27 Dec Cutting Costs: 5 Tips To Lower Your Company’s Operating Expenses
Taxes are the most wonderful time of the year! Wait, maybe that’s Christmas. Either way, both cause a lot of stress, work, and expense, and while you’re on your own with Christmas, I can help to reduce the stress, work, and expense that comes with tax season.
The only constant in life is change, and some of the most important changes in our lives can also have significant impact on our tax liabilities. Sometimes in our favor, but more often not. So today, I’m going to share 7 life events that impact taxes to help you avoid making some of the common mistakes that I see smart people make every day.
Starting, changing, or selling a business
It’s always wise to seek the counsel of a tax professional before starting, making major changes in, or selling your business. Tax professionals can help you avoid making expensive mistakes that draw unwanted attention from the IRS, as well as maximizing your deductions to help you keep more of your hard-earned money. The more money you keep, the more operating capital you’ll have to grow, and that’s why we start a business in the first place, right?
When you become a new parent, there are many new things to deal with, like finding the right baby crib, figuring out how to install the car seat, and dealing with a stream of people stopping by to see little Timmy in action. Yet, there are also many new tax deductions available to parents. A competent tax adviser can help you to get all of the deductions you’re entitled to.
Purchasing a new home
While an experienced architect ensures that your new dream home will stand the test of time, an experienced accountant leverages interest payments, energy-efficiency upgrades, home office space, and even medically-necessary upgrades, such as wheel chair ramps to offset your taxable income.
44.2 million Americans currently carry student loan debt, to the tune of $1.26 trillion dollars as of 2016. If you are one of them, then you likely qualify for tax benefits. For example, did you know about a program called the American Opportunity Credit, which pays for college expenses, but it’s only available to students in their first four years of post-secondary school? There are many more, and your tax professional can tell you which ones you’re qualified for.
You can choose to file jointly or separately—spouses who have similar salaries can file separately to avoid a higher tax bracket, but couples who file separately may miss out on certain tax breaks, so it’s best to evaluate both options before making a decision either way.
So, you tied the knot, and now it’s coming undone. Unfortunately, that happens sometimes, and it can affect your taxes. If you pay alimony, you can deduct it on your tax return, but it must be explained in your support agreement, a stipulation of settlement. However, child support is neither deductible for the person who pays, nor is it taxable for the person who receives it. Additional tax liabilities may be incurred if you must liquidate assets, such as stocks, homes, or businesses. In this case, it may be a smart move to consider collaborative divorce to help minimize or eliminate these liabilities. It’s smart to get your accountant in the picture before the divorce to minimize or avoid unexpected tax liabilities.
While it’s no longer your problem at this point, your eventual death will trigger a tsunami of tax implications and costs, so if you want to save your family from the frustration while passing more of your wealth on rather than handing it over to the government, you need to prepare for the inevitable well in advance.