How To Choose A Good Tax Professional To Ensure The Best Tax Refunds

How To Choose A Good Tax Professional To Ensure The Best Tax Refunds

by | Nov 21, 2019 | global income tax, IRS, tax filing, Tax Planning, Tax Refund, tax savings, taxes

How To Choose A Good Tax Professional To Ensure The Best Tax Refunds

Taxes can be a bit overwhelming for a lot of us. Understanding the different clauses, making the most of the deductions, looking for refunds are just some of the things. In some cases, the tax filing can get quite a bit complicated as well. It is such times that Tax Professionals come to the rescue. Tax professionals or preparers are individuals trained and certified to handle taxes and help you through the entire process. A Good Tax Professional To Ensure The Best Tax Refunds.

Types of Tax Professionals

The first step towards choosing a good tax professional is to understand the different types of tax professionals around. And then make a decision as to whose services would be ideal for your scenario. The two categories of tax professionals that you can choose from are Enrolled Agents and Certified Public Accountants. And both of them have the capability of representing you in front of the IRS, should there be a need for it.

  • Enrolled Agent

An Enrolled Agent or EA is a licensed tax professional. Individuals can earn the designation of EA either through a special exam or by working for the IRS for 5 years or more.An EA can have an area of specialization, thus do not forget to ask your EA about theirs. Another benefit of taking the help of an EA is that they are specially trained for taxes and will mostly cost you less than a CPA.

  • Certified Public Accountant

A Certified Public Accountant or CPA are accountants who have had to undergo an education program and pre-defined requirements to get the title. It is important to note that all CPAs might not have the expertise to work on taxes. One of the biggest advantages of taking the help of a CPA is that you might get ancillary helpfor other financial needs such as financial planning or estate planning.

Apart from EAs and CPAs, you can also choose tax attorneys and chains that offer tax preparation services. Tax attorneys are best known for handling tax related disputes which are complex in nature or corporate matters. You can avail of the services on offer by tax preparation chains such as Jackson Hewitt or H&R Block.

Finding Tax Professionals

Now that you know the different types of tax professionals available, the next step is to find out the right tax professionals. Getting referrals from a friend or someone you know is one of the easiest ways of getting a tax professional. Here are some other sources to get a good tax professional.

  • National Association of Enrolled Agents

You can visit the website of the National Association of Enrolled Agents and look for an EA. The website offers a lot of filters to make your search easy. Filters such as the area of expertise or the ability to speak multiple languages can make your life easier.

  • American Institute of Certified Public Accountants

The AICPA is a good place to look for CPAs who can help you with your taxes. Remember, these financial experts can offer a lot more than merely your taxes.

  • Yelp

You can always refer to Yelp to find a good tax professional in and around you, who has a good rating. The local listings on the website can help you to get in touch with a tax professional.

  • Angie’s List

Though this service is not free, you are more likely to find an authentic tax professional on the website. You get access to a wide range of categories such as financial assistance, tax professionals and reviews from local people to choose from.

Getting tax refunds is an outcome of proper tax filing. Choosing a good professional is essential as they can help one get the best tax refunds and save money.

Is Bonus Taxed For NRI’s In The US

Is Bonus Taxed For NRI’s In The US

by | Nov 18, 2019 | income tax, NRI, Tax Liabilities, Tax Planning, tax savings

Is Bonus Taxed For NRI’s In The US

It is essential for companies to keep their top-performing employees with them for a longer duration. One of the proven techniques for doing the same is to pay a bonus. It not only incentivizes employees but also boosts their motivation levels.

However, as an employee, it is only natural to wonder how you will be taxed on it. Is there a separate tax for the bonus? Is there any way to reduce your tax liability on a bonus?Here is all that you need to know about taxes on bonuses for NRIs in the US.

Are Bonuses categorized as supplemental wages?

It should not come as a surprise that the IRS goes to greater lengths to define different sources of income and tax them accordingly. Bonuses usually are put under the category of supplemental wages. Likewise, they are treated a bit differently from normal salary as far as withholding taxes during payout is concerned. Here are the two standard methods followed to withhold taxes from a bonus.

  • Aggregate Method

The aggregate method comes into the picture when your employer pays the bonus with one of your recent paychecks. Your employer then refers to the withholding tables by the IRS to determine the amount of taxes that must be withheld for both the amount together. Your employer would then take into consideration the amount withheld from your salary and withhold the remaining amount from the bonus.

