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9 End of Year Tax Tips for Individuals and Small Businesses

9 End of Year Tax Tips for Individuals and Small Businesses

The holiday season is upon us with all of its festivities, cheer, and delicious food. However, this also means that the end of the year is approaching, so now is the time to begin using some simple tax strategies to ensure you can reap the biggest benefit and minimize your taxes.

At Gonzalez & Arrambide, Inc. our accountants have a thorough understanding of tax laws, and are up-to-date on current regulations, which means they can help to reduce your payments and devise a year long plan that will get your personal or business financial matters in proper order.

So as we come closer to the end of the year consider using the following 9 tax tips for both individuals and small businesses.

Individual Tax Tips

1. Accelerate Deductions and Defer Income

Consider deferring bonuses, consulting income or self-employment income and accelerating deductions from state and local income taxes, interest payments, and real estate taxes.

2. Bunch Itemized Deductions

Because many expenses can be deducted only if they exceed a certain percentage of your adjusted gross income (AGI), bunching itemized deductions can help you reach that number.

3. Make Up a Tax Shortfall with Increased Withholding

If you’re in danger of an underpayment penalty, try to make up the difference by increasing withholding on your salary or bonuses.

4. Leverage Retirement Account Tax Savings

Contributions to your retirement accounts reduce taxable income at the time that you make them, and you don’t pay taxes until you take the money out at retirement.

5. Reconsider a Roth IRA Rollover

Converting a traditional IRA into a Roth IRA allows you to pay tax on the conversion in exchange for no taxes in the future (if withdrawals are made properly).

6. Make a Charitable Contribution

Cash contributions must be documented to be deductible, and a charitable deduction of more than $500 in donated property, or $250+ for a car donation require certain forms.

7. Give Directly from an IRA

Using your IRA distributions for charitable giving could save you more than taking a charitable deduction on a normal gift.

8. Zero Out AMT

You can “zero out” your alternative minimum tax (AMT) by accelerating income into the AMT year until the tax you calculate for regular tax and AMT are the same.

9. Take Advantage of Historically Low Interest Rates

An appreciating market and historically low rates create the perfect atmosphere for estate planning.

Business Tax Tips

1. Make an S-election on an LLC you set up this year and use it for operations.

There are new IRS regulations that allow for this retroactive classification at year’s end. However, don’t forget you are required to take some payroll for yourself out of the company if you make this election.

2. Set your payroll amount.

S-Corporation owners or newly elected LLC S-Corps must complete their payroll before year’s end.

3. Put your kids on the payroll.

This overlooked strategy allows you to pay your children for actual services they provide your business. Use a separate business account that complies with regulations and make sure follow the proper procedures and have bank accounts for the children.

4. Put your spouse on the payroll.

You should consider this only if your spouse wants to contribute money to your company 401(k) for tax-planning purposes.

5. Implement a 401(k) before year’s end.

A properly designed 401(k) can be self directed and utilized in real estate transactions, hard-money lending, and small business investments.

6. Start establishing your entity now.

Consider the first of the year as the perfect time to file articles.

7. Close on that rental property.

By reclassifying the assets of a rental property into real and personal property, you can defer thousands of tax dollars. Make sure you take into account the real estate classification and other passive income you may be able to deduct this segregated depreciation against.

8. Make a ROTH conversion.

Consider converting your traditional IRA or 401(k) to a Roth IRA, and start paying taxes at a lower rate without paying taxes on your withdrawals in the future.

9. Push income or expenses to the proper year.

You’ll want to push income to the next year and accelerate expenses to the present year.

Gonzalez & Arrambide, Inc. wishes you a wonderful holiday season.

Our accountants and Gonzalez & Arrambide, Inc. work hard year round to make sure that the holiday season means a time of relaxation and financial prosperity; rather than a crunch time rush full of frustration and uncertainty.

Contact us today at (956) 447-9009 to find out how we can help to make your tax season fill like the holidays.

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What Business Owners Should Know About the Increased Hiring in the IRS

What Business Owners Should Know About the Increased Hiring in the IRS

With more than $400 billion owed to the U.S. Treasury in back taxes, the Internal Revenue Service (IRS) is set to hire up to 700 new employees for tax enforcement with a push towards audits and collections.

But there’s more to the story—there’s going to be a big focus on business owners.

This can mean problems for those who have yet to resolve issues from prior years. If you have been purposely neglecting those IRS notices, then you are definitely going to want to make sure to take the proper steps to resolve things.

Failure to do so can mean a seizing of assets or more.

At Gonzalez & Arrambide, Inc., we have the knowledge and skills to help you through a tax audit—whether business or individual.

Nobody likes to deal with the emotional and financial stresses that come with the IRS breathing down their necks, so take the following steps to ensure that you are prepared for this new wave of IRS probing:

1. Be aware of your situation.

In order to understand what’s coming, you’ll need to have a good grasp on where you stand. This means reviewing all of your IRS letters, notices, and tax returns from previous years. This can help you put your financial statements in order so you aren’t blindsided by any of the agency’s requests. You might also find that there were some mistakes made by the IRS, which can help to reduce some of your debt. It’s usually a good idea to get assistance from a tax professional during these times.

2. Request a payment plan.

After you understand your situation and how much you owe, you’re going to need to put a plan together. Because paying thousands of dollars out of pocket may not be feasible for every business owner, the best approach is usually to request an installment agreement.

Depending on your agreement, the duration of the payment plan can be stretched out to as long as six years, with payments occurring on a monthly basis and interest/penalties accruing throughout the process. It should also be noted that this type of arrangement stops liens and levies.

The process should be relatively straightforward, and can be done online, if you owe less than $50,000. Just make sure to be in compliance with the agreement at all times. Violating the terms will make things worse, so be aware of the conditions set in place.

