Tax Appointment Musts for Jackson County Tax Payers

 Playoff season in the NFL is always action-packed. Add crazy weather, and things get even more interesting. Kansas City fans shivered their way through sub-zero temperatures — the 4th coldest game in NFL history — and the Bills/Steelers game was rescheduled thanks to a massive snowstorm and travel ban. 

 

I know from watching these games that you have to be PREPARED to sit for 3-4 hours in that cold. If you don’t prepare, you won’t last — no matter how epic the plays — or you could end up in a worse situation. 

 

Preparation is about more than survival, though. Preparation is also the key to getting things done efficiently and well. Now, here, I’m not talking about the weather. TAX preparation is on my mind because I’m a tax professional on the cusp of the filing season. 

 

Speaking of which…

 

The IRS announced last week that tax forms will officially start to be received on January 29. And, thanks to a larger budget from the American Rescue Plan, they’ve been able to consistently improve and modernize things for you, which means they’re pushing the electronic route more strongly. (Note: Paper returns will take MUCH longer these days). 

 

Now, you and every Jackson County taxpayer can view your tax records (amount owed, payment history, prior year adjusted gross income, and other tax records), make payments, and even double-check any authorization requests filed by your tax pro. All you have to do is log in to your online account. 

 

Let me be straightforward: you know that you can file taxes yourself or use tax software. In a few uncomplicated cases, the software can work just fine (generally very simple returns – single filing status, one income, no assets). 

 

But I’ve also seen where software poorly handled even simple cases. Because software isn’t inclined toward the individual user, they’re algorithmic. They rely on formulas. But your life and tax situation are complex, and the software doesn’t understand you.

 

Knowing my clients’ situations is at the top of my priority list. This kind of detailed knowledge and the understanding that comes with it ensures everything is properly handled and every legal deduction is taken (without errors). 

 

If you want that kind of security, let’s get something scheduled right away:

https://www.afitonline.com/appointments

 

And, to be prepared, let’s talk about what you’ll need for that tax filing…

 

Tax Appointment Musts for Jackson County Clients
“Action is the foundational key to all success.” -Pablo Picasso.

 

Filing your taxes on your own is not for the faint of heart. That’s even with the nice-looking software on the market and the expanding influence of AI — which purports to make it easy for you.

But that’s what I’m here for. Let my team make it *easy* for you.

Below is a list of what you will need during the tax preparation process. Not all of the items will apply to you — probably MOST will not. Nonetheless, it’s a helpful checklist.

 

Before you get overwhelmed: Yes, this is a long list — but the unfortunate reality of our tax code is that it’s not even comprehensive! These items will cover a majority of my clients. This is to ensure I can help you keep every dollar you can legally keep under the tax code.

 

But I’ll be your guide. That’s what I’m here for.

Even if, for some strange reason, you won’t be using our cost-effective services this year, feel free to use this list as a handy guide…

 

Personal information

Social Security numbers (including your spouse, children, and other dependents)
Residential address(es) for 2023
Dates of birth
Type of dependent relationship
Last year’s or most recent federal and state tax returns (if we don’t have them on file) 

 

Employment & Income (a whole lot of 1099s)

W-2 forms for 2023 
“Payment Card and Third-Party Network Transactions” (1099-K – and you may get one of these no matter how little you made. Report the income.) 
Tax refunds and unemployment compensation (Form 1099-G, “Certain Government Payments”) 
Miscellaneous income, including rent, prizes, and awards (Form 1099-MISC & 1099-NEC) 
Partnership, trust, and S-Corp income (K-1 – notorious for arriving late, but only because they don’t have to be out the door until February 15) 
Social Security Benefit Statement (SSA-1099/1042S) 
Distributions from profit-sharing or retirement plans; IRAs; annuities, pensions, insurance contracts, survivor income benefit plans; permanent and total disability payments under life insurance contracts; and charitable gift annuities, among others (1099-R) 
Gambling winnings (W-2G)
State and local income tax refunds (1099-G)
Records for alimony received, jury duty pay, and any other tax credit information for 2023

