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Nicholas G. Vardalos & Company is a full service accounting firm serving clients throughout the Chicago metropolitan area, northwest Indiana and southwest Michigan.

TAXES


► Being self employed, what sort of deductions can I take?
To be deductible, a business expense must be both ordinary and necessary...

► If I have a large capital gain this year, what can I do?
If you have a large capital gain this year from an investment, it may be advisable to hold onto the investment until next year...

► What investments can I make to help defer taxes?
The interest gained from state and local bonds is usually exempt from federal income taxes...

► What retirement plans are available to aid in the deferral of taxes?
You have the ability to invest some of the money that you would have paid in taxes to add to your retirement fund...

► What other ways can I defer this year's income?
If you own your business you may want to postpone sending certain invoices to ensure that you will receive payment in the following tax year...​​


EDUCATION EXPENSES


► Are there available tax breaks for my children's education?
There are many different ways to use tax breaks for the higher education of your children. Be aware that you can only receive one type of relief for one item. It is best to consult with a professional to determine which would be the most advantageous.

► What is the education tax credit?
You must make a choice between two types of tax education credit.

  • The Hope credit will work for the first 2 years of college for at least half-time study.
  • The Lifetime Learning Credit applies for as long as the student studies, but the percentage of savings per year decreases drastically.


► What is a Coverdell (Section 530)?
An education IRA is different than a standard IRA in these ways:

  • Withdrawals aren't taxed if used for qualified education expenses.
  • Contributions can be made only up until the point that the client reaches 18, and all funds must be distributed by the time that they are 30.
  • Contributions are not tax deductible


► How can I best use the Coverdell (section 530)?
It is possible to have various 530 accounts for the same student, each opened by different family members or friends. There is no limit to the number of people that can open an account like this for a child.

The account can be transferred to another family member at any time. If the original child decides against going to college or is granted a scholarship, another family member can still utilize the money that has been saved.

► What is a qualified tuition program?
The Section 529 is a college savings program available in most states. Money is invested to cover the costs of future education. These investments grow tax free and the distributions may also be tax-free.

► What differentiates the Coverdell Section 530 and the Section 529?

  • The Section 529 allows for much larger yearly investments, whereas the Section 530 currently only allows for $2000 annually.
  • The choice of investments in the Section 529 is extremely conservative and limited while the Section 530 allows for many different options.
  • The Section 530 is a nationwide program while the 529 varies from state to state.
  • The Section 530 will let you use its funds for primary and secondary education, while the Section 529 can only be used for secondary.


► Can I take money from my traditional or Roth IRA to fund my child's education?
Yes, you can take distributions from your IRAs for qualifying education expenses without having to pay the 10% additional tax penalty...

► What tax deductions can be used for college education?
There is a limited deduction allowed for higher education and related expenses...

► Is student loan interest tax deductible?
In certain instances, yes, although deductions need to adhere to a few guidelines...

► Can I deduct for education that helps at the workplace?
If you are receiving this education to maintain or improve skills at your current job...



* Please consult with your tax adviser before making a final decision as some dates may have changed due to IRS rulings.

Financial Guides for Taxes