Money professionals offer top five tips for taxpayers
Stacy M. Brown | 2/10/2017, 12:25 p.m.
(NNPA) It’s tax time and time to pull out your manilla folder and get organized, according to Cozette M. White, CEO of My Financial Home Enterprises, a financial management firm.
White’s work is dedicated to developing solutions that fuel business growth and transform products into accelerating profits for organizations and entrepreneurs. She says it’s important for African Americans to be fully informed about the “do’s and don’ts” and what deductions and credits might be available.
Tip 1: Decide early on who will be preparing your returns.
“That’s important,” says White, author, financial analyst and tax strategist. “Tax preparers are the least trained, but the cheapest to hire,” she said, noting that enrolled agents are typically more competent than tax preparers but much less so than a certified public accountant. White also recommends scheduling an appointment early, “especially if you have a child applying for financial aid and, if you have not updated your payroll department with your new address, do so today to avoid delays.”
Tip 2: Beware of scams.
One of the most recent tax scams involved a caller telling a taxpayer that he or she is entitled to a large refund, but first must hand over a certain amount of money first, according to the Internal Revenue Service (IRS).
“Taxpayers across the nation face a deluge of these aggressive phone scams,” IRS Commissioner John Koskinen said in a statement. “Don’t be fooled by callers pretending to be from the IRS in an attempt to steal your money. We continue to say, ‘if you are surprised to be hearing from us, then you’re not hearing from us.’”
Tip #3: Make wise business purchases, maintain healthy savings accounts and keep an eye on tax withholdings and exceptions throughout the tax year.
“Employees that changed jobs or started a new job should review their tax withholdings and exemptions claimed on their new hire paperwork,” said Randy Hughes, founder of Counting Pennies, a tax and accounting firm that specializes in tax preparation, bookkeeping and debt management. “Claiming too few exemptions could result in giving the government more money than necessary, which could result in a cash flow problem for you during the year.”
Tip # 4: Stay informed of updates regarding tax laws and codes. Some to consider are:
●The veteran tax expert urges contributions to 2016 Roth accounts and, if donations have been made to charities in any amount above $250, be sure and have the proof to support the write-off.
●According to the Internal Revenue Service (IRS), charitable contributions are deductible in the year made and donations charged to a credit card before the end of 2016 count for the 2016 tax year, even if the bill isn’t paid until 2017. Checks to a charity count for 2016 if they are mailed by the last day of the year.
●Taxpayers who are over age 70 ½ are generally required to receive payments from their individual retirement a
ccounts and workplace retirement plans by the end of 2016, though a special rule allows those who reached 70 ½ in 2016 to wait until April 1, 2017 to receive them.
Tip # 5: Limit tax liabilities for individuals and businesses.
●Lisa Greene-Lewis, a certified public accountant and Turbo Tax expert, says defer bonuses. “If your hard work paid off this year and you are expecting a year-end bonus, this extra money in your pocket may bump you up to another tax bracket and increase your tax liability,” she said.
●Businesses: Employers, have your payroll processing company process a one-time annual salary amount to satisfy any S-Corp reasonable compensation requirement, says Folasade Ayegbusi, a certified public accountant (CPA) and owner of Suncrest Financial Services in Maryland. Purchasing depreciable assets like a car, furniture, iPad, computer and other items needed for a business would help offset any tax burden.