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Part II – Taxes you paid:

This section generally exhibits different taxes paid. This section includes following sub sections:

State and Local taxes

Income Taxes.

General Sales Taxes.

Real Estate Taxes.

Personal Property Taxes.

Other Taxes.

Line 5a – State and Local taxes:

Taxpayers who itemize their deductions are allowed to deduct state and local taxes from their federal taxable income. This deduction is limited to either income or sales taxes, but not both. Personal property taxes, such as local taxes on housing and real estate, can also be deducted.

Eligible expenses for state income taxes deduction:

All income taxes imposed by state, local or foreign jurisdictions are eligible to be deducted for individuals itemizing their deductions on their Schedule A.

Withholding for state and local income taxes. (i.e., from Form W-2, Form 1099’s)

Estimated taxes paid by taxpayer.

State Disability Insurance (SDI) for some States. (i.e., CASDI, NYSDI on Form W-2’s box 14)

Here is a short list of documents that show how much state or local taxes were paid during the year:

· Form W-2 (Wage and Tax Statement), which shows state income tax withholding in box 17; local income tax withholding is shown in box 19; and contributions to state benefit funds may be shown in box 19 or in box 14.

· Form W-2G (Certain Gambling Winnings), which may show state income tax withholding in box 15 and local income tax withholding in box 17.

· Form 1099-G (Certain Government Payments), which may show state income tax withholding in box 11.

· Form 1099-INT (Interest Income), which may show state income tax withholding in box 13.

· Form 1099-DIV (Dividends and Distributions), which may show state income tax withholding in box 14.

· Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.), which may show state income tax withholding in box 12 and local income tax withholding in box 15.

· Form 1099-MISC (Miscellaneous Income), which may show state income tax withholding in box 16.

· The portion of the previous year's state refund that was applied toward estimated taxes.

Line 5b – General Sales Tax:

General sales tax varies from state to state. You may have to pay taxes even if taxpayer is not present in US and spouse is staying in US.

Sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate.

If we see in the benefit of taxpayer, we have to select whichever is more in between State and local income taxes and General sales tax.

If taxpayer has stayed in more than one state of US, then he/she has to calculate sales tax for the fraction of days stayed in each state.

Ex: You lived in State A from January 1 through August 31, 2015 (243 days), and in State B from September 1 through December 31, 2015 (122 days). The table* amount for State A is $500. The table* amount for State B is $400. You would figure your state general sales tax as follows:

State A: $500 x 243/365 = $333

State B: $400 x 122/365 = $134

Total = $467 ($333+$134)

If taxpayer stayed in more than one locality, same rule applies as of staying in different states. First, we have to search in table for the particular locality. If locality is not present in that table, then we have to consider the table amount as ‘Zero’.

*Optional State Sales Tax Tables

Line 6 – Real Estate Taxes: (Form 1098)

Real estate taxes are paid on the property that taxpayer own. This tax payment should be done to local tax department every year. When purchase or sell a property happens, a HUD (Housing and Urban Development) statement will be given to taxpayer. HUD contains real estate taxes and property taxes too of both seller and buyer.

You can deduct the real estate taxes you pay on property in the year you pay them.

Example: You received a bill in January 2016, but you prepaid it in December 2015. This means you‘ll deduct the amount on your 2015 return.

Line 7 – Personal Property Taxes: (Form 1098)

Personal property tax is an annual tax imposed on movable assets – mobile homes, RVs, vehicles, boats, planes, etc.

Line 8 – Other Taxes:

This section will include those taxes which cannot be mentioned on lines 5, 6 and 7.

Also, Taxes paid (mostly Real Estate Taxes) to Foreign Country or US possession can be entered on this line.

Source Document:

For Mortgage interest, mortgage insurance premiums and real estate taxes.

Input:

For real estate taxes and personal property taxes

Print Preview:

For state income taxes, real estate taxes and personal property taxes

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Taxes you paid- Schedule A

Labels: US Tax

By: Unknown - Tuesday, July 19, 2016

Overview:

IRS offers every taxpayer the option to itemize their deductions or to claim the standard deduction. Standard deduction amount varies depending on your filing status. However, if you have significant deductible expenses during the year, the total of which is greater than your standard deduction, you can itemize by reporting the expenses on Schedule A. Itemized Deductions will help you to reduce federal tax liability if it is more than Standard Deduction.

