Tax and Financial News for April 2016
Tax Tactics to Help With College Costs
Now that we are in the midst of tax filing season, it is a great time for families and college students to re-familiarize themselves on the available tax benefits that could potentially lower higher education costs.
According to research by Sallie Mae, the average family with higher education costs spends more than $24,000 a year on college. However, only one-third of these same families take advantage of federal tax credits and deductions that can help make college more affordable.
The availability of these tax benefits are based on a number of criteria and have varying rules and limitations. Understanding and deciding what is best for your situation can be tricky and take time, but is often well worth it. Hiring a CPA can be useful to help you navigate the process. Now let’s look at the details.
American Opportunity Tax Credit
Families can receive a credit of up to $2,500/year per student for up to four years. This is particularly beneficial if you have more than one student in college at the same time. It is also partially refundable, allowing you to receive up to $1,000 even if you owe no taxes.
The credit is limited by a taxpayer’s adjusted gross income. It starts to phase out at $80,000 and $160,000 for single and married filers, respectively, and is completely unavailable once AGI reaches $90,000 and $180,000.
Lifetime Learning Credit
This credit offers up to $2,000 a year, per taxpayer return. Note that this credit is not per student, but per taxpayer. Any post-high school education qualifies and there is no limit on how long it can be claimed. Also, unlike the American Opportunity Credit, this one is not refundable.
This credit is also subject to AGI limits. The lifetime learning credit starts to phase out at $55,000 for single filers and $110,000 for joint filers and becomes completely unavailable at $65,000 and $130,000, respectively.
Tuition and Fees Deduction
Even if you don’t qualify for one of the above credits, you may still be able to deduct qualified tuition and fees. The tuition and fees deduction is available even if you do not itemize your deductions.
Single filers with an AGI of $65,000 or less can deduct up to $4,000 and up to $2,000 for those between $65,000 and $80,000. Married taxpayers filing jointly are eligible for the $4,000 deduction if their AGI is less than $130,000 and they can get the $2,000 deduction with an AGI between $130,000 and $160,000. Once a taxpayer exceeds these income thresholds, no deduction is available.
The Fine Print
There are a number of nuisances to remember as you navigate the available credits and deductions. For example, if a student qualifies for more than one of the above you can only take a credit or the deduction, but not both. You can mix and match, however. If a family has more than one student, you can claim different credits for different children.
One of the more common approaches to maximize these credits is to claim the American Opportunity Tax Credit for four years when a student is an undergraduate and then switch to the Lifetime Learning Credit for graduate school.
Student Loan Interest Deduction
If you have student loans, the interest you pay may also be deductible. You do not need to itemize to receive the student loan interest deduction. The deduction offers up to $2,500 off of your taxable income for single filers making up to $80,000 and married taxpayers up to $160,000. The deduction is available to the taxpayer obligated to repay the loan. In other words, a student who is not claimed as a dependent on another taxpayer’s return may claim the deduction, even if the parent is the one repaying the loan.
General Business News for April 2016
Can Virtual Reality Be Used as a Marketing Tool?
By 2020, the virtual reality market is estimated to be worth $30 million, according to Rutgers University Online Master in Business Administration program.
For those wondering if virtual reality can be used for marketing purposes, the question is not if virtual reality will be able to be used to market, but how it can be used to market products and services. Based on the same Rutgers’ research, seven in 10 consumers decide what brand they’ll purchase while they’re shopping – not before they go to the store. Virtual reality can mimic a proposed store outlet, thereby providing a cost effective opportunity for a business to plan its marketing strategy
Investment and Market Research with Virtual Reality
Whether it’s a new hire or investing in commercial real estate, they both have their costs. Virtual reality can give candidates and employers a better chance to simulate work conditions to see if the candidate is a good fit for the position, such as driving a tractor trailer or a cruise ship. Similarly, before buying a building in a certain neighborhood or using a particular layout, virtual reality has the potential to let different users determine what types of products, aisle layout and even color schemes are the best fit for shoppers.
Potential Uses for Selling to Consumers
Depending on the type of company, virtual reality has many applications – from presenting a new store to helping a patient or client know where to find an office for their first visit. Whether it’s a new retail chain or one that’s already in the area, a newly remolded store’s layout can be seen in 3-D, along with new products or in-store displays. This can give a more authentic experience than a video or virtual tour on a website.