 

Financial Assets

Interest income (Forms 1099-INT & 1099-OID)
Dividend and distribution income (Form 1099-DIV)
Money from broker transactions (Form 1099-B)
Cryptocurrency sales (including coin-to-coin trades) – report of any cryptocurrency activities
Records for capital gains or losses

 

 

Health Insurance Information 
Form 1095-A, Health Insurance Marketplace Statement
Form 1095-B, Health Coverage
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
Records of credits and/or advance payments received from the Premium Tax Credit (if claiming)

 

Homeowner/Renter Info

Mortgage interest, real estate taxes (Form 1098)
Second mortgage interest paid (if you don’t rent that property or rent it only under specific conditions – check with us)
Sale of your home or other real estate (Form 1099-S)
Settlement statement for any real estate purchased or sold during the year
Moving expenses (only if in active military and then under certain conditions)
Reimbursements for moving
Personal property tax information
Rent paid during tax year

 

Financial Liabilities

Auto loans and leases if vehicle is used for business 
Student loan interest paid (Form 1098-E)
Early withdrawal penalties on retirement funds, certificates of deposit CDs (1099-INT), and other fixed-time deposits
Records of gambling losses (if you plan to itemize deductions – any questions about that, check with us) 

 

Expenses

Gifts to charity (again, if you itemize deductions)
Health insurance information (the Form 1095 series – don’t need it for your federal return anymore but it is good to have among your records)
Education expenses (tuition and fees)
Childcare expenses
Job-hunting expenses
Medical savings accounts information (1099-SA)
Adoption expenses’ records
Unreimbursed expenses related to work (few folks can take this deduction) 

 

Self-Employment (SE) Data

Records for estimated SE tax paid (probably quarterly) in 2023
SE retirement plan information (SIMPLE and SEP-IRAs, for instance)
Health insurance premium records
Receipts or documentation for business-related expenses, including rent/mortgage, utilities, equipment, and auto loans, and leases if you use the vehicle for business
Farm income records 

 

Deduction documents

Retirement plan(s) contributions
Medical expenses (you can deduct only the amount of your medical and dental expenses exceeding 7.5% of your entire adjusted gross income) 
Tuition and higher-ed. (you may be eligible for one of a few education credits)
 

An important thing to understand is that we will guide you through the process and that even with all the changes that happen year after year, we’re on top of those changes and are working on each of our Jackson County client’s behalf, including you. 

 

We’re here to help.

 

Mike Mead, EA, CTC

 

We all have assumptions. It's what we do with them that matters. That includes your assumptions about taxes and finances.

Are any of these assumptions floating through your mind?

"Retirement planning can wait, right?"

"All debt is bad."

"Tax deductions and credits aren't worth the effort."

"Investing is for the rich."

"Saving is enough. No need to invest."

You'll want to dispel some of these assumptions and get a healthier perspective because it could make a difference in your life.

So, educate yourself -- change your narrative around money, taxes, and investing. Capitalize on the financial tools and software out there to help you succeed. And get support from a professional who can help you see things more clearly.

"I have a quick question. Can you help me?"

 

It's the time of year when I get messages from self-preparers who say:  "I have a quick question.  Can you help me?"

Remember, a quick question is, "Is social security taxable?"

That's what I consider a quick question, but sadly, most quick questions are never simple questions.

For most tax questions, the answer is: "It depends."  Everything in tax hinges on the answer(s) to something else.

Is social security taxable? It depends.

Is social security taxable to the state? It depends on if it's taxable, to begin with, and on your state of residence. 

There may be quick tax questions, but there are no simple ones.  

I mulled it over, trying to think up a simple tax question, and I couldn't think of one.  Even the question "Is interest taxable?" has no simple answer.

Yes, it is.... but it also depends on other things. 

