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Florida Small Business Tax Laws and Rules

Florida Small Business Tax: Here’s What You Need to Know

With Miami recently named the top city to start a small business, now is a great time to get a startup off the ground in Florida. Most small businesses start out as sole proprietorships. Compared to many other business entities, sole proprietorships are simple to set up and run. Florida small business tax rules are also favorable for business owners and state laws are generally supportive of small business startups.

But  Individual advice from a Florida small business accountant is better than any information online, as your accountant will advise you according to your situation. Still, there’s nothing wrong with learning more about your small business tax liability in Florida.

Does Florida Have a Strong Economy?

Before looking into small business taxes, it’s good to consider the Florida’s economy. One of the benefits of starting a small business in Florida is the economic growth in the state. Of all US states, Florida has one of the fastest growing economies. According to statistics from 2018, if Florida were its own country, it would boast the 17th largest economy in the world based on GDP growth.

Some of the biggest industries in the sunshine state are as follow:

  • Tourism
  • Agriculture
  • International trade
  • Aviation
  • Life sciences
  • Financial services

While business in many other industries can thrive in Florida, the above represent the industries that employ the most people, generate the most revenue and make up the biggest part of the economy.

The labor force in Florida is expanding by more than 3% annually, while the rest of the US sees little to no growth in the same area.

Florida’s economy is growing at a fast pace. It helps that state laws in Florida encourage rather than dissuade people from starting businesses. When combining all of the benefits of starting a small business in Florida, including taxes and the economic outlook, the state is ranked as the 20th best state to start a small business overall. While that listing might seem mediocre, another survey listed Florida as the sixth best state to start a small business based on startup success.

How are Small Businesses in Florida Taxed?

Most small businesses are sole proprietorships. A sole proprietorship is a company owned by a single person. The owner of a sole proprietorship will usually have full say over what happens in the business, even if a small business employs a manager to make certain decisions, the owner will retain the ultimate authority in his or her business as the only owner.

Sole proprietorships are taxed on profit. This means that business owners will need to implement proper bookkeeping strategies to calculate their tax liability. Small business profits can be calculated monthly by adding up all income. Once a business owner know their total income, all business expenses must also be tallied. Subtracting all the expenses from the total income produces the profit.

While this system seems simple enough, both state and federal tax laws are always changing. Not all business expenses qualify for full deductions – meaning business owners can only subtract part of the costs of certain expenses.

To make matters more complicated, most small businesses in Florida will pay taxes in advance on a quarterly basis. What this means, is that businesses actually pay tax based on what they expect to earn in the future, not what they’ve already earned in the past. If a business underestimates its quarterly earnings and pays too little tax, outstanding taxes will need to be paid later, often with additional tax in the form of late payment fees.

Florida Self-employment Tax Rate

Self-employment tax acts as a replacement for Social Security and Medicare tax. As self-employed business owners don’t have these employment benefits, a self-employment tax compensates.

Florida’s self-employment tax rate is 15.3% for the first $128,400 net income of small businesses. Additional business tax rules apply across different income brackets, however.

Statistically speaking, Florida ranks fourth as one of the states with the lowest self-employment tax rates.

Should You Pay Tax on Your Side Business?

Paying self-employment tax when your business in your sole source of income is expected, but what about if you’re employed with a business on the side?

Unfortunately you’ll still need to pay self-employment tax. If your business makes more than $400 annually, you’ll be liable to pay self-employment tax, regardless of whether or not you hold a full-time (or part time) job.

Florida Sales Tax Rate

Sales tax is a tax levy on all product or services your business sells. As a result, almost all small businesses will qualify for some form of sales tax. One average, Florida sales tax is currently charged at 6%.

What this means, is that you will have to account for 6% sales tax on all the products or services you sell. If you need to sell something for $100 to make your desired profit, you’ll charge a customer for $106 to account for the money you’ll need to pay in sales taxes.

Forgetting to account for sales tax is a mistake many business owners make. Always calculate how much profit your business needs to make to be sustainable, then set your rates. Once you know what you desired rate is, add a 6% sales tax on top of this amount and put the money you get towards you sales tax aside. Never spend your sales tax money. Make sure you have enough left to pay all your taxes!

To calculate how much you need to add onto the cost of your product or service to account for sales tax, use your calculator to multiply your price by 0.06%. Once you have this result, add it to your price – this is the amount you’ll need to charge customers.

For example, if you have a product you want to sell for $50, your calculations will look as follows:

$50 x 0.06 = $3

The $3 is what you need to add onto your $50 to account for your small business taxes, so you’ll be charging your customer $53 for the product you sell.

In the past few years, Florida has consistently ranked 22nd for sale tax rates – meaning the sunshine state is relatively average as far as sales tax is concerned.

Florida Small Business Tax Summarized

Florida ranks 4th as one of the states with the lowest small business tax rates. This makes Florida a great state to start a small business. Tax laws in Florida do differ based on what type of business entity you own though.

While most small businesses operate as sole proprietorships, there are other business tax models in Florida. Florida taxes corporations at an approximate tax rate of 5.5%. However, there are many variables with regards to how much taxes a business entity will end up paying.

The best way to know for sure how much tax your business should pay, it’s best to hire an accountant to analyze your books. A Florida accountant will know what tax deductions, credits and exemptions your business qualifies for.

When consulting an accountant about your business’ tax liability, it’s imperative to have thorough financial records of your business on hand. If you don’t have any financial records yet, your first step should be hiring a reliable bookkeeper for your business. Once tax season comes around, your accountant will calculate your tax liability based on your financial books.

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tax deductions for small business

Tax Deductions for Small Business You Should Know

Tax deductions can go a long way in helping you get more out of your get mall business. A lot of business owners might feel hesitant to take full advantage of all the tax deductions they qualify for, but this shouldn’t be the case. As long as your business is doing its part and paying tax, there’s no reason why you shouldn’t take advantage of permissible tax deductions. After all, the extra money you get for your business by deducting certain expenses can be spent on growing your business which, in turn, will mean that you can contribute even more to the economy.

With that in mind, there are a number of things you can (and should) legally deduct from your taxes.

Rent for Your Business Premises

Renting your business premises is probably one of your larger business expenses. For that exact reason, tax deductions on your rent can make a big difference for your business financially. The more expensive the rent on your premises, the bigger the advantage of deducting this expense, so if you have a large business premises with hefty rent, this can help to lighten the load.

It doesn’t matter what kind of business you have either. Shop owners, healthcare practitioners and even automotive businesses can all take advantage of this deduction. The only prerequisite is paying rent on your business premises.

Vehicle Maintenance and Upkeep

Vehicles are another big business expense for a lot of small businesses. By keeping track of all your business expenses related to your company vehicles, you can deduct your vehicle expenses from your tax. Examples of vehicle expenses that can be tax deductible includes money spent on fuel, vehicle maintenance and repairs, parking and even tolls.

If you’re not keen on all the extra admin involved in tracking each individual vehicle expense, you also have the option of using the IRS standard mileage rate, which is currently sitting at 58 cents per mile driven.

Another alternative is to choose whatever option gets you the best tax return. To calculate this, you will have to keep track of all your vehicle expenses, which means it will involve a lot of work, but it might be worth it if your business owns any vehicles that are more expensive to maintain due to higher fuel consumption or more expensive service parts.

Any vehicle used for business purposes can qualify for this deduction, whether it’s a car, truck or even motorcycles. There are some exceptions to motorcycles, thought. For instance, you’re not allowed to use the IRS flat rate for a motorcycle. The only way you can get deductions for a motorcycle, is by keeping track of all your business-related transport expenses.

Computer Software

Almost all businesses have computers. As a result, most small businesses can benefit from deducting computer software. Whether you have an office and you pay an annual expense for your operating system, word editors and slideshow software, or you have a graphics design firm and you run programs to create images, you can deduct your computer software as a small business expense.

To take full advantage of this deduction, look into all the software and even online tools you use for your small business. You might even be able to deduct the fee you pay to your email service provider or money spent on bookkeeping software.

Advertising and Marketing Expenses

Money spent on advertising and marketing is a business expense, often a big one. You’ll be happy to learn that all the money you spend on advertising in tax deductible, which makes sense, as all advertising is related to business.

There are so many different things that you can deduct as a marketing or advertising expense. If you start to add it all up, it will quickly amount to a staggering figure. Here are some of the things you can potentially deduct as marketing expenses:

  • Business cards
  • Pamphlets
  • Paid advertisements in your local newspaper
  • Advertisements on billboards
  • Promotional materials and goods
  • Your company website expenses
  • Online marketing expenses

This means that any marketing expense can be deducted from your tax. Whether you want to make branded keychain holders to hand out at a corporate event, or print promotional pamphlets, these expenses will usually be tax deductible.

If you spend money on any online marketing-related software or services – such as an email newsletter service provider or pay per click advertising – it might also be worth investigating whether you can deduct these expenses. Perhaps you find you’re unable to deduct the expense for your email newsletter as computer software, but you can deduct it as an advertising or marketing expense instead.

Office Supplies

If you have an office for your small business, there’s a good chance you spend a lot of money each here on office supplies. Whether you’re buying printer ink, paper or pens. Even coffee, tea, milk and cookies can count if you regularly stock your office with these items for your employees.

No matter what industry you work in, your business will have admin, which means your business can deduct for office supplies. It’s easy to get so lost in deducting for expenses directly related to your industry, that you forget to deduct business expenses related to your admin.

Money spent on postage, shipping and delivery fees might be another hidden deduction you can get, which can help a lot if your business regularly makes use of such services.

Furniture and Equipment

Any equipment you purchase for your business (such as computers or printers) and even furniture can be deducted from your tax. There is, however, a catch here. You have the choice between either a full deduction for these items in the year you purchased them, or to depreciate them over a seven year period.

What you choose will depend on what’s best for your business. If you’re uncertain about which option is better and more applicable to your situation, it’s always best to consult your accountant about the matter.

Business-Related Education

If you spent money the past year on education for yourself, or any of your employees, you might just be eligible for a tax deduction. Expenses for seminars, workshops, classes and college programs can be seen as a business expense if it’s related to your industry.

To comply with safety regulations, businesses often have to send employees for first aid and safety training. If this is the case for your business, it’s good to know these forms of training will almost always be a tax deductible expense, as it is education related to your business.

The only important rule for deducting education as a business expense is that it has to be related to your business. You can’t deduct education expenses if you undertook it for personal reasons. If, for instance, you went for cooking classes or dog training lessons, you probably won’t be able to deduct this unless it’s related to your industry and it can benefit your business.

Cleaning Expenses

Cleaning is part of your business upkeep, so if you hired a professional cleaning company to clean at your business premises, there’s a good chance you can deduct it as a business expense. Regardless of if you hired a company to do mundane cleaning work at your office, or if you made use of a specialized cleaning service, cleaning is a tax deductible expense for your business, as it’s a necessary part of keeping your business premises hygienic and safe.

Some cleaning expenses that you may be able to deduct include:

  • Pressure washing your business premises both inside or out
  • Regular or high-rise window cleaning services
  • Carpet cleaning
  • Dry cleaning uniforms
  • Everyday cleaning services

Cleaning is an expense your business will incur every year, so adding it to your tax deductions can make a big difference.

Business-Related Supplies

Business supplies are one of the more obvious expenses, but it’s important to check all of your expenses in this area to make sure you’re getting all the deductions you can.

