

How the Fresh Start Program Works

The primary goal of the Fresh Start Program is increase recovery of unpaid taxes while helping taxpayers avoid an unnecessary financial burden. Specifically, the program is designed the lower the number of taxpayers subject to liens. There are two primary options for dealing with back tax debt under the Fresh Start Program. The first is the Offer in Compromise (OIC), which allows individuals and business owners to negotiate a settlement of their tax debt for less than what’s owed. Whether or not you’ll qualify for an Offer in Compromise depends on the amount of debt you owe, your assets and your income. The IRS accepts roughly 25% of all applications for Offer in Compromise. Read more »

Working from home can eliminate some of the stress associated with the traditional workplace but it can also lead to big headaches at tax time. While the IRS allows taxpayers to claim a deduction for expenses related to maintaining a home office, figuring out just how much you can write off can be complicated to say the least. In an effort to make claiming the deduction easier, the IRS is introducing new home office deduction rules for 2013.

How the Simplified Home Office Deduction Works

According to the guidelines set out in Rev. Proc 2013-13, calculating the amount of your home office deduction is a matter of simple multiplication. All taxpayers have to do is multiply the amount of space their home office occupies by $5 per square foot to figure out their deduction. Known as the “safe harbor” method, this simplified calculation is intended to streamline the tax filing process for home-based workers. As of 2013, the deduction is capped at $1,500 per year or up to 300 feet for each qualified home office space. Read more »

When tax time rolls around, having all of your documents ready to go can eliminate some of the stress of filing. Keeping up with receipts throughout the year can be a hassle but a handful of apps are making it easier for taxpayers to stay organized. Instead of wading through stacks of paper or maintaining a complicated file system, you can simply scan your receipts and access them right from your smartphone. If you’re thinking of going paperless this tax season, the following apps are among the top picks for getting organized. Read more »