Graduation Season Reminder: Save Money with Tax Credits & a 529 Savings Plan

Graduation Season Reminder: Save Money with Tax Credits & a 529 Savings Plan

If your child is graduating from high school this year, congratulations! You’re obviously very proud. But you may also be more than a little worried about how to pay for higher education. Whether it’s specialized job training or an advanced degree, there are a lot of costs associated with higher education.

Thankfully, there are two education tax credits designed to help offset these costs: the American Opportunity Tax Credit and the Lifetime Learning Credit. These credits can reduce the amount of tax you owe. To be eligible to claim either of these credits, you or your dependent must receive a Form 1098-T from an eligible educational institution.

The American Opportunity Tax Credit Is:

  • Worth a maximum benefit of up to $2,500 per eligible student.
  • Only available for the first four years at an eligible college or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable (up to $1,000 back).

The Lifetime Learning Credit Is:

  • Worth a maximum benefit of up to $2,000 per tax return, per year, no matter how many students qualify.
  • Available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years.

Open a 529 Plan, Too

If you still have a few years before your child graduates, consider opening a 529 plan — a tax-advantaged savings plan designed to help you save for future education costs. Any contributions you make to Georgia’s official college savings plan, called Path2College 529 Plan, are eligible for up to an $8,000 state income deduction on your 2022 Georgia income tax return (when filing jointly). What’s more, any earnings on those contributions are federal and Georgia income tax deferred.

When it’s time to use your savings, withdrawals for qualified higher education expenses — such as tuition, books, supplies and many other items — are federal and Georgia income tax-free. And that applies to schools in the United States and abroad for eligible education-related expenses.

 If you have any questions about the education tax credits or 529 plan, contact us for details. We’re here to help you make the most of your money.

If You Get Mail from the IRS …

Now that you’ve filed your federal income taxes, you could receive a letter or notice from the IRS for any one of a variety of reasons, including:

  • You have a balance due.
  • You are due a larger or smaller refund.
  • The IRS has a question about your tax return.
  • The IRS needs to verify your identity.
  • The IRS needs additional information.
  • The IRS made a change to your return.

What Should You Do?

If you receive an IRS letter or notice, you should respond accordingly.

  • Do NOT ignore it. Most IRS letters and notices are about your federal tax return or tax account. Read the notice to learn the reason for the contact and find out the instructions on what to do (if anything). Most of the time, you simply need to read the letter and take the appropriate action.
  • Read it carefully. If the IRS made changes to your tax return, you should compare the information provided in the notice or letter with the information in your original return. In general, there is no need to contact the IRS if you agree with the change.
  • Respond in a timely manner. If the notice or letter requires a response by a specific date, be sure to reply quickly to avoid delays in processing your tax return, minimize interest and penalty charges, and preserve your rights to an appeal.
  • Pay any amount due. If there is an additional tax due, you should pay as much as you can, even if you can’t pay the full amount. You can pay online or apply for a payment agreement (i.e., installment agreement) or an offer in compromise.
  • Keep a copy. It’s important to retain copies of all notices or letters with your other tax records.
  • Do not call the IRS unless requested to do so. If you must contact the IRS by phone, use the number in the upper right-hand corner of the notice. You should have a copy of your related tax return and letter when calling. Generally, however, it’s better to write to the IRS to respond to any requests so you have a written history.

Contact Us First

If we prepared your tax return, we are prepared to help you with any notices you receive from the IRS. Please send us a copy of the notice and we’ll draft any letters and supply any necessary information you may need. If you’re unsure, show us the letter and we can help you determine your best course of action.

Also keep in mind that the IRS will never contact you via social media or text message. The first contact from the IRS usually comes in the mail, so be alert to possible scams asking you for money.

Educator Deduction Increases to $300

For the first time in 20 years, teachers will now be able to deduct up to $300 of out-of-pocket classroom expenses beginning with their 2022 tax return. Previously, the limit was $250; it will now rise in $50 increments in future years based on inflation. Married teachers who file jointly with another eligible educator can deduct up to $600.

Eligible educators include anyone who is a K-12 teacher, instructor, counselor, principal or aide in a public or private school for at least 900 hours during the school year. Eligible expenses include:

  • Books, supplies and other materials used in the classroom.
  • Equipment, including computer equipment, software and services.
  • COVID-19 protective supplies.
  • Professional development courses (not claimed via the lifetime learning credit).

IRS Video Tax Tip

See if money you pay for day camp or other child care expenses can help you claim the Child and Dependent Care Tax Credit.

What to Consider When Choosing a Payroll Service Provider

What to Consider When Choosing a Payroll Service Provider

Payroll is just one checkbox on an often-overwhelming to-do list. But it’s an important task nonetheless. Your employees will be unhappy if they’re not paid correctly and on time. And you’ll be unhappy if you have to spend hours each week adding up timesheets, calculating pay and filing forms for each employee.

