A Few Tips For Your State And Local Taxes

Most people have creative ways to save on their federal taxes, but miss out on tips to maximize their local, state tax refund. Your State collects a portion of taxes from your income, and you’re entitled to a portion of that back each year. It is drawn from a taxpayer’s taxable income by the state. Your state income taxes are an important part of your tax entitlement. You should always include your state, and local income tax obligations, and financial amount to avoid a penalty, or losing money you’re entitled to under state tax laws set by your current state.

Three Tips To Save On Your State And Local Taxes

Combine Your Taxes

Many tax preparers will offer incentives to customers who combine their other taxes with their state income taxes. This incentive is usually offered to customers who file online also. The best way to take part in this tip saving idea is by asking your tax specialist in advance about their state tax savings opportunities.  Not all states apply here.

Participate In State/Local Deductions

There are many state income tax deductions available to taxpayer’s. Deduct the state, and local taxes on throughout the year on all the state approved items, and services each year. For example, you can get a deduction for sales tax, property taxes, and real estate according to the state tax rules of your state. Some states will also allow taxpayers to write-off their annual general state taxes. It’s also important to make provision for these state deductions before they are reformed by Congress. The reform would eliminate the tax on the state/local level. Keep your eyes posted for 2018 tax reform.

Ask A Tax Professional

A tax professional is trained, and qualified with the tax knowledge to help you get your maximum state refund, and save. You should always be aware of their qualifications, past experience, and how they can help you get the best state, and local taxes.

Your state, and local taxes don’t have to be hard to file, or cost a significant amount, if you use reliable tax savings ideas, and tips. Get the most out of the taxes you pay each year on your state, and local taxes.

Check out jmstroudcpa.com for more information.

3 Reasons For Filing A Tax Extension

There are many reasons why people file for their income taxes to be extended. The good part about filing for an extension with the IRS is that your actually reason or circumstance is not required. The process with a federal tax extension is fairly easy as the internet is a great resource for all the required information needed for your extension. With income taxes extended you get 6 more months to actually file your personal tax return. In this blog we are going to discuss three reasons to file a federal tax extension. The first reason to file an extension is if you are a new business owner. New business owners are new to the game and sometimes just don’t know where to begin in terms of business taxes. Some may be used to filing the normal individual tax filing. Another reason to file a tax extension is marriage. It can bring up many new tax laws most may not be aware of. Getting married changes all financials especially on a tax return so some file an extension ensuring everything is squared away. Last but not least the third reason to file for a tax return extension an emergency and have to leave the country. Being out of the country can mean that you may miss the filing deadline so filing an extension just makes sense and saves you money.

First there are many online tools that you can use to prepare your business taxes as well as step by step tutorials in order to file an extension. One key component that a business owner must understand when filing a tax return is that you must be able to estimate how much you owe by the given date. This applies only if you owe anything at all. The correct form for business taxes to be extended is going to be Form 7004. However, keep in mind that each business is different. C-corporations, S-corporations and partnerships all have different dates that you may apply for an extension. There are a number of tax forms and tax help online to help your tax returns be turned in on time.

For marriages and taxes there are many laws that must be reviewed. The filing status for marriages will and same-sex marriage tax laws have been changing and is a great reason to file a tax extension. Reading up on the latest legal decisions for filing a tax extension if you just got married is worth researching and can be time consuming.

 Last but not least if you have a hard time finishing something in one shot filing an extension is best especially if you know that you will be out of the country. If you know that you will be out of the country and you will not be returning until after the tax deadline filing for an extension is extremely beneficial. You may be eligible for an automatic six month extension. There are many filing options, as well as timing deadlines that needs to be met. Also, when to file and pay is going to be information supplied to you when filing for an extension.

8 Easy Ways to Save on Income Taxes

Save All You Can On Your Taxes
By: Guest Tax Poster George
It is very possible to save money on income taxes. The following are eight different ways that an individual or family can save.

