Month: April 2018

Assistance To Appeal Your Property Taxes

There are seven States with no income tax. (1)  Of course, Texas is one of them and this is one of the reasons why many people want to move to Texas. However, this doesn’t mean that there are no other taxes involved. Unfortunately, Texas has one of the highest property taxes in the United States. The tax rate for this tax is 1.94% on average. (2) However, it turns out that many of these property tax bills are not accurate and individuals have the right to appeal their property taxes.

Why appeal?

Let’s take an example. If your property is assessed at $200.000 and your property tax is cut by 5% this means that your assessed value is reduced by $10.000 which can save you around $200. Of course, it all depends on the property tax rate and the value of your property. So, in case you believe that your property has been valued higher than it is, there is a chance to appeal to the tax authority. People can file a property 30 days after they have received the appraisal district notice or until May 31st.

Property Tax Appeal in Texas – How to File One?

Just to be clear – you have to disagree with the appraisal deliver by the authorities in order to file an appeal. This protest must be delivered to the appraisal review board. In most cases, you will be called to a meeting and in the majority of cases, the issue will be resolved during this informal session. Every meeting ends with a written notice that you can use later in the process. If you are unable to resolve this issue during this meeting there is a complex legal procedure.

How to get the most from appealing your personal property taxes?

There a few things that every taxpayer can do to get prepared for their appeal. For instance, it’s a smart move to talk to a district appraiser in your area and get information about the appraisal process. It’s also wise to analyze the appraisal. Every measurement and the description, in general, should be correct. Sometimes, a small technical error can lead to huge problems and an unrealistic appraisal.

The appraisal should include the defects that are not clearly visible as outdated and improper plumbing or damages to the foundation or under the roof. Use an independent appraiser or a simple photograph to provide evidence for these defects.

Experienced tax experts like TaxPM will advise you to check the appraisal information about similar real estates in your area. Of course, your property must be treated in the same way as these properties. Using an independent appraisal provided by a real estate expert in this field can also be very useful. Finally, analyze the expenses that you can expect for appealing this decision and compare them to the potential savings.

Hopefully, this blog post will help you understand when and how to appeal personal property taxes in Texas.




Analyzing the Impact of the New Tax Bill

The Tax Cuts and Jobs Act was signed into law in December 2017. (1) According to experts, this law represents a significant modification of the existing tax law. Without any doubt, this law has an impact on tax planning for this year and that’s why it is crucial to have a professional tax expert on your side.

This is one of those laws that affect both individuals and businesses. The main accent is placed on the businesses, but millions of Americans will be affected too.

What can business owners expect from the Tax Cuts and Jobs Act?

First of all, they can expect a major reduction in corporate tax rate. At this moment, the United States has a corporate rate set at 35% which makes it one of the highest rates for this type of tax in the world. Thanks to this new bill, the rates will fall down to 21% making our country more competitive on the international market.

In addition, this bill will affect the multinational companies too. With the help of these changes, multinational corporations will be encouraged to bring their capital back to the United States instead of keeping it abroad. It’s also good to mention that the Tax Cuts and Jobs Act will allow businesses to deduct the cost of interest on loans for business activities at 30% of income. Of course, this monumental tax reform will bring other changes that should support the domestic companies.

What can individuals expect from the Tax Cuts and Jobs Act?

Just like the previous law, this one keeps the seven distinctive individual tax brackets. The only thing that has changed is the tax rates. Generally speaking, most people will pay less, although there are some people that will have to pay more in taxes.

In addition, the new bill modifies the income thresholds designed for each individual bracket. This makes the savings even greater. For instance, the highest rate (37%) is for individuals who have an annual income of more than half a million dollars. Last year, the highest rate was 39.6% and it applied to those who earned over $418.000 annually.

Another thing that taxpayers should be aware of is that the majority of itemized deductions are removed from the new law. For examples, the itemized deductions for things like investment expenses, alimony payments, personal casualty losses and tax preparation expenses are removed.

The home mortgage interest deductions are affected too. The Tax Cuts and Jobs Act sets a limit to the mortgage interest deduction – $750.000. In the past, this limit was set at one million dollars. Additionally, interest on home equity loans is not deductible anymore.  Also, people who have estates worth up to 11 million dollars will be exempt from the federal estate tax. The previous law had a different limit – 5.5 million dollars. (2)

Just like the law before, the new Tax Cuts and Jobs Act has some pros and cons. It is up to every business and individual to use the incentives and benefits that this law brings. Using the help of a professional accounting and income tax service provider like TaxPM is always a smart move.

