Facebook

Blog

By: Connor Wyllie

ECSU student

 

 Many students, like myself, are unaware of what the Lifetime Learning credit is and therefore don’t take advantage of this opportunity. Paying for college in today’s world can be quite expensive and we look to our family and others to help us afford it. What if we can use our taxes to help us get more money to help offset these high educational expenses?

 

Lifetime Learning Credit or LLC for short is a provision in the United States federal income tax code that allows students, or dependents paying for higher education to lower their tax liability by up to $2,000 allowing to counterweigh those high fees. The program is designed to match dollar for dollar up to $2,000 or if less, the amount individuals spend on expenses for post-secondary higher education. The LLC can definitely help offset these costs, but can’t be combined with American Opportunity Credit or the Hope Credit program.

 

To be eligible to apply for this aid, the individual or dependent must meet all three requirements listed below:

  •  You, or the dependent must be paying qualified expenses at an eligible educational institution.
  • You, or the dependent’s payment must be for an eligible student enrolled at an eligible institution.
  • The Eligible student must be listed on the paying individuals tax return 

*To become an eligible student and considered for this program, the student must be enrolled in or taking classes at an eligible institution in hopes to acquire a degree, or a higher skillset for a job.

       

 

The LLC doesn’t always allow for the matching of $2,000. It’s important to know what category you fall under as a student and as the paying individual. To be considered for the full amount you must make under $65k or if married a total of less than $131k. The allowance from there depends on your financial needs under these amounted guidelines.

 

If you are a student enrolled in a higher education the LLC is something to look into. With rising tuition and fees, it’s important to look for ways to help fund higher education. The Lifetime Learning Credit program is an excellent place to start to offset large expenses.

 

By: Anthony Buttafuoco

Being a college student, I understand the struggles of saving money before and during your college experience. A possible solution to help families save is a 529 plan. This is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. Typically, 529 plans can be used for schools in any states. For example, if a family lives in Connecticut, but wishes to go to school in Florida, they can simply apply for the Connecticut 529 Plan and apply it to the school in Florida.

The prepayment plans are either for 1 year, 3 years, 5 years, or 10 years and are in almost every state. There are two types of plans, a savings plan and a pre-paid plan. The savings plan works much like a 401K or IRA by investing your contributions in mutual funds or similar investments. The plan will offer you several investment options from which to choose. Your account will go up or down in value based on the performance of the particular option you select. The earnings in the account are tax free as long as the distributions from the account are used for college tuition or college expenses.  A pre-paid plan lets you pre-pay all or part of the costs of an in-state public college education. They may also be converted for use at private and out-of-state colleges. The Private College 529 Plan is a separate prepaid plan for private colleges.

The Connecticut Higher Education Trust 529 Plan also has an additional tax benefit.  Contributions of up to $5,000 per year ($10,000 per married couple) are deductible when calculating CT taxable income.

Based on my experience, through my 3 years of college so far, I believe it is worth looking in to investing in a 529 Plan. It may save you and money (from a tax standpoint) and save you a lot of stress when it comes time to pay tuition as well as other necessary college payments.

 

 

As a CPA, I have worked with clients who have had their identity stolen.  I've been sympathetic to these clients and I've done my best to assist them, but now I can truthfully say "I know how you feel".  On March 18, in the throes of tax season, I received a letter from the IRS stating "We received your December 31, 2014, Form 1040 federal individual tax return, but we need more information...".  My heart doesn't normally start racing when I receive a letter from the IRS, but since I hadn't filed my personal tax return yet, I suddenly felt ill. 

I followed the instructions on the letter, and I checked the box stating I did not file the tax return, and then began to think about how this could happen to me.  In my office, data security is very important to me, and I even shred an envelope if it has a client's return address on it.  How then did someone obtain my personal information?  I have Anthem Blue Cross/Blue Shield Insurance, and I can only guess that's how my information was obtained.

