Everyone wants to pay less taxes, which leaves you with two options, make less money or increase your tax deductions and tax credits. The two parts of the tax code often confuse people, but a deduction essentially reduces your taxable income (the amount subject to tax), reducing your tax by your marginal rate * the deduction, and a tax credit reduces your taxes owed by the dollar figure.

Tax Deductions and Credits Put Money in Your Pockets

From itemized deductions for mortgages, payroll, and charitable giving, to energy efficiency, hybrid car, and child related tax credits the interaction of these tax rules with your financial planning is an important tool for tax minimization. What do you have to set aside, what is worth tracking? How do we use the tax code to our advantage? Congress goes through a cycle, where every few decades they engage in “tax reform” – eliminating a slew of these “tax code expenditures,” and then immediately go back to adding them back to the tax code.

The difference between deductions and credits is important for tax planning. For example, if you are at a 24% marginal tax credit, a $1,000 tax deduction is worth $240 in less taxes owed, while a $1,000 tax credit is worth $1,000 in less taxes owed. In addition, with the large standard deduction, the first $28,800 ($14,400 for singles) of itemized deductions “don’t save you money” because you can get it with the standard deduction. The increased standard deduction drastically changed tax planning for middle class families.

Because of the interaction of the Alternative Minimum Tax (AMT), standard deduction, stimulus payment phase ours, and tax code changes, it is not always obvious what the impact of a decision is. One of our most common questions we get midyear from clients contemplating a large investment or purchase will be the tax implications of it. To avoid the dreaded “it depends” non answer, it’s important to have a holistic understanding of your financial picture to understand how they really play together.

Adoption Tax Credit

By |2021-06-03T13:47:23-04:00June 3rd, 2021|Categories: #TaxTipTuesday|Tags: , , , , , , |

To kick off Pride Month, we're bringing you a special tax tip Tuesday. On this one, we are going to go over the adoption credit. Now, obviously, the adoption credit applies to anyone who adopts a child. It is not strictly for the LGBTQIA+ community. It applies to everyone, but the LGBTQIA+ community does tend to make good use of this, so I wanted to do a high-level overview of the credit.

Retirement Planning – Seth Bassoff

By |2021-05-14T11:57:21-04:00May 14th, 2021|Categories: #FinanceFriday|Tags: , , , , , , |

Retirement planning can seem boring, but when you have our #FinanceFriday guest Seth Bassoff CEPA®, APMA®, CRPS®, CRPC®, RFC® on your side, you can do some very cool things. Come check us out on this #FinanceFriday video.

Biden’s $1.8 Trillion Plan & The IRS

By |2021-05-03T22:02:54-04:00April 30th, 2021|Categories: Other Perspectives|Tags: , , , |

President Biden has proposed a new  $1.8 trillion American Families Plan due to the devastating effect that the Covid-19 pandemic has had on American families. To most, this seems to be an excellent thing.

Stimulus Check FAQs

By |2021-04-05T13:00:46-04:00March 31st, 2021|Categories: Quickies with Bette|Tags: , , , |

Stimulus checks can be a source of relief and stress. If you fall into the ladder position, I'm here for you. Hi, I'm Bette Hochberger, CPA CGMA, and I want to thank you all for reaching out to me with questions regarding your stimulus checks. I'm flattered at how many people reached out to us, but it's too many for me to call you each back, so I wanted to get you an answer as soon as possible. These are the main questions we've been receiving.

Why To Track Mileage

By |2021-05-12T23:32:30-04:00May 27th, 2014|Categories: #TaxTipTuesday|Tags: , , |

If you use your car for your business your CPA has probably told you to track your mileage. The reason is that there is two ways to calculate the auto-related costs for your car- actual expenses and standard mileage rate- and both rely on knowing the number of business miles you drove for the year.

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