Tax Planning: End-of-Year Tax Strategies to Plan for Now

It’s the last quarter of the year, and you’re prepping for the holiday season. The last three months of the year are a great time to employ some end-of-year tax planning strategies so you can optimize your return and lower your income tax liability. LongSchaefer explains in today’s blog.

Related Post: Tax Planning Tips for the Holiday Season

Know Which Deduction to Take

Before you make any firm tax planning decisions, you need to determine which deduction to take. The standard deduction is a set amount by which the IRS reduces your income liability. Amounts of the standard deduction vary, depending on if you’re filing as a single person, married and filing jointly, or submitting your taxes as the head of a household. 

It makes sense to itemize deductions if your total annual deduction will be greater than the standard tax deduction. Common itemized deductions include interest on mortgage payments, certain healthcare expenses, and charitable contributions. 

Contribute to Retirement Accounts

Contributions to retirement accounts are a tried-and-true tax deduction that individuals and businesses can make for tax planning purposes. That’s because the annual contribution limits for these plans are $19,500, as of 2020. Those limits may go up in the coming years.

Do you have any extra income in savings heading into the end of the year? Have you lagged in your contributions to IRAs and 401(k) plans? As you decide how best to invest your money at the end of the year, contributions to retirement plans can defer taxes until you use the money for your retirement. 

If you’re 40 and you want to retire at 70, you can put off paying income taxes on those contributions for 30 years. Suppose you put the maximum amount, $19,500, into your retirement account by the end of 2020. That reduces the income used to figure your tax liability by $19,500.

Leverage Stock Losses to Offset Capital Gains

The stock market took a beating in 2020 due to the COVID-19 pandemic. Although the stock market has climbed back up, you can deduct up to $1,500 ($3,000 if filing a joint return) of capital losses in excess of capital gains per year from your ordinary income. Although this isn’t as great as contributing to a retirement account, these smaller deductions add up when it comes to tax planning and reducing your income tax liability every year.

Related Post: Tax Planning: Charities and Tax Deductions

Tax Planning Services From LongSchaefer

The tax and accounting pros at LongSchaefer can tailor a tax planning strategy to your specific situation. We recognize that everyone’s definition of success is different. Contact us or call (513) 245-0300 for more information on our tax planning services and end-of-year tax strategies.

Tax Services: Three Common Tax Problems Faced by Businesses

For large businesses and small businesses alike, tax problems present themselves each year for a variety of reasons. There are many precautions that your business can take to avoid certain tax problems, but without professional tax services, it can be difficult to stay on top of every potential problem. Today, LongSchaefer wants to help your business avoid these problems. In this blog post, we’ll evaluate three common tax problems faced by businesses. 

Failure to Track Deductible Expenses

For businesses that do not utilize expense accounts, it’s crucial that you are keeping track of all of your deductible expenses. Failing to keep track of deductible expenses is a common tax problem for businesses that don’t have a specific credit card or banking account for expenses. Failing to keep track of these expenses means that you are likely missing out on tax savings. Make sure to keep all your receipts to avoid the need for professional tax services. 

IRS Audits

Few things are more stressful for a business than receiving an audit letter from the IRS. There are several red flags that might get your business audited, including year-over-year net losses, consistent late filings, and salaries that are higher than usual for your industry. Audits take significant time and energy, as you gather documents and records to substantiate items on your tax return. The IRS is thorough and isn’t going to let you off easy, so it’s important to have proper representation if faced with this tax problem. At LongSchaefer, we offer IRS audit representation that will help save your business time and money during the audit process. 

Payroll Taxes

There aren’t many things worse in the eyes of the IRS than failing to pay your payroll taxes. A significant portion of payroll taxes are your employees’ withholdings, which immediately puts the IRS on guard. The penalties that come with failing to pay your payroll taxes are often more severe than other tax problems, so you shouldn’t take payroll taxes for granted. If you are behind on these taxes, you will want to make it a priority for your business and avoid the IRS knocking on your door. 

Contact LongSchaefer for Tax Services

If your business is facing a tax problem, whether it’s an audit, payroll taxes, or another issue altogether, LongSchaefer tax services can help. For more information on the tax services we can provide for your business, get in touch with us at (513) 245-0300 or contact us online today. 

Tax Planning Tips for the Holiday Season

During the Christmas season, you are going to be spending money early and often on gifts for family and friends. It can be easy to lose track of how much you are spending, especially without a set budget. During the hectic holidays, many people overlook the tax implications of the holiday season. In today’s blog post, LongSchaefer offers a few tax planning tips for the holiday season.

Don’t Lose Track of Your Receipts

It’s important to keep track of your receipts all year round, but it’s especially true during the holidays. When tax season hits, you’ll want to have all of your receipts for deductible expenses, and that includes holiday receipts. Make sure to keep all of your holiday-related receipts, including gifts, childcare expenditures, and travel expenses. Whether you are filing your taxes or returning a gift, saving your receipts will pay off.

