5 reasons to opt for a professional to file your taxes

5 reasons to opt for a professional to file your taxes

by | Dec 2, 2019 | income tax credit, tax filing, Tax Planning, Tax Refund, tax savings, taxes

5 reasons to opt for a professional to file your taxes

Doing taxes on your own can be overwhelming, to say the least. You must consider the W-2, deductions, write-offs, maybe a collection of 1099s to take care of, etc. This can even more overwhelming considering the fact that you still have a job at hand and several other life decisions. Is there an easy way out? Well, you must file your taxes, there are no shortcuts in that. However, to make your life a bit easier, you can opt for a professional to file your taxes instead.

Here are some of the prominent reasons why you should opt for a professional to file your taxes.

  • Freelancing or side business

The Tax Cuts and Jobs Act introduced recently brings about a lot of changes to the tax regime. If you hold a regular job and have a side hustle along with it, getting professional help for your taxes might be your best bet. People who run businesses are more likely to be put into the 20 percent deduction bracket. Freelancers and people owning businesses might find it a bit difficult to do their taxes on their own.

  • Property Flip

On paper the only two documents that you would need to file for taxes if you have flipped a house are 1098 and 1099-S. However, it is not as straightforward as it might sound. Between the buying and selling of a house, there are a number of transactions that can take place. Opting for professional help in such cases is a smarter choice.

  • Life Changing Events

The occurrence of a life changing event can bring in a myriad of emotions to the table. Life changing events can include graduation, marriage, the birth of a child, divorce, moving on, losing a job or starting with a new one, etc. Such occurrences can complicate your taxes. For starters, it chances your status of filing along with many other things. You must look at different tax benefits, tax credits, etc. to minimize your tax liabilities and to maximize your returns. If you do not want to be bogged down by these complexities, you can take the help of professionals to do your taxes.

  • Student Loans

The equation changes a bit if either you or your spouse has a student loan to take care of. One of the biggest benefits of filing your taxes with the married filing jointly status is that you can expect the lowest tax liabilities. The taxes that you would have to pay individuals would easily overshadow the ones that you would pay with married filing jointly status. And the repayment schedule of student loans depends on the monthly income of the borrower. In certain cases, repaying your student loan on your own can be more beneficial than doing it together. Getting in touch with a professional will help you get over some of these conundrums.

  • Adopting a Child

As noble as the thought of adopting a child is, there are several tax benefits also associated with it. There are quite a few tax incentives for adoption along with tax credits. A sit down with your tax professional will help you make the most of the tax credits available. The downside being, there are higher chances of your taxes being audited. This makes it even more essential to work your taxes out with a professional, to ensure there are no gaps that the IRS can find.

The above are some common scenarios where the need for a tax professional is accentuated. If you have even the slightest of the doubts, do not hesitate to contact one.

All You Need to Know About Tax-Deductions on Charity

by | Nov 30, 2019 | Charitable Deduction, income tax, Standard Deduction, tax filing, Tax Liabilities, taxes

All You Need to Know About Tax-Deductions on Charity

A lot of taxpayers plan to do charity by the end of the year or during the festival season. If you have any such plans, it is only natural to wonder how the new tax laws will have an impact on your donations or Tax Deductions on charity.

While donating to charities, it is essential to be cognizant of the organization that you are donating to. Since there are a lot of scammers who do not miss an opportunity to collect charity in the wake of a natural disaster.

Making donations towards a qualified non-profit organization is the right way to go. Thequalified non-profit organization includes groups that are educational, charitable, religious, literary or scientific. Or any organization that works towards reducing cruelty towards children and animals. The IRS provides enough information on their website regarding all the organizations that are qualified. So that your contributions are directed to the right resources.

Though there have been new tax laws, it doesn’t bring a lot of changes for charity. They are still tax-deductible. The new laws have made some changes to itemized deductions but with minor changes, charity remains tax-deductible. You can still contribute money towards charity or items as long as you itemize them.

Updates for Charitable Deductions

The following are the two major changes for charitable deductions.

  • The earlier law allowed taxpayers to claim up to 80% of donations towards a seasonal ticket for college as tax deductions. However, under the new law, you cannot make any such claims. This is applicable from the year 2018 onwards, or the filing year 2019.
  • The limits when it comes to cash contributions to public charities have been hiked from the current level of 50% to 60%.

Itemized Deductions and Standard Deductions

The new tax laws have increased the standard deduction limits and it might impact the way you claim or do not claim your donations towards charity. Though there is no direct correlation between them, the IRS believes taxpayers are more likely to take the standard deduction.

