If you have children, they may have an impact on your tax situation.  Here are 10 things the IRS wants you to consider if you have children.

1. Dependents - In most cases, a child can be claimed as a dependent in the year they were born.
2. Child Tax Credit - You may be able to take the credit on your tax return for each of your children under age 17.  If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit..  The Additional Child Tax Credit is a refundable credit and may give you a refund even if you do not owe any tax.
3. Child and Dependent Care Credit - You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work.
4. Earned Income Tax Credit - The EITC is a benefit for certain people who work and have earned income from wages, self employment or farming.  EITC reduces the amount of taxes you owe and may also give you a refund.
5. Adoption Credit - You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child.
6. Children With Earned Income - If your child has income earned from working they may be required to file a tax return.
7. Children With Investment Income - Under certain circumstances a child's investment income may be taxed at the parent's tax rate.
8. Coverdell Education Savings Accounts - This savings account is used to pay qualified educational expenses at an eligible educational institution.  Contributions are not deductible, however, qualified distributions generally are tax free.
9. Higher Education Credits - Education tax credits can help offset the costs of education.  The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income.
10. Student Loan Interest - You may be able to deduct interest you pay on a qualified student loan.  The deduction is claimed as an adjustment to income so you do not need to itemize your deductions in order to claim this interest.
    

Earlier is better when it comes to working on your taxes.  By getting a head start on preparing your tax returns, you avoid the last-minute rush, when many filing mistakes are made.  And the sooner the IRS receives your return, the sooner they can process it and get it on to you.  Here are some tips to help you start the tax season off right:

1. Organize - as you begin receiving your tax information and documentation, first review them for accuracy to the best of your ability and begin to store them in a folder or large envelope labeled 2009 Taxes.  Most of your information should be received by February 15, 2010.  If by February 28, you are still missing some information you will want to follow up with your employer or your bank or mortgage company or other institution to find out what the delay is.  (You can also visit our site to download a Tax Prep Checklist of documents that may jog your memory to reduce omitting some important information.)
2. Make Yourself Aware of Schedule M - This is a new IRS form that you will use to account for the Making Work Pay credit money you got last year in your paychecks.  Unfortunately, in some cases, the amount that was paid out to you may have been too much and now it will be reflected on  your tax return through this schedule.
3. Remember Your Life Events - Did you have a baby?  Get married or divorced? Did you or one of your dependents attend College or other post-secondary school?  Start a business?  Have you retired?  Major life events can have a big impact on your taxes.  If you're working with a tax professional, make sure you make them aware of any life events that took place.
4. Use Resources to Stay Informed and connect with a "go-to" person to get your questions answered.  Our site has a Resource Center with links to the IRS' website as well as links to State Taxing Authorities across the U.S and a wealth of other tax and financial links.  You can submit questions through this blog.  You can also subscribe to our monthly newsletter where you will receive ideas and helpful tax and financial tips on how you can keep more of what you make.
5. Check your return for accuracy.  Wrong social security numbers, wrong addresses, incorrect accounts for direct deposit are just a few of the items that can cause your refund to be delayed.

Real estate is a foundation of our economy. So when real estate catches a cold, Washington usually lends a hand to keep the rest of the economy from suffering.

The 2009 economic stimulus act gave "first-time homebuyers" (defined as those who have not owned a primary residence for three years) a tax credit equal to 10% of the new home's purchase price, up to $8,000 ($4,000 for married couples filing separately). This credit is available for purchases through November 30, 2009. (Buyers who sell that home or convert it to rental use before 36 months must recapture the credit in the year the home is sold or converted, making the "credit" more of an interest-free loan.) That credit phases out for incomes between $75,000 and $95,000 ($150,000 and $170,000 for joint filers).

On November 9, President Obama signed the Worker, Homeownership, and Business Act of 2009. That Act extended the first-time homebuyer credit for purchases signed before May 1, 2010 and closed before July 1, 2010. The new law also makes these changes:

• It limits the credit to homes costing $800,000 or less.
  

• It raises the income level to qualify for the credit ($125,000 for individual filers and $225,000 for joint filers).
  

• It extends the credit, up to a limit of $6,500, for buyers who have maintained the same principal residence for any five-consecutive year period during the eight-year period ending on the date they buy a new principal residence.
  
  

Buying a home has always offered tax-saving opportunities. The new law makes these opportunities even more attractive. So if you're thinking about buying or selling a home, and would like more info about this or other tax matters, contact us today.

Hardge Connections, LLC is a revolutionary tax and financial services company to individuals and small business owners Nationwide!  Our goal is to help you keep more of what you make.  We will use this blog to educate you and empower you with information that we hope will help with your overall money matters.  


Visit us often so you can stay up to date with the latest tax and financial news that may impact your finances.