Tax

submitted by Brian J. Delaney, Esq.

In light of the new tax plan that went into effect on January 1, many Americans are expecting a larger tax refund when they file next year. They shouldn't plan on it and here's why: The IRS just released revised tax withholding schedules last week and it's possible people will be underpaying their taxes.  

With a major tax bill pending, now is the right time to see what you can do to reduce your income tax bill before year's end.  Here are some ideas:

Defer to the Second Half

In football, when a team wins the opening coin toss, they can elect to receive the ball to start the game or wait until the start of the second half.  Patriots' fans know that if he wins the coin toss, Coach Bill Belichick will always defer possession to the second half.  Why?  He sees a bigger benefit to having the extra possession later on in the game as opposed to the opening drive.

If you are self-employed and are owed money, is it better to receive income now or a little later?  Most people prefer to get paid now, but if the tax rates are lower in 2018, it may be advantageous to wait a couple of weeks.

The proposed Trump tax plan makes some significant changes to the Internal Revenue Code.  Although being promoted as major middle-class tax relief, some seniors may actually face a massive tax increase.  Under the proposed plan, taxpayers can no longer itemize medical expenses on Schedule A.  The current tax code allows a taxpayer to take an itemized deduction for medical expenses that exceed 10% (or 7.5% if born before 1952) of their adjusted gross income.

submitted by Brian J. Delaney, Esq.

It looks like Congress will be extending the payroll tax cut through the end of 2012.  Many people assume it is a good thing, but don’t understand how it affects their tax returns.  This payroll tax cut actually went into effect in January in 2011.  Will you see a bigger tax refund?  For most people, the answer is no.   In fact, some people will be paying more in tax this year as opposed to last year!  I prepare tax returns for many of my clients and I have quickly realized that a number of them will end up paying more than last year.  Why? Read on…

submitted by Brian J. Delaney, Esq.

Due to last minute tax changes by Congress, the IRS has announced that some tax returns will not be processed until February 14.  If you itemize your deductions on Schedule A (mortgage interest, taxes paid, charitable contributions, etc), claim the higher education tuition and fees deduction, or claim the educator expense deduction, you will not be able to e-file until the 14th.  For our clients, we will finalize returns but hold off e-filing until we get the green light from the IRS.