Tax services top providers in Houston? By the end of January, you should have received all the various tax documents that you need from your employer or employers, as well as from banks, brokerage firms, and others with whom you do business. For each form, check that the information matches your own records. These are some of the most common forms: Form W-2,6? if you had a job. The various 1099 forms that report other income you received, such as dividends (Form 1099-DIV),7? interest (Form 1099-INT),8? and non-employee compensation paid to independent contractors (Form 1099-MISC).9? Brokers aren’t required to mail Form 1099-B,10? which reports gains and losses on securities transactions, until mid-February, so those may come a little later.
The SECURE Act, which became law at the end of 2019, includes several provisions that apply to high income earners. They include: The age for Required Minimum Distributions (RMDs) from retirement plan accounts was raised to 72. However, if you turned 70 1/2 in 2019, you will be required to take a disbursement in 2020. Eliminating the age limit for contributions to Traditional IRA accounts. Increasing annual contribution limits for 401(k) and 103(b) accounts to $19,500, and to $13,400 for SIMPLE IRAs. The contribution maximum for Traditional and Roth IRAs remains at $6,000 per year. Increasing the Social Security wage base to $137,700. Increasing the income ceiling for Roth IRAs. Contributions now phase out at $124,000 and $139,000 of modified adjusted gross income. ($196,000 to $206,000 if you’re married filing jointly.) Increasing limits for long-term care premium deductions to $5,430 per person for people age 71 or over, and to $4,3500 for people between the ages of 61 and 70. Self-employed earners may write off 100% of their premiums using Schedule 1 of the 1040 form. These changes are significant because they make it possible for high income earners to make additional contributions to a retirement plan during the tax year.
Meet With Your Tax Advisor: November is a good month to meet with a tax advisor, Powell says. They have finished their October tax filings and may have time in their schedule before the busy tax season starts after the first of the year. “If you sit down and do some math between now and the end of the year, you can make sure you are in a favorable tax bracket,” Barlin says. An advisor can help pinpoint strategies to reduce taxable income through retirement contributions or itemized deductions. That, in turn, may be key to ensuring households remain eligible for some income-based tax incentives such as student loan interest deductions. If you don’t regularly use a tax professional, Barlin says running numbers through tax software can be just as beneficial.
Timing your income involves moving it from one year to another. You first have to determine the year in which you expect to pay the most in taxes. Review your current expenses before the end of each year and prepay some of those amounts if you want to reduce your income for the current year. You can also increase your expenses and decrease income by making expenditures such as stocking up on supplies. The end of the year is also the time to review your customer accounts if your business operates on the accrual accounting method. First, find those customers who aren’t likely to pay you. You can write off the amounts they owe as “bad debts” and deduct these amounts from your business income to save on taxes. Find extra details at https://greentree.tax/tax-preparation-service-in-houston/.
Don’t Assume Anything. When making your initial debt collection call, quickly make sure that the debt has in fact not been paid. Don’t alienate the customer. Remember there may be potential future business with the customer. The debt in question could be a mistake and not a collection problem at all. Be careful with your tone and your words at this point. Wait and listen to what the customer has to say, and be sure to document the interaction carefully and accurately.
When you offer a 401(k) or other qualified retirement plan, employer contributions and some administrative fees are tax-deductible if they meet certain criteria. And qualified employers can receive a $500 per year tax credit for the first three years of the plan. Plus, as an employee of your practice, you will be able to take advantage of tax-deferred savings with your company 401(k) as well. To make sure the plan seamlessly integrates with your current back-office systems and payroll deductions, contact your payroll services provider to see what retirement savings plans they offer.
