Do I Have To File Taxes?

You’ve probably heard it’s tax filing season again. Like clockwork, it is back and you have seen the marketing efforts by companies notifying you to file your tax return: television commercials, pandora ads, billboards shouting for you to file your return. Do you find yourself left baffled at the whole process of filing taxes, are you a first time filer, or are questioning whether or not you have to file in the first place?

It’s true, filing your taxes can be an overwhelming affair. Gathering the right paperwork and entering numbers seems like a chore, let alone proofing such numbers and making sure you entered them correctly. There are a number of methods that one can adhere to during tax season to ensure the process isn’t as demanding as it may seem at first. Of course, the first step needs to be addressed before going any further this tax season. Determining whether or not you need to file.

Who Needs to File?

Tax season officially opened just days ago on January 29, 2019. This is when the Internal Revenue Service begins to receive tax returns. Those people whose earnings don’t meet certain thresholds each year don’t have to file taxes. There are three main categories to look at when you are determining whether to file: age, your filing status, and your income. The income amounts are adjusted annually to factor inflation. Let us look at each factor in more detail.

Age, Filing Status, and Income

The first factor that determines filing status is age. For IRS purposes, the only marker you have to worry about is whether or not you are younger than 65 or 65 or older on the last day of the tax year. For instance, if you are filing in 2019 for your 2018 taxes, you have to ask yourself how old you were on the last day of 2018, or on the first day of 2019 (The IRS states that you are considered 65 or older if you turn 65 on New Years Day and should consider yourself 65 for the prior year’s taxes).

Under 65 Years of Age

For those that are under the age of 65, they will look at certain number thresholds when determining whether or not they are to file a tax return. In order to not file, they will have had to make under $10,400 if they are single according to tax purposes. This number jumps to $13,400 if they are the head of household, and to $20,800 for those married and filing a joint tax return. For those that are considered to be a qualifying widow or widower with dependent child, the number has to be under $16,750 to not file, and under $4,050 for those married by filing separate returns.

65 Years and Older

For those that are considered to be 65 years and older for the filing of their 2018 taxes, the numbers change a bit. For those who are listed as single for filing purposes, they will be have to make under $11,950 to avoid filing. The number jumps to $14,950 for the head of the household and to $22,050 for one spouse filing jointly and to $23,300 for two spouses filing jointly. The 2018 threshold for those that are considered to be a qualifying widow or widower with dependent child is $18,000, and stays at $4,050 for those who are married but filing separate returns.

The IRS also has certain rules regarding dependents and their filing. Dependents are those that are claimed by the head of household when they file taxes: they have to be under a certain age and be deemed a dependent by the IRS. The IRS determines whether or not a dependent has to file by looking at money earned that is deemed to be earned and unearned.

Earned income is considered money earned from salary, wages, or tips. It also includes taxable scholarships and fellowship grants. Unearned income are things like dividends or investment interest, unemployment benefits, capital gains, and certain trust distributions.

You also might have to file a claim if you received health care as required by The Affordable Care Act. This would be the case if you received some federal help in buying your health care coverage through the health insurance marketplace. As always, it may pay to file even if you don’t think you need to. Make sure to do proper research in determining whether or not you have to file. If you determine you have to file, hiring a CPA may be an option for you.

Benefits of having a CPA file

Yes, filing taxes can be a hassle. That is why trusting a certified accountant to file your taxes for you may be just what you need. There is no stress involved; simply bring in all of the necessary paperwork (ask beforehand if you are questioning what paperwork you need) and let the CPA do the work. The process can go from hours to minutes. Make sure you find one that is reputable in your area and go from there.

How The Shutdown Affects Your Tax Filing

We have all been affected by the government shutdown in one way or another. One thing you may be worrying about is how the shutdown (of a record 34 days) affects your taxes this year. Fortunately, income-tax season opened on January 28. Because of the shutdown there are some things that you need to know about filing your taxes this year.

The Deadlines Haven’t Changed

If you were hoping that you would have a little more time to file your taxes this year then you may be disappointed. You will still need to file them by April 15 in order to avoid a penalty. For those that are in Maine or Massachusetts they will have until April 16, and April 17 for those in the District of Columbia, due to a federal holiday. If you do need more time you still can file for a six month extension, which means that you will have until October 15. Even if you don’t think you will be able to pay what you owe by April 15, it’s still important that you file your taxes so you don’t incur a late filing fee.

