Tax accounting and tax planning are two of the most important key features in personal financial planning. Here are 8 Essential Tips for Personal Taxes and tax accounting that will make your tax preparation less “taxing” this year.
Know the difference between the different types of taxes
Many people do not know the difference between the many different taxes on your income. There are many different type of taxes and here is a small portion of the listFederal Income TaxState Income TaxLocal/City/County TaxProperty TaxInvestment TaxesTax on Interest EarnedCapital Gains TaxPassive Income TaxEstate Or Inheritance TaxGift TaxEntitlement TaxFICA (Social Security & Medicare)Federal Unemployment (FUTA)Sales TaxSelf Employment TaxCorporate Taxationjust to name a few…
Consider working with a Qualified Tax Professional
Tax accounting and tax planning can be a complicated process. We strongly recommend that those individuals that have a household income of over $50,000 or itemize their deductions, see a tax preparation specialist.
At J.M. Trippon & Company CPAs, we pride ourselves in not only saving you money this year, but we are tax planning specialists who look to the future to reduce your tax liability for the future. Some tax preparers simply fill out the form by replacing your last year’s numbers and asking you to sign on the dotted line.
I believe that it is our duty to find all legally deductions for our clients each year. I also take pride in planning for the future to reduce our client’s tax liability in the years to come. We have save our clients millions of dollars over the course of our 25 years in business and filing over 10,000 federal income tax returns.
Tax preparation is both art and science
The science involves computing the complex tax laws that change year to year.
The art of tax accounting and tax planning is understanding the specific circumstances of each of our tax accounting clients. There are tax codes that make the governments intentions of tax law to be cloudy. Each of our clients are unique and require personal attention in every aspect of their tax preparation and tax accounting. By proactively assessing our clients current financial circumstances, we are able to research the tax code and legally reduce our clients tax liability in many cases.
Doing Your Taxes Yourself?
In households with an annual income over $50,000 or for those individuals who itemize their deductions, I strongly believe that you should consider a tax preparation specialist. I know that many people wish to prepare their own taxes, or use an out of the box software program. Our clients who have done this in the past, many times have paid for their processing fees many times over with the deductions that we know about.
We also offer a Audit Protection Service that guarantees representation if audited by the IRS. That in its self is priceless!
Keep great records
I can NEVER stress this enough! The more organized and accurate your financial records are, will save your money, allow you to file your federal income taxes quicker, and prepare in the event you face an IRS audit.
One tool that we advise our personal tax preparation clients on is the use of an accordion file to keep their income tax records organized. We encourage a 16 section accordion file. Label each section asAutoBankBusinessCredit CardsDentalMedicalGeneral ReceiptsGroceryIncomeInsuranceMortgageUtilitiesSchoolTaxesTravel
As a receipt that fits the criteria for any of these categories is received, it is easy to file it away until time to present your financial records to your tax preparer.
Trippon & Company CPAs send out our yearly tax organizer the first week of each new year. We include all the necessary documentation that we require each of our clients to present in order to prepare their federal income tax return.
Wise Paycheck Tax Withholding
Many people like to overpay their taxes, so that they get a nice refund in time for vacations or other wants and needs – Kind of like a forced savings. Overpaying taxes is like a giving the government an interest free loan of your money.
Good financial management involves developing savings habits so that you set aside money in an interest bearing account from each paycheck for future needs, wants and emergencies. This helps you to avoid using credit cards for those things and not having to wait until refund time. Secondly it then allows you to manage how much you can afford or are able to put into 401(k) plans at work. This accomplishes two things, first you are managing your money better and you are saving for retirement. Saving for retirement in tax deductible retirement plans like 401(k)s will also lower your taxes, enabling you to save more for retirement and everyday needs and wants.
If you want to lower the taxes that are being withheld from your paycheck, file a new W-4 form with your employer to claim an additional withholding. Make adjustment for getting married, divorced, having children and for increasing contributions to tax deductible retirement plans. Your accountant will help you estimate this.
Tax planning is not the tail that wags the dog
Taxes consume a large if not the largest single percentage of your income, therefore good financial planning should strive to lessen them, by whatever means possible as allowed by law.
However, tax planning is not the only core issue of good financial planning. Tax planning works in concert with your overall goals and your individual situation.
If you need help in organizing your federal income tax return for your business or your personal tax return, please give Trippon CPAs a call at 713-661-1040. Let our experience begin to save you money on your income taxes this year, and in the years to come.