Posts Tagged "income taxes"

New Year, New Job- 5 Tax Tips for Job Changers

Posted on Dec 19, 2017

There are a lot of new things to get used to when you change jobs, from new responsibilities to adjusting to a new company culture. You may not have considered the tax issues created when you change jobs. Here are tips to reduce any potential tax problems related to making a job change this coming year. Don’t forget about in-between pay. It is easy to forget to account for pay received while you’re between jobs. This includes severance and accrued vacation or sick pay from your former employer. It also includes unemployment benefits. All are taxable but may not have had taxes withheld, causing a surprise at tax time. Adjust your withholdings. A new job requires you to fill out a new Form W- 4, which directs your employer how much to withhold from each paycheck. It may not be best to go with the default withholding schedule, which assumes you have been making the salary of your new job all year. You may need to make special adjustments to avoid having too much or too little taken from your paycheck. This is especially true if there is a significant salary change or you have a period of low-or-no income. Keep in mind you’ll have to fill out a new W-4 in the next year to rebalance your withholding for a full year of your new salary. Rollover your 401(k). While you can leave your 401(k) in your old employer’s plan, you may wish to roll it over into your new employer’s 401(k) or into an IRA. The best way is to get your retirement funds transferred directly between investment companies. If you take a direct check, you’ll have to deposit it into the new account within 60 days, or you may be assessed a 10 percent penalty and pay income tax on the withdrawal. Deduct job-hunting expenses. Tally up your job-seeking expenses. If they and other miscellaneous deductible expenses total more than 2 percent of your adjusted gross income for the year, you can deduct them on an itemized return. This includes things like costs for job-search tools, placement agencies and recruiters, and printing, mailing and travel costs. A couple caveats: you can only use these deductions if your expenses were to search for a job in the same industry as your previous job, and you were not reimbursed for them by your new employer. Deduct moving and home sale expenses. If you moved to take a new job that is at least 50 miles farther from your previous home than your old job was, you can also deduct your moving expenses. There’s another benefit for movers, too. Typically, you can only use the $250,000 capital-gain exclusion for home sales if you lived in your primary residence for two of the last five years before you sold it. But there is an exception to the rule if you sold your home to take a new job. Finding a new job can be an exciting experience, and one that can create tax consequences if not handled correctly. Feel free to call for a discussion of your...

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Tax Filing Reminders

Posted on Sep 15, 2017

Third quarter installment of 2017 individual and corporation estimated income tax is due. S corporations: Filing deadline for 2016 tax returns for S corporations that requested/received a six-month extension. Partnerships: Filing deadline for 2016 tax returns for partnerships that requested/received an automatic six-month extension. Electing large partnerships: Filing deadline for 2016 tax returns for electing large partnerships that requested/received a six-month extension. October 16 – Filing deadline for 2016 individual or corporation tax returns that requested/received a six-month extension. Pay taxes due by this...

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Five home office deduction mistakes

Posted on Jul 25, 2017

Here are five common mistakes of those who deduct home office expenses. 1. Not taking it. Some believe the home office deduction is too complicated, while others believe taking the deduction increases your chance of being audited. 2. Not exclusive or regular. The space you use must be used exclusively and regularly for your business. Exclusively: Your home office cannot be used for another purpose. Regularly: It should be the primary place for conducting regular business activities, such as record-keeping and ordering. 3. Mixing up your other work. If you are an employee for someone else in addition to running your own business, be careful in using your home office to do work for your employer.Generally, IRS rules state you can only use a home office deduction as an employee if your employer doesn’t provide you with a local office. 4. The recapture problem. When selling your home you will need to account for any home office depreciation. This depreciation recapture rule creates a possible tax liability for many unsuspecting home office users. 5. Not getting help. The home office deduction can be tricky, so ask for help, especially if you fall under one of these...

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Reap the benefits of hiring your child for the summer

Posted on Jul 10, 2017

Hiring your children to work in your business can be a win-win situation for everyone. Your kids will earn money, gain real-life experience in the workplace, and learn what you do every day. And you will reap a few tax benefits in the process. The following guidelines will help you determine if the arrangement will work in your situation. Make sure your child works a real job that he or she can reasonably handle, no matter how basic or simple. Consider tasks like office filing, packing orders, or customer service. Treat your child like any other employee. Expect regular hours and appropriate behavior. If you are lenient with your child, you risk upsetting other employees. To avoid questions from the IRS, make sure the pay is reasonable for the duties performed. It’s not a bad idea to prepare a written job description for your files. Include a W-2 at year-end. Record hours worked just as you would for any employee. If possible, pay your child using the normal payroll system and procedures your other employees use. Hiring your children works best if you are a sole proprietor. It has additional tax benefits not available if your business is organized as a C corporation or an S corporation. If you have questions, give us a call. Together we can determine if hiring your child is the right course of action for your business and your...

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Schedule your midyear tax planning session

Posted on May 12, 2017

Most people don’t include tax planning on their summertime agenda, but maybe they should. The problem with waiting until the end of the year is that you reduce the time for planning strategies to take effect. If you take the time now to schedule a midyear tax planning review, you’ll still have eight months for your actions to make a difference on your 2017 tax return. In addition, proposed tax reform could be cause for additional changes to your tax plan. Planning now for 2017 taxes not only helps reduce your tax burden, but it can help you gain control of your entire financial situation. Give us a call to set up an appointment...

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