You Can Find Out Some Information Online

Even though the government shutdown has concluded (pending February 15), you can still find out some information online that pertains to filing your taxes. In fact, if you visit the IRS, you can see updates from time to time. This website is still a good place to go if you are looking for some information that pertains to common tax questions. While some tax questions might be complex, you may still be able to find what you are looking for with a little bit of searching.

Some Individuals Can Use Free Software

Depending on your income and how complex your taxes are, you may be able to use free tax software in order to file your taxes. There are a variety of websites that you can use for tax filing if you earned less than $66,000 in 2018. Some of them may even allow you to file free state returns as well. You will need to check with each company to see what their policies are before you file. As with past years, you can also file your taxes for free by visiting www.irs.gov/freefile. If you made over the $66,000 threshold, you can visit the IRS site to use Free File forms as well. On this website you can also read free instructional booklets and download tax forms. You will find that there are a lot of answers to common questions that you may have about filing your taxes.

Getting Your Tax Information

In order to file your taxes you will need to get your W-2 or 1099 for 2018. You should expect to receive these documents by the end of January. If you don’t receive them, contact your current or former employer to make sure that they mailed these documents to the correct address. For those that are still waiting to receive these documents at the end of February, you can call 1-800-829-1040 to speak to a representative at the IRS to request a substitute. They will contact the employer, by sending them a letter on the taxpayer’s behalf, to request these documents.

If you are looking for information that is from past years, you can visit IRS’ get transcript page to get a tax summary or transcript. Remember that the IRS will not waive penalties for late tax filing even if don’t receive your 2018 tax information from your employer.

Speaking To Someone At The IRS May Be Difficult

While you can call the IRS if you are in need of assistance, it may not be that easy to actually get a hold of someone. In fact, it’s always been pretty difficult. With the government shutdown (and potentially impending one), they are even more short staffed than they have been in the past which can result in difficulties dealing with customer service inquiries. You are better off trying to find answers to your questions online before attempting to call the IRS.

Now that the government has reopened, you will need an appointment to speak to someone in person. Fortunately, most taxpayers don’t need to speak to an IRS representative in person. You still can easily get automated information by calling the IRS. In fact, most questions are answered through automated responses. If your question is more complex, you will need to get ahold of someone, but it may take you awhile so a CPA may be the better route.

Expect Delays

Government shutdown or not, there seems to be some sort of delay each year when it comes to filing your taxes. Keep this in mind and don’t wait until the last minute to file them. You are better off paying a tax professional to help you with your taxes if you aren’t 100% sure how to correctly file them. This will help you avoid unnecessary delays and make the process go as smoothly as possible despite any issues that the government is having.

Carry Over Business Expenses

While every entrepreneur seeks profits, it’s all too common to suffer losses. Carrying over expenses is when a business has undergone losses, and the business owner decides to carry over the loss to the next year; or even the previous year that your business was profitable. The carry over rule in business is an advantage as it enables business owners to offset their profits in the future with tax deductions. For you to reduce your taxable income, you can carry over home office deductions, net operating losses, and capital losses into future years of paying tax. If your business is currently facing operation losses, you can decide to carry back the two years’ loss for you to get a tax refund or you can take the option of carrying over the loss and offset your future taxable income. However, it’s important that you seek professional advice from an accountant or a tax expert for further guidance before you carry forward any business losses.

How A Carry Over Works

For you to carry over business losses, you have to generate a schedule that shows all the cumulative losses. The losses are then used to reduce profits in future years. When your capital gains are less than your capital losses for the year, you will have to deduct some of your losses from your income tax. However, annually you can only subtract losses up to a maximum of $3,500. The only way that one can get the tax benefit of any loss incurred in business is by applying the carry forward rule.

To carry over, you have to calculate the net operating cost for your business. Organizations find this easy, but it is very important that you ensure you have separated the business losses from the non-business ones. However, it’s impossible to carry over the business losses to the same extent as the non-business losses. The net operating losses can be calculated easily by deducting business expenses from work profits. For example, if your organization has made a profit of $7,000 and a loss of $25,000 your net operating loss will amount to $18,000. The carryover deduction is limited to the extent that it would surpass your tax liability. For example, if your net operating loss to carry over to year two is $18000 and your total earnings for the year is $7,000 you will have a limit of $7,000 to carry over losses for that year thus making you wait for future years to use up more of your permitted deduction.

How carry over businesses helps in saving money

One of the benefits of carrying over losses in business is that it helps you to save money and reduce business expenses. The carry over reduces the chances of you losing money on your investment because some asset sales are taxed more heavily than others. For example, if you are selling electronics or other things you can expect that your tax will be 28%. Most business bonds and stocks are taxed at 15%, thus enabling you to save a good percentage on your current earnings. If you are running a small business, you can easily reduce the taxable income and your tax burden through the carried forward losses.

