Tag: IRS


2015 Taxes Due Today! Last Minute Filers Guide

April 18th, 2016 — 11:47am
Tick-Tock, The Deadline Approaches

Tick-Tock, The Deadline Approaches

Tax day is here! And all taxpayers who waited to the last minute are having some form of panic attacks.  But don’t worry!  You are not going to jail if you don’t file your taxes on time, so take a deep breath, and here is your definitive guide to last minute tax filing:

The Deadline Is April 18th:  Due to special holidays, 2015 taxes are due April 18th this year.  So if you’ve already  resigned into thinking you missed the deadline you’re in luck!  Get your stuff together and head to an R&G Brenner location near you before it’s too late!

Not Ready?  File An Extension: If you are still scrambling to amass your documentation, expenses & deductions, don’t sweat and file an extension.  An extension will allow you more time to get your stuff together (or more time to procrastinate).  Either way, you’ll save money in unnecessary penalties and late filing fees.  However, be aware that filing for an extension to file your tax return is not an extension to pay your taxes due; you must send a rough estimate of what you think you will owe to the taxing authorities.  If you are unsure, overestimate; you will get an overpayment refund when you file your final tax return.  If you underestimate, you will be subject to interest charges on the amount you underpaid.  Even if you can’t pay your full amount of taxes due, send something even if it’s just $20.  This will prevent penalties and the taxing authorities will offer to put you on a payment plan.

Deadline & Extensions Are Only For Taxpayers who OWE:  This is the most common mistake that taxpayers make.  If you are due a refund, you have 3 years to file your tax return to claim that refund.   No extensions are necessary.  The deadline & extensions are only if you owe taxes and cannot file your final tax return by the deadline.  So if you are getting a refund, next year don’t scramble to file by the deadline.  You can simply wait one day after the deadline and you should be able to get an appointment of your choice and be able to sit with a tax professional pressure-free.  Just remember: If you do not file for a refund before the statute of limitations runs out (3 years), you refund(s) become the property of the US Government and/0r Taxing State.  That’s your money!  Don’t give it away.

Plan For Next Year: It’s hard to change one’s habits.  But technology is making it easier.  Almost everyone has a smart phone.  If you are in a cab, or taking a client to dinner, it is very easy to simply snap a photo of the receipts with your phone.  Same thing for when you get your income statements of K1’s. Keep all those photos in a folder and when it comes time doing your taxes—either by yourself or with a tax professional—you will have all the heavy lifting done already.  This will save you time and stress.

While most R&G Brenner professionals are fully booked in this late hour, many offices are keeping extended hours in anticipation of a rush of last minute filers.  If you can’t get an appointment with an R&G Brenner Tax Professional, just walk in and if you can’t meet with a tax pro on your schedule, just drop off your papers and we file them as soon as possible.  If you have any questions, please feel free to contact us toll free at (888) APRIL-15.  Happy Tax day and rememeber: “Saving you time and money is what we are all about”.

Benjamin K. Brenner
President

Comment » | Tax Tips

IRS Computer Problems Shut Down Electronic Filing Of Tax Returns

February 4th, 2016 — 11:43am

Computer problems have caused the IRS to cease accepting electronically filed tax returns until further notice:

The outage could affect refunds, but the agency said it doesn’t anticipate “major disruptions.”…”The IRS is still assessing the scope of the outage,” the agency said. “At this time, the IRS does not anticipate major refund disruptions; we continue to expect that nine out of 10 taxpayers will receive their refunds within 21 days.”

Source: USA Today

Comment » | Tax & Financial News

Tax Season Begins; R&G Brenner Promotions Extended

January 20th, 2016 — 10:48am
Don't File By Hand, Electronically File with R&G Brenner

Don’t File By Hand, Electronically File with R&G Brenner!

The 2016 tax season has officially begun as the IRS is currently accepting tax returns for electronic filing. Many employers are mailing their wage documents earlier and/or are offering ways for employees to download their documents.  As such, we are seeing a noticeable increase in client volume at many of our R&G Brenner offices.  If you’d like to make an appointment for an early appointment, we ask that you do so as soon as you are able so we can accommodate your preferred meeting dates & times.