For 2019, the IRS has hiked the standard deduction to $12,200 for single taxpayers and $24, 400 for jointly filing taxpayers. Taxpayers who are the head of the family can claim up to $18,350 as a standard deduction. The thing which hasn’t changed is your decision to take the standard deductions or itemize your deductions. Of course, you still must assess which option gives you a better tax option.

As mentioned, predictions show that a lot more taxpayers will now have their standard deductions a bit higher than itemized deductions. Thereby, leaving them with the option to go with the standard deduction and not itemized deductions. Consider this, you are liable to $8,000 as state and local taxes, $5,000 as mortgage interest and have made charitable contributions of $2,000. If you are filing as a single taxpayer, these itemized deductions sum up to $15,000 which is higher than the standard deduction of $12,200.

However, taxpayers filing jointly have a higher buffer of $24,400 and are more like to take the standard deduction instead of itemizing their deductions.Taxpayers who are close to the upgraded standard deduction limits can choose to contribute towards a charity of their choice during the festival season and claim it under Itemized deductions.

There are a couple of benefits of doing the same. For starters, you will be bringing a positive impact in someone’s life during the festive season and boost your tax refunds at the same time.

While both the options are still available, a taxpayer must do a quick assessment as to which method saves the most amount of taxes for them.

All You Need To Know About Setting Realistic Financial Goals

All You Need To Know About Setting Realistic Financial Goals

by | Nov 27, 2019 | global income tax, tax deductions, tax filing, Tax Planning, Tax Refund, tax return

All You Need To Know About Setting Realistic Financial Goals

Did you achieve your New Year’s resolution this year? If yes, congratulations. If no, the chances are high that you had set an unrealistic goal. A lot of us set ourselves for failure by coming up with unrealistic goals. For instance, if you want to lose some weight a goal of losing a pound or two per week is a realistic goal. But most of us just set the end weight with no time frame.

Losing weight and setting financial goals are poles apart, yet the central theme remains the same. Setting realistic goals is the first step towards achieving them. Here are a few simple steps which will help you set financial goals that are realistic and achievable.

  • Drop Any Comparison

With the presence of social media almost in every sphere of life, it can get a bit difficult to stay away from what your friends or relatives are up to. However, paying too much attention and comparing them to you is a bad place to start your proceedings. You should not compare even with people of your same age group. You can start with what you have in your hands and work your way up,instead of procrastinating of when things get better. As mentioned with the weight loss example, you cannot become wealthy overnight, unless you get your hands on the jackpot.

  • Realistic Goals to Save

You can follow simple goals to start saving and making an impact. You goal must be simple, timely, measurable and relevant. You can set up a goal to save a certain amount by a specific day every month to increase your chances of succeeding. You can break down bigger goals and start working towards them. For example, if you want $10,000 for the down payment of your car in a two to three years, you can start by saving $250 a month. Even before you realize you would have accumulated more than half of your down payment requirement. Of course, you can play around with the $250 a month value. Once you know the amount that you must save, you can plan your expenses accordingly and achieve the goal.

  • The Right Goals

It is essential to set the right goal and priority for these goals as well. While it is essential that you save towards a car, you must not forget that an emergency will not wait for you to be financial stable. Thus, you must make small contributions towards ensuring that you have savings to last you at least a month’s worth spending. The more you end up with, the better it is. This short term goal will give you the confidence that you can achieve bigger goals with equal confidence.

Similarly, you can set other smaller goals to pay of any pending debt. Getting rid of your debt will help you eventually save more and work towards other goals.

  • A Working Budget

When it comes to financial goals, it is crucial that you set up a working budget. An effective budget will ensure that you do not end up spending every penny that you earn. You need to find a good balance between the inflow of funds (income) and expenses. If you find it a bit challenging to create a budget, you can take the help of any of the several apps or tools in the market. However, merely creating a budget is just the beginning. You would need to stick to the budget diligently month after month to achieve your financials goals and eventually achieving financial freedom.

Financial planning is important and so is setting targets. The targets set should be realistic and achievable, else they are of no use. Proper thought and analysis should go into  setting realistic targets.

Cancer Patient’s Tax Considerations for NRI’s In The US

Cancer Patient’s Tax Considerations for NRI’s In The US

by | Nov 24, 2019 | income tax, IRS, NRI, tax deductions, tax filing, Tax Liabilities, taxes

Cancer Patient’s Tax Considerations for NRI’s In The US

The diagnosis of cancer can be heartbreaking for an individual as well as the family. Getting adequate financial assistance during the time is one of the first things that would occur to an individual. While health insurance plans do cover some of the expenses, cancer patients have a lot of expenses that they must cater to. Cancer patients can reduce their tax liability with the help of substantial tax breaks, as they can deduct some of the expenses that they have paid from their pockets.

