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borrowing investment money wisely

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borrowing investment money wisely

I knew that I had to do some things to improve my business, but I didn't have the money to invest at that time. I ran into the problem of needing to spend money to make money but I didn't have the money to help me make more. I started looking into different options for taking out business loans. I wanted to get out just enough money to cover the investment without having to pay too much in interest. I also had to think about the monthly payments - would I earn enough off of that investment to pay back the loan? This blog is all about borrowing investment money wisely.

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Want A Bigger Refund? Don't Miss Out On The Earned Income Credit

9 February 2016
 Categories: , Blog

One of the most valuable credits available to families is the earned income tax credit. But what is it, and can you qualify for it?

The EIC is a refundable credit – meaning that even if you owe no taxes, the credit can still be refunded to you. It is worth between $503 and $6242 depending on your family size and income.

Who is Eligible?

There are two sets of EIC rules: rules for everyone and rules for those with children . First, you should meet the rules for everyone, then proceed to the rules for those claiming a child (if applicable).

Rules for everyone:

  • You must have earned income. This does not include such things as scholarships or grants, work while in a penal institution, pensions or annuities and nontaxable military pay.

  • Your earned income and Adjusted Gross Income (as of 2015) must be less than:

    • $14,820 ($20,330 if filing jointly) if you have zero children

    • $39,131 ($44,651 if filing jointly) if you have one child

    • $44,454 ($49,974 if filing jointly) if you have two children

    • $47,747 ($53267 if filing jointly) if you have three or more children

  • You must be between the ages of 25 and 64 at the end of the tax year.

  • You must have lived in the United States for more than half the year.

  • You may not file Married Filing Separately.

  • You (and your spouse) must have valid Social Security numbers. Your Social Security cards may not say, "Not valid for employment" on them.

  • Your investment income may not be more than $3,400 (in 2015).

  • Neither you nor your spouse may be the Qualifying Child or a dependent of another taxpayer.

Rules for those claiming children:

  • The child must have valid Social Security numbers.

  • The child must have lived with you for more than half the tax year.

  • The child must be unmarried.

  • The child may provide more than half of his or her own support.

How Do You Claim it?

Claiming the EIC as a taxpayer with no children does not require any additional forms. Simply locate your income on the EIC table and fill in the amount on Line 66a of Form 1040 (or Line 8a on Form 1040EZ).

If you are claiming any children for the credit, you will need to complete Schedule EIC and attach it to your tax form. Then, do as above and use the EIC table to determine the amount of the credit to enter on Line 66a of Form 1040.

How Can You Avoid Pitfalls?

Because the earned income tax credit is so valuable, it has suffered from abuse. For this reason, it may be likelier for the IRS to follow up on those claiming this credit. If the IRS audits your return and finds that you intentionally claimed a credit for which you did not qualify, it could ban you from claiming the credit for up to 10 years.

To avoid problems, make copies of proof that any children being claimed live with you. This could include school records, medical records or other documents showing the child's regular address and communication. Attach this proof of residency to your personal copy of Form 1040 upon filing.

If you're unsure whether you may qualify for the EIC, it's advisable to work with a qualified tax preparer like Jeff Baker & Associates, PS to make sure you get everything that's due to you.