Tax Tips

Stock losses have certain limitations:  Sales of stock creates a capital gain or loss. Generally you’re allowed to recognize a capital loss deduction for any year to the extent you have gains plus $3,000. If you have more losses than can be deducted you can carry over the unused part to later years until it is completely used up.

Sale of your personal residence: You can sell your personal residence and make a tax free profit of up to $250,000 if single or up to $500,000 for couples. To qualify, you must have lived in the property for at least two of the last five years.

How long you should keep your Tax records and receipts on file. Uncle Sam requires you to maintain recordsthat support the amounts you claim on your tax return. Generally, you should keep your records for the 3 most recent years of Tax filings. In general, you should keep good books, records and receipts for all of your financial transactions.

You owed taxes this year after you filed your income tax return: It may be time to revisit your Tax withholdings at work by filing a new W-4 form if necessary. If you have a home and/or kids, you can claim a higher number of dependents. If not, then always claim 1 or 0 dependents.

College savings plan: A greatly improved children’s College savings plan called Section 529 offers Tax deferred investing and Tax free withdrawal to pay for College.

First Time Home Buyers: There is a No penalty tax up to the first $10,000 for the early withdrawal of retirement accounts when used by first time home buyers, or if used for college education.

Self employed individuals: Pay estimated quarterly payments to the I.R.S. on time to avoid penalties. Go to www.eftps.gov for IRS payments.

Personal Debt: Take out a line of credit on your home loan or refinance your mortgage to pay off credit cards and auto loans that otherwise would not be tax deductible.

Retirement: Contribute as much as possible to your company’s 401K plan at work to lower your Taxable Income and build up tax savings.

Dependant care benefits: It is not recommended to use Pre-Tax child and dependant care benefits through your payroll plan at work. The actual tax deduction at year end is limited, which may cause additional taxes to be assessed.

Incorporate: It may be beneficial for a small business to become a CORPORATION. This can lead to significant tax savings as well as limiting the liability of the business owner/s. Incorporating is somewhat of a complex matter and requires more administration. Please consult with us to find out if your business should become a corporation.

Filing an Extension for your Taxes.  You are allowed to  file an extension for your Taxes to be relieved of the April 15th tax filing deadline. You will then have until October 15th file the final paperwork and Tax returnsHowever, you must pay any taxes due by April 15th to avoid penalties from the IRS. An extension of time DOES NOT extend the time to pay!!!

You can pay your taxes due by debit or credit card. American Express, MasterCard, Visa or Discover is acceptable.  Use this useful link:  Pay Tax Bill.