Tax Tips

Reduce your property taxes

Posted on Feb 14, 2018

With the passage of the Tax Cuts and Jobs Act, deductions of state, local and property taxes are not worth as much as they used to be. Beginning in 2018, taxpayers are limited to a total of $10,000 in combined state income, sales and property taxes as an itemized deduction. One way you can try to adapt is by lowering your property tax bill. Believe it or not, there is a way. Why you may need a property tax reassessment Property taxes are the revenue lifeblood of cities, counties, school districts and states, and they fluctuate along with house prices. Because local governments are eager to collect more tax revenue, they are quick to get property values assessed higher when times are good. But they aren’t as quick to get values lowered again when the economy falters. As a result, over time your property value tends to creep up without downward corrections. When added to increased property tax rates, your bill today can be much higher than in the past. What you can do about it If you dread the annual letter informing you that your property tax is going to go up again, one thing you can try is to approach your local assessor and ask for a property revaluation. Here are some ideas to successfully reduce your home’s appraised value: Understand process and due dates. Do some homework to understand the approved process to get your property revalued. It is typically outlined on your property tax statement. Understand the deadlines and adhere to them. Assess your property. Do some homework before you call your assessor. Talk to neighbors and honestly assess the amount of disrepair your property may be in versus other comparable properties in your neighborhood. Call a few real estate professionals. Tell them you would like a market review of your property. Try to choose a professional that will not overstate the value of your home hoping to get a listing, but will show you comparable sales for your area. Check the classification. Look at your property classification in the detailed description of your home. Oftentimes errors in this code can overstate the value of your home. For instance, if you live in a condo that was converted from an apartment, the property value could still be based on a non-owner occupied rental basis. Understand first, then clarify your position. Armed with the information you’ve collected, approach the assessor seeking first to understand the basis of their appraisal. Then position your request for a review based on the facts. Do not fall into the trap of defending your review request without first having all the information on your property. Estimate a reasonable value. Suggest a reasonable valuation to the assessor. Assessors are so used to irrational arguments, that they may readily accept a reasonable approach. Get an appraisal, if necessary. If all else fails and you still believe your home is overvalued, consider spending the money for an independent appraisal. This option could be expensive, but can provide a fairly decent defense of your position. You should be able to recoup the cost of the appraisal with many years of lower property taxes. While going through this process, remember to be aware of the pressure that these local tax authorities are under to raise revenue. This understanding can help temper your position and hopefully put you in a better position to have your case heard. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More

Check your tax forms

Posted on Feb 12, 2018

Tax time is here. That means you need to check to make sure you have all the forms you need to file your 2017 tax return. Some of the most common forms include W-2s, 1095s and 1099s. Other commonly used forms are 1098s (used to claim deductions for interest paid) and 1098-Ts (used to deduct educational expenses). Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More

Review your withholdings

Posted on Feb 9, 2018

The IRS recently announced new withholding guidelines for all employers and payroll companies. Employers are expected to update your paycheck on or before Feb. 15. That means you’ll need to review the amount withheld from your paycheck. Why? Because the Tax Cuts and Jobs Act lowered tax rates, increased standard deductions and eliminated personal exemptions. Many employees should see an increase in their paychecks. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More

