Showing posts with label Taxable income. Show all posts
Showing posts with label Taxable income. Show all posts

Thursday, January 30, 2014

When Facing the IRS Make Sure You Have A Qualified Tax Attorney

Exterior of the Internal Revenue Service offic...
Exterior of the Internal Revenue Service office in midtown New York. (Photo credit: Wikipedia)
Literally dozens of questions can be asked of a tax attorney in Los Angeles. Some of the most important are included within the context of this article. A tax attorney can help you to avoid jail time for long-term tax evasion in some cases and can also help you to reduce payments, interest or even settle on a smaller amount for repayment. Getting in trouble with the IRS is not something you want to do as an individual or as a business owner. 

How to Make a Payment Plan with the IRS to Avoid Penalties and Tax Evasion

After preparing your taxes, you may not know quite how to go about working out a payment plan with the IRS when you owe a considerable amount. It is ideal to seek the help of an attorney as they better understand the policies, laws and restrictions that may be put in place in order to make a feasible payment plan. 

Penalties That Can be assessed

Penalties, mostly from interest, can be assessed when you do not adhere to the agreement with the IRS, are late filing or are late paying. Other penalties can be put into place depending on your situation; some serious penalties can include a wage garnishment or a bank account garnishment. The IRS can also put a lien on your vehicle and/or property until the monies owed are paid.

How to Avoid Penalties

You will want to ask your attorney how to avoid penalties. The attorney may suggest filing for an extension to give you more time to prepare your taxes. In most cases, this is a six month extension. At this time, you must at least have your return filed. The return does not have to include payment at this time. 

How to Keep Better Tax Records

An attorney may be able to help you better organize your tax files. You should ask how to organize receipts and expense reports in order to properly calculate these items into your itemized deductions better. You should also ask what items to disregard keeping records for as some items cannot be deducted.

What Items Need to Be Kept and for How Long?

Generally speaking, tax records should be kept for at least 5-years. This means that you will want to keep all items used to file taxes in a box in storage or in files on a computer for at least five years. This should be items such as W-2’s, 1099s and any other documents proving income or revenues. You should also keep utility reports, vehicle usage reports, business expenses, office supplies and equipment purchased to name a few items.

Keep these questions in mind when you seek the help of a tax attorney. It is also a good idea to keep a list of questions written down to take with you or bring up in a phone conversation. The only way that you are going to better understand what can get you in trouble and how to avoid making mistakes in the future is to ask.

Thursday, September 19, 2013

Eight Financial Tips for Working Seniors

More and more people are continuing to work beyond retirement age. For some, it is a choice that keeps them active and involved. For others, it is a financial necessity. Whether work is a choice or a necessity, here are eight financial concerns that those who continue to work should keep in mind: 

1. You are entitled to begin receiving Social Security benefits at age 62. However, if you receive benefits before age of 66 and your earned income exceeds the set limit, your Social Security benefits will be reduced. At age 66, you will receive your full benefits regardless of earned income.

2. If, between the ages of 66 and 70, your earned income is sufficient that you don't need your Social Security benefits, defer them. For every year that you defer your benefits up to age 70, your benefit amount increases by 8% with an adjustment for inflation.

3. Consider the effect of employment on your income tax rate. Calculate your taxable retirement income from Social Security, pensions and retirement accounts and compare it to the current IRS tax brackets. If your earned income puts you into a higher tax bracket, put the amount of income that increases your tax rate into tax-deferred retirement accounts.

4. Take full advantage of tax-deferred retirement accounts. Older workers are allowed to save an extra $1,000 beyond the maximum annual contributions. Many of these accounts have having check writing privileges. You have the choice of standard checks or designer personal checks. This extra saving option adds money to your future retirement income and reduces your current taxable income.

5. Regardless of whether or not you are eligible for Medicare, take advantage of employer health insurance. Basic Medicare does not cover all expenses, and at best, pays only 80% of expenses that it does cover. Additionally, paycheck deductions for health insurance may be made pre-tax, which reduces your taxable income.

6. As investors approach retirement, investment strategies commonly switch from a growth-oriented portfolio to an income-producing one. Those who continue to work, however, are not relying investments for income. Moreover, earned income reduces the potential effects or a decline in the stock market. Those who feel comfortable with the risk could add to their future retirement income by continuing a growth-oriented investment strategy with some investments.

7. Keeping accurate records of living and employment-related expenses has two benefits. Accurately tracking living expenses enables you to make a more accurate estimate of your living expenses after retirement and assures that your combined Social Security benefits, pension, and investment provides a sufficient level of retirement income. Tracking employment-related expenses may lead to job-related tax deductions.

8. Studying your current cash flow and projecting it out for one year, three years, and five years for scenarios such as working full-time, working part-time, or retiring, enables you to analyze the benefits or necessity of working versus retiring. This study switches the emphasis from retiring on an arbitrary date to retiring as preparations become adequate to sustain the life you want to live. That is what retirement should be.

Author's Bio
Phillip Gruppelaar worked as a Sales Tax Inspector and Administration Manager before entering the finance industry in 1988. While working in motor vehicle finance he earned the “AIM Insurance, NSW Business Manager of Year 2000” award. He then moved to home loans and general asset finance including sourcing machinery finance. In 2007, he became General Manager of an online asset financing company, building it to be one of Australia’s largest and most successful. In December 2011, he returned to his own management consultant business and focused on improving client relationships and staff training for another of Australia’s large online finance brokerage firms.

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