tax tips

• Standard deductions are increasing for the 2023 tax filing season [married filing joint & qualified widow(27,700), head of household(20,800), single & married filing separate(13,850)]

  NOTE: Standard deductions reduce taxable income

• Child tax credit is up to $2,000 per child under age 18.

• New enhanced child tax credit of $500 for “other qualifying dependents” remains in effect.

• Business meals purchased from a restaurant remain 100% deductible for 2021 and 2022.

• Client entertainment business expense deductions no longer allowed (i.e. athletic sporting events, night clubs, golf, theaters, etc. )

• Married filing separate filing status - loss of deductions include: Earned income credit, education credits, student loan interest deduction, child & dependent care credit, etc.

• New qualified business income (QBI) deduction equivalent to 20% of taxable income (subject to limitations)

• Hire your child, parent, or spouse to work in your business to save money on taxes

• Consider restructuring your business to increase tax savings (Ex. Converting an LLC to an S-Corporation to save thousands of dollars in self-employment taxes)

• Deduct ALL expenses for costs incurred in connection with your business. (Travel, meals, materials & supplies, advertising, legal and professional fees, business insurance, phone, etc.)

Business Tips

• Decide which business structure is most appropriate: LLC, S-Corp, Partnership, or C-Corp

• Register your business at both the state and federal level. Note - state registrations often have to be file reports annually to maintain good business standing.

• Establish a business bank account to separate personal and business funds. Co-mingling of personal and business income & expenses result in an array of issues.

• Maintaining records and receipts are imperative in business. As a business owner, if you do not have bookkeeping/ an accounting system - you have no “real” business in the eyes of the IRS.

• Utilize an accounting software, such as QuickBooks, to manage and maintain all business records and receipts.

• Hire a professional when needed

Personal Finance tips

Savings

• Pay yourself first (As you earn money, automatically transfer a portion of your earnings to a savings or owner’s pay account)

• Automate savings

• Setup automatic bill pay for household and other recurring monthly bills

• Savings should be maintained in an account with no check writing and limited transfer of funds capabilities

Budgeting

• Create a budget

  *Set a recurring date to budget each month

  *Budget everything (i.e. gifts, car maintenance, etc.)

• Budgeting Tools

  *Mint (budgeting, bill & investment tracking, free credit score, spending alerts, option to link bank account) - FREE

  *Every Dollar (budgeting with option to link bank account) - FREE with option to upgrade

Investing

• Index and mutual funds are great investment vehicles

• Traditional 401K ‘s provide tax deferral benefits that also reduce taxable income

• Roth IRA’s allow individuals to pay taxes now, avoiding taxation on retirement funds when withdrawn at the appropriate time.

• SEP IRA’s are great retirement vehicles that allow self-employed individuals and business owners to contribute thousands of dollars,

  receive tax write offs, and save for retirement.