If it’s just yourself and one or two employees, it might not take that much time. But what else could you be doing to further your business instead of pushing paperwork? Maybe it’s time to do a quick time-cost analysis to determine whether the time you spend processing payroll can be better spent ordering, marketing and selling your products.

 5 Things to Consider

If you’re thinking of outsourcing your payroll processing, consider all your options in order to make a smart decision.

1. Payroll Services

What services do you need? Most payroll providers offer a basic set of services. These often include:

  • Processing payroll
  • Time tracking options
  • Generating payroll records and pay stubs
  • Handling tax filing and compliance

Some payroll providers offer additional services that can further streamline your payroll process, including:

  • Tax filing on your behalf
  • New-hire reporting services
  • Vacation time and sick leave management
  • Software integration
  • Management of employee benefits and retirement plans

2. Software Integration

Chance are, your company uses a variety of software programs like QuickBooks, Gusto, BambooHR, Zendesk, Salesforce and others. If so, you’ll want to make sure your payroll system can integrate with your other software, if necessary. This can streamline the payroll process, making things more convenient and efficient.

3. Processing Costs

The costs for payroll processing services will vary depending on the features and price structures. Most processors charge a flat rate every month or pay period, plus a small fee for each employee. Be sure to ask about any additional charges for tax filing, direct deposit or HR services. Cost should not be the only deciding factor when choosing a payroll provider, however. The best payroll service will save you time and effort at a cost-effective price point.

4. Tax Compliance & Updates

An important part of payroll processing is handling tax services, such as calculating and filing Social Security and withholding taxes. Because tax laws are constantly changing, you’ll want to make sure your payroll processor is up to date on laws and forms — to avoid errors and to help you stay in compliance. You might also want to ask whether they provide penalty protection in case of a filing mistake.

5. Customer Support

It’s bound to happen … so what will you do when something goes wrong? If you’re using simple online payroll software, you might have a hard time tracking down customer service. Or you may have a question, but can’t find the answer in the many FAQs and online forums. When you’re shopping for a payroll processor, be sure to find out about customer support options, as well as ease of use.

Premier Payroll Services Handled Locally

Premier CPA Services uses myPay Solutions, a service of Thomas Reuters. With myPay Solutions, you’re ensured of accurate and timely payroll services for your business. What’s more, you have a dedicated team you can contact directly with any payroll questions — whether simple or complex — right here in Blue Ridge, Georgia.

We can provide you with complete payroll processing, including federal tax services and state tax filing, direct deposit and integration with a variety of software. When you need a payroll report, just send us a quick email and we’ll pull it together for you.

We guarantee that your taxes will be paid accurately and on time; and if the IRS or your local tax agency should ever contact you, our tax experts will handle the matter for you. You’ll have no more worries about ever-changing payroll tax rates, policies or potential penalties with our payroll tax services.

It’s time to hit “delete” on time-consuming payroll tasks. Call us at (706) 632-7850 or email Jackie at jackie@premiercpaservices.com to request more details on how our payroll services can help you and your business.

Premier CPA Services 10 year anniversary logo

May 31 was the 10-Year Anniversary of Premier CPA Services! Over the next few months, we will be offering some great giveaways to our clients and Facebook friends to celebrate! Be sure to follow us and stay tuned!

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Back-to-School: Some Teacher Expenses Are Deductible

If you are a teacher or administrator, the Educator Expense Deduction allows you to deduct up to $250* from your taxes. You can only claim this deduction for expenses that were not reimbursed by your employer, a grant or other source.

To be eligible, you must be a K-12 teacher, instructor, counselor, principal or aide. You must also work at least 900 hours a school year.

Be sure to keep your receipts for purchases including:

  • Professional development course fees
  • Books
  • Supplies
  • Computer equipment, including related software and services
  • Other equipment and materials used in the classroom

*The deduction is $500 if you and your spouse are both educators and file jointly.

Online Access Keeps You In-Touch

Did you know that you can set up an Online Account with the IRS? It’s a safe and easy way to view specific details about your federal tax account.

What You Can Access:

  • Your federal tax payoff amount, if any (updated each day).
  • The balance for each tax year for which you owe taxes.
  • Your tax payment history.
  • Key information from your most current tax return.
  • Payment plan details (if you have one).
  • Digital copies of select IRS notices.
  • Economic Impact Payments you have received, if any.
  • Your current address on file with the IRS.

What You Can Do:

  • Select an electronic payment option.
  • Set up an online payment agreement.
  • Request a 1040 transcript.
  • Authorize who can represent you before the IRS or view your tax records.
  • Approve and electronically sign Power of Attorney and Tax Information Authorization requests from your tax professional.

To access your information online, you must register through Secure Access, the IRS’ two-factor authentication process that protects your personal information.