Taxes are a tremendously convoluted, complicated puzzle.   If you like puzzles, it's fun.  

I like puzzles. 

 

Mike Mead, EA, CTC

Alliance Financial & Income Tax

info@afitonline.com

816-220-2001

Schedule an appointment today.  

What do you do when it's tax time, but you don't have a tax pro you trust?

 

What do you do when it's tax time, but you don't have a tax pro you trust?

Tax pros aren't like ice cream stores where you can get a tiny white spoon and do a taste test.

Tax pros aren't like department stores where you can run your hands over all the different blankets to find just the one you want against your skin.

Tax pros aren't like perfume.  You can't spray a tiny dollop of us on your wrist to see how well we blend with you. 

So, how do you choose if you can't taste, feel, or smell us?

The best way is to read reviews and see what others say. Ask your friends for a referral.  And, look to see if the tax pro has a Facebook business page; see what the tax pro has to say.

Since the initials behind our names are confusing and unfamiliar to most folks, vet your pro carefully.  

Opting to go with the lowest-cost provider can leave you with a tax pro who won't return your calls if you get into trouble with the IRS.

I can't tell you how many new clients I have picked up over the years simply because their tax pro would not answer the phone when the client got a letter from the IRS.

Not every tax pro knows how to deal with the IRS.

Hire a tax pro who will answer your phone calls and emails.   Hire a tax pro who will stand behind her work.  Hire a tax pro who knows how to deal with the IRS.

Hire an Enrolled Agent...

Follow my Facebook business page.   It's entertaining and educational.

See you soon.

Mike Mead, EA, CTC

816-220-2001

Info@AFITonline.com

Alliance Financial & Income Tax

Schedule an appointment today.

Will You Be Paying Taxes in Retirement?

 Retirement is a much-anticipated phase of life, representing when you can finally bid farewell to the daily grind and enjoy the fruits of your labor. As you plan for retirement, one crucial aspect to consider is your tax liability during this golden period.

Many people assume they'll be free from tax burdens in retirement, but the reality is a bit more complex. In this blog, we'll delve into the various factors that could influence your tax obligations during retirement and provide insights into how you can navigate the tax landscape to make the most of your retirement savings.

Sources of Retirement Income

The extent to which you'll pay taxes during retirement depends largely on the sources of income you'll be receiving. Common sources of retirement income include:

1. Social Security:
   Depending on your overall income, a portion of your Social Security benefits may be taxable. The IRS uses a formula to determine the taxable portion, with up to 85% of your benefits subject to taxation.
2. Pension Plans:
   The tax treatment varies if you receive a pension from your former employer. Traditional pensions are generally taxable, while some public-sector pensions might be partially or entirely tax-exempt.
3. Traditional IRAs and 401(k)s:
   Withdrawals from these accounts are considered taxable income unless you've already paid taxes on the contributions (in the case of Roth IRAs and Roth 401(k)s).
4. Roth IRAs and Roth 401(k)s:
   Distributions from these accounts are generally tax-free as long as you meet certain requirements.
5. Investments and Savings:
   If you have investments, dividends, capital gains, and interest income could be subject to taxation, although often at preferential rates.
6. Annuities:
   The tax treatment of annuities can be complex and depends on the type of annuity and the source of funds used to purchase it.
7. Part-Time Work:
   If you continue to work during retirement, any income earned will be subject to regular income tax.
8. Rental Income:
   If you own rental properties, the income generated will also be subject to taxation.

