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I’m Tracy Au and I have graduated from the Professional Writing program from university. I am an aspiring screenwriter, so this blog is used to promote my writing and attract people who will hire me to write for your TV show or movie. I write a lot about writing, TV, movies, jokes, and my daily life and opinions. I have another blog promoting my TV project at www.thevertexfighter.blogspot.com.

Saturday, March 7, 2015

5 Common Causes of Prevalent Tax Mistakes

Mar. 6 5 Common Causes of Prevalent Tax Mistakes: Ginny Grimsley sent me this article.
 
5 Common Causes of Prevalent Tax Mistakes
Nearly Half of Us Believe We Overpay,
Says Veteran Investment Advisor
 
Whether you’ve filed for an extension on your taxes this year, or have waited until the last minute to complete paperwork, or want a better strategy for the future, chances are you could be doing a better job throughout the year to save on income taxes, says seasoned investment advisor Paul Taylor, a member of the National Ethics Bureau.
 
Forty-nine percent of Americans think they personally pay more than their fair share in taxes, according to 2013 Rasmussen reports.
 
“Come tax time, many of the other half could be doing more to legally and strategically save money,” says Taylor, an architect-turned-founder and owner of Capital Advisory Group & Tax Planners of Lake Norman and Capital Investment Advisors, Inc, (www.CapitalAdvGroup.com).
 
He cites mistakes that many taxpayers are liable to make now and in future years.
• Not knowing which tax deductions are available. Tax reform measures are enacted frequently by Congress, which makes it hard for U.S. taxpayers to know which deductions are currently available for maximizing savings. One of the most overlooked deductions is state and local sales taxes. Taxpayers may be able to take deductions for student-loan interest, out-of-pocket charitable contributions, moving expenses to take a first job, the child care tax credit, new points on home refinancing, health insurance premiums, home mortgage interest, tax-preparation services and contributions to a traditional IRA.

• Misunderstanding deduction value for medical expenses. The Affordable Care Act has altered the guidelines for tax-deductible medical expenses. Effective Jan. 1, 2013, the new policy increased the threshold for the itemized deduction for unreimbursed medical expenses from 7.5 percent of adjusted gross income to 10 percent of adjusted gross income for regular tax purposes. The increase is waived for individuals age 65 and older for tax years 2013 through 2016.

• Confusing when taxes must be paid on IRA and employer-sponsored retirement funds. Traditional IRAs and most employer-sponsored retirement plans are tax-deferred accounts, which mean they are typically funded with pre-tax or tax-deductible dollars. As a result, taxes are not payable until funds are withdrawn. Exceptions are the Roth IRA and the Roth 401(k) and Roth 403(b). Roth accounts are funded with after-tax dollars. That’s why qualified distributions – after age 59½ and the five-year holding requirement has been met – are free of federal income tax.

• Overlooking tax-advantaged investments. Tax-advantaged investments can include real estate partnerships, oil and gas partnerships and suitability, which refers to how appropriate an investment may or may not be to an investor. Two of the most common types of real estate partnerships, for example, are low-income housing and historic rehabilitation. The federal government grants tax credits to those who construct or rehabilitate low-income housing or who invest in the rehabilitation or preservation of historic structures. 

• Uncertainty when accounting for gift taxes. The federal gift tax applies to gifts of property or money while the donor is living. The federal estate tax, on the other hand, applies to property conveyed to others, with the exception of a spouse, after a person’s death. There are several exceptions to gift taxes, including gifts of tuition or medical expenses that you pay directly to a medical or educational institution for someone else, gifts to a spouse who is a U.S. citizen, gifts to a qualified charitable organization and gifts to a political organization.
About Paul Taylor
 
Paul Taylor is the founder and owner of Capital Advisory Group & Tax Planners of Lake Norman and Capital Investment Advisors, Inc. Taylor, a fully licensed investment advisor, has more than 20 years of experience in the industry and is committed to providing personalized service to those he serves. Since 2007, he has been a member of the National Ethics Bureau, which acknowledges individuals who prove they are committed to upholding the highest ethical standards in their practices.

Ginny Grimsley also sent me this article:
 
5 Questions to Ask Your CPA
During Tax Season
 
Simple Strategy Changes May Boost Your
Retirement Dollars, Says Financial Advisor

Many people talk to their accountant just once a year – right about now, says financial consultant Larry D. Roby.
 
“This is a good time to ask a few questions that may not have occurred to either you or your accountant simply because at tax time, you’re both focused on the task at hand and not the bigger picture, ” says Roby, founder and president of Senior Financial Advisors, Inc., www.sfabridge.com.
 
“But, if you don’t have a financial advisor, asking your accountant a few questions may help you spot places where you’re unnecessarily leaking retirement funds. Many of those leaks can be plugged with some simple changes.”
Roby tells the story of a woman he worked with at the financial counseling ministry where he volunteers. She was a widow on Social Security who also received an annual disbursement of $35,000 from her retirement plan. She didn’t need the whole $35,000, so she put a large chunk of it in CDs each year.
 
“She was getting hit with what I call ‘the tax torpedo,’ ” Roby says. “That $35,000 from her fund caused the portion of her Social Security income being taxed to jump from zero to 85 percent. And she’s also getting taxed on the whole $35,000! Putting the extra money into CDs earning only about 1 percent interest, meant she was actually losing money.”
The fix, he says, was easy.
 
The woman could pay no taxes on her Social Security benefits if  the combined total of 1 – her adjusted gross income, 2 – nontaxable interest income and 3 – half the benefits, was less than $25,000. If the amount was $25,000 to $34,000, she would likely be taxed on 50 percent of her benefits.
 
“By lowering her retirement fund disbursement to the amount she actually needs, she saw a substantial tax savings,” Roby says.
 
Such oversights are surprisingly common and can be corrected when you have the right information.  If you’re planning for retirement or already retired, here are the questions Roby suggests you ask your accountant:
1.  Do I have to pay taxes on my Social Security benefits?
2.  Is there a way to reduce or eliminate those taxes?
3.  Why am I paying taxes on money I’m not spending?
4.  How long will my retirement funds last based on my current withdrawals?
5.  Based on my tax records, will my spouse have sufficient income after my death?
If your retirement picture is far more complicated, with a variety of taxable and non-taxable income streams, Roby says seeking the services of a financial advisor with a diversified perspective may be a worthwhile investment.
 
“I always recommend people to talk to an advisor who doesn’t specialize in just one area, like annuities,” Roby says. “If you’re a hammer, everything looks like a nail. Someone equipped with lots of tools can put help you put together the best strategies for you.”
 
About Larry D. Roby
 
Larry D. Roby is the founder and president of Senior Financial Advisors, Inc. (www.sfabridge.com). He’s a Registered Financial Consultant, a professional designation awarded by the International Association of Registered Financial Consultants; a licensed insurance agent; a Master Certified Estate Planner; and licensed to serve as an investment advisor representative. He’s currently finishing a two-year Certified Advisor for Senior Living course. Roby is a firm believe in educating clients and the public alike so that they can make the most of the money they’ve earned, saved and invested. He and his firm volunteer time and resources to the Branches Recovery Center, a counseling ministry.

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