Taxes, Financial Management Archives - The C.P.A. Partner to Growing Businesses

The Importance of Timely Tax Filing

admin — Sat, 25 May 2024 04:58:18 +0000

Filing your taxes on time is essential to avoid potential problems and penalties. Late tax filers may face various consequences, such as additional fees, interest charges, and even legal issues. By filing your tax returns promptly, you demonstrate your responsibility as a taxpayer and ensure compliance with the law. Timely tax filing also helps you avoid the stress and anxiety that can come with procrastination.

Additionally, filing your taxes early allows you to receive any potential tax refunds sooner. This can be especially helpful if you are expecting a refund and need the funds for important expenses or financial goals. Overall, timely tax filing is crucial for maintaining financial order and avoiding unnecessary complications.

Benefits of Seeking Expert Help

When it comes to filing taxes, seeking expert help can provide numerous benefits. Tax professionals have the knowledge and expertise to ensure accurate and efficient tax filing, minimizing the risk of errors or omissions. They can help you maximize deductions and credits, potentially reducing your tax liability and increasing your refund.

By working with a tax professional, you can also gain peace of mind knowing that your tax returns are being handled by someone who understands the complexities of the tax system. They can navigate through the ever-changing tax laws and regulations, keeping you informed and helping you make informed decisions.

Furthermore, tax professionals can offer valuable advice and guidance on tax planning strategies, ensuring you are optimizing your financial situation. They can help you understand the implications of certain financial decisions and assist in developing a long-term tax strategy.

Overall, seeking expert help for filing taxes can save you time, reduce stress, and potentially result in financial benefits.

Consequences of Delaying Tax Filing

Delaying tax filing can have significant consequences that should not be taken lightly. One of the immediate consequences is the potential for penalties and interest charges. The IRS imposes penalties for late filing, which can be a percentage of the unpaid taxes. These penalties can accumulate over time and increase your tax liability.

Moreover, delaying tax filing can lead to increased stress and anxiety. Procrastination can create unnecessary pressure as the tax deadline approaches, leaving you with limited time to gather the necessary documents and complete your tax returns accurately. This can result in rushed and potentially error-prone filing.

Another consequence of delaying tax filing is the missed opportunity to claim deductions and credits that can lower your tax liability. By waiting until the last minute, you may overlook certain deductions or fail to provide adequate documentation, resulting in a higher tax bill.

Furthermore, delaying tax filing can increase the chances of falling victim to tax-related scams and identity theft. Fraudsters often target late filers who are in a hurry and may be more susceptible to providing sensitive information to illegitimate sources.

In summary, delaying tax filing can lead to financial penalties, increased stress, missed opportunities for tax savings, and exposure to potential fraud. It is important to prioritize timely tax filing to avoid these consequences.

How to Find the Right Tax Professional

Finding the right tax professional is crucial to ensure a smooth and accurate tax filing process. Here are some tips to help you find the right tax professional:

1. Ask for recommendations: Seek recommendations from friends, family, or colleagues who have had positive experiences with tax professionals. Their firsthand experiences can provide valuable insights.

2. Check qualifications: Verify that the tax professional you are considering has the necessary qualifications, such as being a Certified Public Accountant (CPA) or an Enrolled Agent (EA). These credentials indicate that the professional has met certain educational and ethical standards.

3. Consider experience: Look for tax professionals who have experience in handling situations similar to yours. Whether you have complex investments, self-employment income, or other unique circumstances, it is important to find a professional who can address your specific needs.

4. Interview potential candidates: Schedule consultations with potential tax professionals to discuss your situation and gauge their expertise and compatibility. Ask questions about their experience, fees, and communication style to ensure a good fit.

5. Review references and reviews: Request references from the tax professional and reach out to their past clients to inquire about their experience. Additionally, read online reviews and ratings to gather more information about their reputation.

By following these tips, you can increase the likelihood of finding a qualified and trustworthy tax professional who can assist you in filing your taxes accurately and efficiently.