Strategies to Manage Retirement Taxes

1. Diversification of Retirement Accounts:
   A mix of taxable and tax-advantaged accounts can give you flexibility in managing your taxable income during retirement.
2. Roth Conversions:
   Depending on your financial situation, converting traditional IRA or 401(k) assets to Roth accounts might be beneficial, as withdrawals from Roth accounts in retirement are usually tax-free.
3. Strategic Withdrawals:
   Planning when and how much to withdraw from different accounts can minimize your overall tax liability. For example, withdrawing from taxable accounts in years with lower income could be advantageous.
4. Location Matters:
   Some states have lower or no income taxes, which could significantly impact your tax burden in retirement if you decide to relocate.
5. Charitable Contributions:
   Donating to charitable causes benefits society and can also provide tax deductions, reducing your taxable income.
6. Healthcare Expenses:
   Health-related expenses can be deducted if they exceed a certain threshold, potentially reducing your taxable income.
7. Tax-Efficient Investments:
   Opt for investments that generate less taxable income, such as index funds or tax-efficient mutual funds.

While retirement is often associated with relaxation and leisure, it's essential to consider the potential tax implications that come with it. The taxes you'll pay in retirement depend on various factors, including your sources of income and the strategies you employ to manage your finances.

By understanding the tax landscape, leveraging tax-efficient strategies, and making informed decisions about your retirement accounts, you can make the most of your retirement savings and ensure a more financially secure future. Consulting a financial advisor or tax professional is crucial to tailor these strategies to your unique circumstances.

Tips for a Smooth Tax Season

 A new year means filing your 2023 tax return, which is right around the corner!

With tax documents such as W-2s and 1099s arriving soon in your inbox and mailbox, this month’s newsletter has some tips to help you stay organized this tax season. This will help you file your tax return (and potentially get your refund!) quickly.

Tax Deductions Available for Self-Employed Individuals

 Being self-employed comes with a sense of freedom and control over your work, but it also brings its fair share of responsibilities, including managing your taxes. The good news is that self-employed individuals can access various tax deductions that can help lighten the financial burden and allow them to keep more of their hard-earned money.

In this blog post, we'll explore some of the critical tax deductions available to self-employed individuals and provide tips on how to make the most of them.

1. Home Office Deduction
   If you use a portion of your home exclusively for business purposes, you may be eligible for the home office deduction. This deduction allows you to write off a percentage of your rent or mortgage, utilities, and other home-related expenses. To qualify, your home office must be your primary place of business, and it should be used regularly and exclusively for your business activities.
2. Business Expenses
   Self-employed individuals can deduct various business expenses necessary for their operations. These expenses might include office supplies, equipment, marketing, travel, professional fees, and more. Keeping detailed records of these expenses is crucial to ensure you can claim all eligible deductions.
3. Self-Employment Tax Deduction
   Unlike traditional employees, self-employed individuals are responsible for paying the employer and employee portions of Social Security and Medicare taxes. However, you can deduct the employer-equivalent portion of your self-employment tax, which can significantly reduce your overall tax liability.
4. Health Insurance Premiums
   Self-employed individuals often need to purchase their health insurance. The good news is that you can deduct the premiums you pay for medical, dental, and even long-term care insurance for yourself, your spouse, and your dependents as long as you're not eligible for coverage through another employer or government plan.
5. Retirement Contributions
   As a self-employed individual, you have various retirement savings options while enjoying tax benefits. Contributions to a Simplified Employee Pension (SEP) IRA, a Solo 401(k), or a SIMPLE IRA are deductible. They can provide a means to secure your financial future while reducing your current tax bill.
6. Education and Training
   Investing in your skills and knowledge is essential for any self-employed professional. Fortunately, you can often deduct the costs associated with business-related education and training, including workshops, courses, seminars, and relevant books or materials.
7. Business Use of Vehicles
   If you use a vehicle for your business, you can potentially deduct the expenses associated with its use. This deduction can be claimed by calculating the actual expenses related to the vehicle's business use or utilizing the standard mileage rate set by the IRS.

Navigating the world of self-employment taxes might seem overwhelming at first, but understanding the available tax deductions can significantly ease the burden. By keeping accurate records, seeking professional advice when needed, and staying informed about changes in tax laws, you can ensure that you're making the most of every deduction available to you.

Remember, every dollar you save on taxes is a dollar you can reinvest in your business and your financial well-being.