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Tax Tips: The Top 10 Questions We Get Asked During Tax Season Part 2

Tax Tips: The Top 10 Questions We Get Asked During Tax Season

Tax Tips for this tax season – Part Two: 6 to 10

We continue to look at the top 10 questions that our clients (and family and friends) ask during tax season.
See our post for tips 1 to 5 HERE.

Please keep in mind that each client is unique and there may be variances on these answers… these are simply guidelines to get you thinking and acting in the right direction. Talking to a tax expert is really our best advice and feel free to use these questions as the basis for your conversation. Contact us for questions about your personal taxes this tax season.

Q. What happens if I can’t pay the amount owing? 

A. It is still better to file than to sit on your taxes because you can’t pay. The fine for delayed payment is less severe than it would be if you held off on filing all together. We can work with you to set up a payment plan with the IRS to help manage the penalties. We’ll walk you through your options, but whatever you do… get those taxes filed.

Q. My child started working, does he have to file a tax return?
A. There are many different scenarios to look at when your child starts working, including the option of including your child’s income on your own return, but the general rules of thumb are:

  • If your child works and makes more than the standard personal exemption, s/he has to file
  • If an employer withheld taxes, s/he will have to file a tax return to qualify for a a refund.

    • We can talk details when we discuss your personal return this tax season.

    Q. I withdrew money early from my Retirement Account. How does that impact my taxes?
    Withdrawing money early from a retirement account comes with a 10 percent tax penalty plus regular income tax on the amount withdrawn. Before you withdraw, consult our tax experts to decide if the tax implications are worth it. It might cost you more in the long run, especially if the added income knocks you into a different tax bracket.

    Q. I withdrew money early from my Retirement Account. How does that impact my taxes?
    A. Withdrawing money early from a retirement account comes with a 10 percent tax penalty plus regular income tax on the amount withdrawn. Before you withdraw, consult our tax experts to decide if the tax implications are worth it. It might cost you more in the long run, especially if the added income knocks you into a different tax bracket.

    Q. I started a home business; what deductions can I make?
    A.

  • Home Office & Business Property: Keep track of your basic expenses such as telephone, gas, internet, etc. Your tax team will have some questions to determine the percentage that can be allotted as business use.
  • Entertaining: Wining and dining clients is an important part of most businesses and a valid deductible. If business was discussed during or after a meal you are able to deduct 50% of the expense. Write notes on the receipt showing the client and the business discussed. The more “proof” you have that it is a valid expense, the better prepared you are for any future questions.
  • Travel: You are allowed to deduct 100% of your travel expenses if the purpose was 100% business.
  • Insurance: One critical expense in conducting business is your insurance. If you have insurance (and you should!!) we can deduct the annual cost.
  • Depreciation: Accounting for depreciation in your taxes is very technical and should be left to the tax experts. Your property and business equipment depreciates over time and that is another unfortunate cost of doing business. For small business orders to be eligible to claim depreciation deduction for a property or equipment, they must meet certain requirements… let’s talk.

    • If you have even more questions about personal taxes or tax season, please contact our reliable and ethical Tax Service Team as soon as possible. The more time you have to compile your tax information, the more likely you are to take advantage of every little benefit.
    If you have even more questions, please contact our reliable and ethical Tax Service Team as soon as possible. The more time you have to compile your tax information, the more likely you are to take advantage of every little benefit.

    Call us at (248) 817-8071 … no commitment required to call, just an informational chat!

    Trusted Choice Independent Insurance Agents