If Your Medical Procedures Cost you More than 10% of your Income, Follow the Next Five Rules to Maximize your Tax Return

Even with good insurance and a low deductible, no one truly enjoys paying medical bills. One bright spot to big bills is the opportunity to claim your medical expenses as a tax deduction on your tax return, as long as your bills are greater than ten percent of your tax year’s adjusted gross income.

If your medical procedures cost you more than 10% of your income (still 7.5% if you are 65 and older), follow the next five rules to maximize your tax return.

Medical Isn’t Just ‘Medical’

The IRS allows deductions of dental care and vision, in addition to medical expenses. This means you can potentially deduct eye exams, contacts, glasses, dental visits, braces, false teeth, and root canals.

What else is available for medical deductions? Preventative care and surgeries, psychiatric and psychological treatment, prescription medicine and medical devices – such as hearing aids and in-home medical equipment – all fall under the medical expenses deduction.

You’re even allowed to deduct the cost your monthly insurance payments and travel expenses to and from the doctor.

Non-Deductible

Before you file, you need to know what isn’t tax deductible. As with all things tax-related, you can’t double dip on your tax benefits.

You cannot claim deductions for any expenses that you were reimbursed for – either by your insurance or your employer. If you’re using a medical pre-payment plan, or some other medical reimbursement plan to help with expenses, great. But you can’t claim those expenses as deductions if you’ve been reimbursed.

It’s also important to know that you can’t claim cosmetic surgery as a medical deduction, unless that surgery was part of a life-saving procedure or some other serious health matter. Generally, the IRS doesn’t allow for cosmetic surgeries to be claimed as medical deductions.

Other non-deductible items include every-day or non-prescription health supplies like toothpaste, soap, vitamins, or over-the-counter pain relievers.

You Must Itemize

Like the heading says, to receive the benefits of the medical expense deduction, you must itemize your tax deductions on your return. You can’t take the standard deduction and claim the medical expenses deduction at the same time.

You don’t need to worry about figuring out whether you should take the standard tax deduction or itemize.  Rapid Tax will figure out which one you should take based on your answers to simple questions about your tax deductible expenses and will give you the one that gives you your biggest tax refund.

Pay Your Bills

You know those medical bills that you want to deduct from your income?

When did you pay them? As far as Uncle Sam in concerned, you can only deduct medical expenses if they were paid within the tax year in which you are filing a return. You can’t claim expenses from the previous year or future expenses.  If you used a credit card to pay medical bills in the tax year, then that would count as being paid within the year.

If you’ve incurred medical expenses during this tax year, it might be worth a look to itemize everything and see just what sort of refund could be in store.

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FSA or HSA: Which Offers the Best Tax Advantages?

FSA or HSA: Which Offers the Best Tax Advantages?

Flexible Saving Accounts (FSA) and Health Savings Accounts (HSA) can be used to pay for qualifying out-of-pocket expenses with tax-free dollars. But the IRS rules governing these accounts differ significantly. For example, FSA funds must be spent each year or you lose the money, while funds in a HSA rollover from year to year. Consider these factors when weighing your options.

Flexible Savings Accounts

If you have work-based coverage, you can use a FSA to pay for deductibles, copayments, some medications, certain medical equipment and other health care costs. You don’t pay taxes on FSA contributions, which are limited to $2,550. Employers can (but are not required) to contribute to your FSA.

Under IRS rules, FSA funds must be spent by a certain date or you forfeit the money. Employers, however, have the option to allow a $500 rollover to the next year. So before choosing a FSA, carefully review your medical needs and potential or planned costs for a given year.

Health Savings Accounts

To open a HSA, you must be under age 65 and have a plan with a high deductible of at least $1,300 for an individual and $2,600 for a family. HSA contributions and accrued interest are tax-free. The maximum contribution is $3,350 for individuals and $6,750 for families. If you are 55 or older, you can contribute an extra $1,000. The account belongs to you, whether you open a HSA on your own or through work.

Unlike a FSA, unspent funds can remain in a HSA from one year to another. Once you reach retirement age, a HSA converts to a typical individual retirement account. HSA funds can pay for deductibles, copayments and other health care costs. But if the money goes toward non-medical expenses, you must pay an income tax and a 20% penalty.

Make sure to take these factors into consideration when weighing out your options.

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Four Ways to Save While Summer House Hunting and Renovating

Four Ways to Save While Summer House Hunting and Renovating

If you are looking for a new home this summer, or renovating your old one and replacing appliances, you will want to read this blog before you get too far into your project. That’s because there are loads of tax deductions and tax savings that you can claim, if you do it right.