Eligibility

Taxpayers who use itemized deductions instead of standard deductions can still deduct medical expenses related to cancer. They can deduct expenses related to medical care, hospital stays, medication, diagnosis, provided that these expenses exceed 7.5% of their adjusted gross income (AGI).

Taxpayers can also claim mileage used for medical treatment at 20 cents per mile along with expenses related to attending seminars on education and diagnosis of cancer.

To deduct their health insurance, self-employed taxpayers don’t have to itemize deductions. They can directly deduct their health insurance premiums from their income.

How to Avail the Tax Break

According to the IRS, expenses that qualify for tax deductions under medical expenses include the cost of cure, cost of diagnostics, cost of treatment, cost of prevention, etc. Treatment for cancer is usually very expensive starting from chemotherapy to surgery. And your health insurance policy plays a crucial role in the amount that you can claim under the tax break.

For certain rare types of cancers, patients need to undergo special treatment such as mesothelioma. Travel is an integral part of such treatments and it might be considered for tax breaks.

The IRS lists out all the expenses that qualify for the tax break, which even includes the health insurance premiums which taxpayers pay with pre-tax dollars. To make it even more accessible, there are no restrictions on the mode of payment. You can pay for the care by cash, check or even credit card for the financial year that you want the tax deductions for.

For cancer patient’s tax considerations, there is one important thing that one must keep in mind. The IRS has increased the standard deduction for all the categories. The enhanced limit now stands at $12,200 for single taxpayers and $24,400 for taxpayers filing jointly. And the same for the head of a family is now $18,350.Thus, it still is at the hands of a taxpayer if they want to opt for standard deduction or itemized deductions. The usual condition where it makes sense to opt for an itemized deduction if it exceeds your standard deduction threshold.

When your itemized deductions exceed the standard deductions, you can benefit from the tax considerations for cancer patients. And medical expenses related to treatment or cure of cancer would go under the itemized deduction category, along with expenses such as state and property taxes, contributions to charity, interest paid on the mortgage, etc.

There is another condition that you must satisfy to avail of the benefits mentioned above. If you wish to itemize your deductions pertaining to medical expenses, you can do so only if it exceeds 7.5% of your AGI or adjusted gross income. For 2019, the limit is pushed further to 10% of the Adjusted Gross Income. For the year 2018, if someone had an AGI of $100,000, they would be eligible to deduct medical expenses, if the total expenses exceeded $7,500. The calculation is quite simple, 7.5% of AGI or $100,000, which deduces $7,500 as the threshold amount.Thus, you can claim the medical expenses and reduce your tax liability along with it.

How To Choose A Good Tax Professional To Ensure The Best Tax Refunds

How To Choose A Good Tax Professional To Ensure The Best Tax Refunds

by | Nov 21, 2019 | global income tax, IRS, tax filing, Tax Planning, Tax Refund, tax savings, taxes

How To Choose A Good Tax Professional To Ensure The Best Tax Refunds

Taxes can be a bit overwhelming for a lot of us. Understanding the different clauses, making the most of the deductions, looking for refunds are just some of the things. In some cases, the tax filing can get quite a bit complicated as well. It is such times that Tax Professionals come to the rescue. Tax professionals or preparers are individuals trained and certified to handle taxes and help you through the entire process. A Good Tax Professional To Ensure The Best Tax Refunds.

Types of Tax Professionals

The first step towards choosing a good tax professional is to understand the different types of tax professionals around. And then make a decision as to whose services would be ideal for your scenario. The two categories of tax professionals that you can choose from are Enrolled Agents and Certified Public Accountants. And both of them have the capability of representing you in front of the IRS, should there be a need for it.

  • Enrolled Agent

An Enrolled Agent or EA is a licensed tax professional. Individuals can earn the designation of EA either through a special exam or by working for the IRS for 5 years or more.An EA can have an area of specialization, thus do not forget to ask your EA about theirs. Another benefit of taking the help of an EA is that they are specially trained for taxes and will mostly cost you less than a CPA.

  • Certified Public Accountant

A Certified Public Accountant or CPA are accountants who have had to undergo an education program and pre-defined requirements to get the title. It is important to note that all CPAs might not have the expertise to work on taxes. One of the biggest advantages of taking the help of a CPA is that you might get ancillary helpfor other financial needs such as financial planning or estate planning.