#1 Work At Home

Many wise individuals choose to work from home. Working at home has many benefits. When individuals work home, they’re able to save on taxes. When an individual can section off a portion of their home for their office, then they can report that as a deduction on their taxes. It is very important that the individual that decides to work at home has a work area that is separate from other rooms in their house.

#2 Cashing In On A New Home Loan

Every year individuals choose to refinance or buy a home. It’s important to deduct the original fee and discount points on that loan. When an individual does that, they can spread the deduction over the life of the refinance and they can deduct the remaining points from the first loan. Many people do not take advantage of this amazing tax rule, but it makes sense to use it. A quality CPA will know about this tax deduction, but it is good to do research either way.

#3 Make Sure To Take Advantage Of Any Write Offs

Each year and individual can offset their investment gains with losses. If the losses that individual has is more than what they gained, then they can deduct up to $3000 from their standard income. The rest that is left over can be carried forward to the next year. It is wise to look at the tax returns from the previous year and investigate the capital losses that were not used. In that way those returns can become more affordable. If an individual has to pay a certain amount to manage their safe deposit box, calls to their broker, or fees for tax preparation, then they can all be deducted.

#4 Take Advantage Of Self-Improvement

There are many things that health savvy individuals do to stay healthy. If an individual is sick, there are measures that must be taken to get well. Sometimes an individual’s hard work at taking care of themselves can be taken out of their taxes. Any medical costs that are qualified and go over 7.5% of the annual gross income are deductible (10% for most now). These things can include the following items: weight-loss programs that are prescribed by Dr., classes to stop smoking, acupuncture, massage therapy, chiropractic care, braces, eyeglasses, and occupational therapy. There is a complete list available on the IRS publication number 502.

#5 Take Advantage Of Sales Tax.

There is an option to write off either local income tax or sales tax. There are IRS tables that are available in publication 600 that an individual can use to find out their deduction. If a car, a plane, or boat was bought in the previous year, that can also be added to their IRS deduction.

#6 Make Sure To Include College

If there is a student in college, then it is a great tax benefit that can be deducted for tuition and fees. An individuals annual gross income cannot be over 135,000 if they are married and 65,000 if they are single. There is also a credit that can recuperate up to $1500 of tuition during individuals first two years of college. There’s also a Lifetime Learning Credit that gives up to $2000 for individuals in college.

#7 Make Sure To Include The Kids.

Many parents do make sure to include their kids when they are reporting their taxes, but even if an individual is divorced or a parent of an adopted child, they can still get the parenthood benefits. With a child tax credit, an individual can take the full credit for a child.

# 8 File Electronically

When an individual files for their taxes electronically, they can get their refund sooner and it will have less mistakes. There are are many high quality software programs that are available like TurboTax, or H&R Block. These usually cost a lot less than having to buy the software, and the price for doing e-filing is a lot less than doing paper filing as well. The IRS allows individuals to file their taxes for free online and it is only for those individuals that have an adjusted gross income of $50,000 or less.

It is great to know that a person can file their taxes and still have things be affordable. Some individuals choose to use a CPA for their tax preparation, but when it comes to income taxes, it is possible for a person to do things on their own as well. Whatever the case may be, it is important to make sure that a full investigation goes into these actions, because a person could save themselves thousands of dollars if their taxes are prepared in the correct manner.

The Future of Income Tax Regulation

As time goes on, each political campaign mentions either abolishing the IRS or simplifying the code to allow for easier completion.

I am not confident in either of those taking place. While the simplification of the code would do wonders, the complexity of it also aides in positive reinforcement.

Things such as adopting children, going to college, buying a energy efficient car, are often things done through the tax code to get the public to do something. Not saying that is right or wrong, it just is what it is.

Whenever you get politics involved, the process becomes very time consuming and difficult, as every special interest group and lobbyist is after their time and vote. So getting pulled in a million different directions just makes it even harder to get real reform completed.  No matter what happens, someone will not be happy with the changes.