Furthermore, R&G Brenner is offering a slew of new products and promotions.  They have been so popular, we have already extended the deadlines for some.  Our current promotions are*:

  • $100 Cash Early Bird Special: Come to any participating R&G Brenner office, and all qualifying applicants can walk out with $100 Cash as an advance on their refund.  No Fees or Interest Apply!  Click here for more info.
  • $750 “Easy Advance” Refund Advance: Qualifying applicants who file their return as a Refund Anticipation Check (RAC) can also get a larger no-fee, no-interest $750 advance on their refund from our bank provider: Republic Bank & Trust.  Click here for more info.
  • $50 CASH For Referrals: We’ve updated our Client Rewards this year by more than doubling our cash payments for new clients referred to R&G Brenner: We will pay you $50 Cash for every new client your refer!  Plus, your cash will be available as soon as your referral files their taxes with us. There is no limit to the amount of Cash you can earn!  Click here for more info.
  • FREE Secure File Transfer: Due to the explosion of identity theft as it relates to the IRS and filing taxes, all R&G Brenner professionals are now equipped with Dropbox accounts to securely receive confidential tax information.  Click here for more info.

R&G Brenner offices are all currently opened and staffed with highly trained CPAs, EAs, RTRPs & other professionals.  If you have any questions about the above promotions, any R&G Brenner service and/or have tax related questions, please feel free to contact us.  Have a very happy & profitable New Year!

*All promotions have individual rules, qualifications & restrictions.  Click here for a list of all our promotions and click on the individual promotion for all related rules.

2 comments » | Announcements, Tax Tips

How Do Taxes Affect My Credit?

November 16th, 2015 — 1:01pm
How Paying Tax Can Affect Your Credit Score

How Paying Tax Can Affect Your Credit Score

When you are focused on improving your credit, paying on time and avoiding high amounts of debt will help you build a great credit rating. If you are not paying your taxes, or you use personal loans or credit cards to pay your taxes, your tax bill is something that could have a devastating impact on your credit rating. Missing a deadline for tax payments to the IRS could even result in a tax lien.  Here are some ways taxes can affect your credit:

What is a Tax Lien?

If you fail to pay your taxes, the IRS can file a federal tax lien with the credit bureaus. This will dramatically impact your credit rating. The IRS usually files a lien if you owe more than $10,000 and you have not paid for at least 30 days. If you end up with a lien from the IRS, you can end up with 100-point hit to your credit rating; enough to take your score from good to poor and significantly affect an individual’s financial history.

IRS Payment Plans

The best way to avoid a tax lien is to pay your taxes on time. If you do fall behind, one option the IRS provides is a payment plan for individuals to pay their taxes. The IRS will automatically debit your account each month until you have paid off the entire balance owed. If you enroll in the payment plan, you can have the lien removed by asking the IRS to take it off your credit report. Payment plans with the IRS will not reflect on your credit rating, but if you are late with payments to the IRS, they can reinstate the lien which will then negatively affect your credit.

Personal Loans

Some people choose to take out a personal loan to pay their back taxes. If you decide to go this route to pay your taxes, keep in mind that you will need to pay interest on the loan which could compound and result in a much higher total owed depending on the interest charged. To be approved for the loan, you must meet the credit requirements of the lender. When they pull your credit report, a failure to pay your taxes will appear on your credit report, which will affect the interest rate at which a loan is extended to you or even prevent you from getting a loan at all. If you are late to make payments, your credit rating will be impacted. Defaulting on the loan, like failing to pay your taxes, will drastically hurt your credit score. That said, the interest from an IRS installment plan may accrue more quickly than the interest on a loan. Carefully consider if using a personal loan to pay your taxes is the best decision, and consult with an R&G Brenner tax professional if you need help deciding what would be right for you.

