Sturges & Associates

Practicing in Lake County since 1978

Tax services

The following are a few tips that can save you a lot of money come April 15th:

Self-employed Deductions

Self-employed taxpayers can deduct 100 percent of their health insurance costs, half of their social security taxes, and certain retirement savings in 2007.  These deductions are limited to income reported and are above the standard deduction allowed.

Fund an IRA

For 2007 the maximum individual retirement account, or IRA,  contribution is $4,000. For those over 50 an additional “catch-up” contribution of $1,000 may be made.  For taxpayers covered by a retirement plan, the IRA deduction may be taken if their modified adjusted gross income is below $62,000, or $103,000 if married filing jointly.

Exclude Gain on Sale of Home

The taxpayer can exclude up to $250,000, from the gain of their main home.  If filing married filing jointly, this exclusion increases to up to $500,000.  Generally, the taxpayer has to have had their home as their primary place of residence for at least two of the last five years.  To qualify, you may not have previously taken the exclusion the last two years. 

Take your Education Credits

There are two education credits available for 2007, the Hope Credit and the Lifetime Learning Credit.  These credits are based upon the amount of qualified tuition and related expenses paid during the year.  These credits phase out if your modified adjusted income exceeds $42,000, or $85,000 if married filing jointly.  The maximum Hope Credit is $1,650 and the maximum Lifetime Learning Credit is $2,000.

 

3385 White Oak Way   |   Kelseyville, CA 95451   |   Phone: 707-279-1188   |    Alt. Phone: 707-279-4259 

The Soda Bay CPA

Are you planning on buying or selling a home, or are you worried  that the Alternative Minimum Tax might be a problem.  During a consultation we can  figure out the best way to minimize your tax bill.

 

We do:

 

· Exempt Organization Tax Return

· Corporate Tax Return

· Individual Income Tax Return

· Trust & Partnership Returns

· IRS Audits

Deduct Childcare Expenses

The maximum qualified care expenses you can deducted are $3,00 for one person and $6,000 for 2 or more.  The maximum dependent care credit is 35% of those expenses.  The name, address, and tax identification of the care provider must be disclosed.

Take the Earned Income Credit

The earned income credit is available to low income working individuals and families.  Taxpayers filing jointly can qualify to take the Earned Income Credit if they have two or more qualifying children living with them and earn less than $39,783 in 2007.  The maximum credit is $4,716.00.  The credit is based upon filing status, number of qualifying children, and your earned income.

Child Tax Credit

Taxpayers may be able to take the $1,000 child tax credit for each qualifying child.  A qualifying child is an American citizen that is directly related to the taxpayer and is under 17 at the end of 2007.