The accounting method used should account for inventories in the same manner as supplies and materials so as to confirm your inventories in a financial statement. The method you use in your organizations determines the timing that you recognize your expenditures on your tax return. However, if it’s hard for you to deal with the accounting issues, you can work with a CPA firm that will handle the accounting sector and the business plans in your organization. Here are some of the reasons why hiring a CPA firm for your business is a good option.

Reasons Why You Should Hire A CPA Firm For Your Business

1. Enhances Efficiency In Business Operations

An accountant is very helpful when it comes to handling financial issues and managing your business transactions. The accountants will help in overseeing the company’s payment and payroll process, ensure that your contractors are well classified, provides professional advice on the tax payments that should be made annually, submitting and complying taxes and financial records, and will explain your company’s financial statements. These will ensure that your business operations are running smoothly thus increasing efficiency.

2. Will Help In Decision Making

As a business owner, you end up having so many roles and responsibilities in your company thus making it hard sometimes to make decisions properly. Having an accountant that will handle some of the responsibilities will help you to make informed decisions because you will have time to analyze the situation and the consequences that may come as a result of poor decision making. Hiring a CPA firm with experience in financial health will help you to acquire quality information when making decisions. A CPA firm will have you’re back allowing you to be more effective when performing your other roles.

3. Cash Flow Management

Lack of track of cash flow in business can easily damage your organization. Behind the success of every business, there is a professional accountant who manages the flow of cash. However, any mistake made on cash flow will bring your business down regardless of how big or small your business is. A CPA firm is very reliable as it knows the financial reports to analyze and can detect a financial problem earlier before the company faces loss. For example, when there is a change in customer payments, a CPA firm will know that it can result in problems in the future. Besides the organizations depends fully on the money come in from their clients. An account or a CPA firm will help you minimize the risk of making losses and help you identify the ways to maximize profits for your business in future.

4. Growth Of The Company

It is every entrepreneurs’ dream to see their business reaching greater heights. For instance, if it’s a local business, you will want it to become a multi-billion-dollar global company in the future. However, planning is the best as it will give a clear picture of you want your business to be in the future. Making additions to the line of your product and expanding to a new location are some of the ways that you can use to analyze the growth of your company. Hiring a CPA firm at the time of expanding your business will help you to ensure that your following your company is following the right path. Also, the firm will ensure that your company remains profitable as you expand to different geographical areas.

5. Will Help You Avoid Costly Mistakes

A CPA firm will help you know and understand the numbers of your company. The firm will help you get all the data you need like non-compliance issues, cash shortfalls and missed due dates. This kind of mistakes will cost you more than you could spend on hiring a company that will help you avoid spending more money and time in the long run. Besides putting up a business is expensive spending some extra cash is worth the risk if it will make your business successful and more profitable.

6. Eases Employee Payment

Hiring a CPA firm will save you the stress of handling the payroll as they are well experienced in that. An accountant will manage and solve the payroll issues thus reducing employee complains because of delayed payments. A CPA firm will properly classify the workers and will realize in time when there is an exemption to be made.

7. Auditing Becomes Easy

In case of an audit, a CPA firm will help you handle and guide you through the process. Having a CPA firm that understands and knows your accounting books well enough will help you meet the required business standards. The CPA firm will also help you to avoid penalties and expensive fines as they ensure that your organization stays in compliance with the tax rules even when they keep changing annually.

8. Helps You To Stay Informed

Hiring a CPA firm will help you get information about the new laws that govern the businesses. Such as tax deduction rules, local regulations, state and federal laws that relate to your day to day business operations. Also, the accounting firm will save you the time to read and to search for information regarding finances in business.

9. The End Of Year Reports

The end of the year is not only the time to close for holidays but also the time for your CPA firm to give you an annual financial report. The financial report will give you information on the profits and loss the company has made over the year. Also, it provides ways that you can use to minimize tax deductions. An account will be one of the most important assets when it comes to performing a health check on your business.

10. Professional Reputation

Having a good CPA firm will build a good image for your company thus improving your reputation in the industry — this important especially when your organization is new and strives to build strong business relationships with key players in their success. Portraying a good image to your clients and the public will also boost your productivity levels thus increasing profits.

A CPA firm will not only see the financial information of the many businesses in the industry but also can see the practices that are working for your competitors and also what has caused failure of some organizations in the industry. Here are some of the reasons why you should hire a CPA firm in your company or organization.

