The Balance Sheet, Inc.

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Accountants In West Palm Beach

(561) 842-1304

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West Palm Beach, FL 33407

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Lessons You Can Learn from these Top Three Tax Questions

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Tax Lessons

We live and we learn. Mostly we learn by making mistakes. However, no one wants to learn about taxes that way. Instead, you can learn from these commonly asked tax questions.

1.  How long do I need to keep tax records?

According to the IRS, keep your tax records for three years. That is the period of time they usually are able to examine during an audit. Unless the IRS suspects fraud. Then they can look back seven years. Maxine at The Balance Sheet says to keep business returns for up to FIVE years and personal returns up to SEVEN. 

2.  Are my Social Security benefits taxable?

Possibly. Especially if a substantial amount of your income is from other sources. If this is your only source of income or the major source, then your benefits probably are not taxable.

If you are filing as an individual (either single or married filing separately) and your combined income is between $25,000 and $34,000, up to 50% of your SS benefits may be taxed. If your combined income is more than $34,000, up to 85% of your SS benefits may be taxed.

If you file married filing jointly and your combined income is between $32,000 and $44,000, up to 50% of your SS benefits may be taxed. If your combined income is more than $44,000, up to 85% of your SS benefits may be taxed.

The Social Security Administration defines your combined income as:

Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your “combined income“

3.  Should I hire a tax consultant to prepare my taxes?

The answer may be yes if the following statements are true about you:

A.  You are not a numbers person.

If you have struggled every year to file your tax return, then yes you should. If computing the numbers makes you worry you might be getting in over your head, turn this over to someone who enjoys the work. You could also save yourself from getting into trouble.

B.  You got married, divorced, had a child, or lost a spouse.

If this is true for you, then you may need help finding the best filing status for you. Your tax situation is probably different from your friends, neighbors, and work colleagues. You will need a professional to help you sort it. Also, some credits and deductions expire.

C.  You started a business.

This takes expert knowledge. Someone needs to teach you how to swim before you jump into the water alone. It is not very much like filing your personal tax return.

These are only three tax questions answered. To learn more, consult a professional tax consultant. In West Palm Beach, Florida, you can call The Balance Sheet at (561) 501-3080 or visit us at www.taxaccountingbookkeeping.com.

6 Awesome Ways the 2018 Tax Cuts Will Save You Money

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2018 Tax


You have heard a lot of chatter about how the Tax Cut and Jobs Act is supposed to help middle-class taxpayers. This is true. Most people in the U.S. will pay less to Uncle Sam. Here are 6 tax cut benefits that apply to you.

1. Your standard deduction is increased to almost double.

If you are single, your standard deduction was $6,350. Now it is $12,000. This deduction for married jointly filers increases from $12,700 to $24,000. This is temporary, the tax rates will return to 2017 levels in 2026.

2. The tax rate for most people is lower.

The tax rate for the lowest tax bracket will remain at 10%. But for everyone else, their tax rates will be lower. If you are single and earn up to $9,525 or married filing jointly and makeup to $19,050, your tax rate is only 10%.

The 7 tax brackets are:

Rate     Individuals                           Married Filing Jointly

10%     Up to $9,525                           Up to $19,050

12%     $9,526 to $38,700                   $19,051 to $77,400

22%     38,701 to $82,500                   $77,401 to $165,000

24%     $82,501 to $157,500               $165,001 to $315,000

32%     $157,501 to $200,000             $315,001 to $400,000

35%     $200,001 to $500,000             $400,001 to $600,000

37%     over $500,000                         over $600,000

3. Non-home owners can deduct state and local taxes or sales tax

You can deduct property taxes and state and local or sales taxes. The total for all combined cannot be greater than $10,000.

4. The deduction for medical expenses is expanded.

You can now deduct medical expenses that are more than 7.5% of your adjusted gross income. That threshold is down from 10% for everyone, except seniors. Their threshold was already at 7.5%

5. You get a bigger child tax credit and a non-child dependent tax credit.

You get a credit of $2,000 per child plus $1,400 of the child tax credit may be refundable. Also, there is a $500 tax credit for each non-child dependent you claim. This can help if you are caring for elderly parents.

