Planning 2016 Taxes: New Income Levels for Tax Brackets
Planning 2016 Taxes: New Income Levels for Tax Brackets
Here is a quick look at 2016 tax rates and their associated income levels. Using your past tax information, you can plan for your tax obligation next year starting now.
Don’t forget that tax payers in the higher income levels are also subject to an additional .9% Medicare Tax introduced to help pay for the Affordable Care Act. This will impact those with incomes over:
- $200,000 Single filing
- $250,000 Married filing joint
2016 TAX RATES & RELATED INCOME LEVELS
Action Steps
- Review your Adjusted Gross Income and use the chart above to determine your marginal tax rate. This is the income tax rate applied to the last dollar you earned.
- Note whether your next dollar of income will be taxed at a higher rate. The closer you are to the next highest tax rate could identify an opportunity for tax planning.
- If you need to withhold additional money to avoid a large tax bill, review and file a new W-4 with your employer.
- If possible, take steps now to manage next year’s tax obligation. The sooner you get started, the more options you will have.
Double Check the Check
Double Check the Check – An idea to keep your tax life simple
Following these tips when you receive a check from the Federal or State government can save you more head-aches than you can imagine.
Tip: Double check the dollar amount of your refund check before you cash it. Make sure it matches the amount on your tax return.
Tip: If you have a direct deposit of your refund, only deposit it into one account. This makes matching the dollar amount easier to do.
Tip: Never cash a check received from the IRS or State tax departments that you cannot tie back to a specific reason or tax filing.
The reason for caution
- Wrong amounts usually mean errors. The error could be yours, or the error could be from the IRS. For example, if the IRS mis-applies a quarterly payment or modifies your tax return, they often will send back an amount that does not tie to your filed tax return.
- No explanation. Often checks received from the government have little to no description to help you figure out what the check is for and why is has changed from the amount you expected.*
- Owed money can create penalties and interest. Once cashed, the door is open for a future IRS bill with interest and penalties. For example, a small businessman sent in his quarterly payroll filing. The IRS misapplied the funds, determined the account they applied the money to had no tax, and then sent a check back to the taxpayer. The taxpayer cashed the check. Two years later the business received an underpayment notice along with substantial interest and penalties. The service even applied liens on the taxpayer’s bank account.
- It may mean identity theft or missing forms. A check with an unusual dollar amount could mean the IRS does not have the corresponding tax form on record. It could also mean your taxpayer account has been compromised.
Should you receive a payment that does not make sense to you, please review your tax return and call for assistance. An un-cashed check received in error can often be returned to avoid confusion and hassle when the IRS finally corrects the problem.
*Note: Sometimes the memo line will include interest paid to you from the IRS. This interest will need to be reported on next year’s tax return.
Number one reason Start ups fail
Number one reason Start ups fail
We, thankfully, have a lot of businesses that come to us and are start ups.
It is very enticing to work for yourself and be your own boss.
The lure of making your own money and potential for growth is a strong draw for the entrepreneurial spirit.
However, What can go wrong?
Points to consider.
Sure there are many start up guides and templates for business plans, and cash flow forecasts.
The more business astute even factor in running costs for the first six months.
But, the main reason that we see for a start up failing is…….
The lack of a worse case scenario that would include an allocation for your own personal expenses.
So many times, people develop the plan and have financially accounted for all business costs and an estimated customer growth that is prudent, but have planned with every penny of their personal money included as capital.
The main thing when starting a business is to prepare a personal cash flow. Decide how much money you need to live on for at least 9 months……. say $4,000 per month for 9 months = $36,000. Then make sure to take this out of the equation of capital available to the company. Because believe me, it won’t be available and you will end up trying to draw what little profit you might have made to spend on personal expenses.
Start up a business by all means, but please start with what you will need to live on, especially if it is the only income for your household.
If you need help with Business Plans or just how to structure your start up for the best tax advantage, call us (813) 283-0642.
We will do our best to try and ensure your Business Succeeds!
Hallmark CPA Group win the Brighthouse Small Business Month
Hallmark CPA Group win the Brighthouse Small Business Month
Hallmark CPA Group are proud to reveal that they have won the Brighthouse Small Business Month’s November 2014 award.
“We are so pleased to be recognized by this local business resource. We appreciate how Brighthouse recognize the need for small Businesses to be supported by their local community. ”
“If you are a local Business we would recommend you register on the Brighthouse Small Business Month website and let the public support local Businesses that are such an important part of the economy”
Missing a Form? Not an Excuse.
Missing a Form? Not an Excuse.
At the start of each year our mail boxes begin to fill up with information tax forms. They include W-2s, 1098s, 1099s and the new 1095-A. If you fail to receive a form, you are still liable for the tax it creates. Here are some tips to avoid this possible audit risk.
2015 Social Security Benefits Announced
2015 Social Security Benefits Announced
Each year the Social Security Administration announces benefits for the next calendar year. To help plan your upcoming year, here are the benefit amounts recently announced.
W-2s, 1099s…and Now 1095-A – Are you prepared for this new IRS Form?
W-2s, 1099s…and Now 1095-A – Are you prepared for this new IRS Form?
If you use the Healthcare Marketplace to purchase your health insurance there is a new tax form required to file your tax return. Form 1095-A will be sent to you as a recap of your health insurance activity. Here is what you need to know.
I Need a Copy of My Tax Return
I Need a Copy of My Tax Return
Retaining copies of your federal tax return is important. Not only will you need the return in case of audit, but the tax return is often used to secure student aid, obtain loans, purchase a home or business, plus much more. What can you do if you cannot find a copy of your tax return?
Surprise! The Mutual Fund Tax Trap
Surprise! The Mutual Fund Tax Trap
Year end moves by mutual fund managers often causes tax obligations for their fund owners. These surprises come in the form of 1099 DIV and 1099 B forms. Here are some ideas to help manage the problem.
Reducing the Savings Account Tax Burden
Reducing the Savings Account Tax Burden
Building a traditional savings account is a tax burdened activity. First you must pay income taxes to the Federal and State government. Each year your interest earned is then taxed at the same rate as your wages. Is there anything you can do to reduce this dual tax burden?