Tax Tips
How long to keep your Tax records and receipts on file
Generally, you should keep your records that support the amounts you claim on your tax returns for the 3 most recent years of Tax filings. I would recommend my clients to keep all tax information and tax returns for at least 5 years, since the IRS could revisit the last 3 years and request to see one of the prior years if there is a patterns of claiming deductions or credits.
There is a limitation on losses from stock sale:
Sales of stock create 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 the allowed deduction, you can carry over the unused part to later years until it is completely used up.
If you owed taxes on your prior income tax return:
It may be time to revisit your Tax withholding on your W-2. You can file with your employer a new W-4 form if necessary. If you have a home and/or kids, you can claim a higher number of allowances. If not, then always claim 1 or 0 allowances for tax withholding.
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.
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. New in 2015 are the ABLE accounts.
First-Time Home Buyers
There is a No penalty on early withdrawal of the first $10000 from 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. Contribution should be at list at percentage that your employer matches.
Dependent Care Benefits
It is not recommended to use Pre-Tax child and dependent care benefits through your payroll plan at work. If the actual tax deduction at year end is limited, this 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 returns. However, 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 the following link - Pay Tax Bill.