So, you have filed your income tax return with the IRS and your state, and are now waiting for the refund the government(s) owe you. You are thinking of all the things you can do with that money when you get it. Here are some things to think about as you wait: 1. These refunds are in effect interest free loans you have made the government(s) over the year through excess withholding. They are just paying you back money you earned over the previous year that won’t even earn interest unless you file an extension and wait even longer for your money. This is even worse than that bet that your buddy owes you because at least you know where to find him if he doesn’t pay you right away. With our government you call on the phone and wait an hour for them to tell you that the refund is being processed or go on their website and find out there is a problem and you have to call anyway! 2. You could be earning some income on this refund if you take it with each paycheck instead of putting it into additional withholding. Even with the low interest [...]
Tax CPA Musings: Tax Deduction For Your Sole Proprietorship Hiring Your Kids
This is an update on a posting of mine a year ago, but is still a good planning opportunity if you have a sole proprietorship and kids under 18: If you are a sole proprietor and have kids under 18, you can hire the kids and save on both income tax and self employment tax! You can pay them up to $6,200 in 2014 and save. Your child’s income is tax free to them and because of the exclusion for social security, medicare, state disability (in California) and unemployment taxes, you can effectively get a tax deduction in your sole proprietorship (for income tax and self employment taxes) without having to pay any taxes anywhere else. It can be a great tax planning strategy, but remember it will only work in a sole proprietorship (corporations and LLCs need not apply). Now remember that the kids actually have to do work for you to qualify, the salary has to be reasonable and the money actually belongs to the kids. Since you give them allowance and other things anyway you can probably make this work. Call me or email me and we can discuss this to see if it will work for your business! [...]
Tax Musings of a Burbank CPA: Estate Tax Exemption for 2015 Is Announced
Well, it is official: the IRS has announced the Estate Tax Exemption and the annual gift exclusion for 2015. See the details here in this article in the Wall Street Journal by Laura Saunders: http://blogs.wsj.com/totalreturn/2014/10/30/estate-tax-exemption-for-2015-announced-by-irs As the article says, with the estate exclusion so high most people will not need to file estate tax returns when they pass away, tax planning in this area has moved away from minimizing the estate (except in large asset situations) and more toward capital gain tax and state income and estate tax savings (when applicable). It is quite a change from 15 years ago, when the exemption was under 1 million dollars and a lot of homeowners might have owed estate taxes. For financial, accounting and tax musings, You can count on us to count for you! Email: bstonercpa@sbcglobal.net Phone: 818-317-6035 Website: www.briantstonercpa.com Android and the IPhone: Has been Featured On https://twitter.com/bstonercpa