Tax Advice For Life

A well-rounded tax advisor can help steer clients to tax-advantaged money moves that may help them avoid leaving money on the table come filing time. They can also provide guidance on the implications of new regulations or tax code changes.

There’s a fine line between what counts as tax planning and what crosses over into Steuerberatung The latter typically includes specific recommendations with concrete action steps.

Tax Planning

When it comes to tax preparation, a little planning can go a long way. It’s important to claim all of the deductions and credits you are eligible for, as well as make sure you’re taking advantage of any incentives your business or individual income may be entitled to.

Effective tax planning ensures that savings are generated while adhering to the legal measures put into place by authorities. It also helps individuals and businesses avoid potential tax disputes with federal, state, and local authorities.

Taxes are a necessary part of our daily lives, but they don’t have to be stressful or chaotic. A qualified tax consultant can help you develop a plan to minimize your liability and reduce your stress come tax time. They can also help you if you are currently facing a tax dispute with the IRS by slowing down the collection process and reducing penalties accrued.

Life Changes

Life happens, and the changes you experience can have significant tax implications. Whether you’re getting married, moving, having a child or buying a new home, if your situation has changed you should know how it can affect your taxes. These life events may change how much you are able to claim on your taxes, how much tax you pay or how much the IRS withholds from your paycheck. Miranda Marquit of Planting Money Seeds explains some of the most common life changes and how they can impact your taxes:.

Marriage alone can cause a number of changes to your tax situation including changing your bracket, doubled standard deductions and the ability to itemize or take advantage of credits and deductions with phaseouts.

Tax Bracket Changes

Annual inflation adjustments are an important part of the tax code, and these changes can affect your income tax situation. For example, if you earned the same amount of income each year but saw your inflation-adjusted wages rise by 7%, you may find yourself in a higher tax bracket than you expected.

The IRS recently announced that the seven federal income tax brackets for the 2023 tax year (for returns filed in April or October of next year) will increase due to persistently high consumer prices. These brackets help implement America’s progressive income tax system by determining the rates you pay on different portions of your taxable income, including wages. The brackets are based on your filing status and taxable income, including deductions and credits.

Tax Deductions & Credits

The difference between tax credits and deductions may seem subtle, but the two mechanisms work differently to reduce your tax bill. A tax credit directly lowers your bill dollar for dollar and could potentially increase your refund, whereas a deduction simply lowers your taxable income.

A tax professional can help you determine whether to itemize your deductions or take the standard deduction. They can also help you understand which refundable and nonrefundable credits you qualify for and how much each credit is worth to you. Determining the value of credits versus deductions can be complicated and depends on your marginal tax rate, which rises with income. Credits are nearly always more valuable than deductions. The IRS website has a generous list of credit opportunities for individuals.

Tax Season

This three-and-a-half-month period at the beginning of the year is when individuals receive the documentation and statements they need to complete their tax returns. This includes W-2s from employers and 1099s from freelancers.

If you have questions, a CPA can help. You can meet with them in person or via online chat, phone or email. During tax season, however, they may be busier than usual, so it’s best to engage them outside of the filing period whenever possible.

This year, the IRS warns that refund checks will be smaller than usual. That’s because COVID-19-era tax relief such as enhanced credits and deductions have expired. That means a smaller financial cushion for those who rely on their refunds to pay down debt, save or make major purchases.