Credit Card Payments

Another way your tax bill can impact your credit rating is if you use a credit card to pay your taxes. Credit cards come with certain interest rates, which can increase your debt burden. The interest of a credit card can end up causing you to pay more money than you initially owed in taxes. Like a personal loan, missing payments on your credit card can hurt your credit score. Credit cards add to your debt burden, which can hurt your credit rating if you end up borrowing too much. Having a high balance on your credit cards can even prevent you from raising your credit score. If your credit rating is severely impacted, you can have a hard time getting approved for other loans, and it can even hurt your ability to find a job.

R&G Brenner usually suggests taxpayers try to take advantage of payment programs offered by the IRS, before other options as they usually are the most beneficial to the taxpayer.  However, it is important to consider all different options available when paying your taxes so taxpayers do not end up unnecessarily struggling with higher amounts of debt.

Comment » | Tax Tips

After Documentary, Scientology’s Tax-Exempt Earnings Attracting Attention

August 3rd, 2015 — 1:46pm
Scientology's Tax Exempt Earnings Under Scrutiny

Scientology’s Tax Exempt Earnings Under Scrutiny

The Church of Scientology is getting a lot of attention these days thanks to “Going Clear”, HBO’s recent documentary on Scientology and a number of its practices. One aspect of Scientology which is receiving even more attention than before is the church’s tax-exempt status. Part of the controversy extends to how the Church of Scientology actually received its tax-exempt status—and to just what ends it uses it. After being hit with over 2,400 lawsuits at once from Scientologists, the IRS, after years of rejecting Scientology’s requests for a change in their tax status, gave it tax exemptions typically applied towards churches in 1993.

Tax Exemptions All Around

While the Church of Scientology hasn’t issued a clear response to questions raised by the documentary, one thing that’s definitely not in question is whether Scientology is making use of its tax-exempt status. Fortune’s Chris Matthews, citing the Scientology news website The Scientology Money Project, estimates that the Church of Scientology is worth somewhere in the area of $1.75 billion, with most of that money wrapped up in real estate. About 70% of that real estate is tax-exempt, meaning that a change in tax could possibly land the church a tax bill of $20 million or so a year.

Matthews cites a number of different sources which make a compelling case that Scientology uses its tax-exemption in ways that are clearly commercial, with examples such as a Tampa Bay Times investigation from 2010 which discovered that Scientology had not been paying a 5% occupancy tax for years. It turns out that Scientologists visiting the head offices in Clearwater were staying at hotels owned by Scientology without paying the tax. It is cases such these, now becoming increasingly visible as more similar stories emerge, that are keeping the debate surrounding Scientology’s tax-exempt status alive in the public.

Against the Public Interest?

In a recent interview with The Wrap, Alex Gibney, the director of Going Clear, noted that the main argument against Scientology losing its tax-exempt status was not predicated on whether or not it’s a “real” church, but rather that Scientology wields its tax-exempt status in order to pursue policies which are not in the public interest. In his documentary alleging that people working for the Church of Scientology often earn as little as 40 cents an hour and accusing the Church of illegal imprisonment and torture at the highest levels, Gibney’s central argument departs from the usual tack: that Scientology isn’t a real religion. Gibney argues instead that the religion is a public threat.

While tax exemption is hard to get, it’s also extremely hard to lose, and the IRS will require a great deal of proof of the claims like those made in the documentary and those from former church members who see themselves as victims of a cult. The Church of Scientology reportedly keeps files on all its members to use against them in case they leave the church, making getting that proof even more difficult than it otherwise would be. The evidence presented in Going Clear is damning, but it hasn’t cost Scientology its tax-exempt status—yet.

3 comments » | Tax & Financial News

Wondering What to Do with Your Tax Refund? Invest It!

