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5 Tax Mistakes Business Owners Make

Part of putting together an effective tax management strategy is gaining an understanding of what you can and cannot deduct from your tax return.   I see business owners that make mistakes every single day.  Every CPA or accountant seems to have a slightly different slant on the tax code, but here are a few that may be able to help you increase your bottom line as you grow your business. Wrong Entity Structure – If you are getting into business for the first time, it’s really important to sit down with someone qualified to discuss entity structure.    The reality is that you can set up your business as a sole proprietor, partnership, limited liability Corporation, S-Corporation, C-Corporation, or having multiple structures depending on how many businesses and whether real estate you own will be involved with the business.   Since these entities all work slightly different, a huge tax mistake I see owners make is having the wrong structure for the ...

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Personal Finance 101 – 5 Deductions Taxpayers Overlook

Part of putting together an effective tax management strategy is gaining an understanding of what you can and cannot deduct from your tax return.  Every CPA or accountant seems to have a slightly different slant on the tax code, but here are a few that may be able to help you increase your bottom line. Charitable Mileage – Most taxpayers are very good at keeping receipts of their cash donations that they make to the organizations they donate to during the course of the year.   One of the deductions few taxpayers pay attention to is the charitable mileage deduction.  For 2011, you can deduct .14 cents per mile driven in service of charitable organizations.  Don’t forget fees and tolls as well (www.irs.gov)  Think about the time that you give gratuitously during the course of the year for your religious organizations, charitable causes you support, or possibly coaching a one of your kid’s teams. Non-Cash Charitable Contributions – Most taxpayers literally ...

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Personal Finance 101 – The Tax Management Triangle

Don’t you wish that you had a crystal ball to know what the tax rates will be 20 years from now?   In 1970, the top tax marginal tax rate was at 70%.   In 1980, the top marginal tax rate was still at 70%.   In 1990, the top marginal tax rate hit a historical low of 28%.   In 2000, that top marginal tax rate had moved back up to 39.6%.   Just one year ago in 2010, the top marginal tax rate settled at 35%. (source: taxfoundation.org)  With all the uncertainty going on with our debt and taxes, how can you best plan your finances for the certainty of uncertainty when it comes to income taxes? Over the years, we’ve adopted a tax triangle methodology around taxes and investing.  This allows an individual investor or business owner to think about where they place their investments and tax strategy upon the accumulation and distribution phase.  Here are the three sides to the triangle. ...

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Can I Convert My 401(k) To A Roth 401(k)?

This past week Congress passed the Small Business Jobs Act Of 2010. While there were many interesting parts to the bill including changes to how employee cell phones are viewed and accelerated write offs for business owners, one of the very intriguing parts to the bill is the conversion of your existing 401(k), 403(b), or 457 retirement plan. If your employer has a Roth 401(k) provision, (which if they do not currently you should really complain to your HR or Benefits person) you may be eligible for a potentially good long term tax management idea. Generally your employer must have a Roth 401(k) source in the plan, allow in-service withdrawals, allow rollovers, and have the Roth provision in the plan to be able to take advantage of a conversion. 2010 is an especially meaningful year because no matter what level your income is this year, you can convert some or all of your 401(k) (403(b), 457) over to a Roth ...

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Did the health care bill just crush my taxes?

Scotty, beam me up!   I say this because after reading through the health care bill the taxes that are coming to pay for the plan will make you feel like you are in outer space. If you are high wage earner or a small to medium size business owner that is doing well, now will be the time to begin thinking about your overall tax management plan as your future income taxes could end up skyrocketing to the tune of 60%!  I don’t think people fully realize yet that some tax hikes are in this bill while others are already in motion, and I believe more to come within the next year. First, the top tax rates are scheduled to revert to the 36% and 39.6% number where they were a few years ago from the 33% and 35% number that they are today. (source: www.irs.gov)  If you are in the highest bracket that means you just took a 4.6% ...

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What Tax Deductions Could Go Away In The Future?

All of us know that the United States is in a massive federal deficit. Most pundits on television are letting us know that taxes in some way, shape, or form will have to up. That seems reasonable. Any business that is losing money will eventually have to cut expenses, and figure out how to generate more revenue. We couldn’t cut expenses near enough to solve our problem, so the certainty of some form of increased taxation is an inevitability we will face in the future in my opinion. The one thing that I don’t hear much talk about is that increasing taxes isn’t the only way to generate additional revenue, but you could certainly choose to reduce overall tax deductions that we take today as another source for increasing additional revenue. According to a recent study done by the Joint Committee On Taxation (source: Fiscal Year 2010 Budget: Analytical Perspectives. OMB./Table 19-3), here are the top 5 potential sources of ...

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The Top 10 Most Overlooked Tax Deductions

Top 10 Most Overlooked Tax Deductions Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS® Co-CEO and Founder oXYGen Financial, Inc. Request a FREE consultation: www.oxygenfinancial.net Get the most out of your Tax Return for 2010 – Here is the list of the MOST Commonly Overlooked Tax Deductions: Miscellaneous Deductions On Your Itemized Deduction Form (investment and tax expenses, unreimbursed employee expenses, etc.) Business Owner Deductions (especially if you file a schedule C or have a single member LLC) State Sales Taxes (especially for individuals that live in states with no income tax) Non-Cash Charitable Contributions (do you really know what that bag of stuff is worth?) Teacher Expenses (I’ve hardly ever met a teacher who didn’t buy some supplies out of pocket) Points (on new mortgages and on refinancing) Mileage (charitable, medical, business, and moving) Private Loans (if you have documented and if they haven’t paid back) Student Loan Interest (often missed after someone graduates college) Including Reinvested Dividends To ...

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Tax Changes For 2010

With 2010 rapidly approaching, you should take some time to review your tax management strategy and get your financial plan in place. Here is a list of some of the important changes that could have an effect on your bottom line. Estate Tax Repealed The federal estate tax is scheduled to be eliminated for estates of individuals who die in 2010. We expect Congress to act in 2009 to keep the tax alive. Roth IRA Conversions Starting in 2010, individuals with more than $100,000 of modified Adjusted Gross Income are free to switch a traditional IRA to a Roth IRA. For conversions in 2010, taxpayers can spread the tax due over two years. Half the tax will be due in 2011, and the remaining half will be payable in 2012. Removing the limit on conversions effectively eliminates the income limit on contributions to Roth IRAs. A taxpayer with income too high to use a Roth will be able to contribute ...

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