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You may be qualified for these adjustments to income:

Educator expenses -  This deduction applies to K – 12th grade educators, and is limited to $250 of documented supplies per qualified taxpayer. Expenses exceeding $250 can be taken as a miscellaneous itemized deduction. 

A health savings account - Health savings accounts, or HSA's, are accounts set up exclusively for paying the qualified medical expenses of the account beneficiary or the beneficiary’s spouse and dependents.  Health savings accounts are designed to accompany specific insurance policies with high deductibles.  Be sure to discuss this with your return preparer to see if you qualify.

Moving expenses - If you moved more than 50 miles for employment purposes you may be entitled to deduct the cost of moving your-self and your household goods.  You may deduct qualified out-of-pocket expenses or an employer reimbursement that was included in your W-2 form. If you received a non-taxable reimbursement, you cannot deduct the expenses.

Self-employment tax - If you are a sole-proprietor, active partner or have miscellaneous income subject to self-employment tax, you can deduct half of the self-employment tax. 

Self-employed pension plans - You can deduct all qualified contributions to self-employed SEP, SIMPLE, or other qualified plan.  See related articles under "retirement plans" for limitations and details.

Self-employed health insurance deduction -  Sole proprietor's, active partners with net business income, and greater than than 2% shareholders of an S-corporation may deduct the cost of health insurance for themselves and their families.  The deduction is limited to net profit or, in the case of an S corp shareholder, Medicare wages reported on the W-2 from that S corp. Qualified long-term care insurance premiums, subject to age limitations, are also deductible.

Penalty on early withdrawal of savings - These penalties, which are typically incurred when you cash a CD prematurely, are deductible. You will find this fee on your form 1099-INT. 

Alimony - Court ordered alimony paid is deductible, subject to certain rules. Your return must include the Social Security number of the recipient.

IRA deduction -  If you have compensation or self-employment income and are not covered by an employer plan, or meet certain income limitations, you may deduct contributions to a traditional IRA. For tax year 2014 you are limited to $5500 ($6500 if you are over 50). Roth IRA contributions are not deductible but possess other tax benefits.

Student loan interest - Up to $2,500 of the interest paid on a qualified student loan is deductible (subject to certain income limitations). You should receive a Form 1098-E from the entity to which you paid the student loan interest.

Tuition and fees deduction - Up to $4,000 of higher education tuition and fees can be deducted by taxpayers with an AGI under $80,000 if single, or $160,000 if married filing jointly.  It may be more advantageous for you to claim either the American opportunities credit or the lifetime learning credit.  All of these education benefits have different limitations and requirements.  .  You can find an in depth article on the credits under the education category of this blog.  Please discuss this with your tax advisor to claim the credit or deduction that is most advantageous for you

With another school year now in full swing, the Internal Revenue Service today reminded parents and students that now is a good time to see if they will qualify for either of two college tax credits or any of several other education-related tax benefits when they file their 2014 federal income tax returns.

In general, the American Opportunities and Lifetime Learning Credits are available to taxpayers who pay qualifying expenses for an eligible student. Eligible students include the taxpayer and his or her spouse and dependents. The American opportunity tax credit provides a credit for each eligible student, while the lifetime learning credit provides a maximum credit per tax return. Though a taxpayer often qualifies for both of these credits, he or she can only claim one of them for a particular student in a particular year. Claimed on Form 8863, these credits are available to all taxpayers — both those who itemize their deductions on Schedule A and those who claim a standard deduction.

For those eligible, including most undergraduate students, the American opportunity tax credit will generally yield the greater tax savings. Alternatively, the lifetime learning credit should be considered by part-time students and those attending graduate school.

Both credits are available for students enrolled in an eligible college, university or vocational school, including both nonprofit and for-profit institutions. Neither credit can be claimed by a nonresident alien, a married person filing a separate return or someone claimed as a dependent on another person’s return.

Normally, a student will receive a Form 1098-T from their institution by the end of January of the following year (Jan. 31, 2015 for calendar year 2014). This form will show information about tuition paid or billed along with other information. However, amounts shown on this form may differ from amounts taxpayers are eligible to claim for these tax credits. Taxpayers should see the instructions to Form 8863 and Publication 970 for details on properly figuring allowable tax benefits.

Many of those eligible for the American opportunity tax credit qualify for the maximum annual credit of $2,500 per student. Students can claim this credit for qualified educational expenses paid during the entire tax year for a certain number of years:

• The credit is only available for 4 tax years per eligible student. 
• The credit is available only if the student has not completed the first 4 years of postsecondary education before 2014.

Here are some more key features of the credit:

• Qualified education expenses are amounts paid for tuition, fees and other related expenses for an eligible student. Other expenses, such as room and board, are not qualified expenses.
• The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
• The full credit can only be claimed by taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less. For married couples filing a joint return, the limit is $160,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $180,000 or more and singles, heads of household and some widows and widowers whose MAGI is $90,000 or more.
• Forty percent of the American opportunity tax credit is refundable. This means that even people who owe no tax can get an annual payment of up to $1,000 for each eligible student.

The lifetime learning credit of up to $2,000 per tax return is available for both graduate and undergraduate students. Unlike the American opportunity tax credit, the limit on the lifetime learning credit applies to each tax return, rather than to each student. Also, the lifetime learning credit does not provide a benefit to people who owe no tax.

