Tax office tricks from firms? Which receipts you’ll need to provide depends on whether you itemize your deductions or claim the standard deduction. You’ll want to choose whichever produces the greater write-off, but the only way to know for sure is to add up your itemized deductions and compare that with your standard deduction. For the 2019 tax year, the standard deduction for single taxpayers is $12,200 and for married couples filing jointly it is $24,400. For 2020, these amounts rise to $12,400 for single taxpayers and $24,800 for married couples filing jointly.
The more money you make, the more complicated your taxes are going to be. So, if you have a higher income than most people, it’s important to work with a skilled accountant to figure out how to reduce the amount of income taxes you pay. In addition to taking your standard deduction and other deductions, there are many things you can do to lower the amount you pay. Let’s start with an overview of tax rules for high income earners. For the sake of this post, we’ll consider anybody in the top three tax brackets as a high income earner. That means that if you earn more than $163,301 in gross income as a single earner and $326,601 if you’re married filing jointly, you are a high income earner.
Tax credits are the federal government’s way of encouraging businesses and individuals to do things—or not do things—that affect the greater good. For example, you can take tax credits for hiring employees, going green, providing access to disabled employees and the public, and providing health coverage for employees. Most are part of the General Business Credit, which is quite extensive so it’s quite possible that you qualify under some of its terms. Check with your accountant. Find even more details at here.
Sec. 1031 Exchange Rules. The only way you can avoid current tax when you sell investment property is through a “1031 exchange”, where you involve a third party, called an accommodator, to hold the money and buy a new property for you. But there are some rules you have to comply with: You can’t touch the money. You have to identify the new like-kind real property within 45 days after property being given up is transferred and close within 180 days. The new property has to cost at least as much as the old one. You can’t be relieved of debt (so you can’t use the proceeds from the sale to buy a new property for all cash if the old property had debt tied to it). You will pay hefty fees to the accommodator to handle all this for you.