June 3rd, 2015 — 3:48pm
Invest Your Tax Refund & Get The Most Bang For Your Buck

Invest Your Tax Refund & Get The Most Bang For Your Buck

As the tax filing deadline of April 15th has come and gone, many of us are giving big sighs of relief that it’s all over—at least for now. If you were lucky enough to get some money back this tax season, you’re probably wondering what to do with it. Shopping spree? Vacation? While those ideas certainly sound like fun, the truth is that you’ll be best off investing it. After all, it’s not found money—it was your money to begin with. Look at your tax refund as the contents of a kind of rigidly enforced savings account and do something worthwhile with it that will pay off down the road. Check out these savvy investment ideas to make your tax refund work for you.

Plan to Save

Many Americans seem to heed the call of the savings account, with three out of 10 people planning to save or invest their tax refund this year. Before you dump your refund into your savings, though, decide what you are saving for: set a goal. This will help you determine which investments are best for you. Do you want to invest money for a rainy day slush fund? Perhaps that dream vacation you’ve always wanted? Are you looking to make a large purchase, such as a house, car or motorcycle? Is retirement on the horizon? Take stock of your current financial situation and then decide where your money would be best spent down the road. Once you do, you’ll know exactly what to save for.

Pay Down Some Debt

Let’s assume you got back between $3,000 and $4,000 from the government after tax day. Lucky you! The very first thing you should do is pay down some of your credit card debt or sock some away into your emergency fund. If you’re looking to grow investments but you are losing just as much in credit card or student loan interest, a strategy to invest all of your return doesn’t really make sense, says US News and World Report. Putting money in an emergency fund is a safe bet. For example, the $1,000 you put in now will still be worth the same later when you need to take it out—or more, if your emergency fund is held in such a way that it accrues interest. Your best bet for these accounts are high-yield savings and money markets.

Add to Your 401(k)

Looking into the future and thinking long-term, you can really make the most of your return by contributing some of it to your 401(k) so you can take advantage of your employer’s maximum match. Those who are building a retirement account would be wise to open a Roth IRA using their refund money to ensure a tax-sheltered source of income. Educational plans, such as 529 accounts, are also a great idea. If you open up these types of accounts with your refund money, it can make the process that much easier. Plus, contributions to Roth IRAs can be deducted from next year’s taxes, making next year’s return all the sweeter.

Don’t Put All Your Eggs Into One Basket

Placing one big chunk of change into one stock isn’t your best bet. You’re better off diversifying instead and adding funds to your current investments. If you want to add to your portfolio, you may want to try a specialty bond or stock fund, which will satisfy your urge to take a fun risk yet won’t present you with the looming threat of losing it all if the stock market tanks.

Whether you decide to add to your current portfolio or invest in your 401(k), making an investment with your tax return now instead of blowing it all on a vacation will pay off in the long run.

Comment » | Tax Tips

Native American Tribes, with Tax-Free Advantage in Mind, Consider the Recreational Marijuana Industry

June 2nd, 2015 — 1:40pm
Legalized Marijuana Could Be A Boon to Native Americans

Legalized Marijuana Could Be A Boon to Native Americans

With growth from the gaming industry leveling off in most locations, many Native American tribes are now considering a brand new source of income in states where marijuana has been legalized, either medically and recreationally. As more and more states–including New York–legalize marijuana in one form or another, Native Americans will have a huge advantage over other retailers in the business: Tribal earnings are not subject to federal income tax laws, as long as they are earned on the reservation and are not distributed to individuals as earnings.

The Native American Tax Advantage

The advantages that would be enjoyed by Native American tribes for the sale of marijuana would be similar to the tax-exempt status they already enjoy in those states where gaming is conducted on reservations. 422 tribal gambling facilities in 28 different states earned $26.5 billion, $27.9 billion, and $28 billion from 2011 through 2013, none of which was taxable by the federal government.

Even if commercial activities are conducted on tribal lands, they are exempt from taxes, as long as they are not conducted by individuals. Individuals within the tribes are U.S. citizens and they can be taxed, which is why corporations are usually formed before embarking on a gaming enterprise, and why the same would likely be true of the marijuana business. The legal status of the corporation prevents any federal intervention or taxation on the income from gaming currently, and barring legislation that alters this status the same would be true of income generated from growing and selling legal marijuana.

