Taxation

As a consequence of the latest tax reform, there are going to be changes in Federal revenue tax charges for nearly all taxpayers. The charges of some of the taxpayers’ are likely to change greater than others. A closer look into the new tax rates and corresponding brackets will help shed some insight into the possible impact that will ensue.

The following tables compare and contrast the changes in the Tax rates and brackets for 2017 and 2018 along the Single and Married filing categories.

A clear dip by an average of 2% to 4% in the tax rates is pretty apparent while going over the tables. These dips arise mainly out of the Tax Cuts and Jobs Act. However, the lowest rate – 10% remains unchanged. Another point to be noted is that, it isn’t just the tax rates that have been changed, but also the brackets within which they fall, and this has been done not just to adjust inflation.

For instance, in the Single filer’s category let us consider the 24% tax bracket for 2018, which has been brought down by 4% from a thumping 28%. Simultaneously, it must be noted that the in 2017, the 28% tax rate was applicable to income levels between $93,701 and $195,450, where as in 2018 this bracket ranges between $165,001 all the way to $315,000. So, in other words, not only has the tax rates come down, but the brackets have also been readjusted so as to accommodate more income in the lower tax brackets too.

Income under the lens of Taxation

It’s a fairly common misconception to think that when a particular income reaches a certain bracket level, the entire income would be subjected to a tax deduction of the tax rate corresponding to that bracket level. It has to be understood that the only the taxable portion of the income is taxed at the applicable bracket rate. Say for example, a single person makes $10,000. He/ She would have to pay a flat 10% on the first $9,525 of the income and 12% on the remainder of the income.  The taxable incomes referred to in the tables above are your income after all your adjustments and deductions.

Tax Bracket Implications:

Your tax bracket rate is the amount you pay on each additional dollar you earn. You can use that information to determine how much you get to keep if you earn another dollar, or how much good a deduction does you. So it is important to know what bracket you come under.

Does a drop in tax rate mean a lesser Tax Bill?

It is highly probably that a dip in the tax rate of your bracket could translate to a lower Tax Bill. However, it has to be noted that the new tax law changed more than just the tax rates. It has also doubled the standard deduction, eliminated personal exemptions and added expanded credits for dependents. It has also changed the rules for deducting state and local and mortgage interest among other things. Your tax bill may go down, but along the high income spectrum, some may find that they now pay more.

It’s always wise and smart to estimate your taxes during the year to make sure you’re not overwhelmed by a big tax bill when you file your return. It’s also important to ensure that the IRS doesn’t hold any money that you don’t owe them in case you’re overpaying. Though the money will eventually return in the form of a tax refund, why let them hold it all year interest-free?

The feeling of having an expert, whose professional life is dedicated to taxes, and that you’re not left alone with the pile of forms and numbers is quite relieving. Hiring a tax preparer makes the process easier, less stressful and time-consuming, which is something a lot of people are ready to pay for. By outsourcing tax preparation service, one can increase the productivity of firm and profitability by freeing them to focus on higher value client service. This will also help to achieve better personal and professional life to contribute more in each field.

Why Velan?

We at Velan Bookkeeping are a well acclaimed and renowned bookkeeping firm that fix accounting related issues with the required sensitivity and sensibility that the work demands. Our distinctive, trustworthy and effective methods have helped many companies overcome issues that would have certainly staggered their progress. Having been shaped and moulded with over a decade of experience in this arena, we cater to a web of services like:

• Bank Reconciliation
• Statement of Assets and Liabilities
• Accounts Receivable and Payable
• P&L Statements
• Payroll Tax Preparation
• Sales Tax Preparation
• Individual Tax returns Preparation
• Corporate Tax returns Preparation

Our pricings are highly competitive and guarantee international standards in terms of delivery. We cost less than an in house accountant’s salary exclusive of his paid vacations, incentives and bonuses. With accolades and testimonials such as those bestowed upon us, one needn’t think twice before picking up the phone to outsource their bookkeeping and accounting services with us.

Phone:   +1-860-215-4997
E-mail: [email protected]

** The images and statistical data used in this blog are a product of research of various websites. All references used are purely for informational purposes only. Consult your own tax, legal and accounting advisors before engaging in any transaction.

The line of horror movies stacked up for release this year a little ahead of the tax season is highly symbolic of what is to come. Once again, we stand on the brink of another tax season, quite aware of what awaits us. The thought of a myriad of paperwork built around umpteen hours of strenuous study and scrutiny is capable of sending shivers down one’s spine. Redundant obsequious squealing from the coffee machines would be fairly common hearing pre-tax season. Like most other things in life, taxes are hardly black and white but hidden in the greys and can be extremely complicated and challenging. With the tax season around the corner, it’s common knowledge that it is never too early to start preparing for the upcoming tax return. Doing this in advance will not only save you money but more importantly, time.