Choosing The Right Accountant For Your Real Estate Business

Starting and successfully running a real estate business is no easy feat. If anything, being able to keep it up and running in the dynamic real estate arena is a career milestone that calls for complex and robust decisions from the word go. In that respect, it is essential that you have professionals such as accountants and lawyers by your side every step of the way. It is especially vital that you hire a certified real estate accountant due to the complex transactions involved in your day to day routine.

Gives you access to professional accounting services

Yes, you may be diligent with some financial practices but are you professionally trained to handle them? If not, then it would be more beneficial for you to hire a CPA firm to handle the tasks involved. Arguably, it’s cheaper to manage finance related practices on your own, but the time and potential mistakes make can result in much bigger problems (and financial loss) in the future.

CPA firms boast a sea of certified accountants who have been handling finance practices long enough to avoid any mistakes that might cost you big in the long run. Hiring a CPA firm will also enable you to remain on the right track financially as an accountant will make sure that you stay within your budgetary limits, advise you on how to create room in your budget for future growth and how to go about various financial problems, thereby securing the future of your business.

Saves you overhead costs

While hiring a personal accountant might seem more logical, it comes with costs such as expenses of renting out a bigger office, time off, and benefits. On the other hand, outsourcing the services of a CPA for real estate to help with your finances allows you to tap into the vast resources that it has, while at the same time eliminating the overhead costs that come with having an extra head in your team of employees.

Allows you to focus on other business development aspects

Running a real estate business involves more than just dealing with transactions and other financial issues. In fact, as a brokerage owner, you’ll only deal with these transactions if your business is doing well. For it to perform well, you will need to work on your marketing strategies, process documentation involved in the purchase and selling of properties, meet up with potential prospects and partners and carry out market research on the current and future trends that shape the industry among many other tasks. Most of the time you will find your hands full and having to deal with accounting tasks such as bookkeeping, tax filing, payroll processing and data entry only make your work harder.

Hiring a real estate accountant will take all these number crunching activities off your hands, allowing you more time to indulge in activities that help you grow your business.

Helps you with the tax process

Taxes, especially in real estate, can be incredibly complicated. In respect to that, the chances of you leaving a lot of money on the table when you do your taxes are quite high. Nevertheless, the scenario is different when it comes to a seasoned real estate accountant as they know how to maximize on payoffs while at the same time ensuring that your business doesn’t get in any legal trouble. This is why hiring a CPA for real estate saves you money, time and keeps you out of trouble with the IRS.

Choosing the right accountant for your business

Now that you know of the perks that come with hiring a CPA firm, how do you choose the right one? Check out the factors below:

Licensing and certification

The last thing you want is to hire a firm which is not authorized to operate as it not only puts you in trouble with the law but also means that you place your business in the hands of potential scammers. Therefore, the first factor to consider is the licensing of the firm you want to hire, as well as the certification of the accountants. Also, ensure you double check the firm’s and the accountant’s portfolio to find out what previous clients have to say as well as do your research to see whether there are any records of law violation.

Size of the firm

While choosing a CPA firm, you will want to consider its size. A large one usually boasts vast resources in that; it has accountants who specialize in different areas of finance. For instance, it has tax accountants, auto dealer accountants, real estate and health among many others. It also has more leverage because it is considered a big name in finance. On the other hand, hiring such a firm might be costly, and at times such firms tend to outsource your work to smaller firms.

Smaller CPA firms ones, on the other hand, might have limited resources but are much easier to deal with, skilled and also will offer you the best attention. Plus, small tends to be local so you can ensure your state taxes are accounted for accurately.

Hiring a CPA for real estate comes with more perks than you’ve ever envisioned. It is vital that you hire one, but make sure you take your time while hiring one to prevent any regrets or losses in future.

Rising Cost of Health Insurance? Here’s How You Can Save

You have eventually sealed the deal with your prospective employee; however, they pop in one final question, “Do you have insurance?” Of course, it’s there, but it has been a pain for as long as you have been paying for the expenses. Maybe you have been considering lowering or even eliminating it. Catering for the welfare of your staff is as important as your productivity and profit generation. Look after them properly, and they are more productive. It is very hard escaping the obligation of managing your employee’s health coverage.

Why Get a Health Cover For Your Staff?