Tribes must be careful, however, not to distribute earnings from gaming or marijuana sales to individuals as compensation for their work in the industry. These earnings can be taxed, but there is another federal law which comes to the individual tribe members’ aid in this situation. Earnings can be distributed to individuals as payments from a general welfare program that is earmarked for the needs of families and individuals, relative to health, food, and other essentials that are not related to compensation for services.

State Tax Laws

At the state level, Native Americans cannot be taxed on income that is generated from reservation resources unless that income is generated within the state but not within the boundaries of the reservation. In effect, this neutralizes attempts by state agencies to levy any kind of tax on the potential earnings of Native Americans from either gaming or marijuana growing. Marijuana grown on the reservation would thus be completely un-taxable in any state where it is grown.

As one might expect, this kind of exemption makes both the federal government and state governments very uneasy, and inclined to eye the legislation which currently grants such sweeping freedom from taxation very closely. As Native American enterprises begin entering the preliminary phases of entering the retail marijuana market and the media notes the enormous taxation advantages they would enjoy, federal agencies and state agencies are both taking hard looks at the situation.

It is hard to estimate exactly how lucrative the marijuana growing industry could be for Native Americans, but assuming it is on par with the gaming industry, a huge windfall would accrue to tribes all across the country. Some experts feel so strongly that they’ve said that growing marijuana could eventually eclipse the gaming industry as a source of income, and for tribes that have precious few sources of income on reservations, the allure of huge profits is likely to be overwhelming.

Comment » | Tax & Financial News

What NOT to Do on Your Taxes

May 7th, 2015 — 11:28am
Mistakes to avoid on your taxes

Mistakes to avoid on your taxes

Filing taxes is a painstaking process for almost everyone and every year, without fail, many returns full of mistakes are sent in to the IRS. In fact, mistakes are extremely common on tax returns, with an error rate of 50 percent; on self-prepared returns, according to the Government Accountability Office. There is a near-infinite number of things that can be done wrong on tax returns, from simple computational errors to missing out on deductions. Knowing which mistakes people commonly make is a good place to start when trying to avoid making them yourself. To that end, here’s what not to do on your taxes.

Include Undocumented Charitable Contributions

Though many charitable contributions are deductible, not every donation qualifies, and those that do must be meticulously documented. Every donation requires an accurate record, complete with confirmation receipts of the donation amount from the recipient at a qualified charity. Many people now donate money to crowdfunding campaigns, such as those hosted through Kickstarter, but many of these, because donors receive goods or services in return, don’t qualify as charitable contributions.

Taking a Write-Off for College You Don’t Qualify For

There are currently two write-offs available for college education: a $4,000 tuition and fees deduction and the $2,500 American Opportunity Tax Credit. Most people take the tuition and fees deduction because it seems like more money, but because the AOTC gives a dollar-for-dollar reduction, as opposed to lowering the income subject to tax, it can often be a better deal. It’s worth crunching some numbers to figure out which is the better option for you each time you file.

Claiming State Refunds as Income

Many people make the mistake of claiming their state tax refunds as income on federal tax returns. The only time a state tax refund should be declared is if the filer does not receive a tax benefit from deducting the taxes. Taking a standard deduction as opposed to itemizing means the filer doesn’t need to show state tax refunds as income.

Confusing Real Estate Taxes

Confusion regarding real estate and other property is one of the biggest sources of tax mistakes. People often take the wrong deductions, on everything from home offices to mortgage interest payments. New homeowners should be particularly careful and make sure to check which taxes they paid during closing to ensure they apply for the accurate deductions on their returns.

Forgetting IRA Savings

Throughout the year many people make regular IRA contributions, but they often forget to report them when filing their tax returns. Many of these IRA contributions qualify individuals for tax breaks. Furthermore, reporting all contributions is mandatory and even nondeductible contributions should be reported in order to avoid paying for them during retirement.

