A recent Orlando accountant survey claimed that a large majority of people believe they pay higher taxes every year and the amounts going to the IRS are not fair. Do you believe the same? Well, you should know that there are so many ways in which you can reduce you tax bills and pay only the least possible amounts. But for that, you will have to start preparing for your taxes months before the due dates and not just a few ways prior to them. Here is a quick look at how you can achieve this, but your chosen accountant Orlando can provide you the details.
Contribute greater amounts in your retirement accounts
This is a really good strategy that not only helps you pay reduced taxes, but also helps you prepare for your retirement. Decrease your taxable income by contributing money to your retirement accounts such as IRAs, 401 (k) accounts and so on. We really love this tip because it has a huge effect on your tax bills.
If your age is less than 50, you can contribute $17,500 and $5,500 to a 401 (k) and IRA account respectively, which decreases your taxable income by these amounts. If you are older than 50, you enjoy even higher limits. The net effect is a reduction of a thousand dollars from your tax bills.
Keep hold of our wining investments for prolonged periods
With every rise of the stock market, there are so many people who quickly sell off their winning investments so that none of their gains are converted into losses. In the short term, this may help you, but in the long run, you are just hurting your tax bills. Taxes on short-time profits can be high, sometimes so much that you have to pay 50% of these to the IRS. However, if you can keep these investments with you for at least a year, you can qualify for capital gain rates that are much lesser and cut down your tax bills in half.
Consider municipal bonds that are not applicable to taxes
Since the interest rates are not that high, you can hurt your taxes when you pay them on the CDs and bonds. However, if you consider tax free municipal bonds, you might be able to enjoy some tax advantages, especially if your income levels are higher. And parallel to this, you will also be able to increase your income.
Boost your withholdings
If you did not pay enough taxes the year before, you would probably have given a huge check to the IRS at the year’s end and may also have faced penalties and interest. You can avoid these if you withhold some of your money. Just make sure of one thing: withholding excessive amounts is also not good because it offers an interest fee loan to the IRS.
Use tax deductions and credits
Tax deductions are a great way to decease your taxable income. Itemize your expenses related to medical, interest on mortgages, education, energy efficient appliances and the like, and you will not have to pay any taxes on them.
If you have any queries about the above tips, take help from your accountant Orlando.
Get Your Taxes Organized
So you think your taxes are not complicated? Well, that is just perfect. Whatever be the case, you must still document all your records well enough that is what the IRS demands. Moreover, doing so will help smooth your tax process. Ask any reputed accountant Orlando and they will tell you the same.
Organizing your taxes helps you in filing your returns earlier, which means you can get your refunds more quickly than when you expected. So how do you do this? Let us take a look at what is involved in sorting out your taxes.
File by the ID numbers
The IRS keeps a track on you through your social security number. Should you file your own return, this will not be a problem. However, if you are planning to hand over the task to a reputed accountant Orlando, make sure you provide him with your correct Social Security Number. If you are filing jointly with your spouse, provide their social security number as well.
And by the way, you will also need social security number of your dependants. If any of them do not have it as yet, make sure they apply for one.
Miss out on this vital piece of information, and your return will be delayed, your refund will be slowed down and you might not get to enjoy a tax credit.
Gather all your income data
You pay taxes on your income amounts so sort out all relevant data. Ask your employer to provide you with a W-2 income, which you will need. If you have more than one employer, you will require multiple W-2 forms. For those who are an independent contractor, you will need the to99-MISC form that highlights your gross earning. As for the self-employed, your work is the toughest because you will have to keep a record of all your receipts whether it is the amount you spend on fuel or your office supply expenses. You should also have a copy of your bills with you.
Sort out the details of your assets
The IRS does not only tax you on your income, but also on any savings that you have. The purpose may be any, but you will still require all this information. You will have to get statements for your savings accounts and a 1099-DIV form for your stocks and mutual funds. And do not forget to compare all these documents with your financial statements for that year.
Start trimming your taxes with your home expenses
The best way to bring down your taxes is to reduce your taxable income. You can start with anything, but we prefer home related expenses. You will probably have a mortgage on your home. Any amounts that you pay as interest is exempted from taxes. Also, be sure to take the 1098 form from your lender.
Get receipts for your charitable donations
Did you donate amounts to charity at any time this year? You can use this as a deduction, but you will require a receipt if the amount exceeded $250.
If you need more information about our Orlando accounting and tax services, please contact us at 407-502-2400. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, and Hunters Creek, FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.