Jeff Haywood, CPA

Posts Tagged ‘Penalties’

Talk to Your CPA Now to Plan Year End Moves and Prepare for 2013 Tax Changes

November 16th, 2012 | Author: admin

Plan Year End Moves

A recent meeting with one of my clients uncovered an opportunity to save them at least $12,000 in taxes on their 2012 income tax returns. The opportunities to save on your taxes are greatest this time of year. So if you really want to make the most of your CPA a conversation this time of year can save you much money. In the case of my client it was identifying the time to make an organizational change. For many however there are opportunities to reduce taxes at year-end by delaying income or by accelerating expenses or both.

You may have the ability to reduce the taxable income from your business by delaying billing or receiving of payments until next year. If you are a cash basis taxpayer you can bill customers/clients at the end of the of the year so they pay you next year. In addition you can make purchases that are expenses to your business before year-end. Now here is one that is quite nice…you can put an expense on your credit card before year-end and deduct it this year even if you do not pay the bill until next year. Just remember to pay the bill in a timely manner to avoid any interest charges and penalties. You may be able to significantly reduce your income for the year by purchasing major assets before year-end. When making these moves you want to be careful not to spend money just to save pennies on the dollar in taxes. After all it is about how much money you have in your pocket at the end right? I repeat DO NOT SPEND DOLLARS ONLY TO SAVE PENNIES ON YOUR TAXES. While you want to pay as little tax as possible, even more important should be maximizing your wealth which should lead to you paying some taxes. Paying taxes are a good thing, you just want to keep it to a minimum and this is a great time to make some moves to accomplish that end.

Prepare for 2013 Tax Changes

In addition to tax moves you also need to be actively looking at changing your budget for tax changes for 2013. Income tax rates are due to increase and payroll taxes are due to increase by 2% starting January 1, 2013. Take a look at how this will affect your budget for 2013 and be prepared for this potential reduction in income.

There are other moves that you can make now like contributions to retirement or HMA accounts. What will work for you depends and a conversation with your CPA now can result in a huge savings for you and prepare you for changes starting January 1, 2013. What is the best in your situation depends on your situation. So now is the time to give me a call to discuss your situation and to see what opportunities you have now to minimize your taxes for 2012 and prepare for 2013. Please feel free to contact me using my contact information below.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

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Posted in Business, Financial Literacy, Income Taxes, Life, Tax Planning | Tags: Business, CPA, Deductions, Entrepreneurs, Expenses, Income, IRS, Money, Payments, Penalties, Profits, Retirement, Tax, Tax Return, Tax Tips, Taxes, Tips | No Comments »

Tax Implications: Early Distributions From Retirement Accounts

February 21st, 2012 | Author: admin

Avoid one of the top tax surprises on your income tax return. As always before making a major financial decision you should have a conversation with your CPA/Tax Preparer. We want to avoid any unpleasant surprises when you file your income tax returns. Here are some facts from the IRS regarding one of the most frequent and unpleasant surprises taxpayers often encounter - early distributions from retirement accounts:

Early Distribution from Retirement Plans May Have a Tax Impact

IRS Tax Tip 2012-34, February 21, 2012

Taxpayers may sometimes find themselves in situations when they need to withdraw money from their retirement plan early. What they may not realize is that that transaction may mean a tax impact when they file their return.

Here are 10 facts from the IRS about the tax implications of an early distribution from your retirement plan.

1. Payments you receive from your Individual Retirement Arrangement before you reach age 59 ½ are generally considered early or premature distributions.

2. Early distributions are usually subject to an additional 10 percent tax.

3. Early distributions must also be reported to the IRS.

4. Distributions you roll over to another IRA or qualified retirement plan are not subject to the additional 10 percent tax. You must complete the rollover within 60 days after the day you received the distribution.

5. The amount you roll over is generally taxed when the new plan makes a distribution to you or your beneficiary.

6. If you made nondeductible contributions to an IRA and later take early distributions from your IRA, the portion of the distribution attributable to those nondeductible contributions is not taxed.

7. If you received an early distribution from a Roth IRA, the distribution attributable to your prior contributions is not taxed.

8. If you received a distribution from any other qualified retirement plan, generally the entire distribution is taxable unless you made after-tax employee contributions to the plan.

9. There are several exceptions to the additional 10 percent early distribution tax, such as when the distributions are used for the purchase of a first home (up to $10,000), for certain medical or educational expenses, or if you are totally and permanently disabled.

10. For more information about early distributions from retirement plans, the additional 10 percent tax and all the exceptions, see IRS Publication 575, Pension and Annuity Income and Publication 590, Individual Retirement Arrangements (IRAs). Both publications are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

Publication 575, Pensions and Annuities (PDF 227K)
Publication 590, Individual Retirement Arrangements (IRAs) (PDF 449K)
Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax Favored Accounts (PDF 72K)
Form 5329 Instructions (PDF 40K)

Why pay not only income taxes but also a penalty in addition on early distributions from your retirement accounts when you may have other less costly options? If you are considering this or other financial moves contact me first to discuss your situation. You can use my contact information below to schedule an appointment.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.