Year-End Tax Planning For Individuals – Accelerating Income

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Year-End Tax Planning For Individuals – Accelerating Income

Federal, State, Local and International Taxes -Tax planning is always a good idea, but with the Bush-era tax cuts set to expire and tax rates set to rise to pre-2010 levels, it’s more important than ever. With that in mind, accelerating income is one tax planning strategies you can use this year to help you cut your tax bill in 2013. 

ACCELERATING INCOME

In most years, taxpayers adopt a strategy of deferring income, but with the Bush-era tax cuts set to expire on December 31, 2012, income tax rates and capital gains taxes set to rise, and a 0.9 percent Hospital Insurance (HI) tax applicable to earnings of self-employed individuals or employee wages in excess of $200,000 ($250,000 if filing jointly) effective January 1, 2013, it might make more sense to accelerate income into 2012 instead of deferring it to 2013. Here are some of the ways you can do this:

  • Sell any investments on which you have a gain this year and take advantage of the zero percent long-term capital gains tax rate if you’re in the 10% or 15% tax bracket, or a 15% tax rate for higher tax brackets.
  • If you are expecting a bonus at year-end, try to get it before December 31. However, keep in mind that contractual bonuses are different, in that they are typically not paid out until the first quarter of the following year. Therefore, any taxes owed on a contractual bonus would not be due until you file a tax return for tax year 2013.
  • If your company grants stock options, you may want to exercise the option or sell stock acquired by exercise of an option this year if you think your tax bracket will be higher in 2013. Exercise of the option is often but not always a taxable event; sale of the stock is almost always a taxable event.
  • If you’re self employed, send invoices or bills to clients or customers this year in order to be paid in full by the end of December.
  •              Caution: Keep an eye on the estimated tax requirements.

CALL US FIRST – This is just one of the year-end planning tax moves that could make a substantial difference in your tax bill for 2012. But the best advice we can give you is to give us a call. We’ll sit down with you, discuss your specific tax and financial needs, and develop a plan that works for your business.

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

http://www.abataxaccounting.com

www.abataxaccounting.wordpress.com

Published in: on November 6, 2012 at 1:45 pm  Leave a Comment  
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Tax Strategy: Income Acceleration Techniques

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Income acceleration techniques for 2012 year-end planning  – The acceleration of income for tax purposes has not traditionally been a top-shelf strategy because of the simple fact that the delay of taxable income means the postponement of tax into a subsequent year, which is usually a good thing based upon time-value-of-money principles. The same reasoning applies to postponing deductions. Read the Full Story at Accounting Today (10/01).Considering a Tax Professional? For no obligation free consultation contact us today!

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

 

Published in: on October 16, 2012 at 5:48 pm  Leave a Comment  
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Tax-filing and Payment Extensions Expire Oct. 15

Federal, State, Local and International TaxesIR-2012-73 The Internal Revenue Service today urged taxpayers whose tax-filing extension runs out on Oct. 15 to double check their returns for often-overlooked tax benefits and then file their returns electronically using IRS e-file system.

Many of the more than 11 million taxpayers who requested an automatic six-month extension this year have yet to file. Though Oct. 15 is the last day for most people, some still have more time, including members of the military and others serving in Iraq, Afghanistan or other combat zone localities who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due. Considering a Tax Professional? For no obligation free consultation contact us today!  

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

Published in: on October 10, 2012 at 9:55 pm  Leave a Comment  
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As self-employed how do I file my annual return?

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Federal, State, Local and International Taxes – To file your annual tax return Self-Employed Individual, you will need to use Schedule C or Schedule C – EZ to report your income or loss from a business you operated or a profession you practiced as a sole proprietor.

 

Small businesses and statutory employees with expenses of $5,000 or less may be able to file Schedule C-EZ instead of Schedule C.

 

In order to report your Social Security and Medicare taxes, you must file Schedule SE (Form 1040), Self-Employment Tax. Use the income or loss calculated on Schedule C or Schedule C-EZ to calculate the amount of Social Security and Medicare taxes you should have paid during the year. Considering a Tax Professional? For no obligation free consultation contact us today!  

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

Published in: on October 10, 2012 at 5:46 pm  Leave a Comment  
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Who is Self-Employed? What New Business Owners Need to Know About Taxes

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Federal, State, Local and International Taxes – Generally, you are self-employed if any of the following apply to you.

  • You carry on a trade or business as a sole proprietor or an independent contractor.
  • You are a member of a partnership that carries on a trade or business.
  • You are otherwise in business for yourself (including a part-time business)

Self-Employed: Don’t Forget to Deduct Health Insurance Costs this Year. Under the Small Business Jobs Act of 2010, can reduce your net self-employment income by the amount of your self-employed health insurance deduction on Form 1040. Considering a Tax Professional? For no obligation free consultation contact us today!

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

Published in: on October 5, 2012 at 12:48 pm  Leave a Comment  
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