When health insurance is absent from your offer, what’s to stop a prospective employee from moving on to your competition? They offer a similar salary range and employee benefits, and their insurance is probably better. Providing health care coverage to your staff is the key to employee retention. Lack of it will expose you to high employee turnover and fewer hires for your small business. Small business medical insurance is one of the things that offer you a competitive advantage. The following are more reasons why you should go for medical insurance:

  • It is the law: Even if you are a small business, when you possess more than 50 employees, then you are legally obligated to provide your full-time employees with affordable health coverage.
  • Group coverage is better: A personal plan covers only you and your family, but with a group plan, you get some additional insurance advantages.
  • Tax benefits: You can enjoy some tax credits for your business when you have a health coverage for your staff. However, it is integral that you buy a plan via a Small Business Health Options Program Exchange. You can even write-off health insurance premiums as a business expense.
  • Improve your employee’s health: A health insurance plan encourages employees to get yearly checks, which means that they will be healthier and more productive.

Determining the best health insurance for your small firm is a cumbersome process. Many small businesses do not have an HR department to back you up, which means you are the eyes and ears everywhere. Comprehending how medical insurance works is the ultimate solution to eliminating your problem, and landing at the best insurance program for your employees. It can be a capital expense for your firm if you are not careful when choosing. How can you get the best medical insurance as well as cut down on the cost?

High-Deductible Mixed With Health Savings Account (HSA)

Such an approach motivates one to think about their costs at all times. With this, you can use your pretax employee money to cater for unpaid medical cost, and any unused funds are carried forward to the future. You have two options: either fund the account or request the employees to do so. HRA’s (Health Reimbursement Accounts) have high deductible insurance plans. The employer should reserve some money to facilitate the reimbursement of the employee deductibles. Staff can roll over any unused funds.

Buying Cooperatives

Small companies can massively save on their employee’s health insurance by increasing their bargaining power. How can they achieve this? These small businesses can join health-insurance cooperatives. Although the actual savings that a firm can make via joining these cooperatives vary, ultimately, the terms of the health coverage might be better than if the small firm went at it alone. Of course, insurance rates in the open market depend on underwriting laws in your state as well as other factors. Nevertheless, you are guaranteed of getting some extras that you would have paid for even if the insurance were not discounted.

Organization Wellness Program

There are very many initiatives that you can start to ensure that your employees maintain a proper wellness culture. You can offer them a gym membership, free screenings and so much more. Such a program can aid your firm in keeping the health insurance cost at a minimum via promoting better health awareness, as they take better care of themselves.

Write It Off As A Business Expense

Any firm that takes a groups health cover for its employees can claim these as business expenses when they are filing their taxes. How does it work? You might need the services of a CPA for perfect accounting of these expenses; however, it is basic.

Disease Management

The main aim of a disease management program is to cut down the effects of a disease that can be a chronic illness or any other condition via continuous screening. When you have an employee that gets extended stay at the hospital will expose you to huge expenses that will be a huge burden for your small organization. This is even harder when your resources are limited. When you offer your employees some personalized, preventive care, you prevent such an expense via proper disease management.

Entirely comprehending medical insurance is complicated. In fact, there are very many insurance firms that have tweaked plans; however, the expense to your firm will be unmanageable if you don’t tread carefully. You cannot afford to miss one, hence figure out a way to lessen the impact on your returns.

How To Save Money Starting Your Own Business

Starting your own business is an exciting time in your professional career. One of the most important things to do in the early days of your business is to save money. Here are some ways you can save money on your own business:

1. Work Out Of A Spare Room

Working from home is the number one cost saver. Ideally, if you can convert a room or garage into an office, then you will be able to deduct a portion of your home as an essential part of your business. Of course, this also saves time too since commuting involves heading to your office. Additionally, everything you use to decorate this space becomes a business expense. Overhead lighting, desks, file cabinets, computers, even a portion of your internet bill. When finding business expenses, spare no expense and fill your office with all the tools and technology you need to run your business effectively.

Of course, if customers or clients will be visiting your place of business, then you may want to consider an office outside of the main house. Choosing a location such as a remodeled garage, basement or garden office with a separate entrance may be less disruptive to your family — this is especially important for teachers and tutors who expect regular visitors. If that’s not an option, you can always meet a mutual location for clients and then — guess what — that meal or golf session becomes a write off.

2. Buy Used Equipment

One of your biggest expenses is your equipment. The advantage of purchasing used equipment is it prevents you from overspending on equipment that you ultimately do not use. What’s more, chances are your equipment — no matter how new — will be outdated and it’ll become another expense next year.

Saving money on older models of any technology will really help your wallet. Of course, we’re not saying purchase an archaic system, as you don’t want to decrease productivity with a slow machine. Instead, create a checklist for everything you may need. Then visit yard sales, as well as used technology stores (or go online) for items you may need.

