Tax Planning Strategies
By: Merrill Montgomery | Posted: 14th February 2011
With the amount that you save, from lowering your last estimated tax payment, review the possibility of placing $5000 or more, if you are over 50 years old, into an IRA account by April 15th of next year. This will help to lower your tax liability. (Check with your tax professional, especially, if you have a retirement plan at your place of work) Review old stock purchases that you inherited or have in your portfolio, which can be sold at a lost. This way you can benefit from the $1500 (filing single) or $3000 (filing married, joint) capital gain loss. Review your cash flow, and determine if now would be the time to purchase office equipment, or furniture for your business. Perhaps a super fast laptop, or a new high end cell phone? (Owing a real, home business, has serious tax benefits)
I have a friend named Mark who wanted to do his taxes on his own. Little did he know that the taxes would be so difficult to do. He was not as sure as to what was tax deductible, what forms to do and in the end, couldn't pay the proper amount to the IRS. In the end, he ended up having to pay extra taxes to the IRS extra. I asked him what happened and it seemed that he had too much difficulty filling out the forms and didn't want to get help.
With all the different health care options for employees and different types of billable services, even small business owners can face very complex tax situations. In this case a franchise is financial suicide, but you already knew that. The good news is that nearly every tax professional specializes in a particular field. Finding an accountant that can handle your particular field shouldn't be too much of a problem.
Unfortunately, not too many people can bail you out in case of IRS trouble, so getting an experienced lawyer on your team may turn out to be a very prudent decision. When you enlist the help of an attorney, he does the talking on your behalf in all the hearings also the IRS finds it preferable to deal with an attorney than with the tax payers because the lawyers are professional who can handle the situation effectively. They jump right into negotiations without any emotional outburst.
Many people fail to file tax returns. Many of those who fail to file, do so because they are for whatever reason, overwhelmed by the tasks involved. In the case of members of professions, doctors, lawyers, judges or other government officers, teachers, etc, the added fear and embarrassment of facing the possibility of having their problem become public often creates an additional emotional hurtle which must be overcome. It is always best for people in this situation to seek out professional tax preparation assistance, particularly from professionals who are familiar with preparing delinquent and non filed returns, to get started on handling the problem.
As a former TAO (tax assistance officer) while I was in the military, I was thoroughly impressed with the fact that each year every TAO was required to undergo training and updated modules of tax training to better perform this volunteer task and to be best suited to assist fellow military personnel. With no intended disrespect to other "tax professionals" it is a simple reality that military tax issues require a specialized tax trained person versed in military pay, benefits and compensation matters. That "Q" in block 13 of the W2 is a big number - what does it mean? A military VITA volunteer will know!
The first think you should be looking in tax software is how simple, easy and understandable the application is. If the software is complex, uses too many professional and technical terms and does not offer a clean easy to use navigation system, it will be stressful to prepare a return with it. TaxTreasure is one solution that offers really nice and simple-to-use navigation system. You can easily switch from the personal data screen to the tax deductions screens or goto the W2 worksheet where you will be able to quickly copy your W2 data to the software. Turbotax is another solution that makes your life easy when it comes to menus.
Always beware of a tax preparation office that guarantees you a large refund without even reviewing your financial information. They could be trying to mislead you. Alternatively, they might have the intention of using false claims to get you a refund no matter what. All of our tax professionals are committed to getting you the biggest refund possible, and can typically provide a free estimate over the phone.When you do call and speak to a tax preparer over the phone you should always ask them what they need from you. It is a huge red flag if they tell you they do not need much information from you, or if they rush you off the phone. In order to provide you with an estimate they should ask you a variety of questions to determine what credits and deductions you qualify for.
(If you owe tax and don't file on time, the total late-filing penalty is usually four and one-half percent of the tax owed for each month, or part of a month, that your return is late up to five months. If your return is over 60 days late, the minimum penalty for late filing is the smaller of $100 or 100 percent of the tax owed)About the Author
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Tags: small business owners, home business, cash flow, retirement plan, cell phone, tax liability, accountant, laptop, franchise, capital gain, tax payers, prudent decision