taxadvisorblog

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What Happens If You Lie on Your Taxes?

No one likes to file taxes, but it's one of those civic duties you can't ignore. Every tax season, it's wise to work with a Brooklyn tax advisor to get your ducks in a row, maximize your tax savings and put taxes behind you until next year. While tax professionals can help you do things right, some people do it themselves and fudge the truth to lower what they owe.

Of course, you should never lie on your taxes. But what happens when you do?

Tax Perjury

Let's get one thing clear: Lying on your taxes is illegal. It's a federal crime! Even white lies can get you into hot water with the IRS.

Lying on tax documents is a crime known as tax perjury. Typically, tax perjury occurs whenever an individual intentionally files fraudulent documents. You also break the law when you help someone else do so. Both the tax filer and the preparer can violate federal law by lying.

There are many instances in which the federal government will pursue perjury charges. Some common examples include misidentifying a main source of income, lying about deductions or falsely claiming a non-eligible dependent.

Tax Evasion

In serious cases of perjury, lying can teeter into tax evasion territory. Tax evasion is when someone attempts to get out of paying taxes. Your actions in lying could qualify for evasion.

What are the Penalties?

Tax perjury comes with some serious penalties. The crime is punishable by up to a year in federal prison! But that's not all. Individuals who commit tax perjury can receive a fine of up to $25,000. Corporations who commit perjury may pay up to $100,000.

If your actions turn into tax evasion, the ramifications are even worse. Tax evasion is punishable by up to five years in prison and can come with fines of up to $100,000 for individuals or $500,000 for corporations.

Do yourself a favor and file your taxes honestly. Work with a Brooklyn tax advisor if you struggle to fulfill your tax obligations. They can help you set up payment plans and find options to assist you. It's better than breaking the law, risking prison time and paying steep fines.

Read a similar article about accountant in Long Island here at this page.

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Beyond the Digital Frontier: The Benefits of Hiring an Accountant for Tax Filing

Conquering tax season is an overwhelming challenge for many individuals and businesses. As the April deadline approaches, deciding between hiring a professional accountant or using an online platform to file your taxes is crucial. Though online platforms seem convenient, consulting a qualified accountant provides undeniable benefits read more

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How Much Does It Cost to Have Someone File Your Taxes

Although there are semi-free options available to file your taxes each year, many people choose to work with local tax services instead. There are several reasons for taking this approach, including the ability to deal with a live expert and have access to professional help regarding complex tax situations.

If you’ve never paid a tax service to prepare and file your taxes before, you may be wondering how much these services cost. While it’s true that paying someone to do your taxes may be more expensive than using a free federal filing solution on the web, only you can decide whether the benefits are worth the trade-offs.

Costs Depend on Your Area

One of the biggest factors affecting the cost of having someone file your taxes is your location. For instance, a Queens CPA in New York is likely going to charge more than a CPA in rural Mississippi. Then again, a Queens CPA will be the best solution if you’re filing your taxes as a New York resident since a CPA in another state won’t have as strong a grasp on New York tax laws and may not even be able to legally help you.

Costs Depend on the Complexity of Your Return

If you have a simple tax return that only involves your W2 from your employer, you might only be looking at around $50 to have someone file your taxes. If you have a more complex tax situation that involves write-offs, capital gains, property taxes, medical bills and other elements that can change your tax situation, the cost to have someone file your taxes can go up by quite a bit.

Is a Free Tax Service Better?

You might think that free tax software is the better choice since, after all, these services are advertised as free. Unfortunately, it’s not always that easy.

Most free tax services only allow you to prepare and file your federal return. You still have to pay to do your state taxes. Also, free tax solutions may not be free if your tax situation is complex, and you might also have to pay for things like live support from a tax expert.

Read a similar article about Bronx trust and estate CPA here at this page.

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Are There Tax Law Changes Every Year?

Preparing your taxes can be a confusing and overwhelming process. There are many forms to fill out and laws to follow. But one of the most frustrating aspects of tax season is learning about the changes in tax laws.

That's why hiring a professional Brooklyn CPA is important when tax season comes around. They know the ins and outs of current tax law and can prepare your taxes to ensure 100 percent compliance.

Tax laws can change every year. While the core regulations usually stay the same, a few details can vary from year to year.

Standard Deductions

One part of tax law that typically changes annually is the standard deduction. The standard deduction is a dollar amount you can subtract from your taxable income. While you can make itemized deductions, the standard deduction works best for most people.

The reason why the standard deduction changes every year is because of inflation. It increases a small amount. For example, the standard deduction for individuals in the 2023 tax year is $13,850. That's a $900 increase from the standard deduction in 2022.

