Telling Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.
Note: While our venerable tax and financial matters columnist, Joseph P. Reisman, finds himself inundated beneath miles of piles of tax returns, I’ve culled through his newsletter to bring you more weekly helpful hints and sound financial wisdom. And, hey, you should sign up to receive that newsletter, too, because he also posts fun stuff that someone like me could appreciate, like a YouTube video for — what else? — “Taxman” by George Harrison.
Helpful Tax Tips
- Tip#1 — Energy Tax Credit: The tax credit, which expired December 31, 2011, has been made retroactive to January 1, 2012 and through 2013. This is only for those who did not use $500 of the credit since 2006. As before, it excludes labor, but includes building materials, insulation, and Energy Star exterior doors. Windows give you a credit of $200, central air conditioners, $300, and furnaces, $150.
- Tip #2 — Transit Help: Employers can offer tax-free benefits (free parking; monthly transit passes) up to $245 per month. Alternatively, employees can pay for these benefits on a pre-tax basis. Learn more from TransitChek here.
- Tip #3 — Discharged Home Mortgage Debt: Up to $1 million ($2 million for married filing jointly) is excluded from gross income for 2012 and 2013 for discharged home mortgage debt. Remember, this is only for your primary home.
- Tip #4 — NY State Form 1099-G: New York State has discontinued the mailing of this form. Get your information online here.
- Tip #5 — Your Tax Appointment: Stop procrastinating.
Helpful Tax Reminders
- Reminder #1 — Check Your W-2: Is your Social Security number correct? Do the wages agree to your pay stub Remember, some benefits you have may not be taxable, like health insurance, transit passes, or retirement plans. If you aren’t sure of the figures on your W-2, call your employer for an explanation. After all, it’s your money. Note that you cannot correct your own W-2 — that is the employer’s responsibility. The IRS received the one your employer reported. You cannot file your return without the actual W-2.
- Reminder #2 — Residential Energy Credit: If you did not claim it on any of your tax return from 2006-2011, you can get a $500 credit on your 2012 tax return. The credit is 10% of the amount your spent insulation, water heater, windows/doors, HVAC, oil hot water boiler, oil furnace. Some other items are limited to between $50 and $300. Check the Energy Star website to see if you qualify.
- Reminder #3 — Should You File? If your W-2 shows that your employer withheld any Federal, state, or city tax, you should file even if you are not required. The same is true if you are not required to file this year but made any estimated tax payments, or had your prior year refund applied to this year.
- Reminder #4 — Take Photos: Digital cameras are a great way to document your possessions, not just valuables. Take pictures from several angles of each room in your home. If something happens, these pictures can help jog your memory about missing items. Save the pictures on your desktop, and back up your desktop data with www.Carbonite.com.
- Reminder #5 — Earned Income Credit: If your earnings for 2012 were less than $50,270, you may qualify for the Earned Income Credit and be entitled up to $5.891. But, if you don’t file, you won’t get it.
Multiple Choice Client Question: In which situation would local transportation expenses not be deductible?
A. From the regular or main job to the second job
B. From the regular or main job to a temporary work location
C. From the second job to a temporary work location
D. From home (residence) to the second job on your day off from your main job
Explanation: Travel expenses to the second job are not deducible unless directly from the first job to the second job.
Correct Answer: D
Quip: There is no child so bad that he or she cannot be used as an income tax deduction. Rimshot!
Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.