How to reduce your tax bill
Many of the business expenses you face can be deducted from your income when calculating your tax bill. Here are steps you might be able to take to reduce the amount of tax you need to pay.
The steps below expand on what’s in our visual guide above.
Your tax bill is calculated on your net profit. You can reduce your tax bill by claiming as many valid business expenses as you can. You’ll need to keep good records, eg receipts and log books, and hold onto them for seven years — Inland Revenue will need to see these records if you’re audited.
What to do
Paying by online banking is quickest and easiest.
In your first year of business, you might get a discount if you voluntarily pay tax before the end of the tax year.
If paying by cheque, send it at least a week before the due date to avoid the risk of late penalties
At tax time, your total profit (the amount you need to pay tax on) is your income minus the expenses you can claim — so the more you can claim, the less tax you have to pay. Many of the costs involved in running a business can be claimed. You might be able to claim some household expenses if you work from home.
What to do
Keep all expense receipts and invoices you receive.
Try to pay for anything that could be a claimable business expense through your business account, so you’ve got a paper (and electronic) trail.
Keep records of all your expenses — you have to keep these records for seven years.
Entertainment expenses can be 50% or 100% deductible, so check with Inland Revenue.
You’ll claim your expenses as part of your tax return by entering totals into the relevant boxes. You don’t need to provide the receipts with your return, but you need them on hand if Inland Revenue wants to see them.
Year-end tax planning for expats
The year has been flying by. Maybe you just finished your expat taxes with the extended deadline, or you already filed earlier in the year. Chances are that you paid more tax than what you wanted. Now is the time for year-end tax planning, especially for expats!
With the right tax planning, expats can maximize tax deductions and exclusions and improve their retirement savings
Ensure you qualify for the FEIE – A big tax benefit for expats!
Review your travel dates or residency status abroad to make sure you qualify for the Foreign Earned Income Exclusion, which is up to $105,900 for 2019. To meet the physical presence test, you must spend at least 330 full days in foreign countries within a 12 month period. Review your travel dates and plans to ensure you have a 12 month period for the 2018 tax year that meets the requirement.
Bundle deductions for maximum impact
Most expats don’t itemize deductions but use the standard deduction instead. With the increase of the standard deduction to $12,000 for individuals and $24,000 for married couples filing jointly, even fewer will benefit from itemizing.
Avoid penalties for 2019 if you owed 2018 tax or are self-employed
If your tax withholdings are not sufficient or you are self-employed and don’t have withholdings, you must pay quarterly estimated taxes. Failure to pay enough tax by each due date may result in penalties.
things about home loan tax incentives you didn’t know
looking to be one of the best years for home buyers. More tax benefits, rate cuts on loans, stagnant property prices, new launches in the ‘affordable’ segment with freebies and attractive payment schemes. Many of you will be looking to take advantage of these benefits and buy a house.While hunting for a house at the right price, you’ll be haggling with the bank to cut a loan deal too. Even if you get a discount on both, your tax bill can burn a hole unless you know the rules well.
You can claim tax benefit on interest paid even if you missed an EMI.
Unlike the deduction on property taxes or principal repayment of home loan, which are available on ‘paid’ basis, the deduction on interest is available on accrual basis. Meaning, even if you have missed a few EMIs during a financial year, you would still be eligible to claim deduction on the interest part of the EMI for the entire year.“Section 24 clearly mentions the words “paid or payable” in respect of ..
Processing fee is tax deductible.
Most taxpayers are unaware that charges related to their loan qualify for tax deduction. As per law, these charges are considered as interest and therefore deduction on the same can be claimed.”Under the Income Tax Act, Section 2(28a) defines the term interest as ‘interest payable in any manner in respect of any money borrowed or debt incurred (including a deposit, claim or other similar right or obligation)’. This includes any service fee o ..
Principal repayment tax benefit is reversed if you sell before 5 years.
You score negative tax points if you sell a house within five years from the date of purchase, or, five years from the date of taking the home loan. ” As per rules, any deduction claimed under Section 80C in respect to principal repayment of housing loan, would get reversed and added to your annual taxable income in the year in which the property is sold and you will be taxed at current rates,” says Arch ..