One area that I think will never change is the charitable deduction. There is too much pressure on this as many people give to Goodwill and Salvation Army. One thing I could see though is additional phase outs for high income earners.  The AMT is getting enough pressure as it is though, so that is another sticky topic will will discuss in future tax articles.

While there is lobbying on behalf of tax preparers, there will always be a segment of the population that needs some sort of advice and financial wisdom, so your jobs are not going away, only perhaps change a bit as time moves on and the IRS evolves.

Tax code is extremely complex and if you do not feel confident or have a unique circumstance, seek the help of a tax professional near you.

Saving Those Tax Receipts – Do I need To?

Many times people ask, “Do I need to save every single receipt?”

Taxes Sign Showing Tax Or Taxation

Generally speaking, if you make a good faith charitable donation, it is technically deductible. However, in the case of an IRS audit, you would not be able to support your position and your deduction would be disallowed.

So if you do make the donation, but just forget to get the receipt, you can track and claim it in most cases, just be prepared to lose the deduction if it gets questions.

Each situation is  unique though, so be sure to check with your tax advisor for more information.

Another thing to look into, is possibly buying a receipt scanner or maybe use a free app that can scan and save the receipts. Note, that unless you have a small business or have tons of receipts, this level of detail may not be needed.

When compiling all your tax information for the year, do not just throw it all in a folder and let the tax person try to find everything. It is often easier if both parties know exactly what is going on and what is expected. When the client fully grasps what they are doing and why, they often benefit even more with the use of a tax preparation expert.

Another tip when a person is close to itemizing each year is to structure your charitable deductions and other itemization, so that you load up on them in every other year to maximize the overall tax benefit. One example of this would be paying your January mortgage payment in December every other year.  Things of that nature.

Overall, if you keep generally good records and at least file everything in a somewhat organized fashion, tax time does not have to be a stressful time of year!

Tax Planning For Dummies – 7 FREE Ways to Get Financially Organized

How To Get My Taxes In Order

Do not let the complexities of taxes scare you.  While you may not be able to complete your own return, you can at least have enough knowledge to make wise financial decisions that impact your taxes.

Completing tax information.

 

 

 

 

There is nothing worse for your CPA or tax preparer than being a client that has no clue what is going on or why their choices impact tax planning.

But it is not that hard to focus on seem basic concepts that will help everyone stay more organized in this hectic world we live in.

1. Use The Free Tax Tools Available

There are many free tools available to help you organize your taxes.  You should start by asking your tax prep person, or find a “tax organizer”.

2. Just Google It

From item 1 above, just google “tax checklist” or “income tax organizer” and you will see tons of free items available. Some sites may want you to sign up and they email it to you, so use an email that you do not mind some ads being sent to.

3. Use IRS FREE FILE

If you make around $60,000 or less and have a relativity simple return, the IRS partners with various tax companies to allow a FREE federal return.  Check it out here: https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-free

The benefit for these companies is they charge for a state tax return and most people do not want the hassle, so they just pay. Look for a free state return option elsewhere. Save your money.

4. Visit Tax Message Forums Online

You can get so much knowledge by just taking the time to search sites such as http://www.taxprotalk.com/forums/

Many professional preparers chat here and offer great advice.

5. Ask Friends For Advice Or Their CPA

Good word of mouth advertising is often more reliable than checking the phone book or Google for the answer. Friends and family are often the ones you can trust.

6. Check Online Review Services

Ones such as Angie’s List or Thumbtack and provide good feedback and reviews than can help you determine a quality CPA or EA, in case you need professional advice for your income taxes.

7. Common Sense – Just Save Documents

When in doubt, save all documents that you think are related to your taxes. Try to separate them by type, such as medical bills, charity, or improvements that may have energy credits for example. If you or your children are attending college, the American Opportunity and Lifetime Learning credits are great.

Overall, there are not many stressful situations as tax time for many. However, it is normally not as bad as you think and with a little planning can become just another simple task that is completed each and every year.