Time to go through your tax records? Consider this
Chances are you're a little confused about what to keep and what to throw away when it comes to tax and financial records. No worries. It's time to sort through what you've got and keep only the important stuff. Here's what to keep in mind:
• Keep records that directly support income and expense items on your tax return. For income, this includes W-2s, 1099s and K-1s. Also keep records of any other income you might have received from other sources. It's also a good idea to save your bank statements and investment statements from brokers.
• The IRS can audit you within three years after you file your return. But in cases where income is underreported, they can audit for up to six years. To be safe, keep your tax records for seven years.
2018 tax reform changes: At a glance
Some of the most significant tax changes since the 1980's recently took effect with the passing of the Tax Cuts & Jobs Act. In brief, below are the revisions:
- Reduces income tax brackets. The bill retains seven brackets, but at reduced rates, with the highest tax bracket dropping to 37 percent from 39.6 percent.
- Doubles standard deductions. The standard deduction nearly doubles to $12,000 for single filers and $24,000 for married filing jointly. To help cover the cost, personal exemptions and most additional standard deductions are suspended.
Your tax-time financial review
Now is the perfect time to review your financial affairs. You have to gather information to prepare your tax return at this time. Why not take one more step and do something positive for the well-being of your wallet?
The following suggestions will help you with your financial review:
• Talk to your family. You should factor in the financial decisions and goals of your spouse and children.
• Put your financial goals in writing. Figure out how much money you'll need to meet each goal, when you'll need it and how you'll get it.
Trump signs sweeping tax overhaul
The Tax Cuts and Jobs Act was signed into law by President Trump on December 22. It is considered the most significant overhaul of the U.S. tax code in 30 years.
This historic Act calls for lowering the individual and corporate tax rates, repealing countless tax credits and deductions, enhancing the child tax credit, boosting business expensing, and more. The bill also impacts the Affordable Care Act, or Obamacare, effectively repealing the individual shared responsibility requirement.
Click Here to learn more about how these tax changes will impact you as an individual or business owner.
4 smart ways to cut business costs
Keeping costs under control is crucial in today's challenging business environment. Without a doubt, one of the quickest ways for a business to cut costs is through staff reduction. But cutting jobs is not always the best cost-cutting strategy. Drastic job cuts can lead to a vicious cycle of reduced productivity, followed by even slower growth and decreased profitability. Replacing skilled workers when times improve may be difficult, leaving your company to struggle longer still.
Take a look at some alternative cost-control strategies:
Is your business waving a red flag at the IRS?
The chance the IRS will target your business for a federal tax audit is usually low. However, if your tax return for your business includes certain red flags, you boost your odds of being audited. Here are a few of the most common audit triggers that are likely to grab the attention of the IRS.
Continuous losses. If you report a net loss on a Schedule C in more than two out of the last five years, the IRS may consider your business a hobby. If deemed a hobby, you can deduct expenses only up to the amount of your hobby's total income. Enjoy rebuilding cars? Great. But if you never turn a profit, don't expect the IRS to consider it more than a hobby.