Incorrectly Reporting Foreign Investments

Though foreign investments are only applicable to a relatively small percentage of the tax base, they are amongst the more costly areas to make mistakes. Failing to accurately report foreign bank or financial accounts unintentionally carries a penalty of $10,000 per violation. For willful violations, the fine is $100,000 or 50 percent of the balance of the unreported account at the time of violation, for each violation, if the IRS catches it in an audit. That’s a very expensive mistake!

Changing Jobs and Withholding Too Much/Too Little

Those who switch jobs during the middle of the year and have combined earnings of greater than $117,000 should make sure they are not having extra money withheld. The maximum withholding rate is 6.2% for the first $117,000 of income, but both employers may withhold this amount if the employee made less than that sum at each individual company, meaning the filer would pay too much. It might make for a nice, big tax return, but it also means you’re overpaying on your taxes, and no one wants that.  On the flip-side, if you switch jobs or get promoted and withhold too little, you could be surprised you owe taxes come April 15th when you were expecting a refund.

Overpaying on Investments Sold

Making mistakes on investments sold is frequent as it requires many calculations and meticulous record keeping of stock splits, reinvested dividends, capital gains distributions, and sales commissions. There are several online tools available to help investors make accurate calculations of shares bought. Make sure to keep clear records of all your investments.

These are just a few of the things you absolutely shouldn’t do on your taxes. While it’s by no means an exhaustive list, these mistakes are some of the most frequent—and also some of the easiest to avoid. If you’re concerned that you’ve made mistakes (or will make mistakes) on your taxes, you can always contact an R&G Brenner tax professional for assistance.

Comment » | Tax Tips

The Only Two Countries to Tax Citizens Living Abroad? The United States and China

March 23rd, 2015 — 4:00pm
Will U.S & China Remain The Only Nations To Tax Their Citizen Abroad?

Will U.S. & China Remain The Only Nations To Tax Their Citizen Abroad?

Of all the sovereign nations on the planet, there are only two that tax their citizens’ income earned while living abroad: the United States and, perhaps surprisingly, China. Most countries ascribe to the philosophy that taxation should be primarily national rather than global, but both the United States and China require their citizens living abroad to pay domestic taxes on income earned worldwide. Since these two countries agree on little else, it’s worth taking a look at why each country favors this policy.

Why the U.S. Taxes Citizens Living Abroad

The standard justification for the long-running policy imposed by the United States is that it deters tax evasion by its citizens and ensures that all of them pay for the benefits that come with their citizenship; many of which they still receive while living abroad. With these funds being used to help pay the enormous costs associated with running the government, even those citizens living abroad are therefore significant contributors to the federal budget. Economists globally debate the fairness of taxing citizens and companies overseas, arguing that citizens in another country can’t make use of state-run healthcare or social welfare programs while also promoting exports.

Benefits to China from Taxing Citizens Living Abroad

China’s government implemented sweeping economic changes in the early 1990’s in an effort to modernize its federal tax system, which had fallen into a dreadful state of confusion and inefficiency. After evaluating the systems in place around the world, especially those employed by the global superpowers, China’s political leaders decided to adopt the model then in use by the United States.

Strangely, after adopting this policy China then declined to actually enforce it among citizens living around the world. In response to criticism, political leaders contended that resources in the federal agency charged with levying and collecting taxes were simply insufficient to meet the requirements for tracking down all those living beyond the country’s borders. In addition, the relevant earnings data from private employers was seldom available to provide a basis for taxation.

That will all change in 2015, however. Now the State Administration of Taxation (SAT) insists that all income earned abroad must be accounted for right alongside domestic earnings, and that China’s government will no longer tolerate evasion of taxes. One of the chief reasons for the about-face on the enforcement of the rules seems attributable to the fact that the country has a greatly increased need for revenue to fuel its economic growth.

How China’s SAT Will Enforce Taxation Abroad

One of the past obstacles to tax enforcement abroad was that necessary tax data was lacking on citizens’ overseas investments and earnings. Early in 2015, taxation officials met with executives from more than 150 of China’s largest corporations to inform them that it would require information on their employees’ earnings while living abroad. In this way, one of the loopholes of the system has been tightened up to make the system more enforceable.