Using Virtual Reality to Sell to Businesses
Another way virtual reality can be used includes businesses selling their products or services to other companies. Safety compliance firms that consult with retail or manufacturing companies can show potential clients how virtual reality can educate new and existing employees on safety procedures, which could result in a reduced number of worker compensation or personal injury claims.
In the legal profession, virtual reality can also be used to depict crime scenes in 3-D versus the traditional two-dimensional depiction on paper or computer. Being able to observe a criminal case with a 360-degree view of people and moving objects, such as a knife or bullet traversing the air, offers a holistic perspective for jurors to make a decision from the viewpoint of the victim, defendant or witnesses.
Virtual reality is a solo activity, so it’s unlike social media that can be shared with a click of the mouse. Therefore using as a sole means of marketing eliminates the opportunity for existing or potential customers to share the virtual content with friends and family. Since this platform is so new – and comes with the additional cost of creating original content – it remains to be seen whether virtual reality marketing will become more mainstream or just be a passing trend.
Virtual reality holds a lot of promise for businesses to use as a marketing tool for their own services or products, but its success will ultimately depend on mass adoption and its ability to synchronize with other mobile and computing technology.
What’s New in Technology for April 2016
Technology: Ransomware – Insidious and Growing Fast
Imagine a major hospital crippled by a deliberate effort to block its access to patients’ records. After the hospital pays online extortionists a hefty ransom, the cyber crooks will unlock the data. Meanwhile, the medical facility lacked access to its network, email and patient data – including lab work and scans. This is not the plot of a TV movie, but just one example of a disturbing new type of cybercrime that is becoming widespread in Europe and the United States.
Ransomware criminals use encryption to block users from their online files – releasing the locked-up data when the targeted entity pays a ransom. Instances of this type of online extortion grew a whopping 170 percent in 2015 – with the majority of cases occurring in the U.K. Attacks in the United States have been on the rise, and now the majority of attacks worldwide occur here.
Impact on Small Businesses
In the beginning, attacks targeted small and medium-sized businesses as well as individual consumers. Cyber criminals were more likely to encounter weaker security systems and lax backup procedures at smaller firms, and many cyber-crooks chose high volume and lower returns rather than tackling larger organizations with more sophisticated security protection. Criminals discovered that victims were most likely to pay up without contacting the police if the ransom demand stayed modest – within the hundreds of dollars realm. Online extortionists now have turned their attention to larger organizations, demanding tens of thousands of dollars.
How do the online extortionists get access?
Usually through infected email. Investigators cannot unlock the ransomed files, which are heavily encrypted, unless they find the cyber-crooks’ control servers, which could be anywhere in the world.
What can you do?
A notorious ransomware threat known as Cryptolocker comes as an email or via a downloader brought along as an extra component. Its authors continue to create new variants, target different groups and repel changes in security technology. Seek professional IT assistance to lessen your vulnerability. In the interim, here are several simple steps you can take to protect your files.
- Back up your data to safe storage frequently. That way, if you are attacked, you can restore your system to an earlier setting without losing many files. Cryptolockerattacks all drives that are mapped (e.g., those tagged D or E drives), including external drives like USB thumb drives. This means that your backup system must either include an external drive that is disconnected when not actively backing up your files or an online provider of automated backup services.
- Crooks use email (with attachments) as a way into victims’ systems. Recently, Cryptolocker has used files with the extension PDF.EXE (this may have changed by the time you read this). Set your gateway mail scanner to filter files and deny entry to emails with two file extensions – the last extension being the executable component.
- If your computer is able to allow others to access your machine remotely and you don’t use this function, known as Remote Desktop Protocol or RDP, disable it. This is another favorite entry point for ransomware.
- Keep your security software fully updated – use automatic updates, whenever possible. Don’t delay downloading manufacturers’ updates. Use top quality anti-malware PLUS a software firewall.
Following recent brazen attacks on the BBC and The New York Times, Ransomware has attracted significant attention. It is a major threat, but smart defensive strategies combined with good recovery protocols can help keep your data safe.