Reasons you should hire a tax professional in 2022

Now that 2022 is upon us, tax season is just around the corner. Thinking about the looming tax deadlines doesn’t necessarily make you feel warm and fuzzy inside, and we get it. Have you thought about seeking out tax help

There really are lots of great reasons why it would be beneficial for you to hire a tax professional

Big Changes in 2021

As you probably know, filing your own taxes can be a lengthy and confusing process. Tax laws can change from year to year, and it’s easy to miss the small details while shuffling through all of your paperwork and torn open envelopes. Also, big life changes like buying a home, getting married, or starting a business will all impact your tax return in different and often unexpected ways. Hiring a professional to help you with your taxes helps keep the whole process simple, organized, and easy. 

Save time and money

According to the IRS, the average American takes 11 hours to prepare their tax return. Think of all the other things you could be doing with those hours! Hiring a professional to file your tax return for you frees you from that burden. They are able to complete your taxes often much more quickly and efficiently than you would be able to do yourself. 

No one wants to miss a deduction or trigger an IRS letter or audit, right? Hiring a professional can help ensure that you avoid errors and receive the most on your returns. On top of that, you save yourself lots of time and stress knowing that everything is being filed by someone who is trained to handle your taxes.

You Started a business in 2021

Did you start a business this year? A tax professional can help walk you through how to file taxes with and for a business. They can help you determine what write-offs and deductions apply to you so you can save as much money as possible in the early stages of your venture. As a business, outsourced bookkeeping is also a great way to help you stay organized. You can also trust that everything will be filed accurately and precisely. That means no double and then triple-checking your work, or stressing over the small details and fine print. Filing mistakes can be costly, especially for businesses, so you want to make sure you get it right the first time both with your taxes and your books.

Have Questions about Filing?

If you have a question about filing your taxes, it may seem natural to look up your tax questions online. This can be a problem, though, because oftentimes the information you may find on the internet is outdated or simply incorrect. When you hire a tax professional, you are gaining access to someone who can answer your questions quickly and accurately. When issues arise with filing your taxes or keeping your books, you can rest assured that you have someone to seek for help who can resolve them. 

Additionally, a professional will know how to interact with the IRS easily and professionally if any problems were to come about from your filing. No one wants to face an audit alone. With professional tax help, you will be hiring an advocate as well as an advisor. 

If you are looking for a simple, more efficient, less stressful tax filing experience this year, you know what to do! Contact us today. We’re ready to make things easier on you. 

Do I claim my child as dependent or independent

Are you having a hard time deciding whether or not to claim your adult child as a dependent on your tax return? Here’s some helpful information about claiming a dependent that can help you decide.

When it comes to filing your taxes, claiming your child as a dependent can be beneficial in many ways. According to the IRS, your adult son or daughter may qualify to be claimed as a dependent if he or she is younger than 19 at the end of the year and lived with you (the taxpayer) for more than half the year, if he or she was a student younger than 24, or if he or she is permanently and totally disabled. You cannot claim a child as a dependent if they are not a U.S. citizen, if someone else has claimed them as a dependent, or if they are filing jointly with someone else (e.g. a married adult son). 

When an adult child is considered dependant

If your child is a full-time student, you can claim them as a dependent on your tax return until they turn 24. By having a qualifying child as a dependent you could qualify for valuable credits that lower your tax liability as well as a number of refundable tax credits. If your adult child is not a student, you may still be able to claim them as a Qualifying Relative Dependent.  

When a child is considered independent

If your adult child is 19 years old at the end of a tax year, not a student, not permanently and totally disabled, and earns over $4,300 (in 2021) then they are considered independent. 

Everyone’s situation is unique, and there is no right or wrong approach when it comes to deciding to file your adult child as a dependent. It may seem confusing, but we’re here to help!

Have questions about filing your taxes? Call us to book a Consultation.

What is Capital Gains Tax?

If you have held and sold any investments in the last fiscal year, the IRS is going to tax your profits. This is called a Capital Gains Tax. Capital gains tax is a tax on the profit from an investment that is incurred when that investment is sold. When stock shares or any other taxable assets are sold, the capital gains (or “profits”) are said to have been “realized.”

The tax doesn’t apply to unsold investments because they are unrealized, so stock shares will not incur taxes until they are sold, no matter how long the shares are held or how much they increase in value.

Long-term capital gains tax

Under current federal tax policy, the capital gains tax rate only applies to profits from the sale of assets that were held for more than a year, which are called “long-term capital gains.” The rates can be 0%, 15%, or 20%, depending on the taxpayer’s tax bracket for that year.

Short-term capital gains tax

Short-term capital gains tax, on the other hand, only applies to assets held for a year or less. These short-term capital gains are taxed as ordinary income. One thing to consider is that, for most taxpayers, the tax rate for ordinary income is often higher than the capital gains rate. As a result, it is often more profitable to hold investments for at least a year before selling.

In summary- Capital gains tax is only due after the investment has been sold, and only applies to “capital assets,” which include stocks, bonds, jewelry, coin collections, and real estate. For most taxpayers, the tax rate for long-term gains is lower than the rate for short-term gains. 

Have questions about your taxes? Give us a call or schedule a consultation by clicking the button below!