Top Tips to Save Taxes

We had the Tax Cut and Jobs Act, which was mostly taxpayer-friendly. With the COVID-19 pandemic, we had the American Rescue Plan Act with its provisions to assist businesses. We now have Congress looking to enforce President Biden’s tax directives. What does this all mean? Taxpayers need to keep up with multiple changes to make sure they take advantage of the favorable rules and plan for any negative tax consequences. A good accountant will always be on the lookout to educate their clients and assist them in navigating and implementing tax strategies to maximize tax savings or simply complying with the morass that is the tax code.

 

Businesses can face steep penalties from the IRS for failing to timely file tax returns and or not paying taxes due. C corporations can face late filing penalties or late payment penalties on any unpaid taxes. S corporations would be subjected to late filing penalties based on the number of shareholders they have. Partnerships would face penalties based on the number of partners for filing returns late. Also, do not forget about state income tax compliance. Each state a business operates in would charge penalties on returns not filed on time or unpaid taxes.

Working from home on your small business? Make sure you take advantage of the home office deduction. It applies to both homeowners and persons renting. The IRS has certain guidelines on what qualifies as a home office that taxpayers should be aware of. The main provisions include utilizing the space of your home exclusively and regularly for conducting business. Furthermore, it should be your principal place of business. However, even if you conduct business outside of your home but utilize the home office regularly and substantially- you may still qualify. 

 

Business owners of pass-through entities can easily reduce their individual/personal taxable income by making contributions to a retirement plan. This can have two effects- bring your taxable bracket threshold down if you are just over a higher tax bracket; and secondly, give you a greater qualified business income deduction on the pass-through income.

 

It is important to ensure that estimated taxes are paid on time and in the right amounts to reduce penalties and interest. Furthermore, overpaying your estimated taxes affects your cash flow - money that could be better spent on expanding your business or taking advantage of other opportunities. Underpaying your estimated taxes, which is a notorious theme for new entrepreneurs who are sole proprietors or those with pass-through income, can have adverse effects on their cash flow when they are faced with a large tax bill come tax time. Therefore, it is important to ensure you understand and plan adequately to take care of your tax burdens. 

 

 

How we can help?

At H&CO, we have a team of qualified tax professionals (CPAs) who have a deep understanding of the complexities involved in income tax preparation. Our experts are committed to guiding you throughout the entire process with the utmost care and attention. We provide exceptional service and a personalized approach to help you navigate US and international income tax laws while keeping you up to date with the latest changes.

With US offices in Miami, Coral Gables, Aventura, Fort Lauderdale, Orlando, Melbourne, and Tampa, as well as offices in more than 29 countries, our international CPAs and tax advisors are available to help you with all of your tax planning. taxes. tax preparation and IRS representation needs. To learn more about our accounting firm's services, take a look at our Individual Tax Services, Business Tax Services, International Tax Services, Expat Tax Services, SAP Business One, Entity Management, Capital human, and audit and assurance services.