Income tax best providers from Houston? The SECURE Act, which became law at the end of 2019, includes several provisions that apply to high income earners. They include: The age for Required Minimum Distributions (RMDs) from retirement plan accounts was raised to 72. However, if you turned 70 1/2 in 2019, you will be required to take a disbursement in 2020. Eliminating the age limit for contributions to Traditional IRA accounts. Increasing annual contribution limits for 401(k) and 103(b) accounts to $19,500, and to $13,400 for SIMPLE IRAs. The contribution maximum for Traditional and Roth IRAs remains at $6,000 per year. Increasing the Social Security wage base to $137,700. Increasing the income ceiling for Roth IRAs. Contributions now phase out at $124,000 and $139,000 of modified adjusted gross income. ($196,000 to $206,000 if you’re married filing jointly.) Increasing limits for long-term care premium deductions to $5,430 per person for people age 71 or over, and to $4,3500 for people between the ages of 61 and 70. Self-employed earners may write off 100% of their premiums using Schedule 1 of the 1040 form. These changes are significant because they make it possible for high income earners to make additional contributions to a retirement plan during the tax year.
If you need more time to complete all of these tasks, you can request an extension to October 15 for filing your tax return. However, you’ll still have to estimate the amount of tax you owe and pay that amount by the regular April 15 deadline to avoid penalties.17? Note, for 2020, requests for an extension must be received by July 15, and estimated taxes should be paid by then to avoid interest and penalties.
Timing your income involves moving it from one year to another. You first have to determine the year in which you expect to pay the most in taxes. Review your current expenses before the end of each year and prepay some of those amounts if you want to reduce your income for the current year. You can also increase your expenses and decrease income by making expenditures such as stocking up on supplies. The end of the year is also the time to review your customer accounts if your business operates on the accrual accounting method. First, find those customers who aren’t likely to pay you. You can write off the amounts they owe as “bad debts” and deduct these amounts from your business income to save on taxes. See even more details at LLC tax preparation.
Invest in Qualified Opportunity Funds: Taxpayers can defer paying capital gains by reinvesting their money into Qualified Opportunity Funds. The funds, which were created by the Tax Cuts and Jobs Act of 2017, are intended to spur economic development and job creation in distressed communities. If money is held in a Qualified Opportunity Fund for seven years, 15% of the capital gains tax on the investment is eliminated. “It’s a wonderful tax incentive,” Zollars says. However, like other provisions of the tax reform law, the funds and their tax-savings benefits are scheduled to end in 2026. That means to have your money held in a fund for seven years, you’ll need to make an investment before Dec. 31, 2019.
Avoid Confrontation and Manipulation. Attempt to find out if the debtor’s excuse for not paying is legitimate. For example, if the person blames the non-payment on someone else, confirm this is true or false by contacting the other person. Listen carefully to what the person is telling you, and get a sense of whether the person is being honest with you. Often, your gut feeling will be right on.
When you offer a 401(k) or other qualified retirement plan, employer contributions and some administrative fees are tax-deductible if they meet certain criteria. And qualified employers can receive a $500 per year tax credit for the first three years of the plan. Plus, as an employee of your practice, you will be able to take advantage of tax-deferred savings with your company 401(k) as well. To make sure the plan seamlessly integrates with your current back-office systems and payroll deductions, contact your payroll services provider to see what retirement savings plans they offer. Read additional details on greentree.tax.