by Blair Butters | Jan 24, 2020 | Uncategorized
When tax time rolls around and your bill starts adding up, tax deductions can be a big money saver. As long as you know what they are and how to take advantage of them. Here’s a quick guide to tax deductions and the three most common deductions to take. What is a Tax Deduction? Tax deductions lower a person’s tax liability by decreasing his or her taxable income. Deductions are typically expenses that the taxpayer incurs during the year that can be subtracted from his or her adjusted gross income to figure out how much tax is owed. The government uses tax deductions as a way to entice taxpayers to participate in community service programs for the betterment of society. This means taxpayers who are aware of state and federal deductions can benefit greatly from tax deductions while also supporting and giving back to their communities throughout the year. There are two ways to claim tax deductions: take the standard deduction or itemize deductions. Keep in mind that you cannot do both. Standard Deduction vs Itemized Deductions The standard deduction is a non-taxable portion of income that can be used to reduce your bill. As mentioned above, you can only take the standard deduction if you choose to not itemize your deductions. The standard deduction amount is calculated based on your filing status, age, whether you’re disabled, or are claimed as a dependent on someone else’s tax return. For 2019 taxes filed in April 2020, the standard deductions are: $12,200 for single taxpayers $12,200 for married taxpayers filing separately $18,350 for heads of households $24,400 for married taxpayers filing...
by Blair Butters | Dec 3, 2019 | Uncategorized
December is known for its celebrations, reflections, and planning. If you’re a business owner, you’re likely setting revenue goals for next year, buying holiday gifts, and planning out any big purchases or investments. As you close out your books for the calendar year, below are some valuable (non-retirement plan) end-of-year tax tips to keep in mind. Review your reports with your accountant What can you do to make sure your business ends the calendar year with a healthy financial status? If you’re a DMA monthly or quarterly business client, start by reviewing your most recent financial statements. If you have questions, concerns, or corrections, please contact our office to discuss with your tax advisor. If you are a DMA business tax client but are not a monthly or quarterly business client, start by reviewing your profit/loss statements from your computer software or manual system. You can also complete your Tax Organizer which will remind you of previous year deductions. You will be receiving it in the mail in mid-December – contact us if you don’t receive it! If you’re not a DMA client, consider consulting with a tax planning expert. These professionals have experience with businesses of all sizes, across multiple industries. After reviewing your expenses, billing, and costs, they will offer advice and strategy planning based on your unique situation. No matter who you visit, make sure that you have your records accurate, complete, and as up to date as possible at the time of the meeting. It is difficult for a professional to provide good advice when the information provided is not up-to-date, complete, and accurate. Defer...
by Blair Butters | Oct 22, 2019 | Uncategorized
Generally, it’s rare for people to think about their taxes when major life changes occur, and understandably so. Paperwork is the farthest thing from the minds of those who just got married, had a baby, or bought their first home. Though your tax filing status or the amount of money to withhold on your paychecks aren’t your top priorities when these changes occur, it’s important to round back to your taxes once the dust begins to settle. This month, we’ll review the top three major life changes that require updates to your tax filing and outline the most important steps you should take before tax season. Getting Married 1. Update your last name with the Social Security Administration (SSA). Once you’ve unpacked the wedding presents and sent off your thank-you cards, be sure to let the SSA know if you decided to change your last name to match your spouse’s. The name on your tax return must match your name on file with the SSA. If it doesn’t, your tax return may get rejected – delaying your return until the confusion is rectified. If the tax deadline is nearly here and you’re concerned the name change may not be updated in time, simply file a joint return under the original name that the SSA has recorded. Then, update your name with the SSA after your tax return (or bill) arrives. 2. Update your paycheck withholding. Sit down with your new spouse, your budget, and a W-4. Determine which tax withholding allowances you qualify for, and who will claim which ones. If you are uncertain where to start, it would...
by Blair Butters | Sep 12, 2019 | Uncategorized
One of the biggest mistakes business owners can make is not dedicating enough time for business strategy and future planning. When this happens, companies miss out on opportunities to protect their revenue and maximize their growth. By taking a step back, reviewing the year to date, and considering some goals for the future, business owners can set up their team for success. Investing time in business strategy planning can yield one of the highest returns possible! Get a jump start on your 2020 business strategy planning with some of our tips, below. Create SMART Goals As you are starting your review prior to year-end, review current year-to-date business information, including financial statements. Consider any changes in your staff, customers, and other data you’ve collected since the last year-end. Do you notice any patterns or insights from the data that you didn’t expect? Is your company meeting its growth goals? Consider what could have been done differently, or any extenuating circumstances that may have affected your numbers. Based on what you accomplished in the last year, set some realistic, actionable SMART goals. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-Based. By using this framework to set goals, you’ll be able to break down a huge annual goal into strategic, smaller steps that can be accomplished over time. “Acquire more customers,” for example, is not a SMART goal because there is no measure of success. How many more customers would be a measure of success? An example of a SMART goal: “We will secure 15% more contracts in 2020 than we did in 2019 by increasing our monthly internet ad...
by Blair Butters | Jul 29, 2019 | Uncategorized
Why you need to adjust your tax withholding now Withholding taxes from your paycheck correctly can be a tricky process – if you withhold too little, you receive a bill at the end of tax season (one that, statistically, only 40% of Americans can afford to pay). If you withhold too much, you get a refund after you submit your taxes in April. Sure, many of us enjoy having a refund come every spring, but the reality is that you overpaid the government and gave them an interest-free loan, while you could have used that money yourself throughout the year. In fact, you’d see a better return on investment by letting that money sit in a high-yielding certificate of deposit or savings account. As you may know, the IRS waived withholding penalties for those whose withholding and estimated payments were at least 80 percent of their tax liability for the most recent tax year due to the significant tax law changes taking effect. For tax years prior to 2018, the penalty was enforced if you paid less than 90 percent of your tax liability, and experts expect the penalties to be enforced at the 90 percent level for 2019 and future years. This means you could face an underpayment penalty in addition to receiving a tax bill at the end of the next tax season. The IRS is also planning to make the W-4 more precise next year, with many more details to be included on a much longer form. If this form is used next year, that means there will be fewer refunds and fewer bills, meaning tax...
by Blair Butters | Jun 4, 2019 | Uncategorized
Mistakes happen: you forget about your side-job income, forget to declare a dependent or forget to include important documents in your tax return. Perhaps your filing status changed, or you didn’t claim a key deduction. The quickest way to remedy the issue is to file an amendment, but you shouldn’t do this right away. If you made a mistake after filing your taxes, you cannot make changes until the IRS accepts or rejects your return. If your return is rejected, the IRS will tell you what information they need in order to fix the mistake. If you filed online, simply upload the necessary documents and make the appropriate changes from there. If you filed your taxes manually, you can mail in the corrected or additional documents, and if you hired a CPA to file your taxes, they can submit the additional information on your behalf. If you made a mistake, but your tax return was accepted by the IRS: If your return is accepted and the IRS does not catch the error or make the correction for you, you’ll need to confess to the mistake and amend your tax return. You can only amend an e-filed return accepted by the government or a paper return that has already been mailed. This means you need to wait until your taxes are fully processed, and you’ve received your tax return or paid your tax bill in full. The most important thing to keep in mind is that there’s no need to panic. Generally, you have up to three years of the original due date of your return to amend your...
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