Tax-Time need not fill you with stress and dread if you have great professional tax accountants as your back-up. Perhaps you don’t know you need professional help to prepare your taxes. In this blog, we will examine some instances in which we recommend you get help for filing your taxes.
Our tax squad At Gavrilov& Co. is your back-up team when you go into action by filing your taxes. Yes, we know software provides a popular option to working with professional tax preparers. However, be aware that it is very limited in scope. Please read our previous blog to learn about you’re missing if you depend solely on software for Tax-Time.
In order to know if you need our help at Tax-Time, this article will take a look at some of the circumstances that might have changed a tax-payer’s life—and tax situation– within the last year. However, we first have a special bulletin that requires all tax-payers attention.
Special Alert: Gavrilov & Co Red Hot Tax-Time Alert
There’s no question that the federal tax reforms have stolen the spotlight from this year’s tax story. But tax-time 2017 really is the current matter at hand.
A Red Hot Alert means Heads up, Tax Filers! The Gavrilov & Co Tax Squad does not want you to miss this information.
1. With regard to medical Expenses, the new laws have an effect on 2017 as well as 2018. Recently Melissa Labant, director of tax policy and advocacy with the Association of International Certified Professional Accountants, stated, “Folks should take a close look at their medical expenses.”
She explained that the “tax law expanded the availability of the deduction for medical expenses not just for 2018, but also for 2017. Let’s crunch some numbers to show an example.
2. In the old days, the deduction applied to medical expenses “over 10 percent of adjusted gross income…”
3. However, as the New York Times reported when 2017 tax time began, “the law lowered the bar to 7.5 percent for those two years.” This is a detail you don’t want to miss.
4. Therefore, let’s do the math. Provided your adjusted gross income equals $40,000, “you can write off medical expenses over $3,000, rather than over $4,000.” And that can make a difference in what’s in your wallet.
5. But, as Shakespeare said, “Here’s the rub:” To get this write off for 2017 and 2018 Tax-Time, you must itemize.
6. Likewise, the tax squad at Gavrilov & Company wants you to know also that at next year’s tax time, you must itemize to take the deduction. And then, as if by magic, after 2018, the law restores the 10 percent maxim.
About our Tax-Time Red Hot Alerts
Although this information was reported in the New York Times, we wanted to make sure it was clear to our readers, friends and clients. Therefore, we felt it was worthy of a Tax Time Red Hot Alert. As Tax Time continues, we will be bringing you other Tax Time Red Hot Alerts on tax tips of strong importance.
The tax squad at Gavrilov & Company is here to save you as much money as is legally possible. This is exactly the kind of deduction you could miss without professional help on your filing.
And Now–Back to Our Topic of the Day: Tax Situations That Require a Little Professional Tax-Time Help
Below you will see information on five of our favorite reasons to hire a tax professional at Tax-Time this year. Each reason is keyed to a question about common, life-altering events that cannot fail to affect you personally, professionally and financially.
1. Have you started a Small Business this year?
If you think you should wait a few years before consulting a tax accountant, you could be missing out on some valuable information that could “impact your business’s tax filings in future years…” In the words of U.S. News and World Report, “it pays to start things on the right foot and grow from there, even if you’re a sole proprietor.”
Likewise, there are details you must not overlook. Paul Gevertsman, a partner in the accounting firm Anchin, Block & Anchin, states, “A lot of little things are out there like the sales tax rules, “Do they have to collect sales tax? What if they’re not collecting sales tax?” he asks.
And Gavrilov & Company poses the question, “What about those tips?” How to pay tax on tips can become a big issue, not only in eateries, but in spas, salons, car services, and more. (There might be some answers or red hot alerts on tips in upcoming issues of this blog.)
2. Have You Gotten Married? Congratulations and There Might Be a Tax Penalty!
In case you did not realize it, your status on Dec. 31st sets up your status for the year’s tax filing. Ask a tax professional “how to fix your withholding amount.” We can tell you if it would be penalized in the case of joint filing.
A tax professional can “advise you on adjusting your withholding amount and whether it’s more advantageous to file jointly or separately, based on your situation.”
In spite of what you might think, we have seen some situations where couples actually pay less in taxes by filing together.
3. Let’s Talk About That Little Swiss Account: Foreign
Did you know you must report foreign bank accounts, investments and even inheritances?
You must disclose not only that you have the account, but also any income you are getting from it. As accountants, Gavrilov &Co can figure the exchange rates and file your proper forms. It’s all about transparency in your relationship with the Federal Government.
4. Did you have a Heart Breaking Divorce?
Your tax professional cannot help your heart-break. However, we do often advise folks who know that the divorce is imminent, to file separately. That way, the IRS won’t chase you down at Tax-Time for your ex-spouse’s unpaid taxes.
There are three types of relief from the joint and several-liability of a joint return. We are summarizing directly from the IRS source on this matter. Please visit their online resource for more details.
A. Innocent Spouse Relief: This decrees relief from the additional tax you might owe if your spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits. And of course, there is a form, number 8857, to be exact.
B. Separation of Liability Relief: Just as the title says, this provides for the separate allocation of additional tax owed between you and your former spouse or your current spouse.
You must be separated and not living with the spouse at the time of the filing. Understand, you will be responsible for the amount of tax allocated to you.
C. Equitable Relief: may apply when you don’t qualify for innocent spouse relief or separation of liability relief for something not reported properly on a joint return and generally attributable to your spouse. Likewise, if your spouse has paid you alimony or if you have paid alimony to your spouse, your tax preparer will document it.
5. Did You Buy or Sell A House?
The purchase or sale of real estate can be a life-changing event. Purchase or sale of real estate may impact your taxes. If you consult on taxes with Gavrilov & Co shortly after buying a home we’ll talk about the changes in the mortgage interest deduction and associated expenses.
On the other hand, if you sell your home, we might need to evaluate possible capital gains. The law on capital gains exclusion for the sale of your home did not change with the passage of the new tax.
It mandates you can still exclude up to a half million dollars in capital gains from your taxable income. However, you must have lived in the home as your primary residence for at least 2 years of the last 5 years.
The Tax-Time Take-Aways
There are at least 5-6 more amazing situations THAT should send you directly to a tax professional. The Tax Squad at Gavrilov & Co right here in Midtown Manhattan is ready to bring you guidance and advice that no software can match.
We can offer experienced, educated insights into the new tax code. We will plan with you to help you make decisions that not only impact this year’s taxes but the years ahead. For your own prosperity, we urge you to think outside the software box. Your tax preparer can bring you more peace of mind on these and other issues.
Thanks for reading our Blog. We hope you return to share new tax laws and tips every week.