High class tax preparation companies in Houston? In particular, look for receipts for medical costs not covered by insurance or reimbursed by any other health plan (like a flexible spending account or health savings account), property taxes, and investment-related expenses). These are all subject to limits, but if they’re substantial enough, it may be worth your while to itemize. If you do itemize your deductions, you’ll also need to collect any back-up you have for charitable contributions. For example, contributions of $250 or more require a written acknowledgment from the charity stating the amount of your gift and that you did not receive anything (other than perhaps a token item) in return.15? If you don’t have such an acknowledgment, contact the charity and request it. You can find more details on charitable deductions in IRS Publication 1771.

Why Change the Character of Your Income? One way to reduce your tax burden is to change the character of your income. If you’re wondering why you should do so, here are some of the ways it can help you to lower your tax bill. Convert your SIMPLE, SEP, or traditional IRA to a Roth IRA. If you are over the age of 591/2 and you meet the five-year rule, Roth distributions are tax free. Because they are not considered investment income, they will not increase your modified adjusted gross income (MAGI), which is used to calculate the 3.8% Medicare surtax.

Businesses can take tax write-offs on purchases of business equipment, machinery, vehicles, and sometimes even real estate. These write-offs can sometimes be taken in the first year you own and use the equipment. The two most common types of this accelerated depreciation are Section 179 deductions and bonus depreciation. Section 179 deductions allow you to immediately deduct the costs of certain assets when you put the assets in service. The maximum deduction was increased to $1 million in 2018 under the Tax Cuts and Jobs Act (TCJA). Equipment, machinery, and certain real estate purchases can qualify. Find additional details on https://greentree.tax/best-tax-preparation-services-in-houston/.

Flipping Houses as a Business. If you buy and sell property frequently, the IRS could decide that you are in the business of flipping houses and aren’t just an investor. If so, you’ll have to pay self-employment taxes of up to 15.3% on your profits, in addition to income taxes. Buying and Selling Stuff Can Be Taxable Too. If you scout out bargains at flea markets and then sell the furniture and other finds on eBay (or a similar site), you’ll end up paying income taxes on the profits. If you do that just occasionally, you may not have to report the sale on your tax return. However, if you do it frequently, the IRS will consider you to be in a self-employed business since one of the requirements of owning your own business and claiming the income is if you are engaged in the business activity on a regular basis for a profit.