If you run a store, for instance, it’s obvious that you can deduct all the stock you bought in the past year as a business expense. At the same time, businesses that provide a service must also remember that all supplies they need to complete their service are business supplies. This could be building materials for a contracting firm, or cleaning supplies for a cleaning company.

However, there may be some hidden supplies that your business could possibly get deductions for. If you buy any cleaning supplies to clean your business premises, or if you buy uniforms, there’s a good chance you’ll be able to deduct these expenses.

Always Consult Your Accountant

To so stay within the legal bounds of tax deductions, it’s always best to get an expert opinion. Hiring an accountant can help you stay current with your taxes and avoid penalties for illicit tax deductions or practices. As an added benefit, the money you spend on financial services for your business (like your accountant) is also tax deductible!

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Hiring an Accountant Vs Preparing Your Business Taxes with TurboTax

When it comes to filing taxes, there has been one question that has been the bone of contention; to hire a certified public accountant to do your taxes for you or to buy a tax filing software program such as Turbo Tax?

One thing is for certain; taxes are costs in and of themselves. Therefore, if there is a way to automate the tax preparation and filing process, one should, by all means, consider it. And that is what tax filing software programs are purported to do.

However, even though these programs are quite straightforward to use, Turbo Tax and other tax filing software suffer from certain issues that are typical of any robot.

These issues become more evident when your financial situation starts becoming broader. At this point, it becomes wiser to spend extra and hire a professional.
This article will discuss why you should stop using tax software and hire a professional instead.

What You Need to Know About Tax Software

Whenever the tax conversation is taking place, people are usually either talking about tax planning or tax compliance.

Tax planning refers to the process of planning transactions way ahead before you actually do them. This allows you to make more thoughtful decisions that work towards minimizing the total amount of tax you need to pay.

On the other hand, tax compliance refers to the process of the actual preparation of your returns. Thus, it involves filling out your forms while making reports on transactions that have already happened.

And this is where the bone of contention actually lies. Tax preparation and filing software are designed for one job only; tax compliance. Thus, it will do the actual job but it will not help you make better decisions that will reduce the total amount you pay in taxes.

Consequently, as you broaden and diversify your financial profile, you will have to make increasingly complicated decisions. These decisions will be greatly affected by the amount of tax knowledge you will have, thus the dire need for financial planning. And that is why you need an accountant.

What You Should Know About Using an Accountant

A certified public accountant is the name given to a qualified accountant. For one to attain that title, they are required to pass certain numerous rigorous examinations in order for the government to grant them a license to work as a CPA. Nonetheless, CPAs in the United States are limited by geographical jurisdictions. Thus an accountant from one state cannot work in another.

CPAs, therefore, are tax experts who have intricate knowledge about taxes and the various laws affecting them. Knowledge combined with experience allows them to know what your business can do to reduce its tax costs.

This means that every business needs to seek regular advice from such a professional. However, when are the times that you absolutely need a professional?

Situations Where You Need an Accountant

1. You Find Tax Preparation and Filing too Complicated

As mentioned earlier, tax filing programs such as Turbo Tax allow you to learn how to perform your filing. While they are not that hard to use, you will need to invest your time so as to perform that task.

However, if tax filing is not your cup of tea or would rather focus your efforts on the aspects of your business that you are good at, then you are better of hiring an accountant to do that for you.

CPA for business taxes only makes for enhanced efficiency in your business since each process is going to be handled by someone who is good at it. Nonetheless, when you decide to hire a CPA, keep in mind that you will still be responsible for gathering all the data your tax professional needs to do your taxes.

2. It Is Still a New Business

If you just recently purchased your business from another person or it has been less than a year since you opened it, using an accountant is only wise.

This is because, unless you have experience running a similar business in the past, it is highly likely that there are tax laws and deduction rules that you do not know of. Hiring an accountant will ensure that you do not make costly mistakes that most entrepreneurs make when their business is still in its infancy.

3. The Status of Your Business Has Changed

There are certain complicated business moves that you can make that might warrant the need for a CPA for business taxes. One such move is a business state change.

For example, let us assume that you decided to convert your business from a sole proprietorship to a corporation. Part of this change means making sure that you properly file all the relevant paperwork. Moreover, you also need to calculate all your expenses and deductions for both types of business status to ensure that the business has no shortcomings.

This is easier said than done since you will be essentially dealing with new laws. Any errors that arise will result in fines and potential legal action. Getting an accountant to do this for you will ensure you avoid costly mistakes.

4. You Moved During the Year

As mentioned earlier, a CPA from one state is not usually able to practice in another state, and for good reason; tax laws vary between states. This means that if you move from one state to another, your tax situation is likely to get complicated.

This is why you need an accountant to help you sort your taxes out while determining how to divide your taxes payable or the refund owed between states.

5. You are Passing Through a Major Life Event

Marriage, getting kids, or divorce are life events that will impact your tax situation. If you just got married, how will you proceed to file your taxes? Will you do it separately or jointly? An accountant will help you understand the best way to go around that situation.

The same also applies to when you have kids. Another benefit of that bundle of joy is that it comes with certain tax deductions. But do you know the full extent of those deductions? A professional accountant will help you know what your options are so you can start enjoying some tax write-offs.

Divorce is an all-around messy situation. Which parent will claim the children as deductions? What rules govern taxes when it comes to child support and alimony? An accountant knows everything there is to know about these murky waters. They will help you navigate your way through them to ensure that you not only avoid problems with the law but to also ensure that you get the best deal possible.

6. You Want a Peaceful Life

Establishing a long term relationship with an accountant is one of the best life decisions you could make. You will never have to worry about your taxes being off, moreover, you will continue to enjoy their advice as your business continues growing. This means that all your ducks will be in a row at any single time. This not only helps your business but also enhances the quality of your life.

Tax filing software programs such as Turbo Tax can be beneficial when looking to save on filing costs. However, they do not give you insights that will help grow your business. An accountant not only takes care of all filing processes, but they also look into how they can help your business make better decisions so as to reduce those expenses. This results in major savings and growth in the long term.

Looking for an accountant to help you with your business taxes? Talk to Choice Accounting Solutions today and we will customize a solution for you and your business.

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2019 Tax Penalties Small Businesses Need To Avoid

As any business owner knows, tax season is filled with plenty of stress. With the tax code changing annually, it is difficult to keep up with the various changes. Because of the complexities associated with small business taxes, it is never smart to trust your fate with the IRS to an amateur who knows little about how to properly file tax returns for a business. After all, it just takes only one or two mistakes to not only find yourself owing more than you thought, but also possibly facing fines and a potential audit. Rather than spend the 2019 tax season facing these prospects, here are the most common tax penalties your business should avoid.

Late Filing Penalties

While filing your taxes may not be the most fun thing you will ever do in 2019, it is best to complete the task as soon as possible. If you procrastinate until the last minute, you may find yourself facing tight deadlines, which if not met can result in costly penalties. As an example, if your business is classified as an S Corporation or Partnership, the late filing penalty is done so as a dollar amount per-owner per-month. For 2019, this amount is $200 per owner for each month the tax returns are late, which as you can see can add up in a hurry. In addition to these penalties, it’s important to note that while April 15 is the standard tax filing deadline for individuals, small businesses have a deadline of March 15, so it’s best to get busy as soon as possible.

Estimated Tax Penalties

While it can be difficult to accurately estimate how much your business will owe in taxes, failing to so can prove even more costly in the long run. If you wind up underestimating what you owe, you’ll be facing additional interest charges from Uncle Sam. Based on current guidelines, which can be adjusted on a quarterly basis, this penalty stands at four percent. To avoid this problem, most tax experts recommend business owners simply estimate their 2019 taxes at the same amount they paid in 2018.

Failing to File W-2 Forms

Since each employee of your business must be issued a W-2 form, it is crucial you remember to file a form for each employee. If you fail to do so, expect the IRS to be standing around with their hand out, waiting for your contribution. As the current guidelines stand for 2019, if you file the elusive W-2 forms within 30 days of the January 31 deadline, your penalty will be $50 per W-2. However, if you file between February 1-August 17, the fine doubles to $100 per form. And if you really procrastinate and file the W-2 forms after August 17, be prepared to pay $260 per form. As you can see, it will be much simpler to work with a seasoned tax professional to make sure each and every employee on your roster has a W-2 form that has been filed.

Trust Fund Penalties

Considered one of the costliest penalties enforced by the IRS, trust fund penalties can be a tremendous headache to any small business owner. According to IRS guidelines, as a business owner you are required to deposit withholding amounts from your employees with the United States Treasury. If you fail to do so, even through no fault of your own, be prepared to pay significant penalties. In these situations, you will be held personally liable for all deposits that have not been made, up to 100 percent of the amount of the deposits. To avoid facing these substantial penalties that could possibly put you and your business through severe financial hardship, always verify these deposits are made correctly and on time, especially if you use a third-party payroll company.

Accuracy Penalties

While it stands to reason that the tax returns for your business must contain accurate information, there are additional IRS penalties that can be levied against you and your business, especially if the IRS determines the income and expenses on your returns are grossly underestimated based on a blatant disregard for its rules and regulations. To ensure Uncle Sam does not throw a temper tantrum at your expense, make sure you receive tax advice from a knowledgeable and experienced tax expert who understands the ins and outs of working with small businesses. Otherwise, expect to be hit with a 20 percent penalty for underpayment.

1099 Penalties

Just as it is important you file the necessary W-2 forms for your employees on time, you must also do the same for 1099 forms you use with any independent contractors to whom you have paid at least $600 over the past year. If you fail to file these forms in the proper manner, you can expect the same types of penalties you’ll incur for failing to file W-2 forms. In fact, the IRS is so concerned about your possibly forgetting to do so, they have made the fines the same for both W-2 and 1099 late filings. Therefore, if you remember from earlier, you can find yourself paying anywhere from $50-$260 per form that is not filed. To keep this from happening, be sure you remember all independent contractors with whom you did business over the past year, since forgetting them will take plenty of money out of your pocket.

Excessive Contribution Penalties

While it seems logical that the IRS will penalize you and your business for failing to contribute enough to employee retirement plans, you can also find yourself in trouble with Uncle Sam if you make excessive contributions. But while it seems as if you cannot win any way you go on this issue, all hope is not lost. Though the penalty for making excessive contributions to employee retirement funds is currently six percent, and will be applied to you each year until the error is corrected, getting solid tax advice from the outset of tax season will help you avoid this expensive mishap.

Tax Fraud Penalty

If there is one thing that will get Uncle Sam and the IRS mad at you in a hurry, it is having them believe you committed tax fraud. If this is the case, not only will you be facing harsh financial penalties, but also possible criminal charges against you and your business. Needless to say, this is one scenario you want to avoid at all costs. However, if the worst happens and the IRS determines you did indeed commit tax fraud, expect to be hit with a penalty of 75% on your tax return, which could result in thousands or even millions of extra dollars you will be expected to pay. Therefore, while it may seem as if everyone fudges a bit on their tax returns, it is best to file returns that are true and accurate to the best of your knowledge. Along with getting the best possible individual to prepare your taxes, always have the services of a tax attorney nearby as well. By doing so, you can be sure any and all questions you may have can get answered.

While it appears as if the IRS is simply waiting around for you to make one error after another on your taxes, the fact is virtually all these penalties can be avoided rather easily. By putting your trust in a seasoned tax professional, staying up-to-date on the latest changes, and being proactive throughout the year, the 2019 tax season can come and go without any unexpected and costly surprises.

