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7/28/2017

Tax Deductions 101: Save on Tuition, Fees, and Student Loan Interest

Summer break is quickly passing us by and before you know it, it will be time to send the kids back to school or even return to school yourself to complete your higher education journey. Tuition and other expenses associated with obtaining a degree or diploma can become costly. Luckily, if you meet certain requirements, you can deduct some of these expenses when filing your taxes annually.

Tuition and Fees Deduction

Deductions can be made during tax filing season for qualified tuition expenses and other related expenses that are paid for your education or the education of a spouse or dependent. No itemization is required for this deduction. Simply claim the deduction as an adjustment to your income when filing IRS Form 1040.

Other education benefits for education expenses include:

If your expenses qualify for both a business expense deduction as well as the tuition and fees deduction, you can only claim one deduction and not both.

Tuition and Fees Deduction Requirements

The Tuition and Fees Deduction can NOT be taken if one of the following occurs:
    • Your filing status is married filing separately
    • You can be claimed as a dependent on someone else’s return
    • Your modified Adjusted Gross Income exceeds certain limits
    • You claim the American opportunity tax credit or Lifetime Learning Credit for the same student in the same tax year
    • You or your spouse were a nonresident alien for any part of the tax year.
    • Expenses were paid with tax-free scholarships, grants, or education savings account funds, tax-free savings bond interest, or employer-provided education assistance.

Student Loan Interest Deduction

Student loan payments are never fun. But there is some good news if you do have one! Those that are required to make student loan payments can easily make a deduction for these costs each year. The first step is verifying if your loan qualifies for the deduction. A qualified student loan is one that was taken out solely to pay the expenses to attend a qualified institution of higher education. Student Loan Interest is considered to be any interest paid during the year on a qualified student loan, including required and voluntarily prepaid interest payments. Deductions for these loans can either be $2,500 or less or the amount of interest actually paid during the year can be claimed as an adjustment to your income, so no itemization of the deduction is needed.

Student Loan Interest Deduction Requirements

In order for the deduction to be claimed, you must meet the following requirements:
  • Paid interest on a qualified student loan in the current tax year
  • Are legally obligated to pay interest on a qualified student loan
  • Filing status is not “married filing separately”
  • Modified Adjusted Gross Income is less than a specified amount that is set annually
  • You or your spouse, if filing jointly, can’t be claimed as dependents on someone else’s return.
  • Those that paid $600 or more of interest on a qualified student loan during the year will receive a Form 1098-E (Student Loan Interest Statement) from the entity to which the student loan interest was paid. Keep this form and use the information listed on it when filing.

As you prepare to continue furthering your education, be sure you take advantage of these great deductions when filing. As always, ExpressExtension is here to provide you with any automatic filing extensions that you may need when that hectic time of year comes around. Feel free to contact us if you have any questions or need assistance with filing. We are available Monday - Friday from 9AM to 6PM EST at 803.514.5155. Live chat and 24/7 email support is also available at support@expressextension.com. We look forward to assisting you!
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7/25/2017

Be Good Friends with “Uncle Sam” and Eliminate Tax Surprises


Benjamin Franklin once said “If you fail to plan, you are planning to fail.” This phrase can be applied to various aspects of life, especially when it comes to filing your taxes. Taxpayers who are employed must pay federal income taxes each year. If you don’t pay these taxes, you and “Uncle Sam” probably won’t be the best of friends!

Most employers withhold taxes from the wages of their workers to stay in compliance with Federal Income Tax regulations, which operates on a “pay-as-you-go” system. Each pay period you should see a deduction from your paycheck that will cover these taxes. If not, you may have to pay a lump sum of money back when you file. There are also other sources of income that are usually taxed which include pensions, bonuses, commissions and gambling winnings.

For those that do not have taxes withheld, like self-employed individuals, they generally have to pay what is known as an “estimated tax, which can be paid off quarterly or in one lump sum during tax filing season.  Other income such as capital gains, dividends, interest, rent and royalties are usually required to make estimated tax payments as well.

