5 Tax Tips Before You File

It’s the beginning of February and your tax documents will be piling up by the day as a new mail from your mortgage companies, banks, and investment companies are sent out to you.   As you begin to stack up your pile of information to bring to the CPA or accountant, did you ever wonder if there are still ways you can save money on your 2013 income taxes before you hit the SEND button to the IRS?   Here are my 5 smart money moves on tax tips before your file away for another year. Contribute To An IRA- Whether this is a Traditional IRA or for small business owners/freelancers a SEP-IRA, these types of IRA contributions could still potentially be tax deductible for the 2013 calendar year even though the contributions and accounts were opened in 2014.   The biggest mistake individuals make is not investigating how these vehicles work or the adjusted gross income limits that would make things like ...

Read More →

How Long Can I Carry Forward My Capital Gain Losses?

We are almost two-thirds done with 2013 and some of you haven’t even completed your tax returns.  For those of you who filed and finished your tax returns in April, most of that paperwork is neatly tucked away in your home filing cabinet.   Since the stock market has run up over the past year most investors have made gains in their stock and stock mutual fund positions.   However, the majority of tax payers never look at their capital losses from prior years to do effective tax planning.  So just how long can you carry forward your capital gain losses? First, you should be aware that you can sponge up capital gains year to year against any capital losses or carry forward losses that you have on your tax return.   This means if you have a carry forward loss of $30,000 from a prior year and had $30,000 of long-term capital gains here in 2013, you would essentially have a wash.   ...

Read More →

Five Deals On Tax Day!

It’s Monday and officially tax day. Some of us will be running out as late as 11:59 p.m. tonight to the post office to make sure our taxes are post marked on time. I suppose if you get a refund, tax day feels like a good day, however if you owe money it can feel as if you got pick-pocketed right outside of work. Now, some of you have been done for weeks and will just listen with amusement to the madness as a few of your colleagues scramble to finish everything today, April 15th. But, not all is lost as tax day also brings us some amazing deals. Here are five tax day deals you should look at this morning to see if you can make the most out of your day! FREE Cinnabon Bites– There are quite a few desserts that just seem necessary to indulge in from time to time. Every time I walk into the food court ...

Read More →

Why Are You Mad At Your Accountant?

Here is a question to ask yourself after tax season is over.  What really happens during a typical tax season for a family or business? I have been doing this for over 20 years, and so let me describe to you the typical outcomes. The first thing that we see is that most people cross their fingers and say three Hail Mary’s hoping for a refund.  Does this sound like you?  You gather all of these documents that you get from your employer, your investment companies, and real estate you own, then you hand them over to somebody (an accountant or CPA) and pray that they’re going to get you some money back so you can go on that vacation or remodel your house.  Most individuals that we meet who get a federal refund during tax time think that their CPA is the bomb.  They are assumed to be the smartest, brightest, and most unbelievable individuals in the world.  It’s ...

Read More →

5 Potential IRA Mistakes

Look out IRA investors because the IRS looks like it will be turning its attention to taxpayers who make mistakes with their IRA accounts. (source: www.wsj.com)    This includes matching distributions to your tax returns, stepped up audits, and tighter reporting overall when it comes to scrutinizing IRA accounts.    As I have shared for the last couple of years on Your Smart Money Moves, the Government is in dire need to increase revenue to balance the budget and pay off our voluminous debt.    One way to do this is to crack down on the mistakes that we make as taxpayers.   Nobody likes coming home and getting a letter in the mail from the IRS.  So here are five mistakes you might be making for the IRS to take a closer look at your tax return. Contributions To Roth IRA Accounts –   While some of you did Roth IRA conversions back in 2010 (and some are still converting), a Roth ‘conversion’ and ...

Read More →

Are My Withholdings For Taxes Correct?

Since tax season has just passed, you are probably in one of two states of minds.   Either a) you love your CPA because you got a big refund, or b) you hate your CPA because you owed money.   It generally falls into one of those two camps when returns are filed.   Remember, if you get a tax refund that means you essentially gave an interest free loan to the Government.    Some people see this as an effective way to force savings during the year, but you really lose out on the opportunity cost of having these resources in your hands during the course of the year. As of April 27, the Internal Revenue Service had authorized more than 99.1 million refunds for the 2011 tax year—up about 1% a year earlier. It also represents more than three-fourths of all the individual income-tax returns processed by the IRS by that date. The total dollar amount of refunds this year was about ...

Read More →

6 Potential Red Flags That Can Get You Audited?

You never know ultimately what could cause you and audit once this tax season is over.   Here are 6 potential red flags to avoid that could put you in hot water. You make stupid mistakes– Information has to be entered on to a tax return one way or another.   If you choose to do your taxes by hand, math errors could be very costly for you in the long run if you get audited.    You should consider using a tax program or a professional to avoid making addition, subtraction, multiplication, or division errors.   Sometimes, you may miss filling in certain boxes as well which can be another trigger for the IRS. You have a big mouth– You should never brag to anyone privately or publicly that you pulled a fast one on the IRS.  Especially with the proliferation of sites like Facebook and Twitter, the IRS has become much more intelligent in watching these sites for people who don’t report ...

Read More →

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 ...

Read More →

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. ...

Read More →