David Du Val, Chief Customer Advocacy Officer for TaxAudit, sat with Cheapism.com to discuss strategies for ensuring accurate and stress-free tax filing.
TaxAudit, a Folsom, CA-based tax firm specializing in providing tax audit representation, offered insight into how to make income tax preparation smooth and accurate for the 2019 tax year. David Du Val, the Chief Customer Advocacy Officer for TaxAudit discussed strategies with Cheapism.com, a lifestyle blog that focuses on effective money management.
“If you’re a small business owner or self-employed, you should start by beginning your income review process,” says Mr. Du Val. “Subtract your deductible expenses from your total income to find your taxable net income, and then do a projection for the final months of the year to come up with a rough idea of what you might end up owing or receiving as a refund.” It’s important to start early, because it gives you time to develop a plan in case you end up owing money. “If it looks like you’re going to owe, you can start making estimated payments now — or make higher estimated payments to make up the difference if you’re currently making estimated payments.”
According to Mr. Du Val, if you’re a retiree, you should develop a strategic approach to withdrawing from retirement funds – sizable withdrawals may inadvertently put you in a higher tax bracket, costing you money. “Retirement plan funds that are distributed from tax-deferred accounts, such as traditional IRAs and traditional 401(k) plans are taxed at ordinary income tax rates and the tax bracket you’re in depends on all of your taxable income for the year. This is why it makes sense to take only what you need, so that your distributions don’t push you up into a higher tax bracket,” he says.
However, retirees who are over 70 years old should closely review the Required Minimum Distributions (RMD) that apply to certain retirement accounts, including IRAs, SEP IRAs, and Simple IRAs. Failure to take out the minimum distribution during the calendar year may lead to significant penalties – as high as 50 percent.
If you, a spouse, or a dependent took courses at a college, university, vocational, or post-secondary school, you could be eligible for a tax credit for tuition and expenses. The tax credits you could claim are the American Opportunity Tax Credit, which is for eligible students during their first four years of higher education, or the Lifetime Learning Credit, which offers tax credits for tuition to students in eligible institutions, including undergraduate, graduate, or professional development school. It is crucial to keep detailed records and have the appropriate documents – the 1098-T form in particular. “You’ll need this [the 1098-T form] to do your taxes when the time comes, as well as receipts for required supplies and equipment,” says Mr. Du Val.
To read the full article on Cheapism.com, please visit: https://blog.cheapism.com/year-end-tax-moves-15199/
For additional tax support or to learn about TaxAudit’s services, please visit TaxAudit.com
Boris Dzhingarov graduated UNWE with a major in marketing. He is the founder of ESBO ltd a brand mentioning company. He is also passionate about meditation and healthy living. You can find articles on such topics at his spiritual blog Dzhingarov.com.