The best way to avoid an audit: Preparation

Posted on Jan 24, 2018

Getting audited by the IRS is no fun. Some taxpayers are selected for random audits every year, but the chances of that happening to you are very small. You are much more likely to fall under the IRS’s gaze if you make one of several common mistakes. That means your best chance of avoiding an audit is by doing things right before you file your return this year. Here are some suggestions: Don’t leave anything out. Missing or incomplete information on your return will trigger an audit letter automatically, since the IRS gets copies of the same tax forms (such as W-2s and 1099s) that you do. Double-check your numbers. Bad math will get you audited. People often make calculation errors when they do their returns, especially if they do them without assistance. In 2016, the IRS sent out more than 1.6 million examination letters correcting math errors. The most frequent errors occurred in people’s calculation of their amount of tax due, as well as the number of exemptions and deductions they claimed. Don’t stand out. The IRS takes a closer look at business expenses, charitable donations and high-value itemized deductions. IRS computers reference statistical data on which amounts of these items are typical for various professions and income levels. If what you are claiming is significantly different from what is typical, it may be flagged for review. Have your documentation in order. Keep your records in order by being meticulous about your recordkeeping. Items that will support the tax breaks you take include: cancelled checks, receipts, credit card and investment statements, logs for mileage and business meals, and proof of charitable donations. With proper documentation, a correspondence letter from the IRS inquiring about a particular deduction can be quickly resolved before it turns into a full-blown audit. Remember, the average person has a less than 1 percent chance of being audited. If you prepare now, you can narrow your audit chances even further and rest easy after you’ve filed. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More

Business owners: Forms due Jan. 31

Posted on Jan 19, 2018

Don’t forget that Jan. 31 is an important due date if you own a business, or have a side business in addition to your regular job. Avoid fines by making sure Forms W-2 and 1099-MISC are postmarked or sent electronically by this date to the IRS as well to the people you did business with in 2017. Remember, you may face separate fines for each late form. The Jan. 31 deadline for these forms was unified as part of the IRS’s larger effort to minimize refund fraud. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More

Looking ahead: Tax reform in 2018

Posted on Jan 17, 2018

Congress has passed tax reform that will take effect in 2018, ushering in some of the most significant tax changes in three decades. Here are some major items in the new bill that impact individual taxpayers. Reduces income tax brackets. The bill retains seven brackets, but at reduced rates, with the highest tax bracket dropping to 37 percent from 39.6 percent. Double standard deductions. The standard deduction nearly doubles to $12,000 for single filers and $24,000 for married filing jointly. To help cover the cost, personal exemptions and most additional standard deductions are suspended. Limits itemized deductions. Many itemized deductions are no longer available, or are now limited. Here are some of the major examples: Caps state and local tax deductions. State and local tax deductions are limited to $10,000 total for all property, income and sales taxes. Caps mortgage interest deductions. For new acquisition indebtedness, mortgage interest will be deductible on indebtedness of no more than $750,000. Existing mortgages are unaffected by the new cap as the new limits go into place for acquisition indebtedness after Dec. 14, 2017. The act also suspends the deductibility of interest on home equity debt. Limit on theft and casualty losses. Now only available for federally declared disaster areas. No more 2 percent miscellaneous deductions. Most miscellaneous deductions subject to the 2 percent of adjusted gross income threshold are now gone. Cuts some above-the-line deductions. Moving expense deductions get eliminated except for active-duty military personnel, along with alimony deductions beginning in 2019. Weakens the alternative minimum tax (AMT). The bill retains the alternative minimum tax but changes the exemption to $109,400 for joint filers and the phaseout threshold to $1 million. The changes mean the AMT will affect far fewer people than before. Bumps up child tax credit, adds family tax credit. The child tax credit increases to $2,000 from $1,000, with $1,400 of it being refundable even if no tax is owed. The phaseout threshold increases sharply to $400,000 from $110,000 for joint filers, making it available to more taxpayers. Also, dependents ineligible for the child tax credit can qualify for a new $500-per-person family tax credit. Expands use of 529 education savings plans. Qualified distributions from 529 education savings plans, which are not subject to tax, now include tuition payments for students in K-12 private schools. Doubles estate tax exemption. Estate taxes will apply to fewer people, with the exemption doubled to $11.2 million ($22.4 million for a married couple). Reduces pass-through business taxes. Most owners of pass-through entities such as S corporations, partnerships and sole proprietorships will see their income tax lowered with a new 20 percent income reduction calculation. Because major tax reform like this happens so seldom, it’s worth scheduling a tax-planning consultation early in the year to ensure you reap the most tax savings possible during 2018. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More