With a list of options available to help tide over the complexities that unfold while doing the taxes, a highly recommended suggestion would be hiring a professional to take over the tax preparation service. However, you might be tempted to file your taxes by yourself so as to save a little bit of money. Spoiler Alert! Chances are you’ll be losing more money than you’d be saving. By the time you realize you are losing out more money than you saved by filing on your own it would be a little too late. Here are some of the benefits that come with a professional tax preparer:

1. Time Saving

It is a common understanding that time equals money. Likewise, your time is also valuable and should be used scrupulously. In an attempt to save some money, one might end up spending more than twice the optimal amount of time preparing for taxes. Many people end up stuck in front of their computer for hours when they are filing their own taxes. Self-filing programs can cause issues for people who are not tech-savvy, and you end up wasting more time than if you just hired a professional to file for you.

2. Avoidance of adverse consequences   

As you sign the end of your tax return, you declare that the information is true and accurate to the best of your knowledge. If the IRS audits your return and finds errors, you could face potentially serious legal consequences. Having a professional prepare your tax return adds a little safeguard to potential liability. You need to be cautious, however. As stated, a tax professional can make a mistake. Go over the return yourself to ensure that all the numbers are correct and accurate.

3. Saving Money

There is an endless list of circumstances and technicalities that can literally make the tax season excruciating for the majority of taxpayers. Infused with a significant number of clauses, conditions and preferences, it generally would take an educated professional capable of assessing the individual’s financial situation and tax status in order to save money by finding applicable deductions. The irony is that more often than not, people who hire tax preparers end up saving more money on deductions than they pay for the preparer’s services, not to mention the stress and strain they avoid by doing so.

4. Reduction in Errors

The IRS holds a list of the most common tax errors. On that list are computation errors when determining taxable income, entering payments on the wrong line and simple math errors. An error on your return can delay any refund due. If you err and the mistake results in tax liability, interest and fines accrue from the date you filed the taxes. While no tax professional is perfect, the chances of making a simple mistake on a return are reduced when you use a professional tax service.

5. Liberation from Stress of the highest order

The feeling of having an expert, whose professional life is dedicated to taxes, and that you’re not left alone with the pile of forms and numbers is quite relieving. Hiring a tax preparer makes the process easier, less stressful and time-consuming, which is something a lot of people are ready to pay for.

As for those who are looking for a middle ground between paying high rates for a professional tax preparer and going head on with the onerous paperwork themselves, there’s always the option of outsourcing.  Though outsourcing rates are relatively cheaper they come with the certified benchmark for quality and compliance.

Why Velan?

We at Velan Bookkeeping are a well acclaimed and renowned bookkeeping firm that fix accounting related issues with the required sensitivity and sensibility that the work demands. Our distinctive, trustworthy and effective methods have helped many companies overcome issues that would have certainly staggered their progress. Having been shaped and moulded with over a decade of experience in this arena, we cater to a web of services like:

• Bank Reconciliation
• Statement of Assets and Liabilities
• Accounts Receivable and Payable
• P&L Statements
• Payroll Tax Preparation
• Sales Tax Preparation

Our pricings are highly competitive and guarantee international standards in terms of delivery. We cost less than an in house accountant’s salary exclusive of his paid vacations, incentives and bonuses. With accolades and testimonials such as those bestowed upon us, one needn’t think twice before picking up the phone to outsource their bookkeeping and accounting services with us.

Phone:   +1-860-215-4997
E-mail: [email protected]

Why file your tax returns ASAP?

The tax filing season has opened up to individuals. The Internal Revenue Services has shifted the deadline for tax filing to April 17, 2018. The filing deadline was extended by two days (usually, it is April 15 every year) because 15 April 2018 falls on a Sunday. The 16^th is observed as Emancipation Day, a holiday in Washington D.C. Just like any other Federal holidays, Washington holidays have an impact on the deadline for filing of tax returns. Tax filers must regularly check with the IRS website for latest updates.

The IRS had announced Jan 29^th as the official day of the start of tax season 2018. A projection indicates that 155 million tax returns will be filed for the financial 2017. 70% are expected to receive a refund. Though the IRS hasn’t promised a refund date, it is anticipated that more than 90% of the tax submitted will receive the refunds within 21 days. It is apparent that the sooner you file your tax returns, the sooner you are going to be refunded.

Why do we keep saying, earlier the better? Tax filing can be very time consuming if you don’t have the right documents and details for filing. Getting ready for filing is a tedious process. Gather all information on income statements and receipts for filing Form W-2 and Forms 1099. Itemized record of health insurance, job expenses records, charitable donation record and details on personal information.

1. Support appropriate documents for every expense and income must be  by .
2. Make certain that you procure the W-2 from your employer well in advance.

Let’s discuss the reasons why we need to get our act together to file early returns.

Larger refunds for early filers

Data provided by the IRS reveals that early bird taxpayers enjoy a larger refund amount when compared to the others who file in later. The other reason is to ensure you are eligible for the claims on all deductions.  It goes without saying that itemizing your deductions can get you larger refunds, though the documentation for the same is time-consuming.

You don’t need to cut back on your resources to rush into an early filing, rather find an expert tax returns Preparer to make the filing right on time.

Hassle-free filing of returns

Whether you file your tax returns on your own or engage a pro, fix your own deadline well ahead of the April deadline. Feel relaxed and satisfied with the thought that your taxes for the year is taken care of while everyone you know is rushing to get it done.