As I've done with my clients, I called the IRS to see if I could learn any more information.  The first agent didn't want to assist me because I couldn't prove my identity.  Therefore, I hung up the phone, endured another hour on hold, and tried again with another agent.  This agent was willing to provide me with additional information.  I told her that I was planning on filing an extension since my clients tax filings take priority, and she told me that I needed to file my return as soon as possible. She then told me that I needed to file IRS Form 14039, "Identity Theft Affidavit".  The last thing she told me was that I had to remit a paper return.  Since my husband works in multiple states, this meant that I was now going to have to make numerous copies of my federal return to attach to the multiple state returns ugh! At that point I decided that I needed to do something to protect myself going forward.

Since I file married filing jointly, my husband and I filed a report with our town police department. Next, we enrolled in AllClear ID, an identity theft protection program.  I recently signed up for a new phone plan, and I was afraid that my transaction might be declined (or I would have to prove my identity over the phone), but I was approved at the highest dollar amount the company offers.  Although I was relieved that I wasn't embarrassed by having my credit declined, I have to wonder how well the identity theft protection works.

Since I'm self-employed, I make quarterly estimated tax payments.  I've actually considered not paying them, and paying the penalty and interest.  Anyone who knows me knows that I get upset even if I'm one day late in returning a library book.  However, I hesitate to prepay my taxes so that someone else can go in and try to take these payments.  I've always felt that taxpayers shouldn't over-withhold taxes from their paychecks.  My argument was that you shouldn't give an interest-free loan to the government.  Now I have an even better argument.

In May, when I finally started to relax from a busy tax season, I received a letter from TurboTax.  I use a professional software for my tax practice, and therefore I almost threw the letter out.  Thank goodness that I didn't! I opened the envelope, and it contained an invoice for the fraudulent tax return.  Apparently, the person who filed a fraudulent tax return on my behalf used TurboTax to prepare the return, and then scheduled to have the invoice paid from the refund.  Since the refund was never issued, TurboTax never received payment.  I called TurboTax and they agreed to waive the fee.  I offered to fax a copy of the IRS letter as proof, but they told me that they believed me.

With $16 billion stolen by identity thieves last year, we all need to be prepared for identity theft.  If I can assist you in any way, please don't hesitate to contact me.  

Are you the owner of an agricultural or farming (including horse boarding and training) business in CT?  If so, you may be eligible for sales tax and/or property tax relief in CT.

By obtaining a Farmers Tax Exemption Permit via the CT Department of Revenue Services, you can purchase supplies for your agricultural business tax free.  To be eligible, you must have a minimum of $2,500 in gross sales/income.  The permits are valid for two years.

If you have at least $15,000 in gross sales or expenses related to farming (including horse boarding and training), your first $100,000 in farm machinery, horses and ponies may be exempt from personal property tax.  Business owners must apply annually for the exemption by November 1st.  Also, the farm machinery and horses must be used exclusively for agriculture.  Some municipalities offer an additional $100,000 property tax exemption for machinery and horses increasing the total exemption to $200,000.

Although the next exemption is not state mandated, some municipalities provide a $100,000 property tax exemption on buildings used exclusively for farming.  The business must have at least $15,000 in income or expenses related to farming operations.

Livestock, horses and ponies with a value of less than $1,000 are exempt from property tax.  However, municipalities may vote to exempt livestock and horses of any value from property tax.

Farm tools used exclusively in the business of farming are exempt up to a value of $500.

Public Act 490 was enacted in 1963 to help preserve agriculture and open space in CT.  Research performed across the US has shown that property tax revenues from farm land and open space exceed the town’s costs to service that land.  Therefore, it benefits a town to have open space and farmland.  Farmers (horse boarding facilities) may apply to have their land classified as “farmland” under PA 490 and thereby reduce their property taxes.  The application is due between September 1st and October 31.  The farmland classification does not need to be renewed each year. 

In today’s economy, it’s important to take advantage of every tax incentive available.  

July 1, 2014

By:  Meghan McTeague

Effective October 1, 2014, the due date for filing CT sales tax form OS-114 and remitting related payments is the 20th of the month following the reporting period. Prior to this date, sales tax returns and related payments were due the last day of the month following the reporting period.

This change was part of a bill that was passed unanimously by both legislative bodies. Many taxpayers and CPAs were not aware that this was even being discussed because it was only one piece of a bill that was burried among other areas of legislation related to the operations of the CT Department of Revenue Services.

 

 

 

Announcements

Useful Links

Login