  • Percentage Method

The percentage method is easier of both the methods. According to the percentage method, the bonus that you receive is subject to a flat supplemental rate of 25%.If you were to receive a bonus of $10,000 you would have to pay $2,500 as taxes to the IRS. Employers usually choose this method, since it is easier to implement and consumes less time as compared to the aggregate method. Also, the percentage method usually results in a smaller tax amount being deducted or withheld.

There might be instances where your bonus might push you to a higher tax bracket. Should you expect to make less in the next year, you can ask your employer to defer the bonus to the next year.

High End Bonuses

Few organizations are known to pay their employees with hefty high-end bonuses. These corporate bonuses can at times exceed the $ 1 million mark. How are taxes handled in such cases? These high-end bonuses attract much higher taxes as well. For NRI’s receiving more than $ 1 million in taxes, your employer will withhold a tax of 39.6% for the amount exceeding $ 1 million, on the top of the flat 25% tax using the percentage calculation method. Thus, for the hefty bonuses, taxpayers end up paying hefty taxes as well.

There are chances that your employer might withhold a higher amount of taxes from your bonus. Yet, you should not panic about the situation. Keep in mind that the taxes withheld are at a higher rate during the payout. But it would change later based on the actual taxes that are applicable to your income. The actual tax rate comes into the picture when you file for your taxes and there are chances that the tax rates can be lower due to lower taxable income after deductions.

Your taxable income plays an important role along with the tax rate, deductions and credits in determining how much taxes you will end up paying from your bonus. Proper tax planning can help you get back some of the taxes in the form of credits once you file your tax returns at the end of a financial year.

Most Important Year-End Tips To Increase Your Tax Refunds

Most Important Year-End Tips To Increase Your Tax Refunds

by | Nov 15, 2019 | income tax, Investment & Income, tax deductions, tax filing, Tax Liabilities, Tax Planning, Tax Refund, tax savings, taxes, Taxtips

Most Important Year-End Tips To Increase Your Tax Refunds

A quick look at the calendar and you will realize, this year has come to an end. And even before you realize, the tax season will be close. Instead of rushing during that time, you can take a few simple steps this holiday season to reduce your tax liabilities and increase your tax refunds. Most Important Year-End Tips To Increase Your Tax Refunds.

1.Retirement Planning

Planning for your retirement is a great way to add funds for your retirement and make handsome savings in the form of taxes for the current financial year. You can take the help of either traditional IRA or 401(k) to contribute to your retirement planning. Self-employed individuals can save up to 25% of their income under SEP IRA up to a maximum of $56,000 for the current year.

2.Upskilling

If you have been planning to take some classes to improve your skillset, this might be the best time to enroll. You can start with enrollment and make the payments for the next quarter by the 31st of December. This will help you get some valuable tax credits of up to $2,000 with the help of Lifetime Learning Credit.

3.FSA

Taxpayers who have FSA or Flexible Spending Account, it might be the right time to give your doctor a visit. While there is no hard and fast rule to use the FSA amount but there might not be a lot of benefits in keeping the amount as well. You can only carry forward $500 to the next year. The FSA plans usually allow subscribers to use these funds for up to 2 and a half months in the next year.

4.Charitable Donations

You can make this holiday season a little bit better for the people who are in need. If there are any unused household items or clothes, you can donate them to the less fortunate. Such donations can help you reduce your tax liability, provided you donate to qualified charitable organizations and if you itemize the items. Alternatively, if you volunteer for charitable organizations, you can claim the miles that you drove at 14 cents for each mile driven.

5.Shuffle your Investments

Some investments in your portfolio might not have performed as you expected them to. Investments that have gone down in their value can help you reduce your tax liabilities. You can use the loss to offset the gains that you have received from other investments. However, you must sell the loss-making investments to offset them with the profit-making ones. Should your losses exceed the profits, you can use up to $3,000 against your income.

6.Defer Any bonuses

Taxpayers expecting a year-end bonus for the hard work that they have put in, might find themselves in a spot. The bonus might push you to another tax bracket or increase your tax liability by a healthy margin. If you can, do speak with your boss to deter the bonus to January of next year. This way, you won’t have to taxes for the bonus in the current year.

7.Other Dependent Credit

Taxpayers supporting their grandparents or parents, or other loved ones can benefit from Other Dependent Credit. If they qualify to be non-child dependents, you can claim the Other Dependent Credit. You can claim up to $500 under this category and receive dollar by dollar reduction in your taxes.This tax credit is relatively new and not many taxpayers use it.

Each dollar that you save is a dollar that you earn. Using the above methods, you can save takes on your income and boost your tax returns as well.

