DANIEL E. HOLDER & ASSOCIATES
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Q&A...
Why a CPA firm?
Just about everything we do today has tax implications. Whether it is the tax on buying a car, transferring assets to future generations, or deducting business expenses, the government has regulations determining what and how almost everything is taxed. In fact, the internal revenue code contains more than 3.4 million words and would fill more than 7500 pages. Add to that the complex rulings, tax court cases, and regulations promulgated by the IRS and it is no surprise that taxpayers spend an estimated 5.6 BILLION hours annually on handling tax issues. Are you willing to take on this task alone?
When are my taxes due?
For individuals, tax returns are due on the 15th day of the 4th month of the year (usually April 15th). For Partnerships and trusts, tax returns are due on the 15th day of the 4th month following the end of entity's tax year. Upon request, the IRS grants automatic sixth month extensions for filing your taxes. In addition to your annual tax return, individuals may be required to make 4 estimated tax payments, each on the 15th day of the 4th, 6th, and 9th months of the tax year and in the 1st month of the following tax year. For C and S corporations, taxes are due on 15th day of the 3rd month following the end of the Corporation's tax year. Additionally, corporations may also be required to pay estimated taxes, which are due on the 15th day of the 4th, 6th, 9th, and 12th months of the Corporation's tax year. These dates are important to remember because the IRS may assess interest and penalties on late filings and underpayments.
What about online or electronic tax preparation programs?
Online or electronic tax prep programs like TurboTax or TaxACT have gained popularity as we have become more technologically adept. But these programs are not for everyone, and even if they work for you, you might still want to consider consulting a tax professional. The greater the complexity involved in a tax return or tax issue, the more you will want to seek the advice of a person, rather than a program. Moreover, there are huge "grey areas" of the tax law that computer programs cannot analyze. In any given year, the tax courts, Congress, and the IRS will issue thousands of rule interpretations and modifications, and a knowledgeable CPA will remain up-to-date on the current law. Tax prep programs still require you to take the time to answer questions, and compile and input your tax data. So not only will you be receiving knowledgeable, personal service from a CPA, but you will also be saving your time and frustration!
Is there anything I can do before the end of the year to lessen my tax liability?
Yes, there a many things you can do when it comes to "year-end" tax planning. Below is a list of the most common strategies:
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Income/Deduction Shifting – It is possible to shift income and deductions from 2012 to 2011, or vice versa. This is useful if you know that you are going to be in higher tax bracket in either of those particular years. You might also have tax offsets that expire, and therefore need to be used up. For whatever reason, timing income and deductions at the end of the year can have significant advantages.
Income/Deduction Shifting – It is possible to shift income and deductions from 2012 to 2011, or vice versa. This is useful if you know that you are going to be in higher tax bracket in either of those particular years. You might also have tax offsets that expire, and therefore need to be used up. For whatever reason, timing income and deductions at the end of the year can have significant advantages.•Capital Gains/Dividends – The preferential tax rates for capital gains and qualified dividends are set to expire at the end of 2012. It is important to examine these types of income this year and next in order to ensure that you are achieving maximum tax advantages.
Capital Gains/Dividends – The preferential tax rates for capital gains and qualified dividends are set to expire at the end of 2012. It is important to examine these types of income this year and next in order to ensure that you are achieving maximum tax advantages.•Annual Gift Exclusion – Each year an individual or married couple is allowed to make tax free gifts up to a certain amount. For 2011 that amount is $13,000 for an individual and $26,000 for a married couple, and this limit only applies to each gift recipient. Utilizing the annual gift exclusion can be a very useful tax planning device.
Annual Gift Exclusion – Each year an individual or married couple is allowed to make tax free gifts up to a certain amount. For 2011 that amount is $13,000 for an individual and $26,000 for a married couple, and this limit only applies to each gift recipient. Utilizing the annual gift exclusion can be a very useful tax planning device.•Big Ticket Purchases – Congress currently allows taxpayers to deduct EITHER state and local sales taxes or state and local income taxes, so the tax you pay on expensive personal property may be a tax deduction. The timing of your big-ticket purchase will have may have an impact on your tax bill, and you should consult an expert in order to achieve maximum tax savings.
Big Ticket Purchases – Congress currently allows taxpayers to deduct EITHER state and local sales taxes or state and local income taxes, so the tax you pay on expensive personal property may be a tax deduction. The timing of your big-ticket purchase will have may have an impact on your tax bill, and you should consult an expert in order to achieve maximum tax savings.•Energy Credits – These credits are set to expire at the end of this year so it is necessary to take advantage of them now. While the energy credit rules are complex, they primarily apply to building improvements that utilize energy efficient upgrades. Contact an accountant for more information and to see if these apply to you.
Energy Credits – These credits are set to expire at the end of this year so it is necessary to take advantage of them now. While the energy credit rules are complex, they primarily apply to building improvements that utilize energy efficient upgrades. Contact an accountant for more information and to see if these apply to you.•Business Credits – For business owners these next two years may prove critical. Sec. 179 and bonus depreciation may allow you to expense all of the assets that you place in service over 2011 and 2012. But there are limitations that apply in 2011 and 2012. For some, it may be beneficial to buy 2012 assets now, or hold off on buying 2011 assets until next year. Contact a CPA for more advice.
Business Credits – For business owners these next two years may prove critical. Sec. 179 and bonus depreciation may allow you to expense all of the assets that you place in service over 2011 and 2012. But there are limitations that apply in 2011 and 2012. For some, it may be beneficial to buy 2012 assets now, or hold off on buying 2011 assets until next year. Contact a CPA for more advice.•Additionally Expiring Tax Incentives – For both businesses and individuals there are a multitude of tax incentives set to expire at the end of this year and next. These are important to note if you are seeking to minimize your tax liability. Contact a CPA for more advice if you have any questions.
Additionally Expiring Tax Incentives – For both businesses and individuals there are a multitude of tax incentives set to expire at the end of this year and next. These are important to note if you are seeking to minimize your tax liability. Contact a CPA for more advice if you have any questions.