H&C Tax Services

2025 Healthcare Open Enrollment - Did You Know?

The 2025 open enrollment period for Marketplace health insurance starts on November 1, 2024, and ends December 15, 2024. Plans will start January 1, 2025. During this period, you will be able to enroll in, renew, or change health plans for the coming year.

Once the Open Enrollment period is over, you will only be able to enroll if there's a qualifying life event for the Special Enrollment Period.

Enrollment can be done at https://healthcare.gov, and a simple checklist of documents you'll need can be found here: https://marketplace.cms.gov/outreach-and-education/marketplace-application-checklist.pdf.

Hurricane Relief Charity Scams

Natural disasters like Hurricanes Helene and Milton bring out the best in American generosity, as millions of people seek to help those affected by the storms. Unfortunately, these tragedies also attract scammers looking to steal the money and identities of people who wish to donate to relief efforts.

If you get a phone call, text message or email from someone claiming to represent a hurricane relief charity, verify the legitimacy of the organization before providing any personal information. Request the organization's official name, mailing address and website address, and keep in mind that scammers use fake organization names that sound similar to real charities. You can use the IRS Tax Exempt Organization Search tool (TEOS, link below) to verify that you are dealing with an authentic charity, authorized to receive tax-deductible donations. If you cannot find the organization in the database or the person who contacted you refuses to answer your questions, do not donate or share sensitive information like your Social Security number (SSN) or credit card number. Instead, hang up immediately or delete the message.

TEOS tool: https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations

Clean Energy Tax Credit Scams – Did You Know?

The Inflation Reduction Act 2022 made it possible for people to sell certain clean energy tax credits. In these credit transfers, both the seller and purchaser must meet strict eligibility requirements and file required paperwork with the IRS. Unfortunately, dishonest tax return preparers are actively encouraging people to ignore the rules and improperly claim purchased clean energy credits. These scammers lure people in with false claims that the credits may be used to reduce tax on a wide variety of income types.

In reality, purchased credits may generally only be used to offset tax on passive activity income, which most people do not have. Regardless of what a scammer tells them, anyone who attempts to use purchased tax credits inappropriately, or claims credits they did not actually purchase, may face additional tax assessments and IRS penalties. Meanwhile, the scammer disappears with the fees they collected to file an inaccurate return on the person's behalf.

A tax professional can help you determine whether purchasing clean energy credits would actually reduce your tax, and if so, help you complete and file all the required forms.

IRS Online Account – Did You Know?

Setting up a free IRS online account (link below) makes it possible to handle many tax-related tasks conveniently and securely. With an online account, you can readily check your tax balance, whether your payments have been processed, and the status of your tax return or refund. You can also submit electronic tax payments for fast, safe processing.

In addition, you can use your online account to request transcripts of past returns, or official letters verifying that you were not required to file. These records may come in handy for a variety of purposes, such as securing college financial aid, completing rental applications or claiming the Clean Vehicle Credit when purchasing a car or truck. The IRS may charge a service fee for transcript requests made by phone, mail or email, but with an online account, you can obtain these documents for free.

Link to access or set up your online IRS account:
https://www.irs.gov/payments/online-account-for-individuals.

October 15 is the 6-month Extension Deadline

With the exception of those eligible for tax deadline relief due to a federally declared disaster, everyone who requested a 6-month extension to file a 2023 tax return must file by October 15.

If you owe tax, remember that the automatic 6-month extension applies only to filing your return, not to paying tax. Generally, after the standard April filing deadline, unpaid tax balances begin accumulating interest charges that increase daily. Filing and paying as soon as possible will keep those charges to a minimum.

People who cannot pay their full tax balance now should still file as soon as possible. By proactively setting up a payment plan with the IRS, they can minimize late payment penalties.

Disaster Relief Eligibility: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

Disaster Preparedness – Did You Know?

September is National Preparedness Month, the perfect time for all Americans to check their readiness for storms, floods, fires and other disasters. To help with that checkup, the IRS recently reminded taxpayers of important steps to include in their disaster preparation plans.

- Store key documents in a secure, waterproof and fireproof container. These documents include birth certificates and/or Certificates of Naturalization, Social Security cards, tax returns, home deeds and vehicle titles. If you do not have a suitable storage option in your home, you may wish to rent a safe deposit box. In either case, make copies of these documents and store the copies in a separate location from the originals, such as at a relative's home. You may also wish to scan documents if you have access to a secure digital storage option.

