Tax Services

Planning for Success

Planning is the key to reducing your tax liability successfully and legally. To maximize your after-tax income, we go beyond tax compliance and proactively recommend tax saving strategies. By attending frequent tax seminars, we make it a priority to improve our mastery of the current tax law, complex tax rules, and new tax regulations.

Companies and individuals pay the lowest amount of taxes permitted by law because we are continually looking for ways to reduce your taxes throughout the year, not just at the end of the year.

We recommend strategies to save taxes and help by keeping Uncle Sam out of your pockets. Remember, we work for you, not for the IRS. Many of our clients save many times the fee in reduced tax liability through careful planning and legitimate tax strategies.

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Why Tax Preparation is Important

The U.S. tax code is in constant flux, causing many small business owners and individual taxpayers to miscalculate their taxes. They may not be aware of deductions and tax breaks to which they are legally entitled, or they may make a mathematical mistake.

No one wants to pay more taxes than they need, but underpaid taxes can alert the IRS. Contact our accounting firm to ensure that your taxes are correctly calculated. To reduce tax obligations for our customers, we offer quality tax preparation and proactive tax planning strategies.

We are reliable and experienced tax preparation accountants. Our accounting firm keeps tabs on revisions to tax laws, so our methods are always up-to-date and ensure that no tax penalties are imposed on you. We also know the tax credits and deductions available that can save you hundreds or even thousands at the end of the year.

Minimize Liability

The reduction of tax liability is one of the most critical aspects of financial planning for business owners and individuals every year, but it can also be a confusing process. When filing taxes each year, tax credits and deductions are often overlooked, and miscalculations or misinterpretations of tax guidelines can end up costing taxpayers more than they could have expected.

Although it is not exhaustive, the following tax planning strategies can help some taxpayers reduce their annual tax liabilities.

The easiest way to reduce gross income is by adding to a pension plan sponsored by the employer or by contributing to a traditional IRA held individually. Tax benefited plans such as 401 (k) or 403 (b) offered by an employer allow employees to contribute up to a maximum of $19,000 in pre-tax dollars for the 2019 tax year ($18,500 for 2018); for those over 50 years of age, an additional $6,000 may be added as a catch-up.

The addition of 401(k) or 403(b) is carried out utilizing paychecks and offers a direct dollar-for-dollar reduction in the total taxable income, resulting in a significant decrease in the tax liability for each year. Instead, contributions to a traditional IRA can be made if an employer-sponsored plan is not available or an individual is self-employed.

These additions are also made before taxation, which leads to the same direct reduction in taxable income and ultimately total tax liability. Contributions for the 2019 tax year cannot exceed $6,000, with an additional $1,000 allowed for those over 50 years of age.

Maximize Tax Credits

Tax credits are extremely valuable breaks for taxpayers. Credits lead to a greater reduction in tax than deductions because they are directly applied to your tax bill in a dollar-for-dollar manner.

For instance, a $1,000 credit would cut your tax bill by $1,000, but a $1,000 deduction would reduce your taxes by less than $1,000 -- more specifically, typically somewhere between $100 and $370 under current tax law. The following tax credits are among the most common and can produce significant savings.

The earned income tax credit (EITC) gives sizable reductions in taxes to workers with low- or mid-level incomes. The credit amount varies by family size and income.

The income limits below indicate which taxpayers are eligible for at least some of the earned income credit but bear in mind that the top credit amount phases out gradually over a large portion of the income range.

What is the 2019 tax rate on capital gains?

Investors enjoy a tax break on certain types of investment income. Dividends that certain stocks regularly pay investors is income that qualifies for lower tax rates; so make the profits on investments that you sell after having held them for longer than a year. These qualified dividends and long-term capital gains are eligible to get taxed at 0%, 15%, or 20%, producing substantial savings.

Before tax reform, the rules for the lower rates on these types of investment income were more straightforward. Taxpayers in the old 10% and 15% brackets paid 0%, those in the 25% to 35% brackets paid 15%, and those in the top 39.6% bracket paid 20%.

Rules after tax reform aren't as simple because they refer to somewhat antiquated legal provisions. Accordingly, people with qualified dividend income or long-term capital gains need to refer to the brackets below to determine which tax rate applies to them.

To take advantage of these lower rates, taxpayers have two options. First, try to meet the requirements for qualified dividend income because nonqualified dividend income is taxed at the higher ordinary income tax rate.

