Roseville, CA Accountant (CPA) for Income Tax Planning
Cook CPA Group
Taxes are usually regarded as an unpleasant reality. However, with some basic planning around your income taxes, the experience can be manageable. By reducing your taxable income, increasing the deductions that you claim, and taking advantage of tax credits, you can make the most of your taxes.
You don’t have to plan your income taxes alone. Use the help of an experienced Roseville income tax planning CPA from Cook CPA Group to understand your income, tax rules and expectations, how to best claim deductions, and possible credits that you may qualify for. Get in touch with the accountants that work with Cook CPA Group today by calling (916) 432-2218.
3 Ways to Save Money on Income Taxes in Roseville, CA
The best way to pay taxes in Roseville, CA is to plan carefully so that you owe as little money as possible to the IRS. There are three main ways to reduce the amount that you owe in taxes: reducing your taxable income, increasing your deductions, and taking advantage of credits while avoiding additional taxes.
Reduce Your Taxable Income
You can reduce the amount of income that is taxed by understanding your adjusted gross income (AGI) and reporting all of your sources of income and adjustments.
Your adjusted gross income determines your tax rate and the tax credits that you will receive. It also plays a large role in other financial determinations, including mortgages and financial aid for education programs.
Your AGI is calculated based on the income and adjustments that you claim on Schedule 1 of Form 1040. Aside from those received from regular employment, sources of income may be state tax refunds, income from self-employment, capital gains, and compensation from unemployment. Adjustments that may be claimed, on the other hand, include contributions made to an IRA, student loan interest, and contributions to health savings accounts. Other adjustments are determined by the industry that an individual works in – e.g., educators may claim classroom-related expenses. In some cases, moving expenses may be claimed as an expense by members of the armed forces.
Maximize Tax Deductions
A crucial choice that must be made when preparing income taxes is whether to claim the standard deduction or itemize your qualifying deductions. Possible itemized deductions you may claim include:
- Expenses for health care exceeding 10% of your adjusted gross income
- Local and state taxes up to $10,000 ($5,000 if you are married)
- Property taxes
- Interest on mortgages
- Charitable donations
- Losses as the result of a national disaster
It is advisable to keep a detailed spreadsheet of all of your itemized deductions over the course of the year, which will make it easy to compare your itemized deductions to the standard deduction. For 2019, the standard deductions are $12,200 for single filers and married filers submitting separate returns, $18,350 for heads of households, and $24,400 for married couples filing jointly.
Take Advantage of Tax Credits
Tax Credits can be advantageous because they are subtracted directly from tax debt you owe to the IRS. Most tax credits simply reduce the debt that a person owes. Income restrictions apply, however; people that earn large amounts of money are not as likely to qualify for tax credits, as they are intended for low-to-moderate-income earners.
One of the most commonly claimed tax credits is the Earned Income Tax Credit, which is issued according to the income a person makes. A taxpayer must be between the ages of 25 and 65 to qualify for this tax credit, must have made $3,500 or less in tax investment income, and must have earned at least $1 in income.
Another commonly claimed tax credit is the American Opportunity Tax Credit, which can be claimed for up to four years of post-secondary education. To qualify, a taxpayer must have a modified adjusted gross income of less than $80,000 and be enrolled at least half-time. Taxpayers may receive up to $2,500 based on the cost of their tuition and course materials.
Taxpayers can also claim tax credits for their children. Taxpayers may be issued a tax credit of up to $2,000 per qualifying child. Children must be 16 years old or younger at the end of a calendar year to qualify for the Child Tax Credit. It is also possible for taxpayers to claim credits for children that they adopt.
Other popular credits include the Lifetime Learning Credit (also intended to offset the cost of post-secondary education), the Child and Dependent Care Credit (which offsets the cost of babysitting and childcare), the Savers Tax Credit (which matches the contributions to retirement plans), and a credit for those who have disabilities.
In addition to claiming credits, taxpayers can save money by avoiding additional taxes. One tax that can be added to income taxes is for withdrawals from an IRA or 401(k) retirement plan before reaching the age of 59½. Taxpayers pay a 10% tax penalty on the amount that they withdraw early from their IRA or 401(k).
Income Tax Planning Accountant Available in Roseville, CA
For support with planning your income taxes, contact the Roseville accountants from Cook CPA Group at your earliest convenience. The Roseville tax planning accountants from Cook CPA Group have a wealth of experience that can save you money through careful income tax planning. Contact the accountants at Cook CPA Group soon at (916) 432-2218 to schedule a free consultation.