3. Watch Video Instruction

There is a plethora of free video instruction by online professionals. You can find experts who aptly demonstrate each step of building your business. Need a website — the best, passive lead generation tools — then follow a how-to on YouTube.

Need a logo? Check out Fiverr. Business cards? Of course there’s Vistaprint.

There are plenty of experts who can teach you how to code or master photoshop or manage an app. These online experts can save you money and teach you skills that you need for your business, especially if you want your business to grow. Eventually, you may want to hire an expert for advanced work, but for now, learn the basics and get the job done.

Speaking of hiring however…

4. Hire Contract Workers

When you are first starting your own business, you have to wear a lot of hats including product producer, marketer and payroll specialist. Eventually, you’ll have to relinquish some of those tasks because you prefer to focus on what you are more interested in working on. That, or you’ll need an experienced person to handle a challenging project.

Before hiring out full time employees, save your some money and utilize contract workers. Contract workers can actually live in your area and come into your work environment. Another option is to hire someone to work on a project virtually. There are many online sources where you can hire out contract employees to take care of graphics, payroll or other tasks.

 

5. Free Software & Apps

There is a cornucopia of software and apps that can jump-start your business and preserve the bottom line — this isn’t even considering the freemium tools out there as almost all apps offer deluxe versions that can give you all of the app’s high tech goodies. The benefit of the free software is you can see how often you use it and if it’s worth investing in the full price.

The types of free software and apps can run the gamut of your business needs including: social media scheduling, payroll processing or team communications. For images there are photo editing software as well as software for logos, infographics, and animations or video. There are even free business form templates and apps for online note taking.

As your business grows, you will want to take advantage of analytics to help discover what’s working for your business and what’s not. This way you can increase your efficiency.

Tax Breaks To Help You Save

Tax season is upon us again, and for most people, that means trying to find ways to save as much money as you possibly can. There are many ways that you can take advantage of the tax breaks the federal government offers; often, it’s simply a matter of knowing what those tax breaks are. While you are probably aware of some of the better known deductions – travel expenses, for example – others are not as widely known and can be just as advantageous for both individuals and small businesses. Here are a few lesser known tax breaks to help you save a pretty penny this tax season:

Going Green

Did you make any upgrades to your home this year? If so, did you take advantage of modern, energy-saving technology? If you did, you may be eligible for a tax break. For example, if you had energy efficient windows installed, this could mean a tax break of up to a few hundred dollars. Similarly, if you had a new and more energy-efficient furnace installed, you could be eligible to knock a few hundred more off of your taxes. If you’re an individual filing your taxes, take a look at part two of Form 5695 and see if you qualify for the Nonbusiness Energy Property Credit.

Job Hunting

If you found yourself seeking a new job this year, you may be able to claim some credits related to your job hunting expenses. While there are very specific rules related to whether you can claim any tax breaks from your job hunt, it’s worth looking into. If you are looking for new employment in your current field, make sure to keep detailed records of everything you have to spend.

For example, any fees you incur for resume preparation, or for employment agencies, are potentially deductible if they exceed 2 percent of your adjusted gross income. This is certainly possible if you are not working much; just make sure to keep a detailed record of all costs related to job-hunting expenses. This includes everything from gas mileage for driving to interviews to printing paper for resumes.

Education

Even if you graduated college a long time ago, you might just be eligible for further tax breaks if you are looking to continue your education. Whether that means signing up for one night class, or going back to class full time to earn an advanced degree, you can often write off up to $2,000 per year. This does depend on how much you have spent on further studies, and it also depends on your income, but is worth looking into as your age does not matter.

Child Care Costs

If you have children, there are a few lesser-known tax breaks you can take advantage of. For example, if you do charitable work and need to hire a babysitter while you’re doing it, you can deduct the cost of that babysitter. While you may be aware that you can deduct day-care fees while you’re working during the school year, did you know you can also deduct the cost of summer day camps once school has ended? As with all the other items on this list, just make sure to keep a detailed record of everything.

Medical Care

Deducting the cost of medical care can get complicated, as what deductions you can make varies widely depending on the work you do and the medical insurance you make use of. For example, if you are self-employed, you can usually deduct 100 percent of your health insurance costs. If you are not self employed, you will need to reach the AGI threshold in order to begin deducting itemized health care costs. This is easier to do if you make sure to keep track of miscellaneous costs such as mileage when traveling to doctor’s appointments.