- To facilitate making insurance claims and/or claiming disaster loss tax deductions, individuals and businesses should maintain accurate inventories of their valuables. One simple way to document your possessions is to regularly take photos or videos around your home. Store the photos or videos securely, and include written notes like the year, make and model of key items.

Recovering from a disaster is always challenging. However, the right preparation can make the process a little simpler, and less stressful.

Many Americans May Qualify for Higher Education Tax Credits – Did You Know? (2/2)

If you pay higher education expenses like college or trade school tuition for yourself, your spouse or your dependent, then you may qualify for a tax credit in 2024.

The Lifetime Learning Credit (LLC) is available for an eligible student in your household at any stage of postsecondary education, including taking one or more courses to improve job skills. If you meet the eligibility requirements, which include income limits, you may claim a credit of up to $2,000 for tuition and school fees. Unlike the American Opportunity Tax Credit (AOTC), the LLC is nonrefundable, so if your credit amount exceeds the tax you owe, you cannot receive the excess credit as a refund.

To claim either the LLC or AOTC, you must obtain Form 1098-T (Tuition Statement) from a qualifying educational institution. A tax professional can help you determine whether you qualify for higher education tax benefits, and if so, help you claim them on your tax return next spring.

Quarterly Estimated Tax Payments - Reminder

If you are making quarterly estimated tax payments to the IRS, the due date for the June 1st - August 31st, 2024 quarter of year is September 16th, 2024.

For payments made using IRS Direct Pay, you can make payments until 11:45PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.

Many Americans May Qualify for Higher Education Tax Credits – Did You Know? (1/2)

If you pay higher education expenses like college or trade school tuition for yourself, your spouse or your dependent, then you may qualify for a tax credit in 2024.

The American Opportunity Tax Credit (AOTC) is available for students who are pursuing a degree or similar credential, and have not completed four years of postsecondary education. If you meet the eligibility requirements, which include income limits, you may claim a credit of up to $2,500 per eligible student in your household for tuition and school fees. The credit is partially refundable, so if your credit amount exceeds the tax you owe, you could receive up to 40% of the excess credit as an IRS refund.

In order to claim the credit, you must obtain Form 1098-T (Tuition Statement) from an eligible education institution. A tax professional can help you determine whether you qualify for the AOTC or other benefits for higher education costs, and if so, help you claim them next spring.

Late Summer Tax Checkup – Did You Know?

Every year, millions of Americans face the disappointment of an unexpectedly large tax bill in the spring. Often, those bills occur because people did not adequately plan for the tax impacts of their activities the previous summer. A late summer or early fall tax checkup can help you stay up to date with your payments, protecting you from disheartening April surprises.

Here are some key questions to consider when reviewing your tax situation:
- Did you take on a seasonal or part-time job for the summer?
- Did you earn summer income as a gig worker, freelancer or independent contractor?
- Did you receive other income not subject to tax withholding, such as interest or dividends?
- Did you sell valuable assets like antiques, cryptocurrency, artwork, jewelry, collectibles, stocks or musical instruments at a gain?
- Did your tax filing status change (for example, because you got married)?

Any of these circumstances could result in your regular paycheck withholding being insufficient to cover your tax obligations. You can use the IRS Withholding Estimator tool (link below) to check whether your payments are staying on track. If not, you may need to submit a new Form W-4 to your employer to request extra withholding, or make quarterly estimated tax payments. A tax professional can help you analyze your tax circumstances now, so you can make the right moves to bring about a favorable outcome later.

IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator

Summer Day Camp Expenses May Be Eligible for a Tax Credit – Did You Know?

Parents who paid for their children under the age of 13 to attend summer day camps may qualify to claim the Child and Dependent Care Credit on their 2024 tax returns. This credit provides assistance for parents who pay care expenses for a qualifying child so that they can work or seek work. You may also be able to claim the credit for day camp or other care costs for a dependent age 13 or older with a permanent disability. Note that expenses associated with sending children to overnight summer camps generally do NOT qualify for this credit.

To qualify for the Child and Dependent Care Credit, you must have earned income, and your adjusted gross income (AGI) must not exceed limits set by the IRS. Typically, the credit covers 20-35% of qualifying day camp or other childcare expenses, up to a maximum of $3,000 for one child or $6,000 for two or more children. Your exact credit amount may depend on factors such as your spouse's income and whether you received any reimbursement for childcare costs from a state agency or other source.

