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Simple Tax Deductions You Need to Know About

The 40 Simple Tax Deductions You Probably Don’t Know About

Everybody seems to know what tax deductions are but, if you were to ask them what deductions they qualify you’ll more than likely be met with silence. With the constant shift of government legislation year after year it can be difficult to define what you qualify for (unless you’ve been following that legislation throughout the year and that can be time-consuming). We’re guessing you’re already busy enough as is so, we’ve put together a list of the 40 simple tax deductions you could qualify for this year. Simple tax deductions that, we hope, will help save you quite a lot of money.

obamacare and taxes

Obamacare and Taxes: 2014 Tax Year’s Big Question

The big question of the 2014 tax year is, how will we be effected by Obamacare and taxes?

Do you understand the effect Obamacare has on your taxes? If you aren’t up to date on the health insurance situation, your tax return could be at risk.

Obamacare (the Affordable Care Act) requires almost all U.S. citizens and legal residents (and their dependents) to have health insurance for the entire year (starting January 1, 2014). For all those without health insurance there will be a tax fee during 2014 and beyond. This fee will be paid when filing for your tax return.

Let’s dive into Obamacare and taxes.

file your 2014 taxes early

5 Reasons to File Your 2014 Taxes Early

Tax season is approaching fast. You have three and a half months to file your 2014 taxes, but why wait until the last minute. You can file your 2014 taxes early instead of stressing out about them until April 15, 2015. There are no disadvantages when filing your taxes early. In fact, there are many advantages to doing that.

DMCPA has a couple reasons as to why you should file your 2014 taxes early, thanks to the help of U.S. News.

lower your tax bill

10 Simple Ways to Lower Your Tax Bill

Tax season is rapidly approaching. Last minute tax tips are on everyone’s mind before April 15th. Some quick tax moves and saving on returns can make all the difference. See if you are eligible for these credits and deductions that will lower your tax bill.

tax saving tips

5 Holiday Tax Saving Tips

The holiday season is always a great time of year to be charitable, but you don’t need to send yourself to the poor house in the process. There are many ways to make the most of what you already have, and turn what you don’t need into a charitable donation. For many, the giving process is not thought out and cost more than is necessary. Having tax saving tips can make a huge difference when it comes to the holidays, make sure you have a plan.

s corporation payroll tax

How S Corporation Payroll Tax Works

With regard to S Corporation payroll tax, there’s a bit of flexibility when it comes to filing taxes and giving yourself a salary. However, it’s a slippery slope, because S Corporation owners need to be careful in making sure their salary is deemed “reasonable compensation” for the work they’re doing.

S Corporation owners are technically self-employed, which means S Corporation payroll tax includes both the employee and employer sides of payroll taxes. Therefore, when an S Corporation owner files his taxes, he pays 15.3% tax on his salary, but also accounts for the rest of the company’s income on his return, which remains untaxed. Oftentimes, S Corporation owners will try to reduce the amount they’re required to pay in payroll taxes by reducing their salaries, thereby reducing the amount that’s taxed.

In our previous post, we used Alison as an example, who owns an S Corporation that made $700,000 in profits last year, and gives herself a salary of $300,000. She reports $1,000,000 on her personal tax return, but only pays income tax on $300,000 of it. Let’s compare her to someone who gives himself a reduced salary:

Example 2: Jonathan owns a real estate company that is structured as an S Corporation. His company also reports an annual income of $1,000,000, but he only considers $100,000 of it to be his salary, and the remaining $900,000 is considered profits from the business. By classifying a much lower salary, Jonathan is only responsible for paying $15,300 in S Corporation payroll tax, and is exempt from having to pay the Medicare surtax, because he doesn’t make more than $200,000/year. Jonathan ultimately winds up paying $31,500 LESS in income taxes than Alison does, despite their companies bringing in the exact same amount of money.

reasonable compensation

What is Reasonable Compensation for S Corp Owners?

Reasonable compensation is a term with which the owners of S corporations become incredibly familiar. That’s because it creates a fine, fine line on which these business owners must delicately tread to avoid costly penalties and interest payments. As their own bosses, S corporation owners need to determine the amount of their own annual salary. It’s important that they take great care in choosing that amount, because of how the IRS may perceive it in relation to the rest of the company’s earnings that year.

How the New York Estate Tax Exemption May Have Backfired

How the New York Estate Tax Exemption May Have Backfired

We’ve already discussed how the New York estate tax exemption has changed from last year to this year, but we haven’t talked about why it’s changed. The new legislation regarding estate taxes was passed in an attempt to keep wealthy New Yorkers from leaving the state upon retiring, but whether that’s actually working is debatable.

the 2013 tax deadline is quickly approaching

2013 Tax Deadline for a Traditional IRA

April 15,2014 is everyone’s 2013 tax deadline for federal income returns, as I’m sure we’re all aware. However, if you’re worried you may not make it by April 15, you can get an automatic extension for six months, pushing your deadline back to October 15. To do this, you have to file IRS Form 4868 by April 15. It’s important to remember that while the government will give you extra time to pay up, they’re not giving you a break on the taxes you owe; when you fill out the form, you’ll have to estimate the taxes you’re due and make a payment. If your estimate is too low, you may incur penalties and interest fees.

Learn About the 3.8% Medicare Tax

The New 3.8% Medicare Tax

One of the many changes that stem from the Affordable Care Act that have gone into effect this year is the 3.8% Medicare tax on net investment income. This tax will only affect people who fall into higher-income tax brackets, but if you’ve ever received a one-time, huge investment income gain (whether it was this year or any previous year), you may be susceptible to it. In this two-part blog, we will discuss how the new 3.8% Medicare tax will affect those who are subject to it, and what you can do to lessen the blow.

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