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The Benefits to Completing Your Personal Taxes on Time

No one looks forward to tax time. In fact, your dread could be so strong that you put it off until the last minute, or even beyond. While you can file an extension if you’re running behind, it’s actually better to file your taxes on time, or even early. Why should you get a jump on things? What advantages do you see by having your personal taxes handled as quickly as possible? Below, we’ll run down a few important things you should know about filing in a timely manner.

What Does “On Time” Mean?

First, let’s start out with defining what we mean when we say “on time”. We don’t mean early. Filing too early is silly – you won’t get your refund any faster than someone who files on time. Depending on how early you file, you may have to wait as long or longer for your refund check to arrive than those who file weeks or even months after you do. So, file on time, not super early.

Make Sure You Have Your Paperwork in Hand

Make sure that you have all your forms in hand. If you’ve worked for multiple employers during the year, either as an employee or as a subcontractor, you might have forgotten about one or two. Jumping the gun here can mean big problems down the road. Make sure you have tax documentation from all your employers/jobs over the course of the year.

Don’t Jump the Gun

Finally, avoid filing too early, because the IRS can make changes or amendments to forms, policies and rules all the way up until the final date. You’ll need to file an amended return if that’s the case, and get it to the IRS before the filing deadline.

With all that being said, there are far more benefits to filing your taxes on time, rather than waiting even for a little while. Let’s consider a few of them.

More Time

One reason to at least start preparing your taxes early is this – it lets you maximize your return. In fact, the IRS reports those who file their taxes early receive $300 more per return than those who file late. This isn’t because they earn more money per year necessarily, but that they have more time to maximize their deductions. If you’re in a rush, you’re more likely to miss deductions that could save you a lot of money. If you start early, you’re more likely to get all the deductions available to you. Also, working with a professional tax preparer early on in the process helps ensure that you’re not missing out on some of the more commonly overlooked tax deductions.

Reduce Your Stress

Let’s face it, filing personal taxes is always a stressful, harrowing business. You’re worried that you’re missing deductions, that you will earn too much to receive a refund, and more. By filing early, you have time to come to grips with your filing situation, find workarounds to your issues, and make sure that you’ve got all your I’s dotted and T’s crossed. Of course, working with a professional tax preparer will also reduce your stress level dramatically.

Plan for Bill Payment

Make too much last year? Owe Uncle Sam more than the IRS withheld? By filing early, you gain the advantage of additional time – time you can use to plan about how to handle your additional tax debt. Those who file late don’t have that benefit. In fact, those who owe and file late many times end up filing for an extension. During that time, they’re accruing additional interest on the money they owe the government, and deepening the hole they’re in.

No Wait with Preparers

We’ve mentioned the benefits of working with professional tax professionals, and starting early offers benefits on that score, as well. By getting a jump on things, you’re able to avoid the tax-time rush. That not only reduces your stress, but it ensures that your professional preparer has as much time as possible to work on your return and maximize the amount you get back.

Get a Jump on Life Changes

You cannot rush into some of the big decisions in life. However, you need to have financial information before making a choice. Filing your taxes early ensures that you have access to the information you need when you need it. For instance, your child might need tax information to file for financial aid to get into their school of choice. You might need that financial information if you’re planning to buy a new home, a second home or a vacation home. Get a jump on your taxes so you have a leg up on the process.

Lessen the Chance of Identity Theft Affecting Your Taxes

Identity theft is a huge industry today, and thieves are targeting more and more people. A thief can take your name and Social Security number, file a fake tax return and obtain cash from the government. By the time you file your actual return, the government has recorded your situation as paid. It can take months, even years, to get this straightened out. By filing early, you get the jump on would-be identity thieves and ensure that any return the IRS mails goes to you.

In Conclusion

When it’s all said and done, filing your personal taxes early is not just a smart decision, it’s a crucial consideration. It gives you more time, flexibility and the added benefit of being able to maximize your return with deductions that you could miss if you were rushing through the process. Work with an expert tax preparer and get a jump on things this year.

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Understanding Your Tax Bracket and Its Effect on Your Personal Taxes

When it comes to determining what you owe the government at the end of the year, or what you can expect to see in a tax return from Uncle Sam, the primary factor is your tax bracket. While you probably have at least some understanding of what tax brackets are and how they affect your personal taxes, chances are good that you’re not as in the know as you should be. Let’s explore tax brackets, how they work, and what they do to your tax situation.

What Is a Federal Income Tax Bracket?

Before we dive too far down the rabbit hole, it’s important to first determine what a federal tax bracket is. Really, it’s nothing more than the percentage of your income that you’re expected to pay the government. However, it’s not as simple as looking at your earnings for the year and then matching that to a specific tax bracket. The government will tax you at multiple brackets depending on your income.

What Is an Effective Tax Rate?

Your tax bracket will change as your income climbs. The final dollar you earn in a fiscal year scores a higher tax rate than the first dollar you earned for the year. However, you also need to realize that your effective tax rate comes into play here. What is it? It’s nothing more than an average of what you pay per year in cents on the dollar to Uncle Sam.

For example, if your tax bracket is 10% of the first six months of the year, and then 15% for the second six months of the year, your effective tax rate is 12.5 cents per dollar for the entire year. So, from that, we can draw another conclusion – your tax bracket doesn’t apply to every single dollar you earn. Nor does it apply to all your deductions or your exemptions.

About Federal Income Tax Brackets

There are currently seven federal income tax brackets. These correspond to the amount of tax that you’ll pay on the income that you earn. They are as follows:

  • 10%
  • 15%
  • 25%
  • 28%
  • 33%
  • 35%
  • 6%

Now, that’s not the whole story. You must combine those brackets with your filing status, of which there are four potential choices – single, married joint, married separate and head of household. While you can only file your taxes with one status, you owe taxes at more than one income bracket depending on your financial situation. Sound complicated? It is.

How All This Works

If you’re confused, you’re not alone. This is just one reason that many people opt to work with professionals rather than going it alone when it comes to preparing their personal taxes. The government taxes your income at each tax bracket, as it moves upward. So, if you only earned $9,325 for the year, then the government would assess your tax bracket as 10%. However, if you earned $12,000, then the first $9,325 would be taxed at 10%, and the remainder would be 15%. That continues as your income increases. For higher earners, those in the 28% tax bracket and higher, things become even more complicated. As an example, suppose you earned $115,000 during 2017.

Now, the first $9,325 would incur a 10% tax rate. You will also pay 15% on the amount you earn between the 10% and 15% marks, and then 25% on the amount you earn between the 15% and 25% marks. Finally, you would pay 28% on the amount you earned over $91,901.

Of course, a number of other factors mitigate those. It’s not just a simple matter of figuring out how much you earned and then finding your tax liability. For instance, in addition to the tax bracket, other factors that will affect your liability include your exemptions, the number of dependents you can legally claim, any itemized deductions beyond your personal exemption, and your filing status. There are actually 28 different combinations of just filing status and tax bracket, let alone combinations that include the various deductions, exemptions and credits available.

In the end, you actually end up paying less than your final tax bracket because of the stepped system. If the government taxed your income directly at the tax bracket into which you fell based on total income, rather than on the income earned over time during the year, your tax liability would be much, much higher.

Other Strategies

While the stepped tax bracket system does work in your favor, there are other ways that you can work to reduce your tax bracket. For instance, you can give more to charity each year – those charitable contributions are write-offs, and help you reduce your overall income. You can also increase the amount that you put into tax-advantaged retirement accounts. Note that this only works with accounts based on pre-tax dollars, like standard 401(k) accounts, though.

Check Your Status Annually

Figuring out your tax bracket is not a once and done sort of thing. The government changes the US tax code every now and then, and it’s important that you remain abreast of those changes. For instance, not that long ago, there were only six tax brackets, topping out at 35%. Today, there are seven tax brackets with a maximum of 39.6%. Stay abreast of changes to the US tax code and know how those changes will affect your financial situation.

Working with the Professionals

Obviously, the US tax code is complicated, and figuring out your tax bracket is only part of what you need to do. There’s also the fact that your tax bracket doesn’t really make a major impact on what you owe, not really. There are many factors more important. The best defense here is to work with a professional tax preparer to help you handle issues with personal taxes ranging from tax planning and strategy to ensuring that you’re able to maximize your deductions.

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Tips for Tax Planning with Your Personal Taxes

There are only two sure things in life – death and taxes. And, tax time is about to roll around once more, as it does every single year. While there’s not much that can be done to prevent you from having to pay personal taxes on your income, the good news is that savvy tax planning can help you save on your tax liability, meaning that you get to keep more of your hard-earned money, and hand over less to Uncle Sam. What should you know about planning for taxation? Let’s take a look at some of the most important tips.

Reduce Your Taxable Income

One of the best ways to reduce your tax liability for the year is to bump up your efforts when it comes to retirement savings. Anything you can pull out of your paycheck and put in a tax-advantaged account (basic IRA, Roth IRA and many others), the less you’ll owe in taxes now. However, understand that there are several different types of retirement accounts. Some of them can be funded with pre-tax dollars, but others are funded with post-tax dollars. Pre-tax funding is the better option if your goal is to reduce your taxes right now.

Don’t Wait to Realize Losses

If you have investments that aren’t performing, don’t wait until the end of the year to realize those losses. Instead, sell them off throughout the year. This can allow you to enjoy a tax deduction at the end of the year when you file. Remember that you’re allowed $3,000 in investment losses every year, and that can help to offset your tax liability. In some instances, it might be enough to bump you into a lower tax bracket entirely. So, if you have underperforming or nonperforming investments, get rid of them throughout the year rather than waiting.

Know Your Tax Bracket

Speaking of tax brackets – it’s vital that you know what your tax bracket will be before filing your personal taxes this year. By knowing where you’ll fall on Uncle Sam’s tax spectrum, you can estimate what you’ll end up paying over the course of the year (whether through regular paycheck withholding if you’re an employee, or through semi-annual filing if you’re a contractor). The breakdown at the time of this writing is as follows:

10%: You earn $0 to $9,325

15%: You earn $9,326 to $37,950

25%: You earn $37,951 to $91,900

28%: You earn $91,901 to $191,650

33%: You earn $191,651 to $416,700

35%: You earn $416,701 to $418,400

39.6%: You earn $418,401 or more

Note: Remember – these breakdowns can and do change every time the government passes a new tax bill. So, it’s important that you verify your tax bracket every year. Otherwise, you could be leaving money on the table, or you could end up owing far more than you expected.

Do You Actually Have to File?

While most of us will have to file personal income taxes throughout our lives, there may be periods where you’re not required to do so. Know whether you’re actually required to file income taxes with the government. This can help you make smarter decisions with your money throughout the course of the year. For instance, if you’re under the age of 65 and earned under $10,350, you don’t have to file income taxes for the 2016 tax year. The same thing applies if you’re over the age of 65 and earned less than $11,900.

There are a few other rules that apply, as well. For instance, if you qualify as head of household, you don’t have to file taxes if you earn less than $13,350 if you’re under 65, or $14,900 if you’re over 65. Married couples don’t have to file if their combined income for the year was under $20,700 for those under 65, or $21,950 for couples where one partner is over 65. The limit is $23,200 for couples where both partners are over 65.