When claiming the Child and Dependent Care Credit, you generally must provide the name and taxpayer identification number (TIN) of the day camp or care provider on your tax return. In most cases, married taxpayers must file a joint return in order to get the credit, although exceptions exist for cases where spouses live apart. A tax professional can help you determine whether your summer day camp or other childcare expenses qualify for this valuable credit, and if so, help you maximize your credit amount.

Bogus "Self Employment Tax Credit" – Did You Know?

Scammers have been spreading misinformation through ads and social media posts about a supposed Self Employment Tax Credit, which they claim people can use to get massive IRS refunds. In reality, no such credit even exists. The scammers charge fees to prepare tax returns, on which they actually file bogus claims for the specialized Credit for Sick and Family Leave, which was only available for 2020 and 2021.

In reality, only a small number of self-employed people who experienced very specific COVID-related circumstances qualify for the Credit for Sick and Family Leave. IRS personnel flag suspicious credit claims for investigation. In the end, people who get lured in by these scammers have to repay their tax refunds, with penalties and interest charges added. Meanwhile, the scammers disappear with the fees they collect to file false tax returns.

Remember, if a tax credit or tax refund claim sounds too good to be true, it usually is. A trusted tax professional can help you determine whether you missed any legitimate credits on your past tax returns, and if so, help you file amended returns to claim your refunds.

Teachers: Make Sure to Save Receipts for Classroom Supplies to Get a Tax Benefit

If you are a teacher gearing up for the new school year, you may be able to reduce your tax bill by keeping records of your expenses. Classroom teachers and certain other school employees may qualify to deduct the cost of classroom supplies on their tax returns. The Educator Expense Deduction is an "above the line" deduction, which means that you may claim it even if you do not itemize deductions on your return.

Eligible teachers and classroom staff may deduct up to $300 in classroom expenses (up to $600 for joint filers who are both educators) for tax year 2024. Qualifying expenses may include the cost of typical school supplies like books, paper, writing utensils and rulers, along with athletic supplies for courses in health or physical education. You may also be able to deduct unreimbursed costs to participate in professional development workshops or courses.

You must maintain complete records of all deductible expenses, such as itemized receipts or invoices. A tax professional can help you determine whether you qualify for the Educator Expense Deduction, and if so, help you claim it on your tax return next spring.

Checking Eligibility Before Transferring Clean Vehicle Credit to a Dealer – Did You Know?

For the first time in 2024, people who purchase or lease vehicles that qualify for the Clean Vehicle Credit (CVC) may transfer the credit to a registered seller (usually a dealership). The transferred credit may be used as a down payment, or exchanged for a reduction in the vehicle price. However, you may only claim and transfer a CVC if you meet the eligibility requirements.

Most importantly, for at least one the years 2023 and 2024, your adjusted gross income (AGI) must not exceed the limit for your filing status. The current AGI limits are $300,000 for joint filers, $225,000 for head of household filers and $150,000 for all other filing statuses. In addition, you must use any vehicle you purchase using a transferred CVC predominantly for personal (not business) purposes.

People who transfer a CVC to a vehicle dealer in 2024 must report the credit amount and verify their credit eligibility on their 2024 tax returns. Those with AGIs above the limit will need to repay the credit and may face added IRS penalties. Note that an invalid CVC must be repaid directly to the IRS by the person who claimed and transferred the credit, not by the vehicle dealer. A tax professional can help you determine whether you qualify for the CVC, and if so, whether transferring your credit to a dealer makes sense for you.

Disaster Tax Relief Available – Did You Know?

People who live in areas affected by federally declared disasters like hurricanes, wildfires, flooding and severe storms may qualify for special tax relief programs. The most common forms of relief offered include extended deadlines to file and/or pay taxes, along with free access to copies of past returns for those who lost critical records.

There is typically no need to apply for these programs, as the relief is granted automatically to all eligible people. The IRS Disaster Relief webpage (link below) can help you determine whether you qualify for deadline extensions, or other benefits that make the road of recovery a little easier to navigate.

IRS Disaster Relief Page: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

Standard Mileage Rates for 2024 – Did You Know?

Below are the 2024 standard mileage rates for vehicle uses that qualify for a tax deduction. These rates apply for most passenger vehicles, including cars, vans, SUVs and pickup trucks.