Top #5 Tax Tips For NRI’s Working As Personal Trainers In The US

Top #5 Tax Tips For NRI’s Working As Personal Trainers In The US

by | Nov 9, 2019 | Tax Planning, Tax Preparation, Tax Refund, tax savings, taxes, Taxtips

Top #5 Tax Tips For NRI’s Working As Personal Trainers In The US

Being self-employed brings a lot to the table. From having the freedom to choose your work timings to create a business on your own. Though there are a few challenges, the positives far outweigh the negatives. And it gets even better if you happen to be a personal trainer as you get a chance to help people stay fit. However, being self-employed also means that you have to handle your taxes on your own. Here are top 5 tax tips for NRIs working as Personal Trainers.

  • Setting Up Costs

If you just started as a personal trainer in the country, the chances are high you would have spent a considerable amount of money on creating a website, advertisements, marketing, figuring out business location, etc. You can deduct these expenses from your taxes.

  • Cost of Procuring Equipment

The IRS allows deductions for work related equipment. For any fitness equipment that you have purchased or any training related tools, you can get a healthy tax break on the same. For instance, if you buy any equipment that your clients will be using, you can claim the expenses for a tax break. And the location of the equipment used doesn’t matter much. Meaning, clients can use the equipment or tools in your place, their place, your studio, etc. The only verifying parameter is that the equipment must be used for business.

  • Educational and Training Materials

Educational and training materials offer dual benefits. For starters, you can claim for any educational or training expenses for your clients as well as for yourself. One of the prime examples is that if you undergo any training or educational courses to enhance your skillset, you can claim the amount as deductions. Similarly, if you have any apps or training videos that your clients use, you can claim those as deductions as well.

  • Travel Expenses

There is a very good possibility that you must travel to meet with your clients. As a self-employed individual, you can claim these expenses as well. You can claim a deduction of 58 cents per mile that you drive. If you drive to your client’s place for a training session, you can claim this amount. Though it might not seem a lot at first, if you keep driving to the client’s place regularly, it can add up to be a considerable expense. The IRS even allows deductions under the pretext of depreciation of the vehicle, if you use your vehicle to drive to client’s place.

If you must fly to any client’s place, you can claim the flight expenses along with any hotel accommodation. The IRS even allows you to deduct up to 50% of the meals that you consume on such trips.

  • Business Expenses

There are some generic business-related expenses that are common to everyone. If you have a dedicated phone line to interact with clients or take calls from potential clients, you can claim the bills. If you have to acquire a state license for your personal training classes, you can claim them as deductions as well. Similarly, you can utilize any expenses related to the bookkeeping of your business or tax preparation for a tax break.

If you are using your primary bank account for business, any changes that you pay to the bank for the account is also tax-deductible.

  • Health Insurance

Any contributions that you make towards health insurance plans or retirement plans for your future are also tax deductible. One of the benefits of being self-employed is that you can even deduct your premiums paid for health insurance.

Knowing everything about taxes and especially the ones pertaining to your occupation is important to be able to plan taxes and reduce liability.

Top #5 Ways To Maintain Your Budget During Holidays

Top #5 Ways To Maintain Your Budget During Holidays

by | Nov 6, 2019 | Blog, income tax, Tax Planning, Tax Refund, tax return

Top #5 Ways To Maintain Your Budget During Holidays

Budget During Holidays,Take a few moments to let this sink in, this year is coming to an end. The festival season is around the corner and you might have quite a few plans lined up. Catching up with friends and family, traveling, going out on a shopping spree, stacking up electronic gadgets, etc. are some of the common activities that accompany the holiday season.

As exciting as these might sound, they are not healthy for your wallet. If you want to enjoy your holidays and not burn a hole in your pockets, here are some easy to follow tips for this holiday season.

1.Create a budget

Creating a budget isn’t a new tip, yet a lot of us forget or just ignore to do that. Budget is a very powerful tool that can help you prioritize where your money is going. Spending a few minutes to analyze and go through your plans can go a long way in saving you money. When you go through your plan, you will get a fair understanding of how much money you need or the amount that you have with you. This will prevent you from going on an impulsive spending spree or tackling last-minutes unwanted expenses in a much better way.

2.Plan your Travel better

Since it is the holiday season, we tend to travel and meet almost all of our friends and relatives. This exercise can be both exhausting and expensive. An easier alternative is to visit a location and ask all those who are available to come and drop by. If it is someone’s house or a community park, the costs will be way down, which also enjoying the company of the close ones.