Get All Your Deductions

One of the single most important tips in regard to tax planning is that you need to ensure you’re taking all the deductions available to you. If you can take more in deductions by itemizing than by taking just the standard deduction, then you should do that. Of course, that does mean you’ll need to jump through a few additional hoops, but that can pay off in the long run by lowering your tax bill at the end of the year. You’ll need to make sure you have proof that the deductions you’re claiming are real (receipts and the like). For instance, you can itemize a broad range of expenses, including:

  • Charitable gifts
  • Expenses related to your job
  • Personal property taxes (tax on your home and car, for instance)
  • Interest on your home loan
  • Expenses related to your investments
  • Health care expenses
  • State taxes
  • Local taxes

Generally, it’s best to track your expenses for the year, and then determine whether you’d be better served by itemizing or by taking the standard deduction. For most people, the standard deduction is ample, but for some, itemizing is not just smart – it’s essential for reducing their tax bill.

In the End

Ultimately, smart tax planning can help ensure not only that you owe Uncle Same less when it comes time to file, but that filing your personal taxes is less stressful. There’s no way to make it an exciting prospect, but the more discomfort you can remove from the process, the better. Working with a reputable tax planner and preparer can also ensure that you’re able to maximize your deductions, and that you’re not leaving any money on the table that could have been saved.

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Business Taxes and Bookkeeping: How Do I Keep My Books in Order?

As a small business owner, you have a lot on your plate. You need to worry about product or service quality. You need concern yourself with marketing and advertising. You need to make decisions about branding. Of course, you also need to worry about bookkeeping, but it can be tempting to leave things dealing with business taxes to the last minute. That’s never advisable. In fact, it is absolutely crucial that your books are in order at all times. How do you do that without sacrificing the ability to actually run a successful business, though?

Don’t Toss Receipts

You should consider every single business expense in the light of a potential write-off on your company taxes. This applies to just about anything you can imagine, from business supplies like printer toner and paper to entertainment-related expenses incurred in the line of work. The IRS offers a lot of leeway in these sorts of deductions. The problem is that you may have to prove them, which means you need to have the receipts. Of course, having the receipts is key to knowing how much you’ve spent this year that could you could deduct on taxes anyway. Do not rely on credit card statements – you need actual, physical receipts.

Organize Receipts Numerically

Depending on the type of business you run, chances are good that you frequent the same establishments regularly. You might always buy your office supplies from one particular store, or you might always stay at a specific hotel when visiting a particular city for business. When you have multiple receipts from the same place (or even just the same chain), it can be difficult to organize them. However, if you log them numerically, you’ll discover it’s a lot easier to stay organized and keep your books up to date. Note that you create the numerical system to use, and then maintain it moving forward.

Note What’s What

One of the most important things is that you’re able to justify why you paid for specific things as business expenses. While that might be simple enough in the short term, it can be very difficult in the long term. And, make no mistake, the IRS may decide that they really, really want to know why you decided that $500 dinner you had two years ago was actually a business expense. Note on the receipt itself (or in a spreadsheet program or other software) what the expense was, why it relates to business, and, if possible, the specific client or customer in question. This helps ensure that you’ve dotted all your I’s and crossed all your T’s.

Summarize Regularly (and Stick with It)

It’s not enough to have proof that you’ve spent money, and that it was for business purposes. You also need to summarize your income and expenditure records on a regular basis. The period length doesn’t matter so much as just ensuring that you do it, and that you continue to do so throughout your business ownership. You can do it every daily, every week, or every month – it’s up to you. Just make sure that you update your records on a regular basis and that they’re as accurate as possible.

Keep Them Separated

You know this one, but it might slip from your mind during the press of personal shopping. Your business and personal expenses should never, ever, ever mix. Don’t do it. It doesn’t matter how much easier your business credit card is to reach in your wallet than your personal credit card, or how much higher the balance might be on that card. It also doesn’t matter that you really, really mean to pay your business account back so everything balances. Don’t mix personal expenses with business expenses. Ever. That way lies IRS auditing, inaccurate books and other really bad things.

Build Accurate Reports

Remember when we mentioned creating periodic summaries of your business expenses? You need to take that a step further and transform those summaries into full reports. These will illustrate how cash flows through your business, where it is being used more frequently, areas that need attention, and more.

Track People-Related Expenses

For most businesses, the people that actually run the company make up the bulk of expenses. That’s true whether you employ a hundred people, or you’re the only person working in the company. You need to track what you’re spending on things like:

  • Payroll
  • Overtime
  • Benefits
  • Perks offered (that don’t fall under any of the other headings)

Do the math now. Use that information to help inform your decisions, but also to ensure that your bookkeeping is up to snuff. When it comes to business taxes, you cannot afford even small discrepancies.

Outstanding Invoices

Make sure that you track outstanding invoices and follow up on them. These can get lost in the shuffle pretty easily. A single busy afternoon is enough for your accounts receivable department to become invisible, particularly if you’re the business owner and the only person running the A/R department. Wear too many hats, and you’ll find that your attention first frays, and then snaps, leaving you missing crucial pieces of data.

Hire a Professional

Perhaps the single most important tip for keeping your business books in order is to hire a professional. Experienced bookkeepers can provide you with a great deal more than just financial recording service. The right company can deliver crucial services and solutions tailored to your business, your niche market, and your growth goals. On top of that, the right firm will also be able to deliver tax strategizing and filing services to ensure that not only is your tax liability minimized, but that you stay on the good side of the IRS at all times. What business owner couldn’t benefit from that?

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Personal Taxes and Planning for Your Future

We all have dreams and goals – it’s part of life. Without them, you have nothing to strive for, no impetus to improve your situation. However, it’s vital that you consider personal taxes when planning for your future. For most people, a secure, happy future is one where they don’t have to worry about how they’ll keep the lights on or how they’ll make their next car payment. Financial security can mean paying higher taxes, though. The right planning and strategizing can help alleviate your potential future tax burden while ensuring that you have a reliable nest egg to support your quality of life.

Invest Well

Investing is a time-honored way of reducing your current tax liability while planning for the future. You can (and should) be putting your money into retirement accounts set up to use pre-tax funding. For instance, your IRA or 401(k) account. Using pre-tax funding means that you are at once building a nest egg for your retirement, as well as reducing your gross income. The lower your gross income, the less you’ll owe in federal income taxes. As long as you follow the rules regarding account disbursements, you’ll find that future taxation won’t alleviate the benefits of saving now, either.

Start Saving for College Now

If you’re not yet a parent or your children are young, it seems like you have all the time in the world to save for their college education. That time goes by faster than you will believe. You also run the risk of having your efforts derailed by other costs that crop up during life – braces, accidents, clothing to cover growth spurts, cars when they get old enough. These are just a few of the ways that life can eat into your ability to save. The good news is that you can open a college savings fund now and start saving for their future education. You’ll also be able to deduct those contributions from your taxes, reducing your income and tax liability while simultaneously building a solid future for your child.

More Than Retirement Accounts

In addition to building your nest egg through contributions to your IRA and 401(k), you need to take a more active role in your investing. Adding mutual funds and other slow-growth, low-risk investment vehicles gives you access to a solution to build your wealth for the future, while deferring your tax liability. When properly mixed, retirement funds, stocks and bonds can deliver the right conditions to foster future financial stability while also reducing your immediate and longer-term tax debt.

Save with a Goal

Too many Americans save, but have no real idea of why they’re saving. Sure, you’re socking away money for the future, but for what, in particular? Save with a plan. This allows you to build your nest egg now, but put that money to work when you need it most in order to help you achieve your plans. Are you saving for the down payment on a second home? Want to invest in a vacation home? Planning an international vacation and need to make sure you have the bankroll to pull it off? Maybe you envision yourself spending half the year at the day job and the other half on a spacious catamaran cruising tropical waters? Whatever the case, set your goals. This allows you to track progress and make smart decisions in order to achieve things that have meaning and value to you, personally.

Not Just Any Goals Will Do

While you should certainly set goals that matter to you, personally, and to your family, not just any old goals will work. They need to be SMART. That is, they need to be specific, measurable, attainable, realistic and trackable. If your goals meet those requirements, then you’ll be able to plan effectively to not only secure a stable financial future, but ensure that the IRS does not take a larger bite out of your finances than absolutely necessary. In fact, with the right long-term planning and a sound strategy created with a tax professional, there is no reason that you cannot reduce your income tax liability by a significant amount while still enjoying the lifestyle that you want.

Follow a Budget

One of the most important tips for building a stronger, more stable financial future for yourself and your family is to create a workable budget. Your budget should ensure there is more than ample cash to meet your current and ongoing financial obligations, and that you still have enough to put away for the future.

Note that a good budget does not necessarily mean that you have a ton of cash available for discretionary spending. In fact, a good budget tries to account for every single dollar while leaving only the barest minimum laying around for impulse purchases and the like. This ensures that you are actually putting most of your money to work for your, rather than “frittering” it away.

Stick to Your Plan

Once you’ve created a plan and set a budget, it’s time for the most difficult step for many people – sticking to it. This is particularly true once you begin to amass a sizeable amount in your savings and retirement accounts. It can be incredibly tempting to pull from those funding sources, despite the many drawbacks and penalties imposed. Resist that temptation. Stay the course. Stick to your plan.

Find the Right Help

Perhaps the simplest, yet most important tip to help you plan for your future while minimizing the impact of personal taxes on your financial outlook is this – work with a professional. Yes, much of this can be done on your own, but you cannot replace the insight, knowledge and instincts of seasoned financial professional. From planning for your future to identifying crucial means of reducing your tax liability, the pros offer more than just a helping hand.

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How to Save on Your Small Business Taxes

Tax time – it affects more than just individuals. It affects business owners, as well. While corporate taxes don’t necessarily hurt big companies, smaller firms can find that their tax debt is a serious financial burden. Thankfully, there are quite a few ways that you can save on your small business taxes each year. You can put that money back into your company to foster growth, stability and profitability. What steps should you take to ensure savings on your company’s income taxes?

Invest in a Retirement Plan

Like taxpayers, business owners can reduce their tax liability by investing in retirement plans. Of course, it’s a bit different here than just adding more to your personal IRA. You’ll need to set up and then fund a retirement plan for yourself, as well as for your employees. You’ll need to choose a plan that’s approved by the IRS, as well. If it’s not approved by the IRS, it won’t reduce your tax liability.

File as an S-Corp

Do you run an LLC? Do you operate a C Corp but want to benefit from the unique advantages available only to S Corps? If so, you can change the way that the IRS treats your company by filing an S-election. You’ll need to do it no later than the beginning of the year, and you’ll also need to make sure that this is the right option for you. It’s generally a very smart choice for any LLCs out there, because the IRS doesn’t recognize the limited liability company as a taxable entity, and therefore treats your business as either a sole proprietorship or a partnership, both of which have complication that might increase your tax debt.