6. You can inherit up to $11.8 million tax-free.

The so-called “death tax” is still on the books, but now only applies to inheritances above that amount.  For 2018 tax year, $11.8 million per person and changes to $11.40 million per person for 2019 tax year.

This is a quick summary of some of your tax cut benefits. To learn more, consult a professional tax accounting service. In West Palm Beach, Florida, you can call us at (561) 501-3080. We’re eager to hear from you.

5 Tax Accounting Tips To Prepare Your Business for Success

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Did you just start your own business? Are you wondering what the essentials are to prepare it for success? A large part of ensuring that your business thrives, is making sure that your business funds are properly tracked. This is also known as “tax accounting”, and constitutes the backbone of businesses of any size.

Here are five tax accounting tips to prepare your business:

1.Understand your business entity

As a business owner, you’re liable for a certain amount of tax, depending on your business structure. While you may not have to understand the ins and outs of your particular tax situation, you should have a basic understanding of it.

For instance, you may qualify for substantial tax savings as an S corporation. However, it may be harder to operate than a single member LLC, for example. As an LLC, you may have the option to change the way your business is taxed. Options like being taxed as a regular corporation or an S-corp. Knowing your business entity and the different tax breaks each can provide, has the potential to save you money. Always consult with a tax professional, which leads to our next item.

 2.Consider hiring a professional

 Preparing your business for taxes is a complex task. Consider hiring a professional to help you through this process. The point is not just to get your taxes filed or checking every deduction box.  You want to maximize your tax benefits for your type of business.

A tax professional can help you structure your business for the best tax advantages. He/she can also help you understand the specific IRS requirements for your type of business, so as to better manage your prospective tax liability. While a bookkeeper can help you set up a good record-keeping system, an accountant can handle your year-end tax planning.

3.Get familiar with the various methods of accounting

As a business owner, you must select the accounting method best suited to your type of business. The two methods that are generally used and accepted consist of accrual accounting and cash accounting.

While the accrual method depicts your current, real-time financial situation, the cash method reflects the actual money inflows and outflows occurring in your business. Be mindful of these as you set your business, and consider letting a professional help you determine the best choice.

Cash and accrual are your basic methods of accounting. There are other accounting methods depending on your industry.

 4. Understand what’s deductible in your business

It’s important to understand what is deductible and what is not in your business. This knowledge will help you substantially save on your tax liability.

You can deduct a number of other costs and expenses in your business, including startup costs, education expenses, auto deductions. Equipment, entertainment, travel, and software expenses are also deductible.

5. Track your expenses accurately

Having a complete and accurate record of your expenses is crucial in order to take advantage of any tax deductions. This also means keeping a detailed record of your business transactions, including your mileage log as well as expense receipts. You’ll also need to carefully separate your personal from your business expenses.

It is best to get good bookkeeping software and enlist a professional to set it up for you. That way, using it is user-friendly and built around your needs.

Are you wondering how to apply these bookkeeping tips to your business?

Contact us for a free consultation at (561) 842-1304.

 Sources:

  1. Anon, (2017). [online] Available at: http://www.jelfsmallbusiness.co.uk/media/178275/Tax-Guides-for-Small-Businesses-V04.pdf [Accessed 10 Aug. 2017].
  2. Anon, (2017). [online] Available at: https://www.irs.gov/pub/irs-pdf/p334.pdf [Accessed 10 Aug. 2017].
  3. Staff, I. (2017). Tax Accounting. [online] Investopedia. Available at: http://www.investopedia.com/terms/t/tax-accounting.asp [Accessed 10 Aug. 2017].
  4. co.uk. (2017). Small business tax and accounting guides. [online] Available at: http://www.bytestart.co.uk/section/tax [Accessed 10 Aug. 2017].
  5. Google Books. (2017). K. Lasser’s Small Business Taxes 2017. [online] Available at: https://books.google.com.ph/books?id=o3kxDQAAQBAJ&printsec=frontcover&source=gbs_at b#v=onepage&q&f=false [Accessed 10 Aug. 2017].