Loans from relatives and friends is eligible for tax deduction.
You can claim a deduction under Section 24 for interest repayment on loans taken from from anyone provided the purpose of the loan is purchase or construction of a property . You can also claim deduction for money borrowed from individuals for reconstruction and repairs of property . It does not have to be from a bank. “”For tax purposes, the loan is not relevant, the usage is. The taxpayer should be able to sat ..
TAKE YOUR TAX SKILLS & VALUE PROP TO A WHOLE NEW LEVEL
Taxes are often a make-or-break factor when it comes to business deals, investments, and retirement decisions. They are also a searing pain point for high net worth clients who have the kind of income and assets that invite complicated tax situations.
where you’ll discover the skills, concepts, and strategies to assist these clients and position yourself as the go-to tax-smart advisor in your markets.
How Does a Virtual Workshop Work?
The workshop will be live-streamed and accessible from your computer/tablet
Attendees will be able to ask questions and interact throughout the presentation
Sessions will be recorded and replays will be available for 30 days
Workshop materials will be shipped to you
Holders of the CFP designation will qualify for CE credits (Note: To obtain credit you must either attend all the sessions live or take an assessment after viewing the replays.)
HOW TO LEVERAGE THE NEW TAX ACT TO GET IN FRONT OF PROSPECTS AND BRING PEACE OF MIND TO CLIENTS
How changes in tax brackets and withholding amounts impact your clients
4 tax themes in the TCJA
Which clients still need to worry about the AMT and how you can help
How to compensate for reduced SALT deductions
Spotting opportunities for charitable contributions
Clients’ options for paying investment fees tax-efficiently
How to exercise stock options without triggering the AMT
How to compensate for “bracket creep” by timing certain credits and deductions
Why you should “bunch” charitable contributions, real estate taxes, mortgage payments, and other expenses every other year
FAMILY ISSUES AND TAXES: THE BIG CHANGES THAT IMPACT YOUR CLIENTS THE MOST
Who benefits most from the doubling of the child tax credit and what it means for high-earning families
How you can help families with kids manage the kiddie tax and expanded 529s
Why alimony just got a lot trickier and what that means for clients, especially those going through a gray divorce
How advisors should think about “the full cost” of divorce for clients and working with divorce attorneys and mediators
New rules on how to handle loans from 401(k)s
What the loss of recharacterization affects Roth planning
Why you still need to do estate planning even with the expanded exemption amount
Why it may be smarter for the low-income spouse to receive an IRA transfer or property settlement instead of child support
Tax Planning
Minimizing Taxes Now & in the Future
Effectively managing wealth requires a thorough understanding of how taxes can impact a portfolio. Tax efficiency requires a detailed and focused plan. Together, in coordination with your tax professional and our external network of CPAs, we aim to provide strategies to lower your tax liability and increase the tax efficiency of your overall financial plan.
The COVID-19 Crisis has had the most profound impact on every member of society, perhaps ever. Investors have been forced to decide what financial moves to make, if any. If you have reasoned in your mind that staying invested and taking no action is the best thing to do in this environment, you could be missing out on the benefits of what is known as tax-loss harvesting.
What is Tax-Loss Harvesting and What Accounts Are Applicable?
Tax-loss harvesting is a strategy that attempts to lock in the tax benefit of selling the security at a loss, but avoid the investment ramifications of selling a security at a loss.
Why is Tax-Loss Harvesting Beneficial?
Capital gains (or losses) usually occur at the sale of the security, depending on whether you sold the asset for more or less than what you bought it for. If you sell a security for more than your cost basis, a capital gain occurs. Long-term capital gains are taxed anywhere between 0% – 20%, based on your income. Short-term capital gains are taxed at ordinary income rates. On the flip side, capital losses can either offset capital gains or offset income (up to $3,000/year).
Why Tax-Loss Harvest Now?
During this current environment, and in every bear market, it’s common to see “unrealized capital losses” in taxable accounts. An unrealized loss is simply one that hasn’t officially occurred but shows the amount of losses that would occur if the security was sold at that point in time. That is what makes bear markets an opportune time to evaluate whether a tax-loss harvesting strategy could be beneficial.