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Business Owners Beware — New IRS Matching Program

Beginning in 2012, banks, credit card companies, and other third-party organizations that settle transactions were required to file informational returns with the IRS that reported a business’s credit and debit card transactions and other electronic types of reportable income. The form used to file that information with the IRS is the 1099-K. If your business has credit/debit card transactions, then you, along with the IRS, have received this form in the past.

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How to Cut Your Utility Bills While Reducing Your Taxes
After installing solar or other alternative energy systems in their homes, taxpayers generally benefit from lower utility bills. Taxpayers may also see a lower federal income tax bill for the year of the installation. Through 2016, taxpayers get a 30% tax credit on their federal tax returns for installing certain power-generating systems in their homes. The credit is non-refundable, which means it can only be used to offset a taxpayer’s current tax liability, but any excess can be carried forward to offset tax through 2016.

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Gambling Income and Losses
Generally, a taxpayer must report the full amount of his recreational gambling winnings for the year as income on his 1040 return. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races, and casinos, as well as the fair market value of prizes such as cars, houses, trips or other non-cash prizes.

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October 15th Extension Deadline Approaching
If you were unable to file your 2013 individual tax return by April 15th and filed an extension, you should be aware that the extension gave you until October 15th to file your return or face a late filing penalty, which is 4 1/2% of the tax due per month, with a maximum penalty of 22 1/2% of the tax due. There is also a minimum penalty of the lesser of $135 or 100% of the tax due. If you prepaid your 2013 taxes timely through a combination or withholding or estimated taxes and will receive a refund when your return is ultimately filed, there is no penalty for filing late.

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Getting Around the Kiddie Tax
Congress created the “Kiddie Tax” to prevent parents from placing investments in their child’s name to take advantage of the child’s lower tax rate. Kiddie Tax rules apply most often to children through the age of 17, although children aged 18 through 23 who are full-time students may also be affected. Under the Kiddie Tax, a child’s investment income in excess of an annual inflation adjusted floor amount ($2,000 for 2014) is taxed at the parent’s tax rate rather than the child’s. These rules do not apply to married children who file a joint return with their spouse.

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