Tips for a Stress-Free Tax Filing Experience

Filing taxes can be a stressful process, but there are steps you can take to make it more manageable and less overwhelming. Here are some tips for a stress-free tax filing experience:

1. Get organized: Gather all the necessary documents, such as W-2 forms, 1099 forms, and receipts, well in advance. Create a checklist to ensure you have everything you need before starting the filing process. Check out our free tax organizers.

2. Start early: Avoid procrastination by starting the tax filing process as early as possible. This will give you ample time to address any complications or questions that may arise. Consider filing a tax return extension to get extra time to file your return and avoid late filing fees.

3. Use tax software or hire a professional: Consider using tax software or hiring a tax professional to simplify the filing process. These resources can provide guidance and help ensure accuracy. Check out our blog article on “The Top 4 Qualities to Consider When Choosing a Tax Preparer”.

4. Double-check your work: Before submitting your tax returns, review all the information for accuracy and completeness. This includes verifying personal details, income figures, and deductions or credits claimed.

5. File electronically: Filing your taxes electronically can speed up the process and reduce the chances of errors. It also allows for faster confirmation and potential refunds.

6. Stay informed: Keep up-to-date with tax laws and regulations to ensure compliance and take advantage of any new deductions or credits that may be available to you.

By following these tips, you can minimize stress and streamline the tax filing process, making it a more manageable task.

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3 Steps Towards the Path to Resolving Your Tax Issues

admin — Wed, 13 Jul 2022 14:50:00 +0000

Owing taxes can be financially painful which often leads to physical and relationship problems and more. Tax delinquency can cause feelings of embarrassment and make others lose respect they had for you. Whether you are an individual who may not be affected as emotionally as others when dealing with tax issues, working with a professional who cares about your overall well-being is critical when you’re seeking a resolution to your tax problems. Unfortunately, there are too many “professionals” who are waiting to take advantage of your bad tax situation when you’re not focused. This article will share some concepts that you should be aware of when seeking out a tax professional to help you resolve your tax issues.

1. Get Prepared

Understand that your first step will be to get compliant with all your outstanding tax filings before you can begin to negotiate any options available to you with the IRS. You can find out if you’re missing any years of tax filings by setting up your account online with the IRS, click here.

2. Be Honest

To get the most efficient and timely help, you will need to be as honest as possible. You will need to share all information that could be pertinent to your situation. You will not want to leave out that you’re married, for instance, since it will come out in the end and could have catastrophic effects on any deals being negotiated on your behalf. If you do not feel you can be truthful and honest with your tax professional, it is recommended that you work with a professional you feel more comfortable with and who helps you understand they are not there to judge you, but only to help you!

3. Get Payment Information

Getting help resolving your tax matters will require you to pay out of pocket for the services you will need. Therefore, it is helpful when you have a solid understanding of your finances and what you can and cannot afford to do. Check out our article, “6 Steps to Managing Your Finances” for more information.
It will be crucial that you request upfront agreements and quotes for what it will take to resolve your tax matters. Most professionals charge a fee for obtaining all the necessary information from the governmental agencies you may owe, as this entails getting authorization to call the IRS and state agencies on your behalf to obtain transcripts and other tax account information. Once this information is gathered, a professional can then begin to assess your options and inform you of additional steps that may be involved in resolving your tax matter completely.

If you found this article helpful, allow us to invite you to check out a few of our other blog articles:

Married Filing Joint vs. Married Filing Separate: What Your Tax Preparer is Not Saying

Can I Claim My Young Adult Child on My Taxes

Top 4 Qualities to Consider When Choosing A Tax Preparer

Don't waste another minute! Get help with your tax debt!

Time is of the essence when resolving tax matters. You must act quickly to avoid catastrophic affects to your finances (i.e. bank levies, tax liens, wage garnishments, etc.). Click the button below to begin your journey to financial freedom from tax debt now!

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Married Filing Joint vs. Married Filing Separate: What Your Tax Preparer is Not Saying…

admin — Thu, 10 Mar 2022 20:28:36 +0000

The amount of taxes you pay each year is greatly impacted by your filing status. Selecting the best filing status, while taking certain aspects of each into consideration is key to maximizing your tax situation. Most couples fail to meet with their tax advisor before they get married to gain an understanding of the impacts of marriage. Whether you are already married or planning to be married soon, this article will help you and your spouse prepare for the changes in your tax filings. If you are seeking a divorce, this article will also help you consider important changes you may need to make in your tax filings.