Use Tax Credits to Your Advantage

Tax credits give consumers invaluable way to reduce their tax debt, but they can do the same thing for your business. Didn’t realize you qualified for tax credits as a business owner? Many people don’t. While there are quite a few credits out there, some of the most pertinent and important include the following:

  • Purchase Based – Have you purchased equipment, vehicles or facilities in the current tax year? If so, and those purchases have been put into service, you may qualify for a tax credit based on the type of purchase and the amount you spent.
  • R&D Tax Credit – Is your firm engaged in any type of research and development? If so, the cost of that R&D could give you access to an important tax credit. Even nontraditional R&D can qualify, such as product development, product improvement, business performance improvement and the costs of working with outside providers who perform research and/or development.
  • Going Green – Has your business invested in green technology to reduce its impact on the environment, or its reliance on the energy grid? You could be eligible for a credit on your business taxes here, as well. The business energy tax investment credit helps offset the cost of investing in solar energy, wind generation, fuel cells and more.
  • Improving Access for the Disabled – Ensuring that your business meets the ADA requirements set forth by the government is not cheap. Thankfully, you can deduct some or even all the cost of your modifications to make your business more accessible to the disabled.

Deduct Your Taxes

It might sound strange to recommend deducting taxes in order to save on your taxes, but it’s a proven strategy. Most of the things you buy for your business have taxes built into the price – gas, office supplies and the like. You also have state business income tax, and may have local taxes to pay, as well. You can deduct all of those from your federal business income taxes to help reduce your overall costs.

Deduct Business Asset Depreciation

When you purchase business assets, you generally pay full price for them. That value is then reduced over time, through use. This is called depreciation. The IRS allows you to deduct the full amount invested in business assets within the year you purchase those assets, rather than breaking those deductions down over time. This is called Section 179, and it can give your business access to tens of thousands of dollars in reduced taxes depending on your situation. However, some tax strategies disallow the use of business asset depreciation, so work with a professional tax preparer to determine whether this is the best option for your particular needs or not.

Pay Attention to Carryovers

Some of the deductions available to you as a business owner are only available in part during the initial year. However, you can carry them over to the next year and then use them in full. Make sure you pay attention to these, and use them strategically. For instance, if you have a qualifying carry over that could give you partial value now, but know you’ll be experiencing significant growth next year, you could carry it over to offset your increased tax liability. Some examples of potential carry overs include net operating losses, your home office deduction, charitable contributions, capital losses, and general business credits to name only a few.

Finding the Help You Need

As you can see from the above, there are many ways that you can save on your small business taxes. However, most of these methods require a great deal of knowledge and expertise. Mistakes with company taxes could mean owning more to the IRS in a best-case scenario, or being audited in a worst-case scenario. Work with a professional tax preparer to develop a tax strategy that fits your business’ specific goals and needs, and to ensure that you’re filing your taxes accurately and on time. Note that the right company will also offer other services, including professional bookkeeping to keep your business on the straight and narrow all year long.

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How to Plan for Tax Day to Ensure Accuracy and Simplicity with Your Business Taxes

While no one loves to see tax day roll around each year, business owners definitely have a harder time of it than those who work for someone else. Filing business taxes accurately, and on time, can be an incredible undertaking, particularly if you haven’t been following a plan throughout the fiscal year. What should you know about planning for tax day to make things as simple as possible, while ensuring the utmost accuracy in your taxes? Let’s take a look at a few of the most critical considerations below.

Cover Your Bases from the Outset

Perhaps the single most important tip for business owners planning for tax day is this – make sure you have all of your bases covered from the very beginning. What does that mean? Simply put, you must know your obligations and requirements when it comes to filing taxes.

Are you filing as an S Corp? If so, you have very different filing requirements than a C Corp, or even a general sole proprietorship. Do you have employees? Do you have physical inventory? Do you have investors who receive disbursements throughout the year?

These are just a few of the myriad of considerations that you’ll need to make. It’s a lot to keep up with and still have time to run a successful business, though. That’s why most small business owners turn to tax preparation experts who specialize in business taxes.

Know Your Deductions and Take Advantage of Them

Like personal tax filers, business owners have access to a broad range of tax deductions. These provide you with important ways to reduce your tax liability and save money at the end of the year. However, you must be aware of them in order to take those deductions. If you’re not aware of them, you can’t deduct for them, which means you could be leaving a lot of money on the table for Uncle Sam when you needn’t have.

Make sure you’re deducting for business-related travel, automobiles, business-related entertainment, home office deductions, and more. If you’re not entirely sure which other deductions apply to your small business, work with a tax preparation expert to identify them and save your company some much needed capital.

Make Your Business Classification Work for You

Your business classification is much more than just a label slapped on to help identify your firm. It can be an important tax tool. When used correctly, it can actually help you save money come tax day. However, when used incorrectly, it can be an anchor weighing you down.

Are you filing as an S Corp? As a C Corp? As a sole proprietorship? As an LLC? As a partnership? Each of these carries different implications when it comes to paying your company’s income taxes, including both tax rates and liabilities.

Be smart when choosing your business classification and manner of filing to ensure that you’re maximizing your financial protection. Again, if you’re not entirely sure which classification works best for your firm, or how you’ll be filing in the first place, work with a tax professional to ensure that you’re not overpaying the IRS.

Work a Monthly Payment That Fits Your Finances

Many business owners find that they are unable to make their tax payment in a single lump sum without incurring serious financial damage to the company. There’s nothing wrong with that, and the IRS does offer some help. Perhaps the best option is to work out a monthly payment plan that allows you to pay down your tax debt without reducing your liquidity too much. That ensures you’re able to meet your obligations to the IRS, but also that you’re able to keep your company growing and moving forward.

You’ll find that the IRS offers a range of payment plans based on your specific needs and eligibility requirements. With that being said, pay close attention to the interest rate charged, or you could be paying a huge chunk of change in addition to your tax payment just for the privilege of making payments over time.

Be Smart with Your Actions

Think that you’ll need to file an extension on your company’s income taxes this year? Many business owners do, and they IRS accommodates them. However, many more file for an extension but are not granted one. You can increase your chances of getting an extension by making certain types of purchases before the start of the new year – real estate and equipment are the two primary purchase types to make during this time.

What you don’t want to do is create a cash windfall – avoid selling any of your company assets or collecting on payments until after tax time. This mitigates your financial situation and makes it more likely that the IRS will approve your extension. If they see that you’re flush with capital, then there’s no reason you shouldn’t pay your tax debt immediately, which does your firm little good.

Hire the Right Tax Professionals

The final tip is this – hire the right tax professionals. You have enough on your plate as it is, without having to deal with tax day planning. You need the right help on your side; choose an expert who can determine the right deductions, finding missed opportunities for limiting your tax liability, and guaranteeing accuracy throughout the process. Hire the right tax help and you’ll find that your tax-related worries are significantly reduced, while your firm is in a better position financially.

In the end, business taxes shouldn’t be a nightmare. Use the tips we’ve discussed above, and make sure you have qualified, expert tax help on your side throughout the year. You might just be surprised at how simple it can be to save capital while making sure that the IRS is happy at the same time.

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8 Necessary Steps to Prepare Your Business for Tax Season

Now that the end of January is upon us, it is time to begin to receive important taxation documents. This is a particularly busy season for business owners because they have a legal obligation to get their employees the proper taxation documents by the end of January. If you are struggling with how to organize your finances in the last days of January as a business owner, it is essential to devise a strategy to comply with your legal taxation obligations. Should you do so, you will be in a better position in the coming years for your business. If your business is located in the Miami area, then it is wise to reach out to local professionals that have the proper skill set to assist you during tax season. Here are eight necessary steps to prepare your business for tax season:

1. Consider Miami Bookkeeping: Hiring a firm that specializes in bookkeeping services in Miami is an excellent way to receive the expertise that you need in order to get your finances in line to calculate what payroll taxes you owe to your employees. Investing in a service of this nature is something that will save you a great deal of time in a part of the year that you are the most busy. That being said, it is wise to invest in a firm that you have researched carefully. It may be wise to interview their prior clients to see if they were actually experts in preparing tax returns in order to avoid problems with the IRS down the road. Should you discover that they are the right fit, you will benefit a great deal from their expertise and services.

2. Delegate Your Tasks to Employees Effectively: There are many managers that do not delegate their workload properly, which leads to a great deal of stress in the office. Be sure that you make a list of what you need to get accomplished in this tax year. If you do so, you will be able to take the workload off of yourself and create a more pleasant environment for your employees that are already going to be stressed out during tax season.

3. Put a Plan in Place for Errors in Employee Tax Returns: If you have a larger corporation, there are times where an employee’s W2 form gets lost or does not get to them on time. It is important to remember that this puts your firm at a great deal of risk. Help the employee to recover the documents and have a plan in place to get them their missing documents promptly. Having these steps in place beforehand will provide you with a peace of mind when you are overwhelmed.

4. Establish a Good Relationship with the IRS: Be sure that you are not neglecting any of your duties as a business owner with the IRS. These dishonest behaviors will come back to haunt you in the future. This is why it is best to be honest from the beginning. In doing so, you are putting yourself in a position to be successful and not pay substantial fines with your business.

5. Get Ready to File Your Business Tax Return: Once your employee’s payroll taxes are taken care of, you also have to take care of the taxation documents for your company and/or companies. Make sure that you have organized any and all necessary documents to pay your taxes on time. In doing so, you will be positioning yourself to be fiscally ahead because once you pay the bill, the invoice goes away for that year and you can go back to focusing on making profits for your business rather than paying the IRS.

6. Know the Taxation Deadlines: Taxation deadlines are something that are strict, but do have extensions. If you are having the feeling that you are running late, tell the IRS. This way, you will possibly have fees, but it will show a good faith effort to pay on time. Ideally, it is wise to memorize all of the taxation deadlines so that you have them mentally noted or physically noted on your calendars. If you take the time to do this, you will be positioning yourself to be ahead of the game rather than barely filing your tax return on time.

7. Assess Your International Holdings: In Miami, many companies have a presence in different countries. It is wise to have expert lawyers and accountants look over the nature of your work and how that affects your income within the United States. At times, there are ways to save money on taxation, but they have to be legal. Having experts assist you with this aspect of your tax return is essential to having a return that will not be audited later on.

8. Watch Out for Audits: If you have filed your taxes early and have been selected for an audit, do not panic. Be sure that you have kept accurate records of your transactions. If you have done so, you will find yourself at ease because you will have all of the documentation ready to present to the IRS. If you have not been organized, treat this as a learning curve to organize your finances better next year.

It is essential that you take the time to properly prepare your business for tax season. If you have a larger firm, this is especially true. It is wise that you have several plans in place to delegate your workload. Outsourcing your bookkeeping to a reliable professional is always a viable choice because it will save you a great deal of work. Additionally, make sure that you are careful with your overseas operations and how you are accounting for their incomes, you should not run into trouble with the IRS. When working with the IRS, be sure to meet their deadlines and to comply with any audit requests. If you prepare yourself adequately for any outcome, you will be able to have a smooth tax season for your business both this year and the years to come.

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3 Tips To Help You Save on Employment Taxes

If you are self-employed, you will have to set money aside for your employment taxes. This can be a challenging task, especially if your business is short on cash. However, if you do not pay your employment taxes, you will be subject to penalties and interests that will cost you a lot more money. Read about three tips that will help you ensure you have the employment taxes paid.

Understand Business Deductions

There are several tax deductions you can take when you own a business. Vehicles, mileage and depreciating values of work equipment are all deductions that will save you money on your tax bill. Deduct the actual expenses from your vehicle or the standard mileage rate. It is important that you keep meticulous accounting records for your business deductions. It is a good idea to hire a tax consultant before you start your own business to prevent getting behind on taxes.

