Tag: IRS. Taxes
The tax deadline and filing your return might be behind you, but your tax responsibility isn’t really over until you begin to organize your documents for next year. Staying organized even after your taxes have been filed will make your life a lot easier in the future – especially when life events like buying a home or refinancing your mortgage require you to show past tax returns, W-2s and other tax-related documents. Preparing your documents now will also save you time and money when it’s time to file next year.
Going through the back door can pay off for high-income retirement savers.
We’re talking about the backdoor route into popular Roth individual retirement accounts, which offer tax-free income in later life.
The front door into Roths is shut for many investors. Married couples earning $191,000 or more and singles earning $129,000 or more in 2014 are barred from contributing directly to Roth IRAs.
But there’s a simple detour that works for many of them. They can put money into a traditional IRA—and then roll that into a Roth IRA, getting all the benefits.
For most of us, tax day comes just once a year—on or around April 15. But for people who owe estimated taxes, Uncle Sam expects a check four times a year. Unfortunately, one of those poor quarterly taxpayers may be you if any of the following applies to your situation.
As Americans across the country rang in the new year, many were unaware that, at midnight, more than 50 different tax breaks expired. According to the Tax Foundation, among them were credits for everything from building motorsports facilities, producing biofuels, conducting business research and development, and even training a mine rescue team.
Clearly, the U.S. tax system can be very complex. Understanding the basics, especially the different types of taxes you may face, can be a valuable tool in financial planning.
Not all taxes are paid at the same time. Some, for example, are deducted from your paycheck. “Generally, three types of taxes will show up on a worker’s pay stub: federal income taxes, payroll taxes (Social Security and Medicare), and state income taxes,” Andrew Lundeen, manager of federal projects at the Tax Foundation, told 24/7 Wall St.
In an IRS Legal Advice issued by Field Attorneys employee bonuses paid after year end (within 2 and ½ months) that are accrued as of the year-end could be deductible in the year paid instead of the year accrued.
Basically, if the amount is not fixed and the right to revoke or modify is present, the bonus accrued as of year-end would be deductible in the year paid.
This could remove a key deduction in your yearend tax planning!
If you are an accrual basis taxpayer and accrue employee bonuses at year end to be paid in the subsequent year, we recommend you consult with a tax advisor to make sure that your deduction is sustainable.