Refunds protected from identity thefts

The early tax filing may not ensure identity theft using your Social Security Number, but it makes certain you get refunds on time.

Early filing allows time to make payment plans

Once the tax returns for 2017 is completed, the estimated tax to be paid will be determined by the filer or his tax expert. Now, you have more time on hand to get the money ready instead of breaking into some emergency fund. So, to buy time and get it paid, you have to assess your taxes, prepare all the relevant forms and documents well before the deadline – 17 April 2018.

Easy accessibility to tax professionals

Closer to the deadline, tax filers who are procrastinators would find it difficult to get a good tax professional as they will be busy doing crunch time this season. As a matter of fact, the tax deadline is getting closer, it’s high time you fix an appointment with your  tax expert.

Added to all the issues mentioned, tax professionals may tend to charge more when there is less time for assessment. Start today! Call our tax advisor to whom you can entrust your filing for maximum tax deductions.

Have you started your tax prep for your small business yet? It’s about time you started prepping and it’s not very late to hire a tax preparer to help you out with it. There can be umpteen questions to start like who can be your my preparer? Am I choosing the right person? Can I still prepare taxes on time? So on and so forth. Before you think through all these, if you think that you can’t file your returns on time, do not have inhibitions in applying for an extension using Form 4868. For all you know, an accountant at this point in time may not have time to accommodate you on board; so it is good to know the list of papers you will need for your tax preparation.

Use the simple guide below to start prepping for your tax returns, and if you have started already using the guide to check if you have everything intact:

1. Completed check book statements, bank account details, savings account details, cash on hand, credit details, and any other banking details
2. Credit record should include the business loan that is outstanding, credit card statements, any vendor credits.
3. List your receivables- you will need to have an e-list of the account receivables. Reports can be generated easily if you are using software like QuickBooks. If you find it hard to organize this, you can bring together all your physical invoices, cash drawer receipts, other receipts, and any other paper bills you have and have an accountant organize things for you.
4. Include the entire inventory such an inventory amount in the beginning, total at the end of the year, and inventory which includes personal use, damage, and spoilage.
5. Expenses- Again, expenses have to be e-listed. Fret not if you do have your e-list. It is perfectly okay to have a box of papers and receipts and you are not the only one to carry all your expenses physically. Hire an accountant who can help you organize everything for you.
6. Keep track of the paid employee wages, such as forms W-2, W-3, MISC-1099 and 940.
7. Insurance- your business insurance costs, fringe benefits, and let’s not forget the health insurance costs everything should be included. Ensure that you have calculated the premium dollars that is if you are paying your and your employees health insurance costs.

Should you have any questions or need assistance with tax preparation, contact @ +1-860-215-4997 and free yourself.

Find out what you can and what you cannot deduct..

New Year 2017 has just begun. It does not only mean a new beginning; it also marks the Tax Tips For Small Business Owners season. It’s about time you started prepping your files. We know at this point in time you will be handling plethora of papers and bills. It can get over the top to handle both business bills as well as personal ones. You might also be simultaneously wondering what can get you some savings through tax deductions and what can’t?

1. Office at home

Many small business owners out there do not claim their “home office” deductions, for they fear the auditing involved. This fear should not cease you from claiming what is legitimate. Ensure that you have all the supporting papers, and you are able to prove that all the expenditure mentioned are for your business and you will do just fine. Everything you need to know about home offices:

• Ensure that you have a distinct office area besides the living area and the office space is not used for personal stuff.
• Owning and claiming only one computer that you have at home as your business computer can be very difficult. Either don’t claim the computer as a business property or don’t place it in the office area.
• Calculate what percentage of the home area goes to office space and claim the rent & other bills in the said area and nothing more.

2. Purchase of technology

Striving and thriving businesses need to stay up-to-date with the contemporary tools and technology pertaining to the business. Section 179 under the tax code allows you tax exempt on gadgets like printers, computers, and up to some amount business vehicles are tax exempt. Not only gadgets, software and subscriptions to articles, newsletters, etc. Pertaining to your business also give you the tax exemption. All you need to do is know the amount that can be deducted as it changes yearly. Therefore, do not hesitate to invest in the technology you need for your business.

3. Cost of travelling

Some small businesses involve a lot of travelling which means a lot of expenses. Since this travelling is required for the business expansion, one cannot avoid that. Little do people know that this travelling expense is tax deductible. This exemption writes off the expenses including airfare, hotel, car rentals and mileage, other expenses like laundry, and fifty percent of the food costs. Bear these points in mind before adding your travelling expenses for deduction:

• You can always take your family on your business trip, but only the business related travel and other costs can be deducted.
• You get a 50% deduction for meals you treat your clients. Just ensure that you name the bill, so it doesn’t get lost among your sea of other personal bills.
• Tax deductions also include conference fees as long as they are useful for your business directly. Note that conferences that yields a side income, lectures, and other events that are based on entertainment will not qualify for tax deductions.

Call @ +1-860-215-4997 to explore more about tax tips, tax preparation, bookkeeping and accounting assistance.