Also, did you know that major life events could affect your taxes as well?
We’ll talk about how your taxes can be impacted significantly a little later.

Avoid Tax-Time Surprises

Here’s a “heads up” on ways to eliminate any last minute surprises when it’s time to file your taxes:

  • New Job: New employees must complete a Form W-4 (Employee's Withholding Allowance Certificate) when starting a new job. This form is used by employers to determine how much federal income to withhold from your regular pay, bonuses, commissions and vacation allowances. The IRS Withholding Calculator is a great tool for taxpayers to use to figure out how much tax to withhold.

  • Estimated Tax: If a taxpayer has income that is not subject to withholding or is expecting to owe $1,000 or more than taxes withheld from their wages may need to make estimated tax payments to avoid penalties.

  • Life Events: Major life events such as a change in marital status, the birth of a child or the purchase of a new home can alter the amount of taxes a taxpayer owes. The IRS actually provides detailed information for various major life events that you can gain more specific information from regarding your taxes.
  • See Managing Your Taxes After a Life Event.

By taking these precautionary measures you will be able to keep calm during tax season! If you need some extra time to gather everything you need to file, there’s no need to worry. ExpressExtension is here to provide you with an automatic filing extension of up to 7 months for your business, personal, or exempt organization extension within minutes.

Contact us if you have any questions or need assistance with filing. Our U.S. based customer support team is available Monday - Friday from 9 AM to 6 PM EST at 803.514.5155. We also offer live chat and 24/7 email support at support@expressextension.com.
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7/21/2017

What To Do When You Receive a Notice From the IRS

IRS Letter.jpgMillions of letters and notices from the IRS are mailed to taxpayers every year. While the initial reaction to opening your mailbox and seeing a letter from the IRS may be that of a shocking or nervous state, all letters from the IRS are not detrimental with many being able to resolve easily.


Here’s what you should do if you just so happen to receive that unexpected envelope in the mail:

The Next Steps 


  • BREATHE. Don’t panic when you see the letter; simply follow the instructions that are listed.


  • Read the letter thoroughly and determine why the IRS has contacted you. The notice that you receive usually will cover a specific issue about your tax return or account. Topics such as tax payments or notifying you of a change to your account can also be covered as well.  


  • Notices regarding a correction to your tax return should be reviewed carefully and most likely will need to be compared to the information that was entered on your tax return.
    • A reply to an IRS notice is usually not necessary if you agree with the correction. However, if payment is due, you need to respond.


    • If you are not in agreeance to a correction that the IRS has made, it is very important that you respond as soon as possible in writing. In your response, be sure to include any documentation and information that you would like for the IRS to take into consideration.
  • Correspond with the IRS properly
    • If you decide to respond to the IRS in writing there are a few things you should do while corresponding:
      • Attach the bottom tear-off portion of the IRS notice to your response
      • Mail the information to the IRS address provided in the lower left corner of the notice.
      • Allow at least one month (30 days) for the IRS to respond.
  • Be prepared and organized if you decide to call the IRS
    • The number to contact the IRS will be listed in the upper right corner of the notice that you received. To receive a direct answer to your question(s), review both the IRS notice and your tax return carefully prior to calling.
  • Keep copies of any and all correspondence that will coincide with your tax records.


Receiving a notice from the IRS can always be avoided if you file your return correctly before the annual tax deadline. At ExpressExtension we understand that tax filing can be a little time consuming and that you may need some time to gather all of your information to file properly. With ExpressExtension.com, you can e-file a business, personal, or exempt organization tax extension to get up to six months of additional filing time within minutes.

If you have questions or need assistance with filing please don’t hesitate to contact our US based support team. We’re available Monday - Friday from 9 AM to 6 PM EST at 803.514.5155. We also offer live chat and 24/7 email support at support@expressextension.com.

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7/14/2017

6 Tax Tips for Deducting Gifts to Charity

Clothes Donation.jpgMother Teresa once said, “It's not how much we give but how much love we put into giving.” The change of seasons often prompts people to donate items or money to charity; or if you are a part of a nonprofit organization, you may be seeking donations from current or prospective donors to support the mission and efforts of your group.