Automatic Deduction Payroll Software

Payroll software programs can make automatic deductions from your paycheck to keep you on track with your tax bill. Most payroll software companies will guarantee you will avoid tax penalties by using their software. Payroll software fills in tax forms and automatically files them. They can also send taxes electronically so you do not have to worry about filing on time. Some payroll software will pay employees, transfer data from accounts receivables and payables with accuracy guaranteed.

Schedule Quarterly Payments

Many people who own their own business make quarterly payments to the government. This ensure there are no penalties for late filing or payment of taxes. Speak with a tax advisor to figure out how much to send on a quarterly basis for your company. The amount should be slightly over the estimate to ensure you receive a few dollars back instead of paying.

Business ownership has many advantages if you pay your taxes on time. If you fall behind on tax payments, you may not be able to catch back up while running a business. The first few years of business are the hardest financially. Start your business off right by expecting to pay your taxes right away.

If you work at home, do not forget to take the deduction for a home office. A bookkeeper in Miami can help you figure out the deductions that are right for your business. Expect to work especially hard the first few years of business ownership in order to be successful.

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Three Tax Tips to Consider During the Summer

Summer is just around the corner, and you can think about is filing for taxes again next April. While you may have to hold off on getting those taxes done, summer is the perfect time to start planning and tracking your spending. Make sure to have all of your paperwork in order to make everything easier for your Miami tax preparer.

1. Your Childcare Expenses

If you forgot about it last year, don’t forget to get those receipts from your daycare for watching your children. Next April, you’ll be able to deduct childcare expenses from your taxes.

This is a must-do tax tip, especially for parents who have children who aren’t attending school during the summer. Daycare can become expensive, and you don’t want tax season to roll around without preparing your receipts first.

2. Donate Instead of Sell

Thinking about cleaning out your garage? Summer is the perfect time to do heavy cleaning, especially if you want to get rid of many of your possessions.

Having a garage sale can be a real headache, and, if you make enough money, you might have to claim the profit on your taxes. Instead, give your items to charity and enjoy a nice deduction. Make sure to keep excellent records of what you sold and how much they sold for; bookkeeping services in Miami and the IRS will want to see records if they perform an audit.

3. Deduct Major Home Improvements

Summer is the best time to make improvements on your home, and certain renewable energy installations, such as solar power, are tax deductible. Most homeowners can deduct a certain percentage of the installation costs during the following tax season.

If you own more than one property, you might be eligible to get a tax deduction for each property.

Preparing for tax season early is an essential part to getting your taxes done right. Consult with a reputable tax preparer in Miami to make sure your forms are filled out correctly and that you’ve counted every deduction possible.

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6 Ways to Qualify for the Affordable Care Act Exemption

According to current laws, most individuals must have health insurance. If an individual does not have health insurance, then he or she must pay penalty. However, there are exceptions to this law known as exemptions. Individuals who qualify for an exemption can have the penalty waived.

There are a number of ways that an individual can qualify for the Affordable Care Act Exemption. Here are six of the most common ways.

1. Hardship exemptions are one of the most common ways to qualify for an exemption. Hardships include homelessness, domestic violence, eviction or foreclosure, natural or human disasters, bankruptcy, or the death of a close family member.

2. Individuals who lost their current insurance and believe the Affordable Care Act to be affordable may also qualify for an exemption. Individuals who will spend more than 8.05% of their current household income on coverage may also be eligible for an exemption from the plan.

3. Individuals who are incarcerated are exempt from the health care act.

4. Individuals who are living abroad while studying or working are also exempt from the Affordable Care Act.

5. Members of certain religious denominations who have religious objections the Affordable Care Act are also exempt.

6. Likewise, members of federally recognized Indian tribes or individuals who are covered by an Indian Health Services Provider are also exempt.

Depending upon the circumstances, an exemption may be temporary. This is usually the case if individuals are applying for a hardship exemption. It can be very difficult for taxpayers to determine if they are eligible for exemptions. In addition, finding the necessary forms and completing those forms is time consuming. For this reason, individuals who believe they may be eligible for an exemption should consult a Miami tax preparer or an accounting services in Miami for more information on qualifying for exemptions.

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3 Tax Tips for the Self-Employed

Screen Shot 2015-02-02 at 12.40.20 PMFreelancing offers a world of freedom when it comes to being your own boss, but with respect to taxes, this luxury can come at a cost. Being self-employed means you don’t have taxes automatically deducted from your paychecks, so you will need to stay on top of your financials.

Not to worry, though, as accounting services in Miami is here to help.

Here are our 3 best tips:

Because self-employed individuals are taxed on their income minus qualifying business expenses, it is important to retain paperwork including check stubs and receipts. Having an organized system in place will make things easier come tax time because you will be able to quickly and easily obtain the documents needed to determine your tax burden.

When a large check comes in, avoid the temptation to spend it all. Keep in mind that the government is due its share. Putting aside Uncle Sam’s payment now will cause less stress come tax time.

In an effort to avoid the surprise of a substantial tax bill as well as unfriendly penalties, it is important to consider the need to pay quarterly tax payments. Using an Excel spreadsheet or one of the readily available software programs, be sure to track all of your income and expenses.

If you paid more than $1000 in the previous tax year, you will need to pay quarterly taxes in the current year. Additionally, if you expect to pay more than $1000 in taxes in the current year, you will also need to make quarterly payments. If you paid no taxes or received a return in the previous year, you may not have to pay quarterly taxes in the current year.

You can see that there is a level of responsibility that comes with the freelance status, but with a little planning from a Miami tax preparer, this need not be a burden for the self-employed.

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3 Ways to Wisely Invest Your Tax Refund

Money TreeThe tax season is a time when the average American begins dreaming about making big purchases. They sit around for months pondering what to do with all the money coming in their refund.

While expensive vacations, stylish clothes and flashy cars may make one feel good in the moment, the realization that the money could have been better spent can put a damper on things in the long run. So, for those who want to use their refund check responsibly, here are the top three wise ways.

1. Buy Precious Metals
Gold and silver are two commodities that humankind has used for centuries to make purchases. There is little evidence that things will change in the lifetime of anyone reading this article.

Purchasing some ounces of gold and silver can be a wise way to put a portion of a tax refund to work. These tangible investments are physical properties in the form of coins and bars. A Miami tax preparer can help find out just how much of a refund to expect from the government.

With printed currency going through wild value fluctuations, it could be time to stockpile a little precious metal. These holdings can work as hedges against instability in the volatile currency markets.

2. Open an IRA
It is never too late to begin planning for retirement. A good first step is opening up an investment retirement account (IRA). These instruments provide an income beyond Social Security and pension plans during the golden years.

Basically, the owner makes deposits into the account and then begins withdrawing earnings after leaving the workforce. It is even possible to set up a targeted retirement date with the fund manager. Most experts agree that investing in riskier positions in the beginning and then switching to a more conservative strategy later is a smart move.

There are maximum limits on deposits. Covering this entire amount at one time with the tax refund is a good decision.

3. Pay Off Credit Cards
High-interest credit card debt is something that consumes a large part of most household budgets. Paying off the balances of these albatrosses is an intelligent way to use a tax refund. With the extra disposable income each month, it could then be possible to focus on other investment priorities.

The time to get started on the road to financial health is now. Putting the tax refund to good use is essential. Finding qualified accounting services in Miami is probably the best way to ensure success.

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4 Things to Consider When Hiring a Tax Professional

4 Things to Consider When Hiring a Tax Professional

balboa_purchasingWhen you are going to pay someone to prepare your taxes for you, you need to do everything possible to make sure you are getting your money’s worth. When you trust someone to prepare your taxes for you, they have to be reliable. Here are four things you need to keep in mind when you are hiring a tax professional.

1. Get a Referral

When you know someone else has enjoyed the services of a tax pro, it can help put your mind at ease. You should ask your friends and business associates if they have any recommendations for a Miami tax preparer you can use. It doesn’t hurt to go online and look for recommendations as well.

2. Interview Candidates

You should not just jump at the first tax preparer you come across. Picking someone to do your taxes is kind of an intimate thing. You need to make sure you can find someone who you are comfortable with. The best way to do this is to sit down and interview tax professional before you hire one.

3. Find a Tax Preparer with Good Credentials

When you are looking accountants to do your taxes, you should make sure that they have solid credentials before you hire them. Look for accounting services in Miami that are staffed by CPAs who are members in good standing with the Florida licensing board. If you can find CPAs with the personal financial specialist (PFS) designation, it is a good sign that they know what they are doing.

4. Check out the Fees Carefully

Make sure that you know exactly who much you are going to be charged before you hire a tax preparer. You need to look out for any tax preparer who does not give you a clear, easy-to-understand breakdown of the fee structure. Do not use any tax preparer who bases his fee on a percentage of your return, which is a warning sign that the tax preparer is not fully on the level. Tax preparers who work on a percentage basis have an incentive to use questionable accounting tactics that may get you in trouble with the IRS down the road.

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Will You Hire an Accountant or Do Your Taxes Yourself This Year?

contact-bannerShould you hire a tax accountant, or should you do your taxes by yourself? It is a question that plagues people for a variety of different reasons. For starters, you may simply not like the idea of some stranger knowing everything about your financial history for the last year or so. Alternatively, the thought of sifting through legal jargon in the IRS tax code may send shivers up your spine. Just in case, you thought it might be a smart idea to look online in search of a savvy Miami tax preparer. You never know when a local tax professional will come in handy. If you are still on the fence, then here are a few tips that might help you to make an informed decision.

Do You Want to Spend the Time Doing Your Taxes

The first thing to consider, while searching online for accounting services in Miami, is the time involved in preparing your taxes. For a simple return, time may not be much of an issue. For a more complicated return, the prep time could extend into numerous laborious hours. A tax filing that involves a change in marital status, recently purchased property, gifts, investments and other oddities will inevitably cause a person to question if they want to go it alone. You still have to gather documents and arrange receipts to get your tax preparer everything they need in order to take the burden off your hands; consequently, if you are not a strongly detailed oriented person, then it is probably best to let someone else prepare your taxes in such a case.

You Started a Business

If you started up a business this year, chances are you are a little intimidated and confused about how to file your business taxes. This is perfectly understandable. The IRS code is not intended to be clear. In fact, in many cases the tax code is artfully vague and rather easy to interpret incorrectly. Just to make sure you get everything right, it never hurts to have a tax accountant look things over with a fresh pair of eyes. You will only want to file business taxes yourself if you truly understand the IRS code inside and out. Otherwise, it is best to allow someone who specializes in business taxes to make sure you are doing things correctly.


Although it can be difficult to decide whether you should do your own taxes or hire an accountant, it is generally best to err on the side of caution. A tax professional is not there to simply prepare your taxes. They are also there to be your advocate in situations where you need someone with experience to help you handle the IRS. You never know when an audit is coming, but an experienced tax accountant should be able to help you iron things out as painlessly as possible.

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What To Look For When You Need Professional Financial Services

home-bannerWhen searching for accounting services in Miami, you’ll want to fins a professional who is seasoned and knows about tax laws, regulations and codes.

When you work with an expert tax preparer, you can expect attention to detail and friendly, reliable service. It’s important to make sure that you receive the deductions and credits that you’re entitled to, and so accuracy and dedication are needed for quality and reliability. A qualified, top-notch financial service will provide you with services and amenities, such as:

•Flexible appointment availability
•Friendly and outstanding customer service
•Attention to detail

A premier provider of tax service can help you. Whether you’re facing an audit or tax penalties– it’s crucial that you locate a group that is skilled in bookkeeping, account management, and who can attend to all of your financial needs.

