Author Archives: c08786809

To TurboTax or not is the question!

I often get the question what I think about using Turbo Tax versus using a tax professional.
 
The upside of using Turbo Tax is you will save some money on the preparation, not a lot, but some money. However the downside is that you have to spend your time, miss deductions or worse you make an error and it ends up with letter from the IRS. Here the downside is much greater than the upside in using Turbo Tax in my mind.
 
In reviewing many Turbo Tax returns about 50% of people either leave money on the table or else they make errors on their rentals, stocks or small businesses. In the Seattle area, stock options are often a source of over-payment in taxes.
 
If you have the time to dedicate to researching the latest tax laws and your return is fairly straightforward, then I would say go for it. But if not it doesn’t hurt to have it done once to make sure you aren’t missing anything.

IRS Letter Collecting

The IRS sends out millions of computer generated letters a year to taxpayers. These letters are rarely welcome, as a result they can pile up unopened and certified letters are not collected from the post office.

While stamp collecting can be a rewarding and stress relieving hobby, I don’t know anyone that has the same experience with collecting IRS Letters. Everyone has rights to IRS appeals and tax court that are time sensitive. Having those deadlines go by the wayside make resolving your tax issue more difficult.

Often the IRS thinks you owe more in taxes, when in fact that is not true when all the facts are know. Some issues can be simply and quickly resolved.

The best strategy for dealing with IRS correspondence is to carefully read the letters and response to the IRS. If you don’t feel comfortable doing, this contact a tax professional that can interpret the letter, protect your rights, and craft the proper response.

Don’t loose another nights sleep, give us a call.

Your Home Equity Loan Might Still be Deductible in 2018

With the new tax law now in place, you can still deduct your interest on home equity loans that are at or below $100,000, if the loan was used to buy, build or substantially improve your home.

So if you took out a $25,000 home ‘equity’ loan to remodel your kitchen, that interest could still be deductible as an itemized tax deduction.

There could also be other options to deduct that interest depending on the use of the loan monies.

IRS Focuses on Payroll Taxes

IRS Revenue Officers are continuing to focus on the payroll taxes that employers are required to both file and remit to the IRS on a regular basis. The IRS has determined that getting employers to pay these taxes is relatively easy money and the longer that a business goes not paying these taxes the more likely they will default and the IRS will never get the money. However the government will have to still cover the Medicare, Social Security and income tax withholding for the employees.

For the business owner the risk is that the IRS will go after them personally for the “Trust Fund” taxes and assess an penalty of 100% on those funds. The Trust Fund is the employee’s income tax withholding and their half of the FICA tax. The owner(s) can’t escape this via bankruptcy or by closing down the business.

If you are in this situation or know someone who is give us a call, we can help.

 

The Great Tax Advantages of the HSA (Health Savings Account)

HSA accounts (Health Saving Accounts) are one of the best tax avoidance strategies available.

The accounts are funded through payroll withholding. They are provided by your employer if you have a high deductible Health Insurance plan.

The tax advantages are that the withheld money is free from both income, social security and Medicare taxes. Then any investment growth is tax free. Finally, the money used to pay medical expenses is tax free when withdrawn.

You will need to look at your individual situation to determine if an HSA is right for you. For wealthier taxpayers that don’t need to access the HSA on a yearly basis and can self-fund the yearly health plan deductible, holding an HSA until retirement could part of your financial plan.

Small Business Fair September 29th

 

I’ll be at the Washington State Society of Enrolled Agents table at the Small Business Fair. The fair is at the Renton Technical College September 29 from 8:00 to 4:15. There will be great speakers and exhibitors that you can access for free. This is a great resource for both existing and potential small businesses, hope to see you there.

Biz Fair 2018 – Saturday, September 29 –  One Day, One Place 

Calling all current and aspiring small business owners!  Join us on September 29, 2018 for the 22nd annual Biz Fair at Renton Technical College to learn from the experts how to start or grow a successful business.

Biz Fair is the longest running all government and non-profit-run small business fair in Washington State.

Sharpen your skills by attending seminars taught by savvy business experts who share their knowledge and real-life experiences in a no-sales environment.

Gain access to valuable small business resources – visit the Exhibitor Resource Center, staffed by representatives from federal, state and local government agencies, and business and trade associations.

The fair is free, with plenty of free parking and no advance registration.

Visit www.bizfair.org for more information.

Find us on Facebook at www.facebook.com/bizfair.

Follow us on Twitter at https://twitter.com/bizfair.