Presented by Allen Barron, Inc.
You know the saying. There’s nothing certain in this life except for death and taxes – and tax rule changes.
One of the most frustrating aspects of tax season is that rules change and forms are altered. Intricate details get new wrinkles, leaving filers confused and maybe with a few extra gray hairs.
“It’s no different this year, as a number of 2014 tax laws will change for people with high incomes and significant capital,” said Janathan Allen, Esq., partner in Allen Barron, Inc. and owner of Janathan L. Allen, APC. “Preparing yourself for the 2014 tax year needs to begin now.”
For example, a 3.8 percent tax will be applied to someone if their modified adjusted gross income exceeds $200,000 or the taxpayer’s net investment income (whichever is lesser). This applies for single filers. In addition, filers who earn more than $400,000 if single (or $450,000 combined if joint filing) could be hit with a tax rate of 39.6 percent.
What can high earners do to try to alleviate their potential tax troubles? One big step is to take a look at your portfolio and see where you can better invest.
Moving some money around could save you tax dollars in the short-term. In addition, if you have the chance to obtain stock options, it may be wise to defer those payments to a later year when your income levels out.
Of course, high earners aren’t the only ones who need help come tax time. There are plenty of people who are contacted by the IRS with prying questions about their filing. This can often make people panic and think they are getting audited. It could mean that — but you don’t know for sure. Consult an experienced tax attorney to make sure your rights are protected, and also to help represent you if you negotiate a tax deal with the IRS.
Your tax professional should be an Enrolled Agent (EA), a CPA, or a Tax Attorney. The professional should have experience in preparing tax returns as well as representing similar-size clients and client businesses in the event of an audit by a taxing authority. If you are from a foreign country and have moved to the U.S. it is important that your tax preparer have international experience as well. Remember, as tax day rolls around, it is what you don’t know that can hurt you.
Allen Barron, Inc. can be reached at www.AllenBarron.com, 619-702-8356.