- 67 cents per mile for business use of a vehicle (1.5 cents increase from 2023)
- 21 cents per mile for certain medical purposes or moving purposes for qualified active-duty Armed Forces members (1 cent decrease from 2023)
- 14 cents per mile for vehicle use for qualifying charitable work (unchanged)

In most cases, taxpayers who qualify to claim a vehicle expense deduction may either use the standard mileage rate or actual expenses to figure their deduction. However, if you use your car or truck for business, you generally must use the standard rate for the first year you put the vehicle in service if you want to preserve this option for future years.

A tax professional can help you determine whether the standard mileage rate or actual expenses will result in a larger deduction in your circumstances. Keep in mind that if you choose to deduct actual expenses, you will need to keep detailed records of all vehicle-related costs.

Transferring a Clean Vehicle Credit May Increase Your Tax Benefit – Did You Know?

Beginning in 2024, people who qualify for the Clean Vehicle Credit may transfer the credit to a registered dealership as a down payment, or in exchange for a discounted vehicle price. Vehicles eligible for the CVC include many fully electric cars and trucks (EVs), plug-in hybrids (PHEVs) and vehicles powered by fuel cells. Transferring a CVC to the vehicle seller will enable you to receive an immediate benefit from the credit, instead of having to wait to claim the credit on your 2024 tax return.

Some people will also receive a larger credit amount by transferring their CVCs. Since the CVC is not refundable, you cannot claim a credit amount on your tax return greater than the tax you owe. However, this restriction generally does not apply to transferred CVCs. Therefore, transferring your CVC may help you receive the maximum credit amount available. A tax professional can help you determine whether transferring a CVC to the vehicle seller would work to your advantage.

BOI Filing Requirement Scams - Did You Know?

Beginning in 2024, many businesses must file new beneficial ownership information (BOI) reports, which identify owners who exert control over and/or hold a significant financial stake in the company. Reporting companies must file these forms with the Treasury Department's Financial Crimes Enforcement (FinCEN).

Unfortunately, scammers are using this new filing requirement to attempt to steal money and sensitive information from businesses. If your business receives a message about a supposed FinCEN reporting obligation, examine it carefully and look for these telltale signs of a scam:

- Any request for payment: FinCEN does not charge a fee to file BOI reports.
- Messages with links to click on or QR codes to scan: Authentic FinCEN messages will not have these features.
- Any reference to an "Important Compliance Notice," "Form 4022" or a "U.S. Business Regulations Dept.": FinCEN does not use this terminology, and no such form or department exists.

Do not respond to any suspicious message requesting money or BOI from your company. If you are unsure whether a message is legitimate, contact FinCEN directly (fincen.gov) for more information.

Newlyweds Have Special Tax Considerations – Did You Know?

If you get married in 2024, you may need to update your tax planning and report new information to the IRS and Social Security Administration (SSA). In particular, newly married couples should:

- Report any name changes to the SSA and get a new Social Security Card (link below)
- Report any address changes to the IRS and the U.S. Postal Service
- Recheck their paycheck withholding and/or estimated tax payment amounts. Marriage can affect your tax rate, as well as your deductions and credits. You can use the IRS Withholding Calculator (link below) to make sure you are staying on track.

One of the biggest tax decisions you will need to make as a newly married couple is whether to file separate returns or file jointly. A tax professional can help you determine which status is most advantageous for you.

Social Security Administration: https://www.ssa.gov/myaccount/
IRS Withholding Estimator: https://apps.irs.gov/app/tax-withholding-estimator

Summer Home Upgrades and Kids' Activities May Bring Tax Benefits – Did You Know?

Some projects and activities that people typically undertake in summer may qualify for 2024 tax credits. For example, upgrades to keep your home cool and comfortable may be eligible for clean energy or energy efficiency credits. Examples of potentially qualifying improvements include Energy Star-rated windows and doors, solar-powered water heaters, and new central air conditioning units or ventilation systems. More information about these programs may be found on the IRS Home Energy Tax Credits webpage (link below).

In addition, if your children attend summer camps, day camps or childcare programs so that you can work, the Child and Dependent Care Credit may enable you to reclaim some of the cost. A tax professional can help you determine whether you qualify for these or other tax-saving programs, and if so, help you properly document expenses to preserve your eligibility.

