Tax office recommendations from firms? Which receipts you’ll need to provide depends on whether you itemize your deductions or claim the standard deduction. You’ll want to choose whichever produces the greater write-off, but the only way to know for sure is to add up your itemized deductions and compare that with your standard deduction. For the 2019 tax year, the standard deduction for single taxpayers is $12,200 and for married couples filing jointly it is $24,400. For 2020, these amounts rise to $12,400 for single taxpayers and $24,800 for married couples filing jointly.
If you own a business, restructure your business entity, particularly if you are operating as a sole proprietor, LLC, or an S-Corp. The taxes for a C-Corp are lower at the top than for other business structures. However, there’s also a new 20% deduction of business income for pass-through entities. And, if you hire your children, you can pay them without withholding or matching payroll taxes if you have a sole proprietorship. You should work with an accountant to determine if restructuring your business is worthwhile. Invest in tax-exempt bonds. Any interest you earn is not subject to federal income tax and from Medicare surtax calculations. Also, municipal bond interest for bonds purchased in the state where you live is exempt from state income taxes, too.
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. See extra information on https://greentree.tax/bookkeeping-services-near-me-houston-tx/.
Serial Investors Don’t Necessarily Get a Tax Break. There’s a rumor that you can sell a home and escape taxes by rolling the gain into a new property. That rule, however, hasn’t been around for almost 25 years, and even then applied only to personal residences. To get a tax break for gains on personal residence sales, you’ll have to move into the home and live there at least two years out of five years. If you do that when you sell, you can exclude $250,000 of the gain from tax (twice that if you are married filing jointly).