7 Most Overlooked Tax Deductions

Advice on tax deductions can help you save thousands of dollars in taxable income. Many people forget that the main objective of the IRS is to claim the money that they are entitled to. The rest of that can be deducted. Texas has lower taxes than most States, and on top of that, you can use tax deductions to make things easier. (1) After all, this is one of the reasons why people want to start a business in Texas.

Now let’s check some of the most overlooked tax deductions.

  1. EITC – Earned Income Tax Credit

The Earned Income Tax Credit represents a refundable tax credit. The credit itself was created to support wages for low income and moderate income workers. Those who want to use the refund should file a tax return. The process is a little bit complex and it may be a good idea to hire professional accountants to get the job done.

  1. Changing residence because of a new job or changing a job in general

It turns out that whenever a person has to move from one place to another and this move is over 50 miles away from your current residence can help you deduct specific moving expenses from the taxes. Of course, this relocation must come as a result of the new job you’ve found. This is how the country supports people looking for a job or a better job.

  1. Having a home on leased land

Another great way to deduct some of your taxes is to live in a home on leased land. This situation allows you to deduct rent payments for that land. Once again, we are talking about a complex procedure that requires the attention of a professional tax advisor like the ones from TaxPM.

  1. Home refinancing

Experienced homeowners know that refinancing a home comes with a few fees that can affect your budget. However, you can deduct some of these fees from your taxes. There is actually a list of refinancing deductible items that you can use to your advantage.

  1. Medicare premiums

In case you are a self-employed person, you may be able to deduct the premiums paid for Medicare (parts B and D), Medicare Advantage Plan and Medigap Insurance. You don’t have to itemize deductions to use these deductions.

  1. Casualty loss

Casualty losses represent a specific kind of tax losses that come as a result of an unexpected, unpredictable and sudden event. We are talking about weather-related or fire damage that has led to property loss. If this loss is not covered by an insurance claim, then you can use is at as a tax-deductible item.

  1. Car payments

If you have used your car for business purposes you can deduct actual expenses (oil changes, replacement tires etc.) and/or on the standard mileage rate. This is a nice way to save some money on your tax return. (2)

Keep in mind that these are some of the many overlooked tax deductions. Consult an expert in this area for additional information – contact TaxPM.

Selecting the Right Business Structure – LLC Vs S-Corp

Did you know that Texas is home to 92 Fortune 500 companies? (1) This is not a surprise for many experts because doing business in Texas is much easier compared to many other states. If you are interested in starting a new business in Texas or you already own one that is not incorporated yet, you should take a few things into account. The most important one is to select the right business structure for your business. Typically, people are making a choice between an S-Corp and a Limited Liability Company or LLC. Before we go into details, let us highlight the basics of incorporation.

Why do you need incorporation in the first place?

The fact is that there is more than one good reason for incorporation. Yet, the crucial one is to protect your personal assets from a judgment or from creditors. But, keep in mind that there are many situations when a corporation wants to buy assets, like a corporate vehicle for their employees for example, and the bank that provides the loan will require a personal guarantee. In case you provide such guarantee, then this corporate asset won’t stay protected by the so-called corporate veil. Don’t forget that the same goes for both LLC and S-Corp. Another advantage of incorporation is to get specific tax benefits. Serious business owners are using professional accounting and tax service providers like TaxPM™. These professionals can provide valuable tips and advice related to tax issues.

What’s an S-Corp?

S-Corps are a type of corporations that are one level closer to a different tax categorization. Those who want to opt for S tax treatment must be employees of the corporation. We are talking about so-called pass-through entities that don’t have to pay corporate tax. The income received by the shareholders is taxed as individual income. However, an S-Corp is not allowed to have more than 100 shareholders and every shareholder must be a US citizen or at least a legal resident. In addition, S-Corp shareholders have equal voting power in the company.

What’s an LLC?

Limited Liability Company or simply LLC can usually provide better liability protection compared to S-Corp. This is a very popular option for many small businesses in Texas. Although it’s essentially a pass-through entity just like S-Corp, it can be taxed as a corporation. (2) Most owners like this business structure due to its flexibility. It’s easy to distribute the company income to specific individual members. They pay shares on their tax return. Another great advantage is that LLC doesn’t have a specific management or structure requirements that should be met.

Final Thoughts

No one can say which option is the best because different businesses have different requirements and needs. Generally speaking, LLCs are much better for small businesses as well as for start-ups. On the other hand, S-Corps are a better option for larger companies.

If you are interested in incorporation, use the professional help provided by experienced and knowledgeable experts in this field. Choose TaxPM™ for the best results.