What The Tax Cuts & Jobs Act Means For Your 2018 Tax Return

Many small business owners are unaware of the new tax cuts and jobs act.
Small business owners need to acquaint themselves with the new laws as it will impact their 2018 tax return. For instance, one of the largest changes is in regards to itemized deductions. Businesses can no longer hoard receipts in the name of getting a tax deduction. The standard deductions have doubled up, thus eliminating the personal exemptions. The doubled deductions for married joint filers is $24,000; for singles, it is $12,000.

What Do The Tax Cuts & Jobs Act Mean For Small Businesses?

Large corporations continue to receive tax deductions on their income tax. The rate has decreased from 35% to 21%. For small businesses that are not listed as C Corporations (i.e. partnerships, hybrid LLC, sole proprietors, or the S-corporations), there was a reduction in their business income tax as well.

Small business owners now need to pay their business tax on their tax returns however. They pay the taxes at the same individual rate as any other person which means a 20% reduction. The law provides a 20% qualified business income deduction. The rule applies for the married joint filers who get an income less than $ 315,000 and individuals who get less than $ 157,500.

However when you have an income higher than the stipulated above you still receive deductions which vary. The variations rise depending on various factors such as your wages or occupation.

Other deductions include:

1. Dental And Medical Expenses

The tax laws lowered the threshold regarding the medical expenses deductions. Business owners now can claim itemized deductions they incur out of pocket whenever they exceed 7.5% of the adjusted gross income. The deductions only apply when one files the 2018 tax returns. It is not yet crystal clear as to whether the same rule will apply in 2019. The chances are that it may go back to 10% as it has always been.

2. Losses Due To Casualty Or theft

Previously, the laws allowed one to claim deductions on itemized property losses not reimbursed by insurance. The policy applied to the circumstances happening unexpectedly such as natural disaster, fires, or theft. The law allowed individuals to file until it exceeded 10% of the adjusted gross income.

The current legislation allows individuals to claim personal casualty losses for natural disasters declared by the president. The 10% threshold of AGI will continue to be applied.

3. Charitable Giving

The tax laws have always protected the people with a heart of giving generously to the charitable organizations. However, there have been some slight changes. The changes are with regards to the number of people who will be claiming the deductions. The deductions apply to married joint filers with $ 24,000 and above and to single fillers with $ 12,000 and above.

4. Home Mortgage Interest

With the new laws, you can claim deductions on interests up to $750, 000 as long as you are in the qualified residence loans. The rule applies to combined loans used on buying, building, and improving homes. Some of the restrictions imposed are those regarding interest claimed for lines of credit and home equity loans. Note that the breaks only apply when using the money for building and improving homes and not on personal expenses.

5. State And Local Tax

The state and local taxes mostly affect people living in New York, California, and New Jersey. In the previous system, one could take advantage of an itemized deduction called the state and local tax deductions (SALT). However, the breaks no longer apply to the extent they used to in the past. Now there is a $ 10,000 cap on the SALT deductions. The regulations adversely affect the residents in high tax regions.

How Can Small Businesses Save Money?

Do Not Hire Full-Time Employees

Most of the time, small businesses (and especially startups) cannot afford to keep full-time employees. The full-time employees have many needs including insurance, pension, and allowances. A way for a small business to save money is by looking for temporary employees. They can work for a few hours, and get paid their wages. It is not economical to hire employees when there is not much work to be done.

Try Bartering

The most important thing for small businesses is to conserve cash as much as possible. The habit helps a company to focus on its growth. One way is to monitor the business cash flow keenly and avoid excessive expenses. The enterprise can look for a tax advisor to interpret the new tax laws. The information helps in financial planning and conserving cash. Try exchanging goods for goods to avoid the expenses involved in making payments to and from place to place. The practice works for small businesses as it emphasizes growth.

Small Business Tax Deductions For 2019

Owning and caring for a small business can be as tough as it is expensive — especially if you pay more in taxes than you actually owe. Garrett Gunderson, a finance expert performed a small study on small business tax and found that a large number of business owners pay more in taxes than they should. While you are not expected to be a pro at business tax, it is important to know where you can save money so you can grow your business.

Here are a few ways to save this tax season in 2019!

1. Hold On To Your Receipts

Holding on to your receipts is extremely important because they show your shopping history and what you buy on a daily basis. A lot of items on your receipts can be deducted on your taxes. Depending on your business strategy and structure, there are certain deductions you can apply to all of your structures. Unfortunately, it can be hard to keep up with every receipt you get over the year since small pieces of paper can go missing or be misplaced.

A good way to keep track of your receipts is to take pictures on your phone and label them as “business receipts”. Other alternatives include using apps that will store and organize your receipts in one place. Many also have features that let you import photos of receipts, and forward email invoices.