The SAT also plans to reign in some of the huge overseas investments made by billionaire Chinese individuals and corporations, which it deems to be no more than shelters designed to subvert the taxation process. In prior years, it was common practice for wealthy Chinese businessmen to make foreign investments through specially created companies to protect income. Corrupt officials who have fled overseas to escape this new level of zeal by tax officials may now be caught in the net of taxation reform.

Chinese officials have been negotiating quietly with financial and political officials in the U.S. and other countries where its citizens have been living abroad in order to be granted access to information on earned income and bank account data. With this data, another missing link would be supplied and the SAT would then be much better informed about taxable income.

Potential Influence on Other Nations

Up to now, European countries have resisted adoption of the citizenship-based taxation model for those living abroad, because these countries felt that their foreign citizens received few of the benefits of citizenship. With global economies now slowing, it is entirely conceivable that more countries around the world will begin to adopt this same model of taxation.

Comment » | Tax & Financial News

The Most Important Tax Issues to Focus on This Year, According to the Experts

February 23rd, 2015 — 4:06pm
The Most Important 2015 Tax Issues

The Most Important 2015 Tax Issues

Taxes are never a fun process, and there can be a great deal of confusion about how much to pay or how to get the most money back. With tax season in full swing, many people are finding themselves lost in a flurry of financial advice that’s hitting them from all directions and it’s difficult to sort through all the noise. Here’s some advice from tax experts about what issues they consider the most important tax issues of 2015:

Review New Tax Rules

Every tax-paying family or individual has a unique situation and the only way to know how the code will affect each unique situation is by taking time to look at the new regulations. Among the issues that could affect families is the change to flexible spending accounts (FSAs) and health savings accounts (HSAs). While in 2013 money could be rolled over from the prior year, in 2014 carrying over the money makes one ineligible to participate in the HSA for 2015. There are also several other adjustments to consider regarding capital gains, deductions, and an alternative minimum tax.

Don’t Miss Out on Free Money

Believe it or not, there’s a good deal of free money going around, and it’s yours for the taking. Private wealth-manager George Papadopoulos has several suggestions for where people can get this free money, including participating in their employer’s retirement plan, using company insurance policies and employee stock-purchase plans, and taking advantage of credit card promotions.

For company retirement plans, make sure you are contributing enough to get all of the matching funds, which will also allow participants to enjoy the growing tax-deferred funds in future years. The health insurance plans offered by companies have a number of advantages, frequently offering flexible spending accounts for health and child care as well as health savings accounts. Stock-purchase plans can help employees purchase stocks at 10-15% below the market value, putting capital gain directly into the employees’ paychecks. Credit card promotions are a great way to collect free cash for every dollar spent, but make sure to choose carefully.

Consider Moving Certain Assets to Non-taxable Accounts

Where one is keeping their assets can also play a large role in how much they are paying or not paying in taxes. For instance, the government taxes bonds and stocks at different rates. Dividends and long-term capital gains are taxed at the relatively reasonable rate of 15%, while nearly all interest income is taxed at regular income tax rates, which can reach up to 35%. That’s why doing some shifting around and moving fixed-income assets to nontaxable accounts can minimize the amount of tax expenditures to which you’re exposed. Money in nontaxable accounts is also harder to access, but it’s important to consider moving assets to nontaxable accounts, as it could lead to significant savings.

Maximizing Roth IRA Savings

If you don’t have one already, a Roth IRA allows you to save for retirement in a nontaxable account as long as you meet certain guidelines. One of the ways to take advantage is to contribute the maximum you can every year. Use these contributions to focus on stock options, opting first for high-quality dividend growth stocks. Converting funds from a traditional IRA or 401(k) often allows people to pay less in taxes, though it’s important to plan out as the year of conversion will include the amount converted as part of taxable income. Finding out the specific details for how to save using Roth IRA is the best place to start.

For more information about the above topics and more, please contact an R&G Brenner tax professional today!

Comment » | Tax & Financial News, Tax Tips

Back to top