Donors that choose to give may want to claim their donation as a tax deduction when filing. These are a few tips you should know prior to giving or receiving donations from a generous supporter.

Tax Tips for Deducting Gifts To Charity:

  1. Give to Qualified Charities - Only gifts given to qualified charities can be deducted. Gifts given to churches, synagogues, temples, mosques and government agencies are deductible. The IRS provides a Select Check tool that you can use to see if the group you want to donate to is qualified.

  1. Itemize Deductions - Itemized deductions are eligible expenses that individual taxpayers can claim on federal income tax returns which decreases their taxable income. Each qualified deduction should be itemized and listed.

  1. Keep Detailed Records - Bank records or a written statement from the charity is required for verification purposes of all donations. All gifts of money include those made in cash or by check, electronic funds transfer, credit card, or payroll deduction. For those that give by payroll deduction, have a copy of your pay stub, Form W-2 wage statement or another sufficient document from your employer.
Tax Advice.jpg
  1. Condition of Household Goods - Household items such as furniture, furnishings, appliances, electronics, linens, and more, must be in at least good-used condition for it to be claimed on your taxes.

  1. End of the Year Gifts - Be sure to deduct contributions in the year that you make them. For example, if you purchase a gift and charge it to your credit card prior to the end of 2017, it will count for 2017. Even if the bill is not paid until January 2018, the deduction will still have to be for 2017.

  1. Large Property Donations - There are special rules that apply for large donations such as an airplane, boat, or car given to charity. Also, deductions that are claimed for non-cash contributions of more than $500 require IRS Form 8283 be completed for your tax return.

We hope these tips will be beneficial to you as you help others along the way throughout the year. As always, ExpressExtension is here to assist you with any tax return e-filing needs that you may have. We offer business, exempt organization, and personal extensions to give you extra time to prepare those taxes! If you have any questions or need assistance with the e-filing process, feel free to call our live, US-based support team in Rock Hill, South Carolina. We are available at (803) 514-5155, Monday through Friday from 9 a.m. to 6 p.m. EST. You can also send us an email 24/7 through support@ExpressExtension.com.  



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7/12/2017

KEEP CALM & File Tax Extension Form 8868 This Summer

The summer season has begun to hit us full force--bright sunshine, heat waves, family vacations, Fourth of July cookouts, weekend getaways, celebrations and more. Although you may be enjoying your free time this summer, don’t forget that tax season is still in full swing, especially for tax-exempt organizations. Organizations that operate on a fiscal tax year may have their Information Returns due within the next few days.

Every year nonprofit organizations or tax-exempt groups such as charities, educational groups, religious organizations, and more are required to file either an Information Return Form 990, 990-EZ, 990-PF, or 990-N to maintain their tax-exempt status and stay in compliance with the IRS.

Let’s take Form 990 for example. The deadline for Form 990 is the 15th day of the 5th month after the end of the organization’s fiscal year. If an organization has been liquidated, dissolved, or terminated, they also have to file a return that is still due by the 15th day of the 5th month after liquidation, dissolution, or termination.

Does your organization have a deadline coming up soon? Like maybe this coming Saturday, July 15?? If so, KEEP CALM! ExpressExtension provides IRS Form 8868 that will give you an automatic 6-month extension of time to file your return.

To get started, simply create a free account with ExpressExtension and select “Create Exempt or Tax Extension.” You will then be guided through the e-filing process step-by-step and complete within minutes. Once your primary information has been entered, you will see a summary of your organization’s information that is on file with the IRS. Confirm this information and our system will perform a quick audit to double check for any errors that need to be fixed. As soon as any corrections are made, you can then pay a small fee to submit and transmit directly to the IRS. You will be notified via email that you extension has been approved within minutes.

So take a quick second and submit an extension to get more time to file. Not near your computer? No problem! You can download the free ExpressExtension App and e-file IRS Form 8868 right from your smartphone or tablet at any location.

