As we welcome a new year, and a new decade, we also need to deal with the less-welcoming chore of doing your taxes. Yes, it is rolling around to tax time once again. But, now that we are being forced to think about annual taxes, it is a great opportunity to fine-tune our tax knowledge so maybe we can do some smart tax planning in the new year.
Try Not to Stress About Taxes Too Much
Whether you owe or expect a refund, it is common for stress levels to rise during tax time. In fact, there are some statistics that show that car crashes increase by 6 percent on Tax Day. That is collective stress indeed.
Don’t take that stress, however, and make bad tax decisions as a result. For example, it is a bad idea to pay your tax bill with a high-interest credit card. That is simply digging yourself deeper into debt. It is also a very bad idea to fail to file your tax return because you do not have the money to pay your taxes, or even worse, report false information on your return.
The better way to work through the tax stress is to file a tax return and ask for an extension if you do not have all of the money you need to pay to the IRS. And, if you do have the money, pay the tax bill with a check or money order, not a credit card.
Think Ahead with Year-Round Tax Planning
In this article, we will discuss several strategies you can employ in the new year so you can minimize the kinds of stressors that you have felt on past tax days.
In the past, if you were surprised that you were not going to get a refund, or if you were annoyed that your refund was a lot less than you were expecting, then you are probably someone who could benefit from some solid tax planning. Use these strategies to help you avoid surprises in the future.
Of course, after reading this article, you feel like you would benefit from talking to an experienced professional about your own tax situation because the IRS has sent you a notice, we invite you to call the tax attorney of Florida, Mary E. King, P.L. The Law Office of Mary E. King, P.L. can make sure that your tax issues are resolved efficiently and at the lowest cost to you. Please fill out our online contact form, or call us at 941-906-7585 today.
Now, on to the Year-Round tax planning strategies.
Strategy #1: Adjusting Your Withholding
About 75 percent of Americans get a tax refund every year. The average refund is about $2,400. That is a lot of money that you are essentially loaning out to the IRS by overpaying your taxes in increments of about $200 a month.
Perhaps you could get more value out of that money during the year. You could invest in yourself and take advantage of the time value of money.
So, consider adjusting the withholding from your paycheck by ensuring that roughly the actual amount of money you owe in taxes is withdrawn, rather than overpaying. One easy way to do that is by claiming something other than “0” for the number of dependents.
Strategy #2: Remember the Legal Ways to Save on Taxes
There are a number of so-called “legal loopholes” that allow you to minimize your tax burden. You would be wise to take full advantage of them. For example:
1. Charitable Donations. If you itemize your deductions, then you can deduct a charitable donation made, voluntarily and with no expectation of any substantial reward or benefit, to a qualified organization of your choice. That includes not only monetary donations but the fair market value of any donated property.
2. Gifts. You can also deduct from your income any gifts given to family members. For 2019 tax purposes, an individual can give up to $15,000 to children or grandchildren without any gift tax. A gift over that amount, however, is subject to a gift tax, which is paid by the giver, not the receiver, of the gift.
3. Tax–Free Income. There is certain compensation that you receive that cannot be taxed by the IRS. A few examples of tax-free income from your employer include $5,250 for education, $5,000 for child care assistance, adoption assistance and reimbursements, and $260 per month for public transportation or parking.
Strategy #3: Use a Tax-Favored Spending Account.
Many employers provide “flexible spending accounts” or flex-spending, which is an account that holds pre-tax money for your use. Most, if not all, flex-spending accounts must be forfeited by December 31, and do not rollover. So, be sure to get the most out of that pre-tax money before it disappears.
Strategy #4: Talk to an Experienced Tax Lawyer in Florida for Help
Taxes can be a challenge, bringing you a great deal of stress. Of course, that stress is compounded when the IRS sends you a notice of some issue or notifies you that you will be audited.
In the event of an audit, you need to talk to a tax attorney in Florida who can help. Mary E. King has spent her career concentrating in tax law and can help you with tax audits in Florida and elsewhere. Attorney King has a wealth of information about what types of options would make the most sense for you and your business.
That helps explain why she’s received an A+ rating from the Florida Better Business Bureau. If you have a tax-related issue – no matter how small or how large – setting up an initial consultation with Mary E. King, tax attorney of Florida, is the first step you should take towards relief.
The Law Office of Mary King P.L. offers complete IRS problem solving services including all areas from tax debt settlement to planning the most efficient tax strategy for individuals and businesses. Call us today to schedule an initial consultation. With years of experience as a tax lawyer in Florida for many clients, Attorney Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form, or call us at 941-906-7585.