Whether you need support for individual or business accounting services in Miami, or you need dependable representation for more complicated cases, it’s important that you find a service that will go above and beyond to meet your specific demands.

When it comes to locating a reputable tax preparation service, a company who employs only well-qualified, trustworthy individuals can mean your financial success.

An accountant and tax professional who is current on all of the tax laws and who’ll go over your financial documents thoroughly–providing you with detailed reports and plans–can go a long ways to improving your return on investments and increasing your ability to save more money.

A high-quality financial advisor and representative will always have your best interest at heart, and they will work hard to provide you with a mixture of valuable services, like:

•Tax preparation
•Financial statement reviews
•Tax and personal finance consulting and planning

A dedicated finance advisor and wealth manager will be able to provide you with a higher caliber of service, and will assist you in making critical financial decisions.

The key is to do your research and to make sure that you choose a service with a good reputation.

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4 Tax Tips for Independent Contractors

Screen Shot 2015-02-02 at 12.40.20 PMIf you are an independent contractor, you must pay very close attention to your taxes. The last thing that you want is to get in trouble with the IRS. Here are four tax tips for independent contractors.

Do not forget to report all of your earnings

As an independent contractor, you are obligated to report all of your income to the IRS. According to the law, independent contractors who earn $600 or more must fill out a 1099-MISC form. Although you may be tempted to exclude small jobs, make it a priority to be as honest as possible. If your income raises a red flag, you can look forward to receiving a letter fro the IRS.

Pay estimated taxes

Due to the fact that you are an independent contractor, you are responsible for paying self-employment taxes. While working for yourself has many advantages, you are still not exempt from paying taxes. In fact, most independent contractors are required to pay estimated taxes at least four times a year. If you are confused about how the estimated tax system works, be sure to consult a tax professional. Reputable accounting services in Miami will be more than happy to guide you through the process.

Keep up with all of your receipts

Receipts are very important financial documents. Fortunately, receipts can actually decrease the amount of money that you owe to the IRS. Each year, thousands of taxpayers fail to store their receipts in a safe location. Never make the mistake of throwing a precious receipt into the garbage. When it comes time to file your taxes, even small purchases can make a big difference.

Always separate personal and business expenses

Personal and business expenses should always remain separate from each other. Some of the most common business expenses include advertising, telephone service, business-related meals, legal fees, union dues, and office equipment. You can also receive a deduction for your traveling expenses. In order to receive a deduction for a home office, the room must be used only for business purposes.

Independent contractors certainly have a lot of freedom. However, their taxes should remain a top priority.

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6 Tips To Avoid Last-Minute IRS Stress

last minute irs stressProcrastination tends to cause a lot of avoidable stress. On the other hand, timely preparation helps taxpayers to stay ahead of the curve. Here are six tips to avoid last-minute IRS stress.

If necessary, request an extension to file

Most people understand that the deadline to file their federal taxes is on April 15. However, the IRS does grant deadline extensions to taxpayers. In the event that you are unable to pay your taxes on time, do not hesitate to request for a deadline extension. In some instances, you may be able set up a monthly payment plan.

File your taxes as soon as possible

Filing your taxes early is always the best approach. If you make a mistake on your tax return, filing early will give a Miami tax preparer ample time to make the necessary corrections. Prompt action will also help you to get the most possible deductions.

Choose a reputable accountant

In regards to experience and knowledge, accounting services in Miami can vary greatly. Before choosing an accountant to complete your tax return, be sure to research their credentials. Hiring an unqualified accountant can actually cause a lot of problems in the long run.

Always file a tax return

Even if you do not plan on getting a significant tax refund, it is still in your best interest to file a tax return. In fact, the IRS could penalize you for failing to file a tax return. Furthermore, you may get more money back than you originally predicted.

Do not be afraid to ask questions

Tax laws can be very confusing. If you are unsure about a particular tax law, be sure to ask a qualified professional. Never make the mistake of sending an incomplete tax form to the IRS.

Organize your important documents

Before attempting to file your taxes, take the time to organize all of the essential financial documents. Do not wait until the last minute to search for various receipts and sales slips. If needed, set aside some free time to arrange your financial paperwork.

Do not allow your tax return to become a last-minute headache. These five tips will surely help you to remain prepared for the current tax season.

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5 Things To Remember for the 2015 Tax Season

Screen Shot 2015-02-02 at 11.51.16 AMWhether you own a business or work for a corporation, you should always remain prepared for the upcoming tax season. Here are five things to remember for the 2015 tax season.

You can file your taxes on January 20, 2015

Each year, thousands of people find themselves scrambling to meet the April 15 tax deadline. If you do not expect to meet this very important deadline, it is a good idea to contact the IRS. If requested, the IRS will typically grant you an extension of time to file your taxes. However, you may be required to pay an extra fee.

You are now required to have health insurance

Due to the arrival of the Affordable Care Act, everyone is now required to have health insurance. If you do not have any insurance, the IRS may withhold some of your return. In the event that you are without health coverage, be sure to discuss this issue with a Miami tax preparer.

File your taxes as early as possible

While a lot of people wait until the last minute to file their taxes, the best approach is to file early. Due to the fact that some business owners may owe money to the IRS, filing early will give them ample time to make the payments. Filing your tax return early also gives accounting services in Miami enough time to seek all of the available deductions.

Gather your receipts

Before filing your taxes, take the time to gather all of your receipts from last year. This will certainly help you to get the most deductions. In fact, all your important financial documents should be scanned prior to filing your taxes.

Be careful when attempting to prepare your own taxes

Preparing taxes can be a very tedious and time-consuming process. Furthermore, a few small mistakes could jeopardize your tax return. If you want to avoid the hassle of dealing with a lot of tax forms, hire a professional to do the job.

While very few people like the idea of paying taxes, it is something that every citizen must do. With the 2015 tax season finally here, now is the time to file your taxes.

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Four Fears That Hold You Back From a Successful Retirement Plan

Screen Shot 2015-02-03 at 9.41.11 AMAll but a few of us wish to quickly reach the inevitable age of retirement. We know it is going to happen, but the thought of no longer having a job to go to may be daunting regardless of what some may say. In addition to being nervous about what you are going to do with yourself during retirement, there are other concerns which hold us back and create undue stress about retirement. Below are a few ways you can kick those fears and come up with a great retirement plan.

1. Save, save, save your money. Some plan, huh? You might be surprised to learn the number of people who forget this most basic rule. Some simply rely on their Social Security Retirement pay for their income. The simple fact is Social Security should not be your only income source.

2. Do you plan on working part-time during your retirement years? More and more people choose to work during their retirement in order generate a little income, get out of the house, stay active, and interact with people. If you plan on doing so, have a game plan. Don’t settle for the first menial job that pays minimum wage to jump on. The truth is if you do so, you are likely to grow unhappy with the situation. Find something that suites you, but not something that will occupy massive amounts of your time. Also, realize that if you work during retirement you may see smaller Social Security checks.

3. Start making an effort to become debt free before you retire. Do you plan on staying in your home? Put a little extra effort into paying your home off before you retire. Planning on buying that brand new luxury recreational vehicle to travel the country? Start saving now, while you are still working, to soften that sticker shock.

4. Do you wish to remain active during retirement, perhaps travel the world? The popular notion of traveling or opening a winery all sounds very romantic, but c’mon, a winery? For the vast number of Americans in retirement this is not a reality. If you are in the Miami area, make sure you consult with a Miami area financial consultant to help you plan for your future. It is never too early, or too late, to start planning for retirement.

Honestly, not everyone’s retirement years are comfortable. Far too many retirees struggle to make ends meet, especially during the most recent economic down turn. Remember, you don’t have to come up with a plan yourself. Contact a Miami tax consultant to get you started today.

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Four Practical Tips From a CPA That Can Save You On Your Taxes

The 2014 tax season is over with. Hopefully you filed your 2014 taxes and received a large refund check. If you didn’t get that check, perhaps next year will be your year. Below are four practical tips which might have you seeing green for the 2015 tax season.

1. This is the year you should finally start keeping your receipts. As we sit and try to do our taxes we know what qualifies as a deduction, but we never know exactly how much we spent on a given item. Also, having receipts for any donations you made will come in handy. When you choose to keep a receipt, be sure to write why you are saving it on the back. Doing this simple task can save you a headache the next time you file your taxes.

2. If you will be looking for a job this year, be sure to keep track of all of your job hunting expenses. If you will be spending money on résumé writing services, employment agencies fees, transportation costs, printing, postage, and the like, keep a record. No one ever really realizes just how much looking for a job can cost; that is until they add their receipts up.

3. If you are self-employed, there are a number of tax deductions you will be eligible for next year. The most important aspect of self-employment and taxes is to make sure you keep impeccable records of your transactions and expenses. Also, keep in mind you might consider making estimated tax payments throughout the year instead of all at once at the end of the year. Estimated tax is used to pay tax on income not subject to withholding.

4. If you want to receive your refund check faster next year, file your taxes electronically and opt for direct deposit option. True, at this point in time, most people already perform this function. However, you may be surprised at how many people are still using snail mail in order to receive their refund check.

The tax code changes every year. Have you ever wondered why you can’t use that tax filing program you purchased last year and this year’s taxes? If you did so, you might be headed for an audit by the IRS. Consider consulting with an accounting service in the Miami area in order to maximize next year’s return.

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Seven Last-Minute Tax Filling Mistakes People Make

The federal government has an uncanny ability to find even the most minute tax mistakes you may make. With more and more tax audits occurring each year, be sure these seven common mistakes below don’t land you under the microscope of the IRS.

1. Perhaps the biggest mistake people make is forgetting the tax deadline and filing late. Even by being only a few days late with your filing with have you paying out of pocket.

2. Another mistake individuals make is not collecting all of the required paperwork in order to do you taxes properly. Sure, W-2s are a no-brainer, but are you so sure you have all of your needed 1099s? Miscellaneous income you earn is independently sent to the IRS via a 1099, so you are not doing yourself any favors by under reporting your income. Make sure you account for all income to avoid an audit.

3. Not that you would be penalized for doing so, but if you want your return sent directly to your bank account, be sure to list the proper routing and account number. Nothing more frustrating than waiting on a tax return check which was sent to the wrong location.

4. If at all possible try to slip a few more dollars into your retirement account before filing. Nothing like reducing your tax burden by putting your hard earned dollars to work.

5. If after doing your taxes you find you owe money, don’t panic! Simply not filing your return is not the answer to this conundrum. If you cannot pay right away, the IRS will take payments over time.

6. If you need help with your taxes, but don’t want to pay to have them done, some individuals may qualify for free help. If a person earned less than $50,000 and is filing a simple tax return they can call 1-800-906-9887 to find out more information on the program.

7. Lastly, don’t forget to take all of the deductions you qualify for. There are a number of deductions some people have never considered. For example, one can take a deduction in regards to their gambling losses. Of course there are a number of steps you must take in order to prove your gambling losses, but a deduction may exist for that $1.00 scratch off lotto ticket you lost on back in June.

The IRS is a large organization which oversees the filings of millions of people’s taxes each year. Don’t make the mistake that they do not care about one individual not filing their taxes. Ask the millions of people who have been audited in the past few years, they will tell you the IRS cares about everyone!