3.Healthy Eating

While traveling or visiting different places, we tend to pick up fast food, as it is convenient and quick. If you can replace these with planned meals, you will do your body a huge favor and save a considerable amount of money as well. There are several guides online, which can help you prepare quick meals that are healthy as well. Thus, spend a few minutes to plan for a week and grab the essential ingredients. Simple meals won’t require a lot of effort or time to prepare. Similarly, you can pack some healthy and tasty snacks for the road or the airport, so that you don’t have to stop and keep buying stuff regularly.

4.Cutting corners

The holiday season can be overwhelming for you as well as your bank accounts. The idea of buying presents for everyone can be easily put a dent in your budget or wallet. You can continue to enjoy the holiday spirit and yet save money. You must figure out different places where you can cut corners, without giving up on the spirit. One of the easier ways is to wrap the gifts on your own, either with newspaper or brown wrapping paper and be creative with it. If you can cut down on the gift wrapping for several gifts, it might seem small but will turn out to be a decent enough amount.

5.Free Activities for Meet up

Meeting friends or relatives at restaurants can be expensive, especially during the holiday season where you might bump into even more people. Instead, you can plan for some free activities, where you can catch up and have fun, without ballooning your credit card bills or hurting your wallet. A simple walk around your neighborhood or house can be a pleasant way to catch up.

The above steps will help you make considerable savings this holiday season, without missing out on the spirit of holidays.

Top #10 Tax Deductions That You Might Not Have Even Heard Of

Top #10 Tax Deductions That You Might Not Have Even Heard Of

by | Nov 2, 2019 | income tax, tax deductions, Tax Liabilities, Tax Planning, Tax Preparation, tax rate, Tax Refund, tax return, taxes

Top #10 Tax Deductions That You Might Not Have Even Heard Of

The holiday season is around,and taxes are the last thing that one would like to think of. Tax Deductions,However, even before you realize, the holiday season would be over and the tax filing season would be at center stage. Spending a few moments to plan your taxes can help you in lowering your tax liabilities and a smoother tax filing season. And who doesn’t like lower taxes! Here are some Tax deductions that taxpayers do not use that often.

1.Use Your Vehicle’s Mileage

Whether you are self-employed or work for a business, you can claim your vehicle’s mileage as expenses as 58 cents for every dollar. The number is slightly higher from 2018, where one could claim 54.5 cents per dollar. Taxpayers who work for different clients can even claim the amount spent on traveling between different job locations.

2.Miscellaneous Itemized Deductions

Certain miscellaneous tax deductions such as tax preparation expenses or job-related expenses that are not reimbursed are no longer covered under itemized deductions. Tax preparation expenses are still covered for self-employed individuals. Losses due to fire, shipwrecks, storms, etc. are deductible up to 10% of the adjusted gross income of an individual, as long as the natural disaster is federally declared.

3.State and Local taxes

The IRS allows taxpayers to deduct either state income tax or state sales tax as long as you itemize your deductions. For states with no income tax, there is no reason why you should not claim the sales tax that you have paid. You can opt for the deduction that offers you the biggest tax cut. The maximum amount that you can deduct stands at $10,000.

4.Medical Expenses

You can claim medical expenses for a financial year, including miles driven for medical purposes at 20 cents a dollar. However, this is applicable only if your medical expenses exceed 10% of your adjusted gross income, provided you itemize the deductions. This might include the installation of certain equipment in your home, as recommended by the doctor.

5.Camping For Kids

Taxpayers with children less than 13 years can avail of the Child and Dependent Care Credit. This is applicable if you took your children to day camp before or after their daycare, or school care program so that you can go to work. This excludes sleepover camps or overnight camps.

6.Education Expenses

You can make use of the American Opportunity Tax Credit and Lifetime Learning Credit.You can claim up to $2,500 underAmerican Opportunity Tax Credit for expenses in the college. Similarly, you can claim up to $2,000 under Lifetime Learning Credit for tuition fees and even books.

7.Health Insurance Policy

Any premiums that you pay for yourself and your family members, you can take deductions for the same if you are self-employed. Employees might be able to make the premiums tax-deductible if they can itemize these deductions.

8.Charity

Irrespective of how small your charity is, you can claim the same for deductions. The only thing to keep in mind is that you must have receipts for the same. You can even claim the miles you have driven for charity including parking and tolls at 14 cents per mile.

9.Home Office

If you use your home for work-related purposes, you can claim certain expenses such as utilities, rent, depreciation, maintenance, etc.

10.ODC

The Other Dependent Credit comes in handy if you take care of someone other than your dependent children. You can take tax credits up to $500 for every non-child dependent that you support.

Tax planning is an important part of financial planning and must not be ignored. Knowing the basics of taxes and the deductions is essential and helps in the long run to save money.