Archive for the ‘Tip Of The Day’ Category

Understand Capital Losses

Capital losses offset other capital gains first. The excess capital loss is then limited to just $3,000 per year of additional loss. For example, if you have $1 million in capital losses with no capital gains offset, it will take you 333 years to fully write the loss off. If you have a large amount ...

Short Term vs Long Term Capital Gains

Short-term capital gains are taxed at ordinary tax rates. If you hold investment property for one year and one day (or more), the gains qualify for long terms capital gains treatment of 15%. This tax rate may be changing in the next few years, so make sure you check on what is current first. And ...

Invest for Dividends

When investing in mutual funds, you sometimes have a choice in receiving dividends or receiving interest. This isn’t a choice within one particular fund, but a choice between funds. If all other things are equal for the investment, invest for dividends. Under current law, you’ll pay less tax. Thank you for choosing UsTaxAid Services, we ...

3 Types of Taxable Income

There are three types of taxable income, at least under current law. (1) Earned income is the highest tax rate that there is and is up to 35% for federal. But don’t forget state income tax, Social Security tax, Medicare tax and/or self-employment tax. The total amount can be 50%, 60%, even 70%. And the ...

Taxable, Tax Deferred, and Tax Free Income

There are three types of income.  Knowing the difference can mean a whole lot less in taxes. Taxable income is income you pay tax on now. Tax deferred income means you pay tax later. Tax free income means you pay tax never. All things being equal, tax free income is the best. But if you ...

ADA (Americans with Disability Act) Tax Credits

If you do something to make your business more accesible for clients or employees, chances are you’ll get a 50% tax credit on the expense, subject to some limitations.  First, here are examples of what is allowed: (1) Removing barriers that prevent a business from being accesible to or usable by individuals with disabilities’ (2) ...

Know the Difference Between Tax Credits and Tax Deductions

A tax deduction reduces your taxable income. Your tax rate is then applied to your taxable income and since it’s less, you pay less tax. On the other hand, a tax credit directly reduces the amount of tax you pay. If you have a choice between an equal amount of tax deduction or tax credit, ...

Know the Difference Between a Tax Credit and a Tax Deduction

A tax deduction reduces your taxable income. A tax credit reduces the amount of tax you pay. If you had the choice of $5,000 in tax deductions or $5,000 in tax credits, take the credits any day. The tax deduction indirectly reduces your taxes, but it’ll only be a fraction of the amount. The only ...