5 reasons to opt for a professional to file your taxes

5 reasons to opt for a professional to file your taxes

by | Dec 2, 2019 | income tax credit, tax filing, Tax Planning, Tax Refund, tax savings, taxes

5 reasons to opt for a professional to file your taxes

Doing taxes on your own can be overwhelming, to say the least. You must consider the W-2, deductions, write-offs, maybe a collection of 1099s to take care of, etc. This can even more overwhelming considering the fact that you still have a job at hand and several other life decisions. Is there an easy way out? Well, you must file your taxes, there are no shortcuts in that. However, to make your life a bit easier, you can opt for a professional to file your taxes instead.

Here are some of the prominent reasons why you should opt for a professional to file your taxes.

  • Freelancing or side business

The Tax Cuts and Jobs Act introduced recently brings about a lot of changes to the tax regime. If you hold a regular job and have a side hustle along with it, getting professional help for your taxes might be your best bet. People who run businesses are more likely to be put into the 20 percent deduction bracket. Freelancers and people owning businesses might find it a bit difficult to do their taxes on their own.

  • Property Flip

On paper the only two documents that you would need to file for taxes if you have flipped a house are 1098 and 1099-S. However, it is not as straightforward as it might sound. Between the buying and selling of a house, there are a number of transactions that can take place. Opting for professional help in such cases is a smarter choice.

  • Life Changing Events

The occurrence of a life changing event can bring in a myriad of emotions to the table. Life changing events can include graduation, marriage, the birth of a child, divorce, moving on, losing a job or starting with a new one, etc. Such occurrences can complicate your taxes. For starters, it chances your status of filing along with many other things. You must look at different tax benefits, tax credits, etc. to minimize your tax liabilities and to maximize your returns. If you do not want to be bogged down by these complexities, you can take the help of professionals to do your taxes.

  • Student Loans

The equation changes a bit if either you or your spouse has a student loan to take care of. One of the biggest benefits of filing your taxes with the married filing jointly status is that you can expect the lowest tax liabilities. The taxes that you would have to pay individuals would easily overshadow the ones that you would pay with married filing jointly status. And the repayment schedule of student loans depends on the monthly income of the borrower. In certain cases, repaying your student loan on your own can be more beneficial than doing it together. Getting in touch with a professional will help you get over some of these conundrums.

  • Adopting a Child

As noble as the thought of adopting a child is, there are several tax benefits also associated with it. There are quite a few tax incentives for adoption along with tax credits. A sit down with your tax professional will help you make the most of the tax credits available. The downside being, there are higher chances of your taxes being audited. This makes it even more essential to work your taxes out with a professional, to ensure there are no gaps that the IRS can find.

The above are some common scenarios where the need for a tax professional is accentuated. If you have even the slightest of the doubts, do not hesitate to contact one.

All You Need To Know About Setting Realistic Financial Goals

All You Need To Know About Setting Realistic Financial Goals

by | Nov 27, 2019 | global income tax, tax deductions, tax filing, Tax Planning, Tax Refund, tax return

All You Need To Know About Setting Realistic Financial Goals

Did you achieve your New Year’s resolution this year? If yes, congratulations. If no, the chances are high that you had set an unrealistic goal. A lot of us set ourselves for failure by coming up with unrealistic goals. For instance, if you want to lose some weight a goal of losing a pound or two per week is a realistic goal. But most of us just set the end weight with no time frame.

Losing weight and setting financial goals are poles apart, yet the central theme remains the same. Setting realistic goals is the first step towards achieving them. Here are a few simple steps which will help you set financial goals that are realistic and achievable.

  • Drop Any Comparison

With the presence of social media almost in every sphere of life, it can get a bit difficult to stay away from what your friends or relatives are up to. However, paying too much attention and comparing them to you is a bad place to start your proceedings. You should not compare even with people of your same age group. You can start with what you have in your hands and work your way up,instead of procrastinating of when things get better. As mentioned with the weight loss example, you cannot become wealthy overnight, unless you get your hands on the jackpot.

  • Realistic Goals to Save

You can follow simple goals to start saving and making an impact. You goal must be simple, timely, measurable and relevant. You can set up a goal to save a certain amount by a specific day every month to increase your chances of succeeding. You can break down bigger goals and start working towards them. For example, if you want $10,000 for the down payment of your car in a two to three years, you can start by saving $250 a month. Even before you realize you would have accumulated more than half of your down payment requirement. Of course, you can play around with the $250 a month value. Once you know the amount that you must save, you can plan your expenses accordingly and achieve the goal.

  • The Right Goals

It is essential to set the right goal and priority for these goals as well. While it is essential that you save towards a car, you must not forget that an emergency will not wait for you to be financial stable. Thus, you must make small contributions towards ensuring that you have savings to last you at least a month’s worth spending. The more you end up with, the better it is. This short term goal will give you the confidence that you can achieve bigger goals with equal confidence.

Similarly, you can set other smaller goals to pay of any pending debt. Getting rid of your debt will help you eventually save more and work towards other goals.

  • A Working Budget

When it comes to financial goals, it is crucial that you set up a working budget. An effective budget will ensure that you do not end up spending every penny that you earn. You need to find a good balance between the inflow of funds (income) and expenses. If you find it a bit challenging to create a budget, you can take the help of any of the several apps or tools in the market. However, merely creating a budget is just the beginning. You would need to stick to the budget diligently month after month to achieve your financials goals and eventually achieving financial freedom.

Financial planning is important and so is setting targets. The targets set should be realistic and achievable, else they are of no use. Proper thought and analysis should go into  setting realistic targets.

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.