Personal Services
Tax Planning – Yes, It’s That Time of Year!
Sometimes surprises are good, just not often the ones that come on April 15th each year. Yet year after year people fail to properly plan or save for what may come due on that fateful date. There are two main points to remember when it comes to your taxes. First, it’s never too early to start planning. Secondly, adjustments to withholding or estimate payments are easily accomplished.
As we face the new year, now is the time to sit down with your tax advisor to take a look at your potential bill for next April. Bring your most recent pay stub (plus that of a spouse, if employed), information about any changes to your lifestyle (bought/sold a house, added/lost a dependent), and a copy of your prior year’s return if you are changing tax professionals. All of these items will aid a tax preparer in estimating the amount of money you may owe the IRS.
After getting an estimate of your tax bill, go ahead NOW and adjust your withholdings, save, or execute tax reduction strategies. Your employer can provide you with a new W-4 so that you can contribute additional amounts from your paycheck. If you are a disciplined saver, setting up a CD or savings account specifically for your tax burden may be a better choice. There is also time to open tax reduction vehicles, such as an IRA or college savings plan, many of which allow deductible contributions all the way to the April 15th deadline. Your tax professional can help in these decisions and provide you with the pros and cons of each plus detailed information on how they operate and what your liabilities and benefits might be.
Three Ways to Reduce Your Taxes in 2011
Now that we have our 2010 taxes behind us, it’s time to look at how to reduce your tax burden in 2011….here are some helpful hints:
- In the case where you do not have a commercial vehicle for tax purposes (ie. Section 179 deduction or depreciable company asset), it is important to log the amount of mileage that you use for business purposes on a daily basis.
If you are someone who needs an organizer or mileage book to keep in your car to help you track monitor mileage on a timely basis, please do. However, if you are iPhone or iPad user, there are some great apps that you can download which are specific to helping you track business mileage as well.
- Qualify some of your purchased property in 2011 as Section 179 deductions instead of depreciating over longer periods of time. If you are not sure which of your purchases qualify, just ask us!
For example, the total depreciation deduction (including the section 179 expense deduction) you can take for a passenger automobile (that is not a truck or a van) you use in your business and first placed in service in 2010 is $3,060. The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2010 is increased to $3,160.
- A qualified IRA can lead the way today!
As always, it’s a pleasure to be of service to our clients….call us today and let’s get started!
How You and Your Small Business Can Better Prepare For Next Year’s Taxes
Another year’s tax preparation has come and gone….hopefully you were not up until 11:00 Sunday night the 17th staring at a blank 1040 form with a stack of receipts or schedules beside you moaning, “Why do I do this every year?!”
Taxes and tax preparation can be painful… but like anything else in life, spending a little time preparing prior to the tax deadline helps immensely. Here are three ways to better prepare yourself in 2011:
First, organize any and all of your receipts over the current year in ONE SPECIFIC BINDER OR OTHER ORGANIZATION TOOL! Writing small details on lunch receipts with clients, including details in the memo field of a business checking transaction, or simply keeping a mileage book to keep track of mileage over the course of the year is a small investment of time each day. However, it saves you long hours at tax time remembering how some of your transactions need to be classified and making sure that expenses which may be deductible aren’t missed. Then, add any 1099 forms or W-2′s received in January of 2012 to your 2011 binder and you’re all set for tax prep. Whether you do your own taxes or pay to have someone do them for you, you’ll save time and be in a better position to take advantage of deductions offered when your business and personal information is in good order.
Next, if you itemize deductions, plan your level of cash/non-cash donations ahead of time to give yourself a tax advantage. Donating to your favorite charity or church warms your heart; it also can help reduce the amount of taxation you have to pay in a given year. It’s best to speak with a tax planning specialist or financial consultant ahead of time if you plan to donate more than $5,000 in total to be sure you’re tracking appropriately to take advantage of any deductions. We can give you an idea of what organizations fit within the 50%, 30%, or 20% rules and how they apply to donations.
Finally, make yourself a line item in your budget that simply goes toward paying taxes. Whether you are filing for yourself or your business, budget an approximate amount that you will owe in taxes in 2011 going forward. For instance, if in the prior two years you owed $4,800 in taxes and you remain in the same approximate financial shape, better to budget $400/month in your safe spot (whether it is in marketable securities or in a simple savings account) than try to come up with the $4,800 in the middle of April 2012.
Remember, taxes and tax preparation are a part of life; fine tuning your organizational skills, timely planning, and budgeting are three factors that can help you and your small business, be better prepared in 2011. Contact us if you need help getting started. Need to figure out other ways to get your small business on the right financial track? We can help!
Did You Pay Your Retirement Bill Today?
Golden, Sandy Beaches, anyone?
While many of us dream of sandy beaches, ski slopes, or second homes in the midst of our retirement, most of us have not adequately planned financially for our golden years.
Regardless of your financial position today, here are some things you need to keep in mind:
- Treat investing for your future, whether it is into an IRA, 401k, or a blend of stock/bond/mutual funds, etc., the same way you treat paying your everyday bills. It’s just as necessary.
Financial Food for thought: In order to keep the lights on in our home, we have to pay a monthly electric bill to our regional utility company; else the lights in our home will be shut off. The same goes for preparing for our financial future….if you choose to eliminate or procrastinate saving/investing into your future, will you be able to pay that same light bill into your 70s, 80s, and beyond?
- Discipline, Discipline, Discipline – Did I Say Discipline?
Monthly budgets for many of us are absolutely essential so that we’re able to pay our monthly bills, fulfill current needs, and provide for our future.
Financial Food for thought: Staying disciplined and setting aside a certain amount each month or quarter for your future allows you to reach your financial goals and ensures you and your loved ones can live comfortably in later years.
Preparing for your financial future does not have to be difficult or intimidating; find sound advice from someone who can guide you in the right financial direction. Need advice today? Contact us and let’s get started.
photo credit: Dhammika Heenpella / Images of Sri Lanka
