Should we file separate tax returns (Married Filing Separately) even if we are married?

Filing separate tax returns (Married Filing Separate) may benefit some couples that have both high incomes and high medical expenses or unreimbursed work expenses. We can help you determine which filing status pays off best for you. In general you would only file separately if:

Both spouses earn approximately the same AND one of the spouses has high amounts of casualty losses, or medical/dental expenses.

What can I do if I have large capital gains this year?

Look through your portfolio before the end of the year and determine if there are any investments in which you have losses. If so consider selling them because capital losses are deductible up to the amount of your capital gains plus $3,000 (if MFJ). Before you sell an investment that may give you a gain, (but do not have any losses to net) you may want to wait until next year to sell it as that will push your tax bill for those gains out one more year.

How can I donate to charity and get the best tax deduction?

Donations to charity not only enrich your life and those who you give to, but may help you lower your tax bill or increase your refund! If you have an asset such as stocks, investments, property or other items that may have gained value since you acquired it, you can significantly benefit from donating the item. Instead of selling the items(s) and paying taxes on the capital gains, you can give it to the charity and receive a tax deduction for the full fair market value of the item!

Remember: When giving cash or check remember to retain the receipt.

How can I defer income to a later year to reduce my taxes?

If you are expecting to be paid a lump sum bonus near the end of a calendar year you may be able to ask your HR department if you can be paid in January. This would put off reporting the income until the next tax year.

What tax deductions are available if I am self-employed?

Owning a small business has many advantages for tax savings. Working with owners for over 20 years we have seen it all. The following is a short list of items to consider, but feel free to have a free consultation with us to discuss what other tax deductions we can find for you.

Your income is obvious and you would have to pay taxes on that amount minus any legal deductions we can find. So the best option for you is to keep track of all expenditures related to the business. In that, you may be able to accelerate tax deductions by paying your state estimated tax installment in December instead of at the January due date.

You may be able to take an immediate expense deduction for equipment purchased for use in your business, instead of writing it off over many years. Additionally, self-employed individuals can deduct 100% of their health insurance premiums. You may also be able to establish a Keogh, SEP or SIMPLE plan and deduct your contributions (investments).

You may also establish a retirement plan such as a Keogh plan, the SEP, and the SIMPLE. These options allow you to receive a tax deduction for money put into your retirement account.

As stated, there are hundreds of items that can be deducted from your income and our goal is to find every one that pertains to your business and help lower your taxable income.

Why should I use a Flexible Medical Spending Account or FSA?

Most taxpayers do not incur enough medical expenses to get to deduct them on their taxes. You must spend more than 10% of your Adjusted Gross Income on these expense, just to start to deduct them.

So every tax-savvy person MUST take advantage of their employer’s Flexible Spending Account (FSA) or Health Savings Account or cafeteria plan. These plans give you the ability to use pre-tax dollars to pay for medical, vision and dental expenses. That is like saving 25% on all your medical bills! That could equal thousands of dollars a year.

There are some downfalls in this process but after speaking with me you will steer clear of them and pay only 75% of what the true cost is!