Tax Planning for Consistency

Tax Planning for Consistency is a blog that goes right along with our previous tax planning article to eliminate surprises and save money. Now that the dust has settled with tax season, let’s take a look back at what happened. Were you surprised by how little you got back in your refund this year? Or maybe you owed more than you’d expected? Safe to say, surprises from the IRS generally don’t mean good news. When you do tax planning for consistency every year, you’ll find you’re less and less surprised each April. But you have to do your homework… or know someone who can help you.

Tax Planning for Consistency. A blue, white, and black graphic of the word TAX and a calculator and calendar.
Were you surprised by how little you got back in your refund this year?
Better Planning Eliminates Surprises

Instead of waiting until somewhere around mid-April to get a handle on your tax responsibilities, review them quarterly. If you own a small business, that means making payments or submitting loss statements on quarterly tax estimates.

Additionally, review your purchasing needs for new equipment or evaluate how other expenses might impact your tax responsibilities. Consider any new employees or contracts you’ve taken on. This is also a good time to review profits and losses to help you better plan for the next quarter.

Not only that, but you can also get a better idea of how well you’ve accounted for year-end taxes. Also, by sending accurate quarter tax estimate payments you eliminate those pesky late penalties the IRS loves to tack on.

When you take time to plan out your strategy, you can attack your taxes each year in more manageable chunks. Then you get a more consistent (and reliable) idea of your tax liability.

Changes in Tax Law

The IRS likes to keep everyone on their toes by changing the rules every year. Everything from standard deduction and tax brackets shifts pretty much annually. But pandemic-related tax provisions made things even more complicated, especially when they went away.

Occasionally, changes in tax laws work to your advantage, but sometimes only temporarily. For example, the child and dependent care credit boosted the maximum credit percentage in 2021 (up to 50%) dropped to 35%. And while it was fully refundable in 2021, that’s no longer the case in 2022.

But more likely you saw things like unemployment income taxed again. In 2020, the American Rescue Plan allowed impacted individuals to waive up to $10,200 of paid unemployment. In 2021? If you didn’t already withhold taxes from your benefits, unemployment compensation taxation may have come as a surprise.

Finally, unsure of how to get started? Relax! Our experienced tax professionals have helped hundreds of taxpayers just like you. We’ll help you understand how the latest changes in the tax code might affect you. And we’ll help you plan your year for better consistency. Complete our online form or call us today at 724-216-5180 to learn more.

Cut those taxes by investing in a consistent tax planning strategy.

August is National Make a Will Month

If you’re like me, you’re wondering why we need to say August is National Make a Will Month. Why do we need to be reminded of the importance of having a will? Also, wills aren’t just for “rich” people. As responsible grownups shouldn’t we have already done this? We understand that talking about death – namely YOURS – can feel uncomfortable. But it’s worth a bit of discomfort today to save your loved ones the double heartache after your passing.

Image of a Last Will & Testament document and a hand with a stamp.
A thorough legal will and estate plan matters to those you care about.
Making a Will

Did you know only an estimated 46 percent American adults have a will? That means more than half the adults in this country are letting the government decide how to divide up their assets after their death. A court will not know (or care) about your wishes. If you didn’t write them down in a will, they don’t matter. And if they should leave behind minor dependents, they are also leaving their future care decisions up to strangers. I can think of nothing more heartbreaking than a child losing their parent then being shipped someplace they’re not comfortable. Making a will also means your heirs pay estate taxes quicker and may receive the inheritances faster. So, yes, regardless of whether you consider yourself wealthy or not, you do need a will.

Updating a Will

Even if you already have a will, this National Make a Will Month can remind you to review it. It triggers a reminder to be responsible. Kind of like the time change triggers folks to check their smoke detectors batteries (another responsible adult thing to have). Situations change, sometimes frequently. Periodically reexamining the language in your will can remind you to update beneficiaries or remove assets you no longer have. If your kids have grown, maybe they should take more responsibility over your assets than another less-reliable family member. You really don’t have to review your will annually – unless you live a particularly chaotic life. But recognizing National Make a Will Month can be the prompt you need when necessary.

Ready to Make a Will?