Tax Brackets

Another tax law that can change yearly is tax brackets. Like the standard deduction, tax brackets see minor increases to account for inflation.

A tax bracket reflects how much you owe in federal taxes based on your adjusted gross income. Bracket changes are minor but can be significant if you're near the threshold. Increases could move those previously on the bottom of a tax bracket down to the lower one.

Major Changes

While major changes to tax laws don't come annually, there were a few in 2022. The pandemic saw temporary expansions to child tax credits. Those expansions helped put more money into the pockets of people affected by the pandemic and its economic impacts. In 2022, those credits returned to what they were pre-pandemic. Therefore, fewer people will qualify for the credit. Those that do may also see a smaller return.

If you need help navigating tax law changes, don't hesitate to go to a Brooklyn CPA. Professionals study tax laws and stay updated on changes, passing that knowledge on to you to ensure you do your taxes correctly.

Read a similar article about Bronx CPA here at this page.

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What are Medicare Taxes?

Medicare tax is something that most people know about, but few are familiar with what it does. It's one of those charges on your W-2 alongside Social Security Tax. You may see it when working with an NYC tax preparation professional. But what is it, and why do you pay for it?

Funding Medicare Part A

The sole purpose of Medicare tax is to fund the Medicare system. More specifically, it pays for Medicare Part A.

Medicare is a federal health insurance program for people over the age of 65. It also covers those with disabilities and certain medical conditions. Part A refers to hospital insurance. It covers hospital stays, hospice care, nursing home stays and more.

Medicare tax and Social Security tax go into trust funds held by the United States Treasury. Medicare Tax goes into the Hospital Insurance Trust Fund, which funds Medicare Part A.

This tax helps current and future Medicare beneficiaries. The idea is that you pay the tax throughout your life to utilize it yourself when you reach 65.

How Do You Pay Medicare Tax?

For most people, Medicare tax comes out of their paycheck directly. The current tax rate is 2.9 percent. Employers and employees split that percentage evenly.

Under the Federal Insurance Contributions Act (FICA), your employer must withhold both Medicare and Social Security taxes from your paycheck. You don't pay for it at the end of the year like some taxes. It comes out of each paycheck, making it easier for most people to manage.

If you're self-employed, things are different. Because you have no employer, you must pay the full 2.9 percent and employer contributions for Social Security tax. In those cases, the taxes are part of self-employment taxes.

It's a good idea to visit an NYC tax preparation professional if you are self-employed. It doesn't matter if you pay quarterly taxes or wait until tax season to pay everything in one lump sum. Tax preparers will help you calculate your Medicare tax responsibilities and help you find ways to reduce your taxable income.

Read a similar article about Brooklyn tax planning here at this page.

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Tax Preparation vs. Tax Planning

Planning and preparation are important factors in most complex projects, and they both play a role in getting your taxes ready to file. What can be confusing, however, is the difference between tax preparation and tax planning. Are they the same thing? What are the differences? Below is a short guide to help demystify the differences between tax preparation and tax planning:

Tax Preparation

Tax preparation is the process of gathering together all of your tax documents and filling out all forms necessary to create your annual tax filing. This can be done at home for most people, but others may require the services of a tax preparer. It’s usually a good idea to work with a local tax preparation services provider since laws differ from state to state regarding taxes.

New Yorkers can look for services that offer local individual tax preparation New York residents trust for guidance. You can search online service providers that offer individual tax preparation New York residents recommend, or you can work with experts in individual tax preparation that are available from software providers like TurboTax and H&R Block.

Tax Planning

Tax planning is the process of analyzing your tax situation to see if there are ways to optimize your withholdings and tax status. In most cases, people with high incomes or many taxable assets will work with a tax planning professional to help them reduce tax debt. Individuals who have high incomes or high-value assets and accounts are often taxed at a higher rate, so tax planning helps them to reduce or eliminate tax debt.

Although some accountants provide tax planning advice, most people who are serious about saving on taxes will want to work with a wealth planner. These professionals can often provide a full financial review of your accounts and assets to create a customized wealth plan that takes into account tax planning strategies. This becomes even more important for business owners and individuals with high-value assets that may be heavily taxed.

Visit this website for expert Brooklyn tax preparation services today!

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Business Priority Planning for 2023

The beginning of the year is an ideal time for a business to plan for new opportunities and potential challenges. In recent years, we learned valuable lessons about the type of workspace and flexibility desired by employees as well as ways to better meet the needs of customers and clients. Expectations continue to evolve and so should your goals and plans for your business, too read more