2. Start Retirement Today

Start and pay for your retirement now so you can get the payoff later. A self employed individual’s taxable income can be lessened by putting extra money to a 401k account, and the money isn’t taxed unless money is taken out! Small business owners who are under the age of 50 can add up to 6,500 to a Roth IRA or a retirement account. Those who are older than 50 can add 6,500 to theirs.

3. Earn Money From Your Business Equipment

Section 179 gives small business owners the opportunity to avoid tracking depreciation by acting like the equipment as a business expense the year it was bought. There is a limit of $500,000 (as of 2018). Business equipment includes anything a business owner may need to keep things running from computers, laptops, furniture, cooking items and office supplies.

The section 179 calculator can help with finding out how much you can save by having the lump sum. Remember that you need to file a 4562 form to elect it as it won’t be automatically applied.

4. Hire A Family Member

When you hire a family member, you make it so you can take a business deduction for compensation paid to that person, this can lower your taxable income and you can even avoid taxes like FUTA and FICA.

5. Account For Carryovers

Unfortunately, some tax deductions or credits will not be fully used in 1 fiscal year but they can be used in the future and can keep carrying on. These things can include net operating loses, charitable contribution deductions, home office deductions, and capital loses.

You should track these or have a software for it so you don’t forget about years later. This is a great way to save and invest money!

Note: Do not sell your old equipment outright.

If you’d like to get rid of equipment or property that’s no longer needed, see if it would be better to leave it (a normal loss) or sell it as capital loss for tax deductions. A normal loss of business equipment is completely taxable. So see what the equipment or property would be classified as under section 1231.

6. Penalty Relief

Try to take full advantage of penalty relief if you are eligible. If you follow these recommendations, and occasionally with an accountant, you might still get in trouble with the IRS and be penalized. See if you qualify for relief.

Some penalties such as not filing for a tax return or paying too late are eligible for penalty relief. There’s also ways people can be considered for relief like people who attempted to follow the rules but were unable to due to life events that were not in their control or those who fixed the issue once they received the notice.

What is your favorite tax reduction that we listed here? What are some ways that you get tax deductions for your small business? Tell us in the comment section below and share this with other small business owners!

What Does An Accountant Do With Taxes?

Accountant's desk riddled with forms, calculator, glasses and a sticky note saying tax time

Tax laws are constantly changing and quite frankly trying to keep up with all of these changes can be a complex tax. Tax accountants help companies and also individuals make sure they remain in alignment with tax laws by making sure they file their federal and state income returns. In fact, some tax accountants are even willing to offer tax planning advice to help businesses save more money in taxes.

While this may not be the path that all accountants choose to take it’s important to know that there is still some value in hiring a tax accountant because the wide array of services they tend to offer businesses both large and small.

Tax Return Preparation

Do you find yourself often dreading tax return season? That’s one of the great assets of having a tax accountant. Tax accountants primary responsibility is to meet with clients to help them assess their financial needs. This includes but is not limited to gathering needed documentation, such as pay stubs, investment income statements and other financial documents.

Tax Planning

Every corporate business decision leads to tax ramifications, which is complex in general. Companies who typically do business outside of the United States typically experience complexities much more than other businesses do. In most cases, this leads could lead to a growing need for tax professionals.  

Many tax accountants choose to specialize in tax planning because it helps them develop strategy around their client’s financial situation to minimize income tax. Most companies hire internal and external tax accountants to help them develop long term plans that will ultimately help them save money.

Real Estate or Taxable Investment Dealings

Do you own a rental property? If you do it will be in your best interest to hire a tax accountant. Owning a rental company creates a lot of special tax situations that you’ll want to be sure you are taking advantage of and making sure you aren’t making any mistakes.

The same thoughts can also apply when you are buying and selling a home in addition to other real estate. While these laws are straightforward, it’s important to make sure you are doing things properly.

Help You File Your Taxes

For obvious reasons a tax accountant can help you file your taxes. This does not mean that you shouldn’t know what’s going on with your personal and business taxes.; however, it does mean that you must be willing to admit that you need some additional help as it relates to filing your taxes.

You Don’t Have To Do It On Your Own

It doesn’t matter how long you have been in business, it’s important for you to remember that you don’t have to do everything on your own. When necessary and possible make sure you are delegating anything that you aren’t able to do on your own.  By having someone help you with your taxes along the way you are insuring your businesses success even before the success comes. There is also a great deal of methodology around the idea that says that you shouldn’t wait until you need help to implore the help of a professional.