Don’t Forget Child and Dependent Care Tax Credits

One of the most common headaches during the holiday season is childcare over winter vacation from school. While the adults of the home are still working, children are out of school, many needing some sort of childcare. If you have to hire a babysitter or send your kids to winter camp, you might be eligible for child and dependent care tax credits. In fact, you could be eligible for up to $2,100 in tax credits for your childcare.

Consider When to Payout Your Holiday Bonus

If you are expecting a holiday bonus from your employer in the coming weeks, you might want to consider waiting until 2020 to cash it out. For a bonus that comes with a significant payout, it could actually bump you into the next tax bracket. When working through your tax planning for 2020, it might benefit you to defer your bonus to 2020 so that it doesn’t impact your 2019 tax return. If you don’t immediately need the extra income, it might serve your family best to wait. 

Contact LongSchaefer for Tax Planning

As we head into 2020, tax season will be upon us in no time. If you are looking for tax planning help in 2020, give LongSchaefer a call at (513) 245-0300 or contact us online today.

Tax Planning: Charities and Tax Deductions

Tax Planning: Charities and Tax Deductions

It’s the season of giving, and now is a great time for you to become involved with your favorite charity. Making donations can help you to score some additional tax deductions. In this blog, LongSchaefer explains how you can give and get a bit more this tax season.

Rules of Charitable Deductions

The following rules act as a quick-guide that will allow you to understand some specifics of how to claim your charitable contributions.

  1. Know where to claim- Your claims will all be made on Schedule A of Form 1040.
  2. If you claim it, donate it– Do not try to fudge your donations. If you didn’t donate it, do not try to say that you did.
  3. Record your donations- If you are donating, make sure that you keep track of where you have donated, when you donated, and the amount you gave. Bank statements can help you to prove your donations.
  4. Non-cash? No problem. Make a list of your donations, carefully noting the condition of the items and the value of those items. Many charities provide valuation guides on their websites.
  5. Picture? Perfect!- Take pictures of the items you donate so you can show they are in good condition. It also shows how much you have donated.
  6. Know Your Limits- If you’re donating to a political party campaign, you cannot deduct that. You cannot deduct gifts or contributions to for-profit businesses.

Contact LongSchaefer Today

Still not sure of all the nuances related to charity deductions, or deductions in general? Connect with the professionals at LongSchaefer today. We have worked diligently with the Cincinnati, OH, community since 1981. We believe in providing affordable tax and business services to our customers. Contact us online today, or call us at (513) 854-0217.

What are the Tax Implications of Buying a Car?

Tax Implications of Buying a Car

If you’re buying a car, you should be aware of what it could mean for your taxes. Planning for your taxes is the best way to prevent unwanted surprises and make sure you’re prepared for anything. Today in the LongSchaefer blog, we’ll talk about how buying or leasing a car will affect your taxes.

Sales Tax

The sales tax you pay on your car will be your biggest consideration. When you buy or lease a car, you will have to pay the sales tax when you go to get it registered. This is an expense that many first-time car buyers may not be aware of. Make sure you have enough money set aside when you buy or lease a new car to pay your sales tax as well.

Fortunately, the nice thing about sales tax on a car is you can claim it on your yearly taxes as a deduction. You should be able to claim both your sales tax and your registration fees. If you want these deductions available the next time you file your taxes, you may want to go ahead and get that car you’ve been looking at before December 31st. Waiting until after means you’ll have to claim your deductions on next year’s taxes instead, meaning the benefits aren’t as immediate.

Property Tax

Don’t forget you’ll need to pay your property taxes. Many states assess property tax on vehicles, so you’ll need to make sure to update your form to send into your assessor. You can remove any old cars off the form and add your new car. Forgetting to do this means they may not get an accurate assessment, and your property tax payment will be delayed.

Business Related

If you buy or lease a car for your business, or if you’re self-employed, you may be able to write off operating costs of the vehicle. This could include gas, repairs, and more. This is something you’ll want to run by a tax advisor because this can get fairly complicated. Luckily, you can always bring your taxes to the advisors at LongSchaefer. We’ll be happy to help you with your taxes, no matter how complicated they might be.

Contact LongSchaefer Today

The professionals on our team are here for you. Your taxes are our first priority and we have been offering experienced service in the Cincinnati, OH, area since 1981. We have won several awards for our services, and we would love to offer that same award-winning expertise to you. Call (513) 854-0217, or contact us online today.

May 2020 COVID-19 Update

In order to comply with the Ohio Health Department Order & CDC social distancing recommendations, our offices are closed until further notice. Rest assured that our established protocols and available technology will allow us to provide the same level of service and quality you expect from LongSchaefer during this time.

The SBA has announced details of how it’s helping small businesses through the Coronavirus outbreak. The IRS is sending payments to families affected by this crisis. 

Please click on our Coronavirus information pages for more information.