Also, if you sell an investment you've held for a year or less, then it's treated as a short-term capital gain rather than long-term, and short-term gains are also taxed at regular tax rates. If you have the foresight to choose your investments carefully and adopt a longer-term investing strategy, tax laws will reward you with lower rates.

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What is the standard deduction for 2019?

The standard deduction took on extra significance in 2018 because of the big boost in the size of the tax break. The standard deduction is essential because it allows you to reduce the amount of income you earn that's subject to tax, and you're able to use it automatically without doing any extra work to demonstrate that you qualify for other available tax deductions. One big part of tax reform resulted in standard deduction amounts nearly doubling between 2017 and 2018.

The only changes to the standard deduction for 2019 reflected the inflation adjustments for the year. You can see in the table below that the changes were relatively minimal, although getting an extra few hundred dollars of tax-free income will be at least somewhat valuable.

In addition to these base amounts, those who are 65 or older or are blind get to take additional measures as a standard deduction. For those who are married, the added amount is $1,300, while singles get to add $1,650. The married amount is the same as in 2018, but the single amount is $50 higher.

If you're 65 or older and blind, then you can boost your standard deduction by double the relevant amount. Moreover, for joint filers, each spouse has an opportunity to get these added amounts. So, for a married couple in which both spouses are over 65, and both are blind, the standard deduction would increase by $5,200 -- or $1,300 times four.

Most minor children don't have to file taxes at all, but if they have income from a job or investments held in their name, then it's possible that they will need to file. If so, they typically aren't allowed to claim the full standard deduction. Instead, they're subject to reduced standard deductions.

For them, a standard deduction of at least $1,100 is available, which is $50 more than in 2018. Those who have earned income from a job or other source get a standard deduction of at least their total earned income plus $350 more, until that amount rises above the regular standard deduction shown in the table above.

The most popular tax credits for 2019

Tax credits are extremely valuable breaks for taxpayers. Credits lead to a greater reduction in tax than deductions because they are directly applied to your tax bill in a dollar-for-dollar manner.

For instance, a $1,000 credit would cut your tax bill by $1,000, but a $1,000 deduction would reduce your taxes by less than $1,000 -- more specifically, typically somewhere between $100 and $370 under current tax law. In particular, the following tax credits are among the most common and can produce significant savings.

The earned income tax credit (EITC) gives sizable reductions in taxes to workers with low- or mid-level incomes. The credit amount varies by family size and income, with a maximum of $6,557 for filers with three or more children, $5,828 for those with two children, $3,526 for those with one child, or $529 for those with no children.

The income limits below indicate which taxpayers are eligible for at least some of the earned income credit but bear in mind that the top credit amount phases out gradually over a large portion of the income range.

A special thing about the earned income tax credit is that you can still get the credit amount back from the IRS in the form of a refund, even if you don't owe anything in taxes. As you can imagine from the chart, a credit of several thousand dollars for workers earning less than $55,000 can make a big financial difference for families struggling to achieve ends.

The child tax credit is a simple provision, paying $2,000 for each eligible child. To qualify, children must be 16 or younger at the end of the tax year, and the person claiming the credit must live with the child for more than half the year and provide at least half of the child's financial support.

Also, to get the full credit, your income must be no greater than the below amounts. If your income exceeds these thresholds, you lose $50 in credits for every $1,000 that you earn above the threshold. Two different tax credits provide financial relief for educators.

The American Opportunity tax credit pays 100 percent of the eligible tuition and required fees of up to $2,000 and another 25 percent of the next $2,000, resulting in a maximum total credit of $2,500 per year. For four years of undergraduate education, taxpayers can claim full credit if they make up to $80,000 for singles or $160,000 for joint filers. Reduced amounts are available for incomes up to $90,000 for singles or $180,000 for joint filers.

Meanwhile, the tax credit for lifelong learning offers additional educational tax breaks beyond traditional college. A 20 percent credit of up to $10,000 in eligible expenditure each year is available to taxpayers who receive less than $58,000 if they are single or $116,000 if they file together.

This credit is available for graduate school, vocational training and other non-traditional expenditure on education. Finally, the Saver's tax credit pays up to $1,000 per person to support pension contributions. Depending on your income, 10 percent, 20 percent, or 50 percent of contributions to an IRA, 401 (k) or similar retirement account can be credited to up to $2,000.



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