If you have any questions or need assistance with filing please don’t hesitate to contact our US based support team.
We’re available Monday - Friday from 9 AM to 6 PM EST at 803.514.5155. We also offer live chat and 24/7 email support at support@expressextension.com.



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7/07/2017

The Ins and Outs of Estimated Taxes

Those that are self employed may be responsible for paying taxes directly to the IRS after filing their annual tax return. Taxes must be paid as you earn or receive income throughout the year. These taxes can be paid through two ways:
1) Withholding Tax Payments or 2) Estimated Tax Payments. If you are an individual that is in business for yourself, you generally need to make estimated tax payments.

There are also instances where the income tax withheld from your salary is not enough. Income such as interest, dividends, alimony, capital gains, or prizes and awards can cause you to make estimated tax payments.

REQUIRED TO PAY ESTIMATED TAX:
Those required to pay estimated tax include:
  • Individuals, sole proprietors, partners, and S-corporation shareholders if they expect to owe tax of $1,000 or more.
  • Corporations that expect to owe tax of $500 or more.
NOT REQUIRED TO PAY ESTIMATED TAX:
Those NOT required to pay estimated tax include:
  • Meeting all of the following conditions:
    • Had no tax liability for the prior year
      • This occurs when your total tax was zero or it was not required for an income tax return to be filed the previous year.
    • Was a U.S. citizen or resident for the entire year.
    • Prior tax year covered a 12-month period.  
  • Individuals that request having additional tax withheld from their earnings. The amount that you would like to have withheld should be noted on your Form W-4.
HOW TO CALCULATE ESTIMATED TAX:
Most tax filers use Form 1040-ES to calculate the amount of estimated tax that they will owe. These individuals include sole proprietors, partners, and S corporation shareholders. In order to calculate your estimated tax you will need the following info:
  • Expected Adjusted Gross Income
  • Taxable Income
  • Taxes
  • Deductions
  • Credits for the Year
Calculation Tip: Use your prior year’s federal tax return as a guide and utilize Form 1040-ES to calculate your estimated tax. You will have to estimate your expected amount of income for the year. If your estimations are too high or too low, simply complete another Form 1040-ES with the correct information. Be sure to estimate your income accurately to avoid any penalties. Also, just so you know, corporations generally use Form 1120-W to figure its estimated tax.
ESTIMATED TAX PAYMENT DUE DATE:
Estimated taxes can be paid in four divided payment periods: Each period has a specific due date and if you don’t pay enough tax by the due date of each period, you may be charged a penalty, even if you’re eligible for a refund when you file your income tax return. These taxes can be paid in full or quarterly in a pay-as-you-go method on the following dates:
  1. First Payment - April 18, 2017
  2. Second Payment - June 15, 2017
  3. Third Payment - September 15, 2017
  4. Fourth Payment - January 16, 2018
Payments for estimated tax can be made directly to the IRS online at https://www.irs.gov/payments, by phone or by mail. Corporations must make these payments using the Electronic Federal Tax Payment System.
PENALTY FOR UNDERPAYMENT:
As one may expect, if you do not pay enough tax throughout the year you may have to pay the IRS a penalty fee for underpayment of estimated tax. Most taxpayers avoid this penalty if they owe less than $1,000 in tax after deducting any withholdings and credits or have already paid at least 90% of estimated taxes for the current year or 100% of the  tax shown on the return for the previous year--whichever is smaller.
Penalties may also be avoided or lowered by annualizing your income and making unequal payments if your income is received unevenly during the year. Other ways to have a penalty waived include:
  1. Failure to make payments due to a casualty, disaster, or other unusual circumstance. The situation must be inequitable to impose a penalty.
  2. You retired (after age 62) or became disabled during the tax year that payments were required, but the underpayment was due to reasonable cause and not willful neglect.
Be sure to take advantage of these useful tips and stay caught up throughout the year to avoid any large payments when it’s time to file your taxes. If the time comes to file and you need an extension, be sure to file one with ExpressExtension in just a few minutes!

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