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Obamacare’s Individual Mandate Tax and You

Regardless of your feeling towards the Affordable Care Act, otherwise known as Obamacare, there are a number of new taxes which coincide with Barrack Obama’s signature piece of legislature. The taxes may affect some more than others.

There are dozens of new taxes which accompany Obamacare. Some are big, some are small. Some will likely not even affect you, some certainly will. The number one tax most people are concerned with is the ‘individual mandate’ tax. The individual mandate is the tax penalty which requires a person to purchase healthcare coverage. Much has been made of the individual mandate and how it affects Americans. Most people do not realize the tax involved with the individual mandate increases over time. Below is a breakdown of the individual mandate tax over the next several years and beyond:

  • 2014 – $95 per person per year or 1% of your Income
  • 2015 – $325 per person per year or 2% of your Income
  • 2016 – $695 per person per year or 2.5% of your Income
  • 2017 – Tax Penalty will increase by the rate of inflation going forward, or 2.5% of your Income

As you can see, there are two penalty options per each non-covered year. Whatever dollar amount is greater is the dollar amount the government will tax you. So, in the year 2014, a single uninsured individual earning $30,000 a year will have to pay a $300 individual mandate tax if they do not obtain health insurance. If the same individual does not obtain health insurance by 2016, they will have to pay a $750 individual mandate tax.

The total penalty cannot exceed the amount it would cost you to obtain the most affordable health insurance plan. Meaning, if an Obamacare “Bronze Plan” cost $800 a year for you, the total tax penalty could only be $800. There are a number of nuances which surround the individual mandate. Each tax payer seeking coverage, or not seeking coverage for that matter, will wind up paying a different amount. Factors include income, family dynamics, and employer to name a few. Obtaining coverage online varies by state, and has been problematic thus far. There are telephone service centers which will walk a person through the process so they may obtain health care coverage.

Obamacare may not be the most agreeable program in America at the moment, but it is here to stay for the foreseeable feature. The only thing certain about taxes is there will always be more, never less, to get used to.

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5 Tax Tips for Retirees

Retirees, and those about to retire, face some daunting tax questions and dilemmas. Depending on how much you have prepared for retirement will increase your enjoyment during retirement. Unfortunately, no two retirements are the same. Regardless if you are living on a pension, social security, investments, or a combination, below are some tips a retiree will benefit from.

1. Choose the state you live in wisely. All states have different ways of taxing retirees. For instance, California and New York are considered non-tax friendly, while Arizona and Florida are considered tax friendly. The differences include: sales tax, tax on social security, property tax, income tax, and inheritance tax. Be sure to do your research, the different tax burdens state-to-state can be in the thousands of dollars.

2. While keeping the above tip in mind, choose a state which does not tax your social security earnings. Some retirees only have their social security to live off each month. Living in a state such as Nebraska or Minnesota which tax social security, may be too much for a retiree to handle.

3. Reassess your living situation. Some individuals enjoy a large home, some look for amenities, while others value a country over city living. If you prefer a large home, know a significant portion of your retirement will go towards maintenance, care, and property tax based on square footage. The size of your home is a completely personal decision, but base it off of your needs verses your desires. Shaving a few thousand dollars off of your property tax bill can make a huge difference.

4. Take advantage of credits and deductions during your yearly federal tax filings. Leaving “money on the table,” as some may say, could greatly affect your bottom line. If you usually do your taxes yourself, consider utilizing a tax preparing service during your first full year of retirement. By doing so, you will have a baseline tax return for future years. This professional prepared filing will show you ways on how to make these deductions, which may prove useful in the future.

5. Lastly, and if you have money to spare, give it away! This may sound counter intuitive, but you will receive tax benefits from gifting or donating your retirement money.

Again, no two individuals will be in the same retirement situation. What will be good for you may not be good for your neighbor. However; one thing no individual has ever been harmed by is having a solid retirement plan.

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Why Americans Struggle to Save

It has been well documented American’s have had a difficult time in terms of saving money. Regardless if you are saving for a down payment on a home, or retirement, Americans are having an increasingly difficult time. The possibilities and reasoning behind these difficulties are numerous. Below are several reasons which continually hamper our saving aspirations.

Over The Limit
It is quite obvious some Americans simply live outside their means. Do not confuse this as an individual not making enough money. A person who lives outside of their means typically will purchase a flashy home or car. They will have the latest and greatest phone or gadget which they are always replacing with “the next big thing.” They dine out regularly and sabotage their savings frequently.

Over Estimators
Individuals, especially those saving for retirement, may overestimate their savings and pensions. If an individual is saving for retirement, they may want to speak with a financial planner who is well versed on the subject. A financial planner will help you meet your goals.

Credit Junkies
Americans have an unhealthy obsession with unsecured credit debt. It is not uncommon for individuals to have three or four credit cards in their wallet. Some of these credit cards have interest rates approaching thirty percent. If an individual is to have any hope of saving money, they will have to first get from under any credit debt they may have.

Easy Access
At no point in history have Americans had such easy access to the money in their bank accounts. With an ATM machine on every corner and a debit card in every wallet, we spend money like mad. Checks are a thing of the past. No longer do we have to endure the pain of writing out a check. Today, the swipe of a card means money in our pocket. Such easy access to cash means our savings dwindle.

Though the above reasons may not particularly pertain to you, they pertain to many Americans. Some estimate two out of three American have deep concerns in their retirement savings. The American credit debt, though down, is still close to a trillion dollars. Even our federal government has a difficult time in terms of relying on credit debt. The point is, everyone is in the same boat together. Build a spending plan and stick to it. You will be on your way to saving for that Jet Ski in no time.

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4 Tax Penalties and How to Avoid Them

It is not easy to file your own taxes. In fact, when you run a business or have more than just the standard deduction, you will run into problems if you make one or two slight errors. While this is true, most issues are largely avoidable provided you know what you are doing and what to avoid. With this in mind, here are four tax penalties and how to avoid them.

Underpayment of estimated tax
Now, when filing, some people will need to pay their taxes as they go. This is often the case for retired people or entrepreneurs who run their own companies. For this reason, it is wise to pay the right amount as the IRS will penalize a consumer severely. Of course, if you have sporadic income, you can pay in four equal amounts to avoid penalty. Either way, when paying too little in taxes, you are going to have to deal with the repercussions. For this reason, if you are in a constant battle with the IRS over this, you should consider hiring a professional who can make the estimated tax payments on your behalf. Otherwise, if this problem reoccurs, you will have to pay the penalty again.

Late filing
Believe it or not, even with all the technology available, many still file too late. When this happens, you will have to pay a penalty in many cases. Other times, if you did not make enough money or paid all your taxes through your employer, you may skirt by untouched. With that being said, it is wise to file on or before the filing deadline. Remember, while it is easy to procrastinate, it is not a wise thing to do too much as it is costly to file too late. Instead, when you receive your tax documentation, you should do a quick estimate on how much you will owe. Then, if you will receive a refund, you should file quickly and get your money. On the other hand, if you owe, you should fill out the forms and send them in the last possible day.

Home office deductions
While working from home, you can write off some home office costs. However, this is a tricky subject and it is wise to talk to a CPA who can advise you on your best course of action. At the same time, when using this deduction, you should remember to save your receipts and keep everything in perfect order. You must realize that the IRS cracks down on this, and you should keep perfect records. At the same time, if audited, you should be prepared to explain your situation and fight for your rights as an agent will listen if you provide the right information.

Math errors
If you make a huge math error, you may end up paying some more to the IRS. If you use a program or online-based filing service, you should not experience any issues. Of course, if you use a pen and paper, you should double-check your math and ensure there are no issues. Luckily, if the error is minor, you should only have to send in the extra money.

Without a doubt, people make mistakes when dealing with the tax authorities. If you can avoid these four common pitfalls, you can avoid any penalties.

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10 Tax Filing Mistakes to Avoid

We’re in the middle of tax season, and you may already have received a refund. If your process isn’t complete, avoid these common tax filing mistakes.

1. Not filing at all is illegal an can lead to fines. You’ll also lose out on tax refunds when you don’t file.

2. Filing too late can be costly. Prepare all your documents in January so you have plenty of time to file taxes before the April deadline. Collect receipts, W2s, 1099 forms and other paperwork, including rent certificates, well ahead of time. If you need an extension, apply for one to avoid fines.

3. Filing taxes yourself works fine when you have a simple return. However, complicated returns, small business owners and other situations require a professional.

4. Forgetting all the possible credits — claiming yourself, homestead credits and even tuition tax write-offs — can severely shrink your refund. This is especially important when you work from home.

5. Remember to add any donations to charity as write-offs on your taxes. Most charities will provide you with a receipt for your records, which you should make sure to file away safely until tax time.

6. However, lying on your taxes or writing off items such as that new car or television that aren’t actually deductible can lead to an audit by the IRS. You can make it easier by separating business and personal finances through separate accounts or creating an LLC.

7. Furthermore, make sure to add all of your income, even if it was in cash. Bloggers have learned the hard way to report any revenue over $25, and even items given to you in return for your work count as payment. Similarly, alimony and prize winnings must also be reported on your taxes.

8. Math errors can lead to greater fines or shrink your refund. Double-check your math. If math isn’t your strong suit, have someone else look at it. This might be the time to consider hiring a professional.

9. Double-check the spelling of your name, and ensure that your name is correct if you’ve recently changed it. New spouses often run into glitches because of a name change. Otherwise, the IRS might take longer to process your tax return.

10. Lack of or poor organization when it comes to taxes can be costly because you may have to file late or retrieve copies of paperwork before you can file.

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How to Do Your Taxes if You’re Paying Tuition

For those parents who feel that children are a blessing, here is yet another reason to see them as so. Parents who pay their child’s college tuition will be happy to know that thanks to Uncle Sam, they can receive education credits and tax deductions on tuition and fees, room and board, books, supplies, student loan interest payments, qualified student loan payments, and more, for a qualifying child enrolled in college.

Who Qualifies?

Students who are:

  • Full time students
  • Under 24 years of age
  • Provides less than half of his or her own support
  • Filing as single or married filing separately

  • Adults who are:

  • Paying yourself through school
  • Spouse paying for your partner’s grad school

  • Student Loan Interest Deduction

    Up to $2,500 of your student loan interest can be deducted on your taxes as long as: (1) the individual’s adjusted gross income isn’t more than $75,000 for a single person and no more than $150,000 if they are married, (2) their filing status is not “married filing separately, and (3) they can’t be claimed as a dependent on their parents taxes.

    Lifetime Learning Credit

    Parents may be eligible to claim up to $2,000 of the lifetime learning credit for qualified students enrolled in an eligible institution as long as; (1) they pay qualified education expenses for higher education, (2) the eligible student is yourself, your spouse, or a dependent the parent claims an exemption for on their taxes, and (3) parents pay education expenses for an eligible student.

    American Opportunity Credit

    If parents pay eligible college expenses for themselves or a qualified student, and they are single with an AGI less than $80,000, less than $160,000 for married couples, they may be eligible for a maximum annual credit of up to $2,500 per student.

    How to File

    Even if the parent or the parent’s child/children meet the requirements for both the Lifetime Learning Credit and the American Opportunity Credit, they can only receive one of them for each student in the same year. Parents can, however, spread the credits amongst qualifying students and alternate between them each year. According to the IRS, when doing your taxes, individuals should compare the tuition fee deductions they or their children qualify for to see which gives the biggest break then claim that credit on their tax return.

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