1. Moving costs. If you are house-hunting because a job change has brought you to a new locale, you’ll likely be able to deduct any moving costs that your employer doesn’t pay. Those include the expenses of packing and moving your belongings to your new home, temporary storage for up to 30 days, insuring your household goods, utility connection costs, shipping pets, and the expenses of traveling to your new home (at 19 cents a mile for 2016 if you drive, 23 cents in 2015), and lodging expenses on the trip and when you first arrive at your new location. You don’t have to itemize your tax deductions to claim moving expenses, and no limitations, income thresholds, phase-ins or phase-outs will reduce what you are allowed to claim. Your new job must be at least 50 miles farther from your old house than the distance between your old house and your old job, and during the first year after your move, you have to work full-time for at least 39 weeks.

2. Expenses buying and selling a home. If you are selling your current home or buying another one, you’ll be able to deduct points that you pay, prorated property taxes and interest on loans. It is likely you won’t be paying tax on the difference between what you sell your old home for and the original cost of that home plus improvements. That’s because you can exclude a gain of as much as $500,000 if you’re married and filing a joint return with your spouse, or $250,000 if you’re single or married filing separately. To be eligible for the full exclusion, you must have owned the home and lived in it as your principal residence for at least two of the five years prior to sale. If you have owned it less than two years you can claim a reduced exclusion if the sale occurred because of a change in your place of employment, health reasons or “unforeseen circumstances” such as divorce, multiple births or job loss.

3. Energy-saving improvements. Solar energy systems, geothermal heat pumps and wind turbines installed qualify for a 30 percent federal tax credit. You can claim this for new or existing structures, and for your vacation home as well as your primary residence.

4, Remodeling projects. Converting a storage attic into a bedroom, building an entertainment deck, or finishing a basement are all smart ways to add usable square footage to a home, increasing its livability and its resale value. New landscaping and paint will give your home a facelift that provides curb appeal. Replacing kitchen and bathroom counters and fixtures and adding mirrors and designer touches in the bathroom will add considerably to the value with relatively little cost.

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Tips for Tips: Employees Who Make Tips

Tips for Tips: Employees Who Make Tips

If you receive pay in the form of tips, those tips are taxable income, and don’t let anyone tell you otherwise.

Here’s how tip reporting works. You report your tips to your employer.  Your employer then includes those tips in income through the payroll processing system, and all the applicable taxes, such as federal and state income taxes and Social Security and Medicare taxes are withheld from your check. Your employer will also pay its share of employment taxes on your tip income. The reported tips appear on your W-2 in Box 8.

That’s it in a nutshell, and it’s pretty simple – you report your tips to your employer, they include the tips in their payroll processing, and it appears on your W-2 as tip income. Here are some of the things that you might hear about tips that are incorrect.

If a tip is less than $20 it isn’t taxable. WRONG. If your tips are less than $20 per month, you don’t have to report the tips to your employer. But any tips that you do earn are taxable to you, and you should include them in income on your tax return.
You only have to report 8% of tips. WRONG AGAIN. If your employer is a big company in the business of serving food and beverages, the employer must allocate 8% of total sales to all employees in the form of tip income. But if your tips, net of tip pay outs that you pay to other employees, are greater than the amount allocated to you by your employer, you are required to report the difference on your tax return.
Record-keeping for tips is entirely up to my employer. That would make your life easier, I know, but that too is incorrect. If you receive tips, you are required to keep a diary or other contemporaneous records. At the end of the year, compare the total tips shown in your diary to the tips shown on your W-2. If your diary shows a higher amount, you should report the difference as additional income on your tax return.
Only restaurant employees are required to report their tips. This also is not true. No matter what industry you are in, if you get wages and also collect tips, you must report your tips as income. This applies to hair dressers, cab drivers, performers, anyone receiving tips.
Don’t worry about knowing how to report your tips.  Rapid Tax will ask simple questions about you and help you report your tip income.  Rapid Tax will also check for over 350 tax deductions and credits and give you the ones you are eligible for.

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Rapid Fix Will Cater to Any Problems When You Visit Us

Modern smartphones are technologically advanced devices allowing anyone to check their email, navigate via GPS, and even manage finances all on the go. Among these mobile devices, the iPhone and Samsung Galaxy remain two of the leading contenders in the market. Having access to a trustworthy iPhone/Samsung repair service can help users keep their devices running in top shape.

Rapid Fix is one of the best iphone/smartphone repair centers in Winter Park, Florida. They are considered the best in the business for the super-fast service speed and their low prices compared to many others. The repair shop deals and offers services in repairing and unlocking various mobile phones and other devices for example iPhone, iPod, iPad, Android, laptops, Samsung and tablets.

Rapid Fix also specializes in all types of iPhones from iPhone 5,S,6,6 plus and 6S plus. We also fix many other problems concerning your devices. As we all have experienced with our smart phones and cell phones, we face many challenges from cracked screens to broken lenses and phone bodies, our services at Rapid Fix will cater to all these problems when you visit us.

