Tips to get a head start on your taxes.
The following 10 tax tips address frequently visited topics. If you have questions you should feel free to call.
You can deduct a credit charge in the year it was charged, rather than when you pay the bill. So if you charge a deductible expense on December 20th, but don’t pay the credit card bill until January 17th, you should take the deduction for the prior year.
If you owe money on your tax return but you can’t afford to pay it, don’t fail to file timely. Instead, file the return timely and enclose what you can afford. Many taxpayer’s do not realize that the penalty for ‘Failure to File’ is 10 times greater than ‘Failure to Pay.’
If you have self-employed income or you were issued a form 1099, you should strongly consider making a SEP contribution rather than and IRA contribution. A SEP contribution (Simplified Employee Pension) is fully tax deductible and can usually be larger in amount than an IRA. Further, the SEP gives you other options an IRA doesn’t.
If you are self-employed or have self-employed income, you may be eligible to deduct part of your health insurance premiums directly against your income. This could be a big tax saver.
If you receive a 1099 in one year for money you physically receive in the following year, you do not have to pick it up until that following year. This deferral of income can improve your cash flow a lot. You should be sure to note this properly on your return.
You can deduct certain educational expenses. In general if the education is required by your employer or is to improve your skills in your existing profession you can write it off. Nowadays, with the need for higher education to secure employment, this is a deduction that can save big bucks and should not be overlooked.
If you make a charitable contribution of $250 or more, you should obtain written acknowledgement from the charity and keep it with that year’s tax file. You do not have to enclose the receipt with your filing to the government. This is an ever changing area of the tax law.
If you have a child you must have his/her social security number in order to claim an exemption. This is true regardless of your child’s age. You can contact Social Security at 1-800-772-1213. Make your life easy and just fill out the forms in the hospital when your child is born.
The top long term capital gains rate is 15%. You may wish to cash in on some of your paper profits before year end. If you have paper losses, you may wish to sell them along with your profits and offset these together. Your should aim for a total combined capital loss of $3,000 for the year.
Did you know the following are deductible medical expenses if you can itemize? Birth control pills, abortion costs, transportation for medical care, drug rehab. The following are not: Health club dues, stop smoking programs, weight loss programs, medication without prescription, cosmetic surgery.
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