Your marital status is determined as of the last day of the tax year. For example, if you were married on December 31, 2021, you’d be considered married for the entire year of 2021. Same goes for couples who divorce on or before December 31, 2021; they’d be considered single or unmarried for the entire tax year for income tax purposes. If you are married, in general, there are only two filing status options for you – married filing joint (MFJ) or married filing separate (MFS). In some cases, that we’ll discuss below, you may be considered unmarried, even if you are not legally separated under a decree of divorce or separate maintenance.

Marriage “Bonus” or “Penalty”

Depending on the income of you and your spouse, you may benefit from filing MFJ or MFS. For instance, if one of you has high income while the other has little to no income, filing joint returns could be more advantageous – “marriage bonus.” On the other hand, if both you and your spouse have incomes that are more or less equal, a “marriage penalty” results. A “marriage penalty” results when you, as a married couple, pay more in taxes than you would have if you had filed as single persons.

Some relief can be found from the marriage penalty since various tax brackets below 35%, credits and the standard deduction, double the amount for joint filers to place an equal footing with single filers. However, for couples who itemize deductions or have incomes beyond 35%, the marriage penalty is still a very real issue.

Joint Liability

When you file as MFJ, you agree to both be jointly and severally liable for the taxes owed on the return for each tax year you file jointly (the decision to file jointly is an annual election). This liability extends to any penalties and interest assessed as well. Innocent spouse relief can be sought for a spouse seeking to escape this joint liability, but this is not easy, and you must be able to prove why you should not be liable for the debt and that you had no knowledge of the tax understatement attributable to erroneous items of the other spouse.

The issue of joint liability is very important to consider, especially when your marriage may be “on the rocks”. If you file as MFJ and there is a tax liability that cannot be paid at the time of filing, then it may be best to file separately, even if it means you’ll owe more in taxes than you would filing joint.

Credits available for MFJ only

Some of the tax benefits available to MFJ filers that are not available when filing separately are:

Child and Dependent Care Credit
Earned Income Credit
Capital loss offset against ordinary income up to $3K
Full $25K rental loss allowance
IRA deduction for nonworking spouse
American Opportunity and Lifetime learning credits
Deduction for student loan interest

Some of these credits can be claimed if the married persons lived apart for all or part of the year.

Other Considerations

Another “marriage penalty” includes a married person receiving social security benefits. If you are married and do not file jointly, up to 85% of your benefits are automatically includible in income.
Once you file a joint return, it cannot be undone. However, if you file as MFS and want to change to MFJ later, this can be done on an amended return. Another reason to make your selection wisely.
If you are married to a nonresident alien, the only way to file jointly is by having your nonresident spouse include all their income, including non-US income, on the return.
If you file married filing separately, both spouses must either itemize or use the standard deduction. For instance, one spouse would not be able to use the standard deduction for MFS, while the other spouse on their return, chooses to itemize deductions. For optimal filing purposes, running the numbers for MFJ vs MFS is useful to determine all the effects of each filing and to determine any tax savings.

Head of Household Filing Status

Under the Head of Household filing status, the standard deduction is higher than the standard deduction for Married Filing Separate. Additionally, the tax rates are more favorable under this filing status. If you are considering filing as married filing separate and have a dependent, and if other situations apply, it would be advantageous to see if you qualify as “unmarried” for the tax year to qualify for this filing status.

You are considered unmarried if you are legally separated from your spouse or are married to a nonresident alien. Additionally, you are considered “unmarried” if you are NOT legally separated but the following applies:

You live apart from your spouse
You file a separate tax return
You maintain as your home a household that for more than ½ the year, is the principal home of a dependent son or daughter (including a stepchild or foster child)
You furnish over ½ the cost of maintaining the household for the entire year
The other spouse did not live with you during the last 6 months of the tax year (temporary absences due to illness, education, vacation, business, etc. Does not count)

If you are married filing separately with a dependent, you would get better tax rates filing as Head of Household.

