I have been a CPA for almost 20 years and I LOVE taxes. Over the years I have saved my clients hundreds of thousands of dollars by creating and implementing effective tax planning strategies.
My investors love that not only do we work on profitable real estate deals together, but we also create tax efficient investment vehicles so they get to keep more of what they make.
For most people I know, tax time creates lots of stress. You don’t have to be a tax expert like myself to save money on your taxes.
To get you ready for the April 15th tax deadline, this week of content is all about TAXES.
First, we will cover what you should know about your tax return.
Let’s get started…
Most people don’t give much thought to their tax strategy until it comes time to file, and by then it’s too late to employ many of the most valuable tax-savings strategies.
By the time you file, you’ve already made most of your investments for the year, and you can’t do anything to structure them better after the fact. Starting early by thinking about upcoming tax years can help you establish smart financial habits that will help you save money by shifting the bulk of your expenses to pre-tax dollars, reducing your overall tax burden and boosting your purchasing power.
Nevertheless, it’s still possible to employ a few smart tax strategies when you file your return. Understanding current tax laws will help you find ways to trim your costs this year, and reviewing your finances will help you find opportunities to establish a smarter strategy for the next year.
Here are couple items you should be aware of when you file your tax return:
- Use a tax-advantaged account to shelter your income right up until the tax filing deadline. An IRA or SEP-IRA contribution can be made up until April 15th, allowing you to reduce your taxable income for the year.
- If you operate a real estate investment business or any other kind of home business, don’t forget to take the home office deduction. To simplify the process, use the simplified option, which bases the amount of the deduction on the square footage of your home office, rather than taking line-item deductions for the office.
- If you’re a high earner, you may owe more than you expected. Individuals with incomes over $400,000 and couples with incomes over $450,000 fall into a new tax bracket this year. People in this bracket owe 4.6 percent more than they did last year.
- Capital gains and qualified dividends are taxed at a higher rate than they were last year as well.
- The net investment income tax or NIIT is a new tax that applies to individual, trust and estate income tax returns. Net investment income includes interest, dividends, rental income and other categories of income. The tax rate is 3.8% and impacts taxpayer’s with a modified adjusted gross income above $200,000.
Most importantly, as you prepare your taxes, keep an eye out for things you could have done better. Discuss these opportunities with your accountant or CPA to help secure a better tax strategy for the upcoming year.
Smart investments allow you to work smarter, not harder, and reap the rewards.
Investing smartly is only half of the equation, though: You also need a tax strategy that will allow you to keep more money in your pocket.
This is where my experience as a CPA can help you. Over the next few days, keep an eye out for more emails with valuable tips on handling your taxes. Together, we can make wealth easy with real estate.