3. Act swiftly to negotiate penalties.

Failing to effectively manage your IRS debt can lead to a severe amount of penalties. Acting promptly to the notifications of the IRS can help ease the situation.

By acting swiftly, you leave yourself room for negotiating penalties, which can either lower or even eliminate them—if you can show reasonable cause. Harsh financial circumstances or the destruction of your home or business could qualify you for deductions.

There’s also a program provided by the IRS, which provides some alleviation to those who are in trouble with agency for the first time. Even if you are rejected at first, you can still appeal.

4. Other options.

The IRS has another option known as an Offer in Compromise (OIC), which releases you from some of the debt. Because the process requires disclosing an extensive amount of financial information utilizing forms 656 and 433, it’s best that you get the assistance of tax professionals like Gonzalez & Arrambide, Inc. to help you fill out the required paperwork.

The IRS does reject quite a bit of the submissions so you’ll need assistance in navigating the IRS bureaucracy.

Gonzalez & Arrambide, Inc. are your audit experts.

While it can be a nerve-racking ordeal to deal with the IRS, the accounting and tax audit experts at Gonzalez & Arrambide, Inc. know just what to do to help you get through the process with minimal headaches.

Whether during tax season, or for any other financial purpose, our CPAs can offer you quality support and protection.

Give us a call today at 956-447-9009 and let Gonzalez & Arrambide, Inc. serve you.

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Should I Hire a CPA?

Should I Hire a CPA?

Yes, it’s true.

Sometimes software like TurboTax and companies like H&R Block can provide you a suitable solution for relatively simple taxes.

But sometimes your financial planning requires more than a few hours sitting in front of a computer or handing your 1040 form over to a tax preparer.  That’s when the service of a qualified CPA firm can make all the difference.

More than just number crunchers and pencil pushers, CPAs offer businesses and individuals highly valuable financial and tax planning services, investment advice, audit support, and that much needed consultation when in dire situations.  So with your financial security on the line, it only makes sense to use an agency like Gonzalez & Arrambide, Inc. to ensure your economic success.

Not too sure if your situation requires the highly competent and trusted professional skills of a CPA?  Well here’s some food for thought…

  • CPAs aren’t just tax preparers (but we do that too).  CPAs are actually highly educated and state licensed individuals who meet stringent qualifications to handle their roles.
  • CPA license holders must continue to undertake professional development courses.
  • Membership in professional associations means CPAs must work ethically and under strict codes.
  • All CPA firms in Texas abide to comprehensive reviews of their accounting and auditing practices every three years.
  • CPAs are expert analysts and can handle your complicated financial legal issues.
  • Partnering with a CPA means you gain the knowledge and confidence to help you make those critical financial decisions.
  • CPAs can help businesses develop effective accounting systems.
  • Businesses also seek out accomplished CPAs to help determine new profitable products lines, diversify investments, and provide consultation.

Or even if receiving some assistance with your taxes, the expertise of a CPA firm like Gonzalez & Arrambide, Inc. will ultimately save you money and help you avoid the headaches of having to deal with inexperienced tax preparers and inadequate software.  Remember…

  • Simple mistakes can lead to big problems.  CPAs can help you avoid this.
  • CPAs can you save you time (and annoyance) during tax season.
  • CPAs are trained to complete complex tax returns and know how to maximize your tax deductions.
  • CPAs understand how life experiences can have an impact on your tax liability and financial objectives.
  • CPAs can help you avoid those dreaded IRS tax audits by thoroughly examining your tax situation and ensuring all those complicated forms are properly filled out.

Perhaps even more importantly, CPAs can provide you the support and care you need during a tax audit.  For instance, Gonzalez & Arrambide, Inc. can help you with:

  • Federal and state compliance.
  • Preparation for amended returns.
  • Advisement.
  • Legal representation.
  • Guidance to avoid future tax issues.

If you’ve decided to hire a CPA, then make sure to follow a few simple guidelines to get the best return on your investment:

  • Get recommendations from lawyers, bankers, colleagues, and trusted contacts.
  • Make sure the CPA communicates to you in a manner that meshes well with your own style of communication.
  • Have some plans and objectives before you even meet.
  • Make sure the CPA is licensed and meets technical and professional standards.
  • Gather all your financial documentation.
  • Be willing to open up about your life to CPAs so they can understand all of your financial needs and goals.
  • Remember…you are in charge.

If this seems like the right choice for you, then make sure to give Gonzalez & Arrambide, Inc. a call at 956-447-9009.  Let’s get you started on the path to financial prosperity.   

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Changes in big name media streaming company teach small businesses

Changes in big name media streaming company teach small businesses

The popular on-demand media streaming provider, Netflix, has upped their prices and split their company into two causing customers to unsubscribe and other businesses to learn from their mistakes.

The DVD rental service will now be provided by Qwikster at a higher price to those who choose to keep the service.

Changes are inevitable in businesses and like The Business Finance store provides to their clients, legal and business advice along with accounting and bookkeeping are essential when starting up a business and maintaining one.

For this invaluable service to your company, contact the Weslaco CPAs at Gonzalez & Arrambide, Inc. by calling 956-447-9009 today.

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Small businesses and growth

Small businesses and growth

If you own a small business, you may be looking to expand. Financially, this may be difficult and dealing with the legalities may be complicated.

It is a good idea for business owners to establish a relationship early on with trusted advisers who can help them achieve their goals.

Whether you are looking to promote your business or make valuable connections, a Certified Public Accountant can help you achieve your business goals.

Contact the Texas Certified Public Accountants of Gonzalez and Arrambide at 956-447-9099 for more information.

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