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Accessing Your Small Business Success


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Accessing Your Small Business Success

A couple of years ago, I decided to abandon a long, unsuccessful job search. After many months of desperately looking for the perfect job, I chose to start a home based business. Because I’d never been an entrepreneur before, I was more than a little anxious. I was excited as well. Thankfully, I’ve enjoyed success in my new business venture. At the end of every month and year, I carefully analyze my revenues. Because I have a background in accounting, I know how to calculate various financial statement ratios that help me determine how my business is doing on many different levels. If you’re a struggling small business owner, consider hiring an accountant to help you access the success of your business. On this blog, you will learn the types of consulting services an accountant can offer a small business owner.

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Grown Kids Living At Home? How They Affect Your Taxes

If you, like many American parents, have adult children living at home, you probably wonder if their presence could benefit your taxes. And there may be good news: sometimes, they can.

Here's the lowdown on when and how.

Claiming Adult Dependents. If you are providing the home while your child is in school for at least 5 months of the calendar year (not necessarily consecutive months, either), you can claim him or her as a dependent child until they turn 24… as long as they earn less than $4,050 (in 2016). However, even if they aren't in school, you may be able to claim them as a "qualifying relative" dependent. While this dependent status isn't as valuable as a "qualifying child" dependent, it can still reduce your taxable income by $4,050 (in 2016).

Receiving Education Credits. If you claim your adult child as a "qualifying child" while they're in college, you can also claim education tax credits. Undergraduate students qualify for the most valuable benefits -- the American Opportunity Tax Credit -- which can be refunded to you even if you owe no taxes. The amount of credits depends on the amount paid for qualifying education expenses, so keep receipts and look for Form 1098-T from your child's school.

College Costs Deductions. If you took out student loans while your child was a dependent on your taxes, you can still reduce your taxable income by the amount of interest you pay each year on those loans. The maximum interest you may deduct annually is $2,500. And, if you can't qualify for education credits due to a high income, you may still be able to deduct the cost of tuition and fees from your taxable income.

Claiming Minor Grandchildren. If your adult child has a child of their own, you may be able to claim that grandchild on your taxes. When would this be appropriate? Generally, this is when the minor child lives with you for more than half the year and their custodial parent (your child) is not required to file income taxes. Claiming a grandchild (or other immediate, minor family member) can mean lower taxable income as well as things like the Child Tax Credit and the Earned Income Tax Credit.

While it can be expensive to continue to provide a home for your child as they grow up, it's also satisfying to be able to help. And, knowing how you can save on your taxes for doing so will surely help ease your financial challenges. Reach out to a professional who provides tax services to learn more.