Apart from EAs and CPAs, you can also choose tax attorneys and chains that offer tax preparation services. Tax attorneys are best known for handling tax related disputes which are complex in nature or corporate matters. You can avail of the services on offer by tax preparation chains such as Jackson Hewitt or H&R Block.

Finding Tax Professionals

Now that you know the different types of tax professionals available, the next step is to find out the right tax professionals. Getting referrals from a friend or someone you know is one of the easiest ways of getting a tax professional. Here are some other sources to get a good tax professional.

  • National Association of Enrolled Agents

You can visit the website of the National Association of Enrolled Agents and look for an EA. The website offers a lot of filters to make your search easy. Filters such as the area of expertise or the ability to speak multiple languages can make your life easier.

  • American Institute of Certified Public Accountants

The AICPA is a good place to look for CPAs who can help you with your taxes. Remember, these financial experts can offer a lot more than merely your taxes.

  • Yelp

You can always refer to Yelp to find a good tax professional in and around you, who has a good rating. The local listings on the website can help you to get in touch with a tax professional.

  • Angie’s List

Though this service is not free, you are more likely to find an authentic tax professional on the website. You get access to a wide range of categories such as financial assistance, tax professionals and reviews from local people to choose from.

Getting tax refunds is an outcome of proper tax filing. Choosing a good professional is essential as they can help one get the best tax refunds and save money.

Most Important Year-End Tips To Increase Your Tax Refunds

Most Important Year-End Tips To Increase Your Tax Refunds

by | Nov 15, 2019 | income tax, Investment & Income, tax deductions, tax filing, Tax Liabilities, Tax Planning, Tax Refund, tax savings, taxes, Taxtips

Most Important Year-End Tips To Increase Your Tax Refunds

A quick look at the calendar and you will realize, this year has come to an end. And even before you realize, the tax season will be close. Instead of rushing during that time, you can take a few simple steps this holiday season to reduce your tax liabilities and increase your tax refunds. Most Important Year-End Tips To Increase Your Tax Refunds.

1.Retirement Planning

Planning for your retirement is a great way to add funds for your retirement and make handsome savings in the form of taxes for the current financial year. You can take the help of either traditional IRA or 401(k) to contribute to your retirement planning. Self-employed individuals can save up to 25% of their income under SEP IRA up to a maximum of $56,000 for the current year.

2.Upskilling

If you have been planning to take some classes to improve your skillset, this might be the best time to enroll. You can start with enrollment and make the payments for the next quarter by the 31st of December. This will help you get some valuable tax credits of up to $2,000 with the help of Lifetime Learning Credit.

3.FSA

Taxpayers who have FSA or Flexible Spending Account, it might be the right time to give your doctor a visit. While there is no hard and fast rule to use the FSA amount but there might not be a lot of benefits in keeping the amount as well. You can only carry forward $500 to the next year. The FSA plans usually allow subscribers to use these funds for up to 2 and a half months in the next year.

4.Charitable Donations

You can make this holiday season a little bit better for the people who are in need. If there are any unused household items or clothes, you can donate them to the less fortunate. Such donations can help you reduce your tax liability, provided you donate to qualified charitable organizations and if you itemize the items. Alternatively, if you volunteer for charitable organizations, you can claim the miles that you drove at 14 cents for each mile driven.

5.Shuffle your Investments

Some investments in your portfolio might not have performed as you expected them to. Investments that have gone down in their value can help you reduce your tax liabilities. You can use the loss to offset the gains that you have received from other investments. However, you must sell the loss-making investments to offset them with the profit-making ones. Should your losses exceed the profits, you can use up to $3,000 against your income.

6.Defer Any bonuses

Taxpayers expecting a year-end bonus for the hard work that they have put in, might find themselves in a spot. The bonus might push you to another tax bracket or increase your tax liability by a healthy margin. If you can, do speak with your boss to deter the bonus to January of next year. This way, you won’t have to taxes for the bonus in the current year.

7.Other Dependent Credit

Taxpayers supporting their grandparents or parents, or other loved ones can benefit from Other Dependent Credit. If they qualify to be non-child dependents, you can claim the Other Dependent Credit. You can claim up to $500 under this category and receive dollar by dollar reduction in your taxes.This tax credit is relatively new and not many taxpayers use it.

Each dollar that you save is a dollar that you earn. Using the above methods, you can save takes on your income and boost your tax returns as well.