IF you have ever been frustrated By a huge tax bill this newsletter is for YOU! every week we will cover ways to legally reduce your tax bill or tax liability so you can keep more of your income (or resolve unpaid taxes you already owe) without breaking the bank.
This is my first of what I hope will be many helpful weekly newsletters on tax topics relevant to you. I'll be sending out e-mails every Tuesday morning with helpful tax tips which will help you keep your tax bill down so you can keep more of your hard-earned income. The e-mails will be short and to the point and have links to other helpful resources.
If you're not interested, no hard feelings! There's a simple unsubscribe link at the bottom of this e-mail. But, I hope you'll stick around and enjoy the helpful tips.
John's Tax Week Smart Taxpayer Tips
1. Avoid Penalties by Making a Last Minute Estimated Payment. One of our clients withheld from their taxes all year long, but got a big $50,000 commission check that came in right before the end of December. April snuck up on him and the money was spent. He was about $20,000 short this year of paying what he owes. He filed an extension. Phew! Home free until October! Not quite. The Failure to Pay Penalty stacks up each month at .5% per month... $100 in April, $200 in May, $300 in June, $400 in July, $500 in August, $600 in September, and $700 in October. That's $2,800!!! But, that's not all, there's interest which runs 5% over prime. That's another $575!! The grand total is $3,375. That's real money! Make an estimated payment for 2018 with your 2017 Taxes and put the kibosh on unnecessarylate payment penalties.
2. Check Your W-4 Withholding. A lot of people are surprised to find out at the end of the year that they unexpectedly owe taxes even though they had withholding taken out of their pay. Is this you? If so, the new tax year is a great time to check with HR and make sure you're withholding enough to make sure you won't have a big tax bill a year from now. And for those that have regular pay as well as commissions and bonuses or other incentive pay, its even more important to make sure you have sufficient withholding.
3. Set Up Your Home Office in 2018. Whether you are a doctor, a plumber, as long as you are self-employed, you probably qualify for a home office deduction and can use it to offset your business profits. However, under the TCJA, employees can no longer claim these deductions. If you are self-employed you need to come up with a system for getting credit for the amount you pay from mortgage or rent, utilities, etc. and for supplies related to your home office. What is the quick & dirty test to know if your home office qualifies? Glad you asked. The home office must be: 1) exclusively used for business; and 2) a "primary" area where you do a particular task (i.e., writing your company newsletter). If everything else is in order, don't let the stigma of potential audit risk scare you away from taking a very beneficial deduction available to many taxpayers.
Free Advice the IRS Loves: Writing Off Legal & Accounting Fees.
Is it business or is it personal? That is the question when it comes to whether professional fees are deductible.
So let’s start with the obvious. The IRS has a special place in its heart for “tax preparation fees” because they lead to revenue, and the IRS encourages you to get your taxes right every chance it gets. Most of your tax preparation fees are fully deductible. That question you asked your Tax Attorney about that tricky business expense – deductible! Those Quickbooks adjustments your accountant did for you – deductible! And, that audit, or dispute over taxes owed for your business that you paid Fazzio Law Offices to defend for you – deductible! Legal fees related to determining your business taxes are fully deductible on your Sch. C while expenses related to your personal taxes can only be deducted on Sch. A, if you itemize, which won’t give you the same bang for your buck. More on how the TCJA effects this perennial favorite below. Read more...
Fazzio Law Offices is a law firm dedicated to helping guide our clients through the storms of life. We meet most of our clients when they are facing a personal or financial problem that requires legal intervention. But, once their problem is solved, we go on to build a long-term relationship with our clients and hope to help them with all their future legal needs. If you are one of our current or former clients or thinking of becoming one, please e-mail me directly at email@example.com and let me know what we can do to serve you better, what we are doing poorly, and also please give us a pat on the back for what we are doing well.