Home Energy Credits: https://www.irs.gov/credits-deductions/home-energy-tax-credits

Overseas Tax Filing & Quarterly Installment Deadlines

If you are a U.S Citizen or Green Card Holder living abroad and have not filed your taxes yet, the deadline is coming up on Monday, June 17th, 2024.

If you are making quarterly estimated tax payments to the IRS, the due date for the April 1 – May 31 quarter of the year is also June 17th.

For payments made using IRS Direct Pay, you can make payments until 11:45PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.

Letters from the IRS - Did You Know?

If the IRS needs to contact a taxpayer, the agency will generally send a letter in the mail rather than emailing or calling. Taxpayers may receive IRS letters for many reasons, including:

- The taxpayer owes tax and did not pay it with their return or set up a payment plan.
- The IRS has a question about a tax return or needs more information to process it.
- The IRS has made an adjustment to a tax return or refund amount.
- The IRS needs to verify a taxpayer's identity.

If you receive an IRS letter in the mail, do not ignore it, but also do not panic. Some IRS notices do not require the taxpayer to take any action, while others advise the taxpayer of an issue that can be readily resolved. In many cases, you will not need to respond to the letter. For example, if an IRS notice simply informs you of a minor change made to your return or your refund amount, you can just file it with your tax records for future reference.

However, if the letter asks you to provide the IRS with additional information, you should respond as quickly as possible. Pay special attention to whether the notice includes a deadline to respond. Taxpayers who fail to reply to an IRS letter by a specified deadline may face penalties or forfeit their appeal rights.

You have the right to appeal any IRS decision about your tax return or the amount of tax you owe. If you do not understand an IRS notice or believe the IRS has made an error, a tax professional can help you figure out the situation and plan your next steps.

National 529 Day - Did You Know?

If you put money in a 529 account for education, withdrawal of earnings are tax-free if used for qualified educational expenses. Qualified educational expenses include tuition, fees, housing, meals and books. Many states offer a full or partial tax deduction for 529 plan contributions. They may also offer incentives and promotions to encourage families to open and contribute to 529 accounts today on National 529 Day.

The Tax Cuts and Jobs Act (TCJA) also expanded eligibility for 529 savings plans. Up to $10,000 per year may be used for Kindergarten through Grade 12 education (public, private, or religious schools).

U.S. Citizens and Residents Living Abroad - Did You Know?

Generally, U.S. citizens and resident aliens must pay federal tax on their worldwide income, including income received while living outside the country. Even those who qualify to exclude foreign earned income for tax purposes, or to claim a credit for taxes paid to other countries to offset their U.S. tax liability, generally must still file a federal tax return.

People living abroad typically qualify for an automatic two-month extension to file, meaning that they may file their 2023 federal tax returns anytime through June 17, 2024. However, this extension applies only to filing, NOT to taxes owed. The IRS will generally add interest charges to any tax amounts not paid by the standard April filing deadline.

Remember also that if you own or control financial accounts based outside the U.S., you may need to report not only the income from those accounts, but also the account balances on your tax return. You may also have to file a special Foreign Bank Accounts Report (FBAR) form. You cannot include the FBAR with your tax return, as it must be filed with a different treasury department than the IRS. A tax professional can help you file your tax return and all other required reporting forms by the appropriate deadlines electronically, to ensure rapid processing.

Clean Vehicle Credit Dealer Transfer – Did You Know?

As of January 1, 2024, people who buy or lease cars or trucks that qualify for the Clean Vehicle Credit (CVC) may transfer the credit to an eligible seller (usually a dealership). The transferred credit may be used as a down payment, or exchanged for a reduction in the vehicle price. Eligible vehicles include many fully electric cars and trucks (EVs), plug-in hybrids (PHEVs) and vehicles powered by fuel cells.

To transfer the credit, you must present a government-issued photo ID, and provide the seller with information including your current address and valid taxpayer ID number. You will also need to sign a certification of eligibility for the CVC, along with pledges to file a 2024 tax return and to use the vehicle primarily for personal (not business) purposes within the U.S.

In turn, the dealer must certify that the vehicle meets IRS standards for the CVC, and provide you with documentation of the date of sale, selling price and other vehicle information. Store these documents securely, as you will need to refer to them when filing your federal tax return for 2024. A tax professional can help you determine whether transferring a CVC to the vehicle seller would make sense for you.