While married filing joint, in most cases, will present the most tax savings, there are times where you may still choose to file separately. For instance, if there are marital issues, or your spouse runs a business that will also be included in the joint return, and you don’t want to be liable for potential additional taxes that could be assessed if your spouse left out income or has poor recordkeeping that could be exposed if the return is audited. Filing jointly cannot be reversed once the return is filed, so it is important to consider all facts and circumstances with your Tax Advisor prior to filing.

Visit Our Tax Planning Resource Page!

Our Tax Planning Resource page provides you with many different tools and resources that will help you with tax planning. Some of these tools include E-Books, blogs, tax calendars, links to important IRS pages, and more! All of these resources will help you with your tax panning needs for the upcoming tax season.

Click Here

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Itemized Tax Deductions Most Taxpayers Don’t or Can’t Use

admin — Thu, 10 Feb 2022 20:15:15 +0000

Medical Deductions:

Limited by 7.5% of your AGI. Example, if your adjusted gross income is $100K, your medical deductions would have to be over $7,500. If your medical expenses totaled $8K for the tax year, your medical deduction would be only $500.

State and Real Estate Property taxes are capped at $10K:

You can deduct the state income taxes withheld from your paycheck and real estate property taxes paid during the tax year, but only to the maximum level of $10K. If your real estate taxes total to $15K per year and you had another $5K withheld from your pay for a total of $20K in taxes paid, you’d only be able to deduct $10K, the other half would not be deductible.

Casualty and Theft Deductions:

This is only available if the losses you have sustained were due to a nationally declared disaster and also carries limitations in how it gets calculated for write off on your return.

If your total itemized deductions are LESS than the standard deduction based on your filing status, then you take the greater of these two options, which would be the standard deduction amount. For example, if you are single, your standard deduction would be $12,400. Your itemized deductions would have to be greater than this amount to help you in reducing the amount of income being taxed. With so many limitations on some of the most common deductions taxpayers have, it’s very difficult to get over this hump.

Charitable Deductions:

Charitable contributions get added to your other itemized deductions and can help you exceed the amount of the standard deduction. You should take into consideration the amount of other deductions you plan to itemize to see how much your donations would have to be to assist in increasing your itemized deductions. For most individuals, this amount could be sizeable, particularly if you don’t have other itemized deductions you can write off like mortgage interest, property taxes, etc. This is why charitable contributions, in a lot of cases, is also considered a tax deduction most can’t use. Recent tax laws have allowed for up to $300 to be treated as a deduction in income, even if you don’t itemize. If you’ve given thousands to charity, you’re still losing the ability to deduct a sizeable amount of donations.

Just when you thought it couldn’t get any worse, it does! If you file separate from your spouse, both of you must itemize or use the standard deduction. For example, if your spouse would like to deduct the mortgage interest and property taxes and you would have no itemized deductions, like charity or medical, you could write off on a separate return, one would end up being limited to the amount of itemized deductions, which would equal $0 for the spouse with no deductions. To try to minimize the tax blow to the spouse with nothing to write off, both would have to choose to use the standard deduction on their returns.

These concepts are what makes tax planning so critical even for the taxpayers earning less than $50K a year. To ensure you can take advantage of tax laws relevant to you, we suggest you work with a tax professional who offers tax planning throughout the year.

Check Out Our Benefits Comparison Chart!

Our benefits comparison chart showcases how we differ from other CPA firms, tax preparers, and DIY tax softwares.

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4 Reasons Why You May Owe Taxes

admin — Thu, 09 Dec 2021 00:30:49 +0000

If you are of the many taxpayers who owe taxes year after year and never really understand why, this article will help to uncover some potential reasons why, as well as help you to avoid this problem going forward.

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Releasing IRS levies on your paycheck or bank account

admin — Thu, 09 Dec 2021 00:30:29 +0000

Owing the IRS can be a very daunting experience that causes many individuals to run and hide from IRS notices that demand payment. However, as with most things in life, you cannot hide forever and typically the time comes when you may be faced with having to deal with a levy on your paycheck or bank account. A levy is a legal seizure of your property to satisfy a tax debt. Having an IRS levy released requires your immediate and full attention to resolve the matter quickly and before a loss of needed income to pay our bills, etc results.

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