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Be Careful Preparing Your Own Taxes!
We prepared taxes for several people this year that had done their own taxes in previous years. After reviewing their most recent self-prepared returns, we noticed errors that cost the taxpayers a lot of refund money.....
The small amount of money they saved by preparing their own tax return was far overshadowed by the thousands of dollars they left on the table in missed deductions and credits. For the most part, taxes are not a “do-it-yourself” project and should be left up to a professional tax preparer, just like diagnosing medical issues should be left up to a doctor!
1099 Income Catches Many By Surprise
If you work as an independent contractor, for all intents and purposes you are considered self-employed. This means you likely didn’t have federal and state taxes taken out of your pay when received. It also means recognizing you are responsible for self-employment taxes, which are the uncollected Social Security and Medicare taxes on your income. This figure usually represents a 15.3% tax on top of your federal and state tax rates. So it is important to be prepared for the taxes due on this income. This may mean paying estimated quarterly taxes to the IRS and your state. Contact us if you would like to learn more about how to prepare for taxes as an independent contractor. Also, read our most recent Blog Article on handling 1099 income.
Switching Jobs Mid-Year Can Cause A Tax Problem
Any time you have multiple jobs in a calendar year, you need to be very careful when calculating your withholdings for each job (usually done on a W4 Form). We had several clients this past year who got a promotion, only to see a tax liability on their tax return due to short withholdings. You can read more about this topic in this Blog Article we wrote a few weeks ago. It also applies to those who have multiple jobs.
Make Next Year’s Tax Filing Easier
A little work along the way is much easier than doing everything at once last minute. Here are a few tips to help you prepare for next tax season:
Welcoming Our Newest Team Member
We are excited to announce our newest team member, Ken Bogle. Ken has joined the team as our Financial Services Assistant. He is currently pursuing a business degree as a grad student at Concordia University in Irvine, CA. Feel free to use Ken as a resource for your financial questions.