Hopefully this prompted you to think more about what happens to your possessions and your loved ones after your death. If the thought of dying and leaving your loved ones stranded stresses you out, relax! Yes, August is National Make a Will Month. However, we can help you make or update a will any time of the year, not just during the month of August. Call our office at 724-216-5180 or complete the online form to schedule a free consultation.

Animal Care Costs and Other Random Tax Deductions

a photo of 1049 and money

We’re getting closer to the end of the year. For many, that means a bulging shoe box of receipts to write off as tax deductions. It can be tempting when scrutinizing an especially large receipt to put it in the tax deduction box. But is it really an approved tax deduction? 

I’ve noticed that taxpayers have gotten particularly creative in their justification for a purchase being tax deductible. Aside from the usual medical deductions ranging from the cost of replacement batteries for hearing aids to home improvements to make home accessible for someone with a disability, there are dozens of lesser known deductions. Below are a few and their stipulations:

Animals

Care for service animals – a necessity of daily life for persons living with a disability – is an approved tax deduction. Here the Internal Revenue Service allows deductions for the costs of buying, training and maintaining the animal. You can also deduct expenses for food, grooming and veterinary care.

The justification gets muddled when we start talking about emotional support animals. To be clear, I am not suggesting that an emotional support animal is not a necessity to someone struggling with depression, anxiety or any of a host of other medical conditions that the animal can help soothe. However, the IRS does not recognize therapy animals as certified service animals. 

Wigs

Getting a new wig is generally not deductible. It is deductible though if 1) you’re in the market for a new wig because of hair loss; 2) your hair loss is causing you anxiety; and 3) you have a psychiatrist’s prescription for a new wig as part of your treatment plan. Depending on your line of work, as small subset of people also may be able to deduct it as part of required costume purchases. 

Gluten-free Foods 

This tax deduction is not for the trendy dieters: it’s for the medically necessary diet adjustments, as prescribed by a physician. Celiac disease and other gluten sensitivities require diet substitutions that are more costly than their traditional forms. To offset the dietary requirements of these dietary needs, patients are able to deduct ONLY the difference in cost from the gluten-free item vs. the traditional foodstuffs. This means if a traditional loaf of wheat bread is $2 and the gluten-free version of bread is $3.50, you only get to add $1.50 to your list of tax deductions. 

Others

There are tons of other lesser-known deductions that individuals can add to their regular tax deductions, and they change every year. Unsure if you can add a particular expense to your list of deductions? Call our office at 724-216-5180 to find out! 

New Year, New Look

Welcome to the New Year!

If you’re a returning visitor to our site, you may notice that things look a little different today. Like many each new year, I’ve had a ‘resolution’ to update the website and make it more useful to my clients. This year, I decided 2019 is time to take the upgrades off the ‘someday list’ and make it a real action today.

Even with our new look online, our commitment to offering our clients the best possible results remains unwavering. We still provide the same outstanding responsiveness and dedication to our clients (please see our Google reviews.)

Are you ready to make a commitment to your important resolutions?

Sometimes we need a little help from others to make progress towards our goals. For example, I couldn’t manage the upgrades to this site by myself due to time constraints, and a lack of proficiency in the field of web design. I had to call in experts. If you find yourself in need of assistance with tax, estate, or business law, you’ve come to the right place.

Maybe this is the year you resolve any outstanding tax situations. We can help! Together we’ll minimize your tax debts while complying with federal and state tax laws.

Perhaps you’re ready to create an estate, a will for your family, discuss business success plans, or administer a probate. Our office can help with everything from drafting basic documents to complex analyses on the best avenues for wealth preservation within a family.

We make achieving your goals easier by providing you the same legal services and expertise as the expensive downtown Pittsburgh firms but without the higher rates and lengthy drive. We’re located at 140 South Main Street in the heart of Greensburg, PA and offer cost-effective solutions to your situations.

Whatever your needs, the best way to receive proper guidance on a specific legal issue is to talk with a reputable attorney you can trust.

Let’s work on turning your someday resolutions into actions for today! Call us at 724-216-5180 or email us at john@jacochranlaw.com. We look forward to working with you.