Month: April 2018

Self-Employed? Five Easy Ways to Lower your Tax Bill

If you’re like most small business owners, you’re always looking for ways to lower your taxable income. Here are five ways to do just that.

1. Deducting the Cost of a Home Computer

If you purchased a computer and use it for work-related purposes, you can take advantage of the Section 179 expense election, which allows you to write off new equipment in the year it was purchased if it is used for business more than 50 percent of the time (subject to certain rules).

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Correct Filing Status and Reporting Name Changes

If you haven’t filed your taxes yet, it’s time to stop procrastinating. If you’re not sure what to do first, the fastest way to get started is to figure out which filing status applies to you. In addition, if your name or that of a dependent changed during the tax year for which you are filing, then you will also need to report the name changes to the Social Security Administration.

Choosing the Correct Filing Status

Choosing the correct filing status is important because it can affect the amount of tax you owe for the year. It may even determine if you must file a tax return. Here are the five filing statuses you can choose from:

1. Single. This status normally applies if you aren’t married. It applies if you are divorced or legally separated under state law.

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Time For a Paycheck Checkup — Tax Withholding 2018

Withholding issues can be complicated, and with the passage of the recent tax reform legislation — most of which takes effect starting in 2018 — it’s important to make sure the right amount of tax is withheld for your personal tax situation. As a first step to reflect the tax law changes, the IRS released new withholding tables in January 2018. A revised Form W-4 was released on February 28, 2018. These updated tables were designed to produce the correct amount of tax withholding.

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Refundable Vs. Non-Refundable Tax Credits 

Tax credits can reduce your tax bill or give you a bigger refund but not all tax credits are created equal. While most tax credits are refundable, some credits are nonrefundable but before we take a look at the difference between refundable and nonrefundable tax credits, it’s important to understand the difference between a tax credit and a tax deduction.

Understanding The Difference Between A Tax Credit And A Tax Deduction
Tax credits reduce your tax liability dollar for dollar and are more valuable than tax deductions that reduce your taxable income and tied to your marginal tax bracket. Let’s look at the difference between a tax credit of $1,000 and a tax deduction of $1,000 for a taxpayer whose income places them in the 22% tax bracket:

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Five Tax Tips for Older Americans — Senior Tax Planning

Everyone wants to save money on their taxes, and older Americans are no exception. If you’re age 50 or older, here are five tax tips that could help you do just that.

1. Standard Deduction for Seniors. If you and/or your spouse are 65 years old or older and you do not itemize your deductions, you can take advantage of a higher standard deduction amount. There is an additional increase in the standard deduction if either you or your spouse is blind.

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Need To File A Tax Extension? Don’t Wait.

If you’ve been procrastinating when it comes to preparing and filing your tax return this year you might be considering filing an extension. While obtaining a 6-month extension to file is relatively easy — and there are legitimate reasons for doing so — there are also some downsides. If you need more time to file your tax return this year, here’s what you need to know about filing an extension.

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Late Filing and Late Payment Penalties

April 17 is the deadline for most people to file their federal income tax return and pay any taxes they owe. The bad news is that if you miss the deadline (for whatever reason) you may be assessed penalties for both failing to file a tax return and for failing to pay taxes they owe by the deadline. The good news is that there is no penalty if you file a late tax return but are due a refund.

Here are ten important facts every taxpayer should know about penalties for filing or paying late:

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Understanding Estimated Tax Payments

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, and rent, as well as gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

FILING AND PAYING ESTIMATED TAXES

Both individuals and business owners may need to file and pay estimated taxes, which are paid quarterly. In 2018, the first estimated tax payment is due on April 17, the same day tax returns are due. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

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