Though the half-time student requirement does not apply to the lifetime learning credit, the course of study must be either part of a post-secondary degree program or taken by the student to maintain or improve job skills. Other features of the credit include:

• Tuition and fees required for enrollment or attendance qualify as do other fees required for the course. Additional expenses do not.
• The credit equals 20 percent of the amount spent on eligible expenses across all students on the return. That means the full $2,000 credit is only available to a taxpayer who pays $10,000 or more in qualifying tuition and fees and has sufficient tax liability.
• Income limits are lower than under the American opportunity tax credit. For 2014, the full credit can be claimed by taxpayers whose MAGI is $54,000 or less. For married couples filing a joint return, the limit is $108,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $128,000 or more and singles, heads of household and some widows and widowers whose MAGI is $64,000 or more.

There are a variety of other education-related tax benefits that can help many taxpayers. They include:

• Scholarship and fellowship grants — generally tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.
• Student loan interest deduction of up to $2,500 per year.
• Savings bonds used to pay for college — though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years old.
• Qualified tuition programs, also called 529 plans, used by many families to prepay or save for a child’s college education.

Taxpayers with qualifying children who are students up to age 24 may be able to claim a dependent exemption and the earned income tax credit.

The general comparison table in Publication 970 can be a useful guide to taxpayers in determining eligibility for these benefits. Details can also be found in the Tax Benefits for Education Information Center on IRS.gov.

Received a bill from the IRS that needs to be paid?  Have an estimated tax payment due on September 15th?  On extension until October 15th and need to pay your balance due?  The IRS has a relatively new way for you to pay your taxes from the convenience of your own computer. Direct Pay is the latest addition to the IRS's online tools.  Available through the Pay Your Tax Bill  icon on IRS.gov, Direct Pay allows individuals to e-pay their tax bills or make quarterly estimated tax payments directly from checking or savings accounts without any fees or pre-registration.
Because Direct Pay allows taxpayers to schedule payments up to 30 days in advance, now is a good time for those who are making estimated tax payments for 2014 to set up their third quarter payment due Sept. 15. In addition, anyone who received an extension until Oct. 15 to file their 2013 federal return and now finds they owe additional tax can also use Direct Pay to e-pay the additional amount due.

Direct Pay is available 24 hours a day, seven days a week. Any taxpayer who uses the system receives instant confirmation that their payment was submitted. 

Direct Pay cannot be used to pay business taxes. Taxpayers who wish to e-pay their federal business taxes should enroll in the Electronic Federal Tax Payment System (EFTPS), or click on the Pay Your Tax Bill icon to check out other payment options.

I've had calls recently from some of our clients wanting to know if the call they just received from the IRS was a real call or a phone scam.  Unfortunately, such scams have become common.   The IRS recently published the following article addressing the issue:

Five Easy Ways to Spot a Scam Phone Call

The IRS continues to warn the public to be alert for telephone scams and offers five tell-tale warning signs to tip you off if you get such a call. These callers claim to be with the IRS. The scammers often demand money to pay taxes. Some may try to con you by saying that you’re due a refund. The refund is a fake lure so you’ll give them your banking or other private financial information.

These con artists can sound convincing when they call. They may even know a lot about you. They may alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS badge numbers. If you don’t answer, they often leave an “urgent” callback request.

The IRS respects taxpayer rights when working out payment of your taxes. So, it’s pretty easy to tell when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any one of these five things is a sign of a scam. The IRS will never:

1. Call you about taxes you owe without first mailing you an official notice.
2. Demand that you pay taxes without giving you the chance to question or appeal the amount they say you owe.
3. Require you to use a certain payment method for your taxes, such as a prepaid debit card.
4. Ask for credit or debit card numbers over the phone.
5. Threaten to bring in local police or other law-enforcement to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what to do:

• If you know you owe taxes or think you might owe, call the IRS at 800-829-1040 to talk about payment options. You also may be able to set up a payment plan online at IRS.gov.
• If you know you don’t owe taxes or have no reason to believe that you do, report the incident to TIGTA at 1.800.366.4484 or at www.tigta.gov.
• If phone scammers target you, also contact the Federal Trade Commission at FTC.gov. Use their “FTC Complaint Assistant” to report the scam. Please add "IRS Telephone Scam" to the comments of your complaint.

Remember, the IRS currently does not use unsolicited email, text messages or any social media to discuss your personal tax issues. For more information on reporting tax scams, go to www.irs.gov and type “scam” in the search box. 

The answer to that is, it depends.  Long-term disability benefits can be a little tricky.   Sometimes it's taxable and sometimes not.  Generally, if you paid the premiums for the long term disability insurance then the benefits are not taxable.  If the company paid the premiums, or you paid them through a pre-tax plan, then the benefits will be taxable.  The IRS provides the following guidance:

• If both you and your employer have paid the premiums for the plan, only the amount you receive for your disability that is due to your employer’s payments is reported as income.
• If you pay the entire cost of a health or accident insurance plan, do not include any amounts you receive for your disability as income on your tax return.
• If you pay the premiums of a health or accident insurance plan through a cafeteria plan, and the amount of the premium was not included as taxable income to you, the premiums are considered paid by your employer, and the disability benefits are fully taxable.
• If the amounts are taxable, you can submit a Form W-4S (PDF), Request for Federal Income Tax Withholding From Sick Pay, to the insurance company, or
• Make estimated tax payments by filing Form 1040-ES (PDF), Estimated Tax for Individuals

In the event that your long term-disability payments are taxable they will be reported to you on a W-2.  You will report these payments as wages on line 7 of your tax return.