Nearly half of us believe we overpay, says veteran investment advisor. Are you paying in more taxes to the IRS than you have to? Here are five common tax mistakes that could be causing you to overpay.
Whether you’ve filed for an extension on your taxes this year, 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.
• Confusion 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 As a result, taxes are not payable until funds are withdrawn.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.
Tax Information and Resources
-
6 Tax Hacks For SMB Owners
-
3 Common Tax Problems You Can Fix
-
4 Ways To Remove Your Tax Lien
-
Avoid Tax Time Frustrations
-
6 Tax Hacks For SMB
-
7 Tax Planning Myths
-
Abusive Tax Shelter Info
-
California Franchise Tax Board Fee
-
How to File Taxes for LLC
-
Transcript Delivery
-
Tax Write-Offs for an LLC
-
Calculate Sales Tax
-
IRS Is Auditing Your Return
-
End of Year Tax Strategies
-
SMB Tax Struggles
-
Start Business For Tax Purposes
-
How To Sell Your Business
-
Tax Tips For The Self Employed
-
Home Office Telephones
-
SMB Tax Tips for 2022
-
What is a W9
-
Self Employed Tax Deductions
-
Filing Partnership taxes
-
Tax Mistakes
-
Self Employed Quarterly Tax Filing
-
Home Business Tax Deductions
-
Choosing LLC Fiscal Year
-
Helpful Tax Tips
-
IRS W-4
-
Owing the IRS 6 Tips
-
Self Employed Tax Mistakes
-
Tax Information for LLC's
-
Home Office Deductions
-
Structuring Taxes and Your Business
-
6 Tax Tips For Self Employed
-
Quarterly and Annual Tax Filing
-
Tax Deductions For Purchasing Artwork
-
Tax Credits As Revenue for Your Business
-
10 Self Employed Tax Tips
-
50 Tax Deductions Not to Miss
-
File for a Tax Extension
-
Compare the Benefits of Inc vs LLC Taxes
-
Independent Contractors
-
Home Business Tax Breaks
-
What is Franchise Tax
-
How are LLCs Taxed?
-
Taxes As An Artist
-
Deduct Start Up Expenses
-
Tax ID Numbers
-
Business Tax Refund
-
Single Member LLC Taxes
-
Estimating Taxes
-
Vehicle Tax Deduction
-
Income Tax Liability: What You Need to Know
-
Don't Forget These Deductions
-
Sales Tax Nexus Explained
-
Small Business Federal Taxes
-
1099 W2 Whats The Difference
-
Avoid Triggering an IRS Audit
-
SMB Tax Deductions
-
What Does an SMB Pay in Taxes
-
Fed and State Tax ID Numbers
-
Estimated Taxes
-
TINs and 1099s
-
LLC Tax Filing Deadline
-
Payroll Tax Guide
-
Avoid Capital Gains Tax on Stock Sales
-
Tax Debt Schemes The Facts
-
7 Self Employed Tax Deductions
-
W2 Prep & Reading
-
Can I Deduct My Hobby?
-
Do Not Forget These Deductibles
-
Guide to EIN Numbers
-
K1 Tax Forms
-
Track Tax Deductible Expenses
-
Difference 401k & 401a
-
Small Business Tax Tips
-
State Business Taxes
-
National Internet Sales Tax Bill
-
Top 19 Tax Deductions
-
Small Business Tax Basics