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Litchfield, NH Resident Looks to Delay the Inevitable

There are plenty of reasons to file your taxes early, not the least of which are to get this done and off your to-do list. If you are expecting a tax refund, the sooner that you file your return the sooner the IRS can begin processing it and get your refund sent out. Filing your tax return early can also protect you from scammers and identity theft. If someone files a fraudulent tax return under your identity and you have already filed, the fraudulent one will be rejected.

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Business Owner in Litchfield, NH Strategizes to Maximize Her Tax Deductions

There are some tax advantages to hiring your spouse to do work for your family business. You will not have to pay FUTA (Federal Unemployment Tax), which is set at 6.0%. Family based businesses are also exempt from withholding FICA (Federal Insurance Contributions Act). In order to take advantage of this tax savings, your spouse needs to contribute to the business for a compensation, making them a legitimate employee. This allows you to convert higher-taxed income from your business profit into lower-taxed income, creating significant savings.

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Amherst, NH Resident Has Questions

The standard deduction for 2023 is $13,850 for single filers and $27,700 for married couples filing jointly. If other eligible deductions exceed this amount, then you will want to itemize your deductions instead. These include mortgage interest, unreimbursed medical expenses exceeding 7.5% of your income, charitable contributions, property taxes, and state or local income tax. To determine whether you should use the standard or itemized deductions, you will first need to have an idea of how many deductions you will have and which offers the greatest amount of savings.

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Nashua, NH Homeowner Looks to Plan Ahead

When you sell your home, you will owe capital gains tax on any profit that you make. This is the difference between the price that you originally bought the house at and the amount that you get selling the property. If you have been at the property for a substantial amount of time, the taxable amount may be significant. Home improvement projects that add value to the property and / or prolong the home’s life can be subtracted from the sale price, reducing the amount that will be subject to the capital gains tax.

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What Does Tax Planning Involve?

Hudson, NH Resident Has Questions

Tax planning involves analyzing an individual or family’s current financial situation and making the necessary changes to ensure that they can pay the lowest amount in taxes for their circumstances. This may include manipulating the timing of income, purchases, investments including retirement plans and college savings. Through careful tax planning, you may be able to maintain or even reduce your tax bracket. This can make a significant difference to the amount of taxes that you wind up paying. Tax planning is completely legal, and a skilled tax professional can help you to best understand how to manage your finances.

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Litchfield, NH Resident Looks to Reduce Her Tax Burden

Maximizing 401(k) contributions, charitable donations, and selling underperforming investments are all ways to reduce your taxable income before the end of the year. Another option is to put money aside in a health savings account (HSA) or traditional IRA. You have until December 31st to make these moves, reducing your taxable income for the calendar year.

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Who Is Exempt from Paying Taxes?

Milford, NH Resident Asks an Important Question

There are some groups that are exempt from paying taxes. These include qualified 501(c)3 non-profit organizations, US citizens working abroad, and some low-income individuals. While most of us will have to pay some amount in taxes throughout the year, there are some circumstances when no taxes will be owed. For those with low or no income, lots of deductions, or many dependents taking advantage of the Earned Income Tax, you may wind up with no tax bill for the year.

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Nashua, NH Student Looks for Student Tax Breaks

The IRS offers several tax breaks for college students, as well as graduates who are paying off student loans. The American Opportunity Tax Credit (AOTC) is available for those enrolled in their first four years of college courses. Taxpayers paying for college, either the student themselves, a parent, or spouse, can claim a tax credit of 100% on the first $2,000 spent on eligible education expenses. The Lifetime Learning Credit is another advantage for current students. This differs from the AOTC in that graduate students can be eligible, and you are not required to be enrolled for at least half of the year. Those that have student loans, whether current or former students, can deduct the interest paid on the student loans from their taxes.

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Amherst, NH Resident Seeks Information

If you are the caregiver for your elderly parent, you may be eligible for tax deductions. The first tax credit that you may be able to utilize is the child and dependent care tax credit. If you are paying for care for your elderly parent while you are working, these expenses may be eligible. You can claim up to $3,000 for one person or $6,000 for two. A second tax credit is available for other dependents, with up to $500 in tax credits. To be eligible for this the parent must be a US citizen with a gross income that is not greater than $4,400 and have lived with you more than 50% of the year.

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How Gambling Wins Can Affect Your Taxes

Hollis, NH Resident Hits the Jackpot

Experiencing a big win, whether in a casino, poker tournament, or through some other gambling venture, can feel great. It is important to know that the money that you earn through gambling is taxed by the IRS. By planning accordingly, you can be sure you won’t have any costly surprises at the end of the year. Gambling winnings are considered taxable income in most states, whether this is paid by cash, check, or electronically. This should be accounted for in the income reported for in the year that the money was won, paying the appropriate taxes on this windfall.

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