Tax office recommendations from firms? Even if you hire someone else to prepare your tax return, you’ll need to do some of the advance work yourself—and the earlier you start, the better. Round up your receipts and check that you’ve received all the forms you need from employers and financial institutions. Last year’s tax return can be a good guide for making sure you aren’t missing any important information. For 2020, the deadline for filing taxes and making deductible contributions to an IRA or health savings account has been moved to July 15.
If you own a business, restructure your business entity, particularly if you are operating as a sole proprietor, LLC, or an S-Corp. The taxes for a C-Corp are lower at the top than for other business structures. However, there’s also a new 20% deduction of business income for pass-through entities. And, if you hire your children, you can pay them without withholding or matching payroll taxes if you have a sole proprietorship. You should work with an accountant to determine if restructuring your business is worthwhile. Invest in tax-exempt bonds. Any interest you earn is not subject to federal income tax and from Medicare surtax calculations. Also, municipal bond interest for bonds purchased in the state where you live is exempt from state income taxes, too.
Consult a tax professional before making any decisions that can affect your business tax return or spending money for the sole purpose of saving on taxes. Make sure you select someone who can help you all year, not just at tax time. Consider hiring an expert who can represent you before the IRS in case you’re ever audited. An enrolled agent might be your best bet. These professionals are designated by the IRS because they’ve passed a strenuous, three-part test, or because they actually worked for the IRS at some point. Note: These tips are not intended to be tax advice, but only to give you some tax-saving ideas to discuss with your tax professional. Every business is unique, and tax laws change frequently. Read extra information at https://greentree.tax/bookkeeping-services-near-me-houston-tx/.
Sec. 1031 Exchange Rules. The only way you can avoid current tax when you sell investment property is through a “1031 exchange”, where you involve a third party, called an accommodator, to hold the money and buy a new property for you. But there are some rules you have to comply with: You can’t touch the money. You have to identify the new like-kind real property within 45 days after property being given up is transferred and close within 180 days. The new property has to cost at least as much as the old one. You can’t be relieved of debt (so you can’t use the proceeds from the sale to buy a new property for all cash if the old property had debt tied to it). You will pay hefty fees to the accommodator to handle all this for you.