Generally speaking, individuals on higher tax brackets have more to gain from itemizing their deductions. For example, many people list interest on a mortgage payment as a large deductible in the “interest you paid” section. Obviously, a wealthier home owner will have paid more interest on their home than a poorer one.

Purpose Of Schedule A

Like the standard tax returns, itemized deductions are subtracted from the adjusted gross income (AGI) to arrive at an individual's taxable income. Schedule A is required in any year you choose to itemize your deductions.

The schedule has seven categories of expenses:

1. Medical and dental expenses.

2. Taxes.

3. Interest.

4. Gifts to charity.

5. Casualty and theft losses.

6. Job expenses and certain miscellaneous.

7. Other Miscellaneous Deductions.

Each of these categories has different requirements and limitations on the amount you can deduct.

Taxpayer can claim those deductions which he/she is eligible to claim and no need to complete each section as one single section may be enough to be more than standard deduction. You can notice the table of Standard Deductions according to your filing status on left side top corner of Form 1040, page 2.

Example 1 – For tax year 2015, $6,300 is the eligible amount of Standard deduction for those who file their filing status as ‘Single’. If you have spent $2,000 for charity and $2,000 for mortgage interest, your total itemized deductions will be $4,000 which is less than $6,300 of standard deduction amount. So, opting for higher deduction (i.e., standard deduction of $6,300 is beneficial)

Note: The mortgage interest deduction alone can be quite significant and by itself be greater than the standard deduction.

After all calculations, if itemized deductions are more than standard deductions, the total deduction should be transferred to line 40 of Form 1040.

Part I: Medical and Dental Expenses (Pub 502)

This deduction will be claimed usually if unreimbursed medical and dental expenses are more. Both of the below conditions should be met in order to deduct your medical and dental expenses:

a. If you itemize deductions on Schedule A.

b. If your expenses are more than 10% of your AGI or 7.5% of your AGI for taxpayers 65 years or older.

If a question arises as what all a taxpayer can deduct? Answer is as below:

Any medical condition which includes the cost of following:

· Mitigation.

· Cure.

· Diagnosis.

· Treatment.

· Prevention.

· Items needed for above purposes, including

ü Equipment

ü Supplies.

ü Diagnostic Devices.

These are some of the expenses that you can deduct under medical and dental section:

Ø Cost of medical care from any of these practitioners

o Acupuncturists

o Chiropractors

o Dentists

o Eye doctors

o Medical doctors

o Occupational therapists

o Osteopathic doctors

o Physical therapists

o Podiatrists

o Psychiatrists

o Psychoanalysts giving medical care

o Psychologists

o Other qualified medical practitioners

Ø Transportation costs to and from medical care. If you drive your own car, the deduction is 23 cents per mile in 2015. (Medical miles deduction)

Ø Prescription medicines

Ø Amounts you paid for qualified long-term care services

Ø Limited amounts you paid for any qualified long-term care insurance contracts

Ø Medical insurance premium -- You can't deduct pre-tax salary contributions you make to an employer-sponsored health insurance plan.

Ø Amounts you pay if not covered by Social Security for:

o Medicare B supplemental insurance

o Medicare D insurance

o Medicare A premiums

You usually can't deduct premiums you pay for certain types of policies. This is true of policies with benefits that aren't tied to the actual cost of the medical care you received. These policies:

Ø Pay you a certain amount (Ex: policy that pays you $200 a day while hospitalized)

Ø Pay you for lost earnings

Ø Pay a flat amount for the loss of a limb or eyesight

The required contributions you make to state disability-benefit funds might not be medical expenses limited by the 10% rule -- 7.5% if 65 or older. This is true if you contribute to:

Ø Alaska Unemployment Compensation Fund

Ø California Paid Family Leave Program

Ø California Non occupational Disability Benefit Fund

Ø New Jersey Non occupational Disability Benefit Fund

Ø New Jersey Unemployment Compensation Fund

Ø New York Non occupational Disability Benefit Fund

Ø Pennsylvania Unemployment Compensation Fund

Ø Rhode Island Temporary Disability Benefit Fund

Ø Washington State Supplemental Workmen’s Compensation Fund

Instead, include these payments as a part of your state tax deductions on Schedule A.

These are some of the expenses that you cannot deduct under medical and dental section:

Ø Cosmetic surgery not related to any of these:

o Congenital abnormality

o Accident

o Disease

Ø Medicare tax on wages and tips paid as part of the self-employment tax or household employment taxes

Ø Nursing care for a healthy baby

Ø Usually, drugs not approved by the FDA

Ø Funeral, burial, or cremation costs.