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6 Ways to Reduce Your Taxable Income

6 Ways to Reduce Your Taxable Income

Famed baseball player Roger Maris once said “You hit home runs not by chance but by preparation.” If you haven’t already filed your taxes and want to hit a home run on your tax return this year and in the future remember these six tips.

Contribute to an IRA

You can still reduce your taxable income, if you make a contribution to a traditional IRA no later than April 15. You can contribute and deduct up to $5,500, or $6,500 if you are age 50 or older. And if you are married, your spouse can also make a contribution. That would give you a fresh tax deduction of up to $11,000, or $13,000 if you’re both 50 or older.

If either of you are covered by a retirement plan through your employer, there may be limitations on your ability to take this deduction. But if you do not have a plan, or if you have one and you are within the income thresholds, this is one of the best ways to lower your taxable income.

Remember to let your IRA administrator know that your contribution made this year is actually for last year so you can deduct it when you file your 2015 taxes.

To get a jump on the taxes you file next year, if you haven’t set up automatic contributions to a retirement plan, do so today so you are making small contributions every month. If you have set one up, increase it by a little bit, and save even more throughout the year.

Un-reimbursed Employee Business Expenses

If you have any expenses you incur in connection with your employment, that are not reimbursed by your employer, you may be able to deduct them for tax purposes.

Be sure you have all your related receipts together when you sit down to prepare your taxes.

Non-cash Charitable Contributions

People often overlook donations of clothing, household items, and other goods donated to charitable organizations. Did you donate household items or clothing to a charity last year?  You may be able to get a nice deduction on your taxes.  If you donations are more than $250 make sure you have an acknowledgement from the charitable organization.  You can value and track your donations using TurboTax ItsDeductible. Some people give away items totaling thousands of dollars in value. Take advantage of that deduction for any items you’ve given away.

Real Estate Taxes on Non-Primary Residence Property

Most people know that you can deduct real estate taxes on your primary residence. Many are also aware that you can deduct the taxes on a second home. Less well-known however is the fact that you can deduct real estate taxes on any property that you own, and there’s no limit on the number of properties.

Let’s say that you own land that you’re holding for future speculation. Since it doesn’t generate any revenue, you can’t include it as a rental property. But you can deduct real estate taxes that you’re paying on the land.

Offset Losing Investments

Did you sell any investment losers before the end of last year? If your losses exceed your gains, you can still deduct up to $3,000 of the loss against ordinary income, and carry the balance forward to future years indefinitely.

Contribute to a Health Savings Account

This is like an IRA for medical expenses. You can contribute up to $3,350 to a personal Health Savings Plan up to the tax deadline this year and reduce your taxable income.

This has to be done in conjunction with a high deductible health insurance plan. But it is also an excellent way to get the benefit of medical expense deductions if either you don’t itemize, or if you itemize and your medical expenses don’t exceed 10% of your adjusted gross income.

These are just some of the things you can start today, execute throughout the year, and see big dividends come next tax season.

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All You Need to Know About Advanced Premium Tax Credits

All You Need to Know About Advanced Premium Tax Credits

Americans often wonder what exactly an advanced premium tax credit (APTC) is and how it could offset the costs of a health insurance plan. To start, if you have purchased or are considering purchasing Marketplace insurance, you may be one of the millions of Americans eligible for an APTC to help pay for health insurance premiums.

How does it work?

Using your projected annual household income and household size, the Marketplace estimates what your 2016 premium tax credit will be when you apply. The process to determine your premium tax credit also depends on several variables like marriage status, location, dependents, etc.

What does this mean for my taxes?

Starting in February, all Marketplace enrollees will receive Form 1095-A which will include information regarding your health insurance coverage such as your monthly premium cost, the date you were insured, and your APTC.

When you file your 2015 taxes with Rapid Tax, you will enter the information from the Form 1095-A just like you would a W-2. Rapid Tax calculates the APTC’s you were eligible for based on your actual income and family size.

What if I calculated incorrectly?

If you overestimated your income when you applied for a subsidy, you may see a larger tax credit on your taxes if you took your health insurance tax credits up front on the Marketplace. However, if you underestimated, you may see a lower tax refund and in some cases you may owe money back. It may be possible to reduce your income and avoid paying back and APTC if for example you pay into your IRA before April 15th.

Moving forward for 2016, in order to receive the most accurate APTC, make sure to notify the Marketplace about any changes in your circumstances as soon as they happen. And if it’s possible, Rapid Tax recommends only taking half of the APTC up front to avoid any surprises come tax time.

Some of the changes in circumstances that can affect the amount of your ATPC and should be reported to the Marketplace include:

-Increases or decreases in household income
-Marriage/Divorce
-Birth or adoption of a child
-Other changes in household composition
-Gaining or losing eligibility for government-sponsored or employer-sponsored health care coverage
-Change of address

Have more questions about the Affordable Care Act and how it impacts your taxes and finances? Don’t sweat it,  Rapid Tax has you covered.

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