Source Document: Generally amounts spent on medical and dental will be provided by taxpayer himself.

Input:

Print Preview in lacerte tax software:

Schedule A: (Itemized Deductions) (Line 40)

Labels: US Tax

By: Unknown -

REFUND:

AMOUNT OVERPAID (Line 75)

If line 75 is under $1 IRS will send a refund only on written request.

Amount Refunded to You (Lines 76a to 76d)

Have your 2015 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Taxpayer can request a deposit for the refund to a Treasury Direct online account to buy U.S. Treasury marketable securities and savings bonds.

If the taxpayer wants IRS to directly deposit the refund amount shown on line76A to checking or saving account, including an IRA at a bank or other Financial Institution in the US. Direct deposit of the refund is faster, secure, convenient and economical.

· Need to complete lines 76b through 76d,

OR

· Check the box on line 76a and attach Form 8888 if you want to split the direct deposit of your refund into more than one account or use all or part of your refund to buy paper series I savings bonds.

If the taxpayer doesn’t want the refund directly deposited to the account, then IRS will send a check instead.

Line 76c:

Check the appropriate box for the type of account. Do not check more than one box.

Line 76d :

The account number can be up to 17 characters (both numbers and letters). Include hyphens but omit spaces and special symbols.

If any of the following apply, direct deposit request will be rejected and a check will be sent instead:

You are asking to have a joint refund deposited to an individual account, and your financial institution(s) won't allow this. The IRS isn't responsible if a financial institution rejects a direct deposit.

The name on your account doesn't match the name on the refund, and your financial institution(s) won't allow a refund to be deposited unless the name on the refund matches the name on the account.

Three direct deposits of tax refunds have already been made to the same account or prepaid debit card.

You haven't given a valid account number.

You file your 2015 return after December 31, 2016.Any numbers or letters on lines 76b through 76d are crossed out or whited out.

Output of Refund appears in page no.2 (Line 76a)

The total taxable income is $ 9026. As federal income tax withheld (i.e. $19498) is more than the taxable income ( $9026 ), the amount is refunded ($10472).

Applied to Your 2016 Estimated Tax Line77

Enter on line 77 the amount, if any, of the over payment on line 75 you want applied to your 2016 estimated tax. We will apply this amount to your account unless you include a statement requesting us to apply it to your spouse's account. Include your spouse's social security number in the statement.

REFUND

Labels: US Tax

By: Unknown - Friday, July 15, 2016

This credit is for people who have a qualifying child as defined below. It is in addition to the credit for child and dependent care expenses (on Form 1040, line 49; Form 1040A, line 31; or Form 1040NR, line 47) and the earned income credit (on Form 1040, line 66a; or Form 1040A, line 42a).

The maximum amount you can claim for the credit is $1,000 for each qualifying child.

Qualifying Child:

A qualifying child for purposes of the child tax credit is a child who:

Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew).
Was under age 17 at the end of 2015.
Did not provide over half of his or her own support for 2015.
Lived with you for more than half of 2015.
Is claimed as a dependent on your return.
Does not file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid)
Was a U.S. citizen, a U.S. national, or a U.S. resident alien. For more information. If the child was adopted.

Filers who have certain child dependents with an IRS Individual Taxpayer Identification Number (ITIN).

If you are claiming a child tax credit or additional child tax credit for a child identified on your tax return with an ITIN, you must complete Part I of Schedule 8812 (Form 1040A or 1040).

Although a child may be your dependent, you may claim a child tax credit or additional child tax credit only for a dependent who is a citizen, national, or resident of the United States. To be treated as a resident of the United States, a child generally will need to meet the requirements of the substantial presence test. For more information about the substantial presence test, see Pub. 519, U.S. Tax Guide for Aliens.

Adopted child.

An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

Limits on the Credit

You must reduce the maximum credit amount of $1,000 for each child if either (1) or (2) applies.

1. The amount on Form 1040, line 47; Form 1040A, line 30; or Form 1040NR, line 45, is less than the credit. If this amount is zero, you cannot take this credit because there is no tax to reduce. But you may be able to take the additional child tax credit.

2. Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status.

a. Married filing jointly – $110,000.

b. Single, head of household or qualifying widow(er) – $75,000.

c. Married filing separately – $55,000.

Foreign earned income : If you file Form 2555 or 2555-EZ (both relating to foreign earned income), you cannot claim the additional child tax credit.

Output In 1040 Form appears in page 2 (Line 52)