tax planning - Linkenheimer LLP CPAs & Advisors

Filing Jointly or Separately as a Married Couple: What’s the Difference?

When you file your tax return, a tax filing status must be chosen. This status is used to determine your standard deduction, tax rates, eligibility for certain tax breaks and your correct tax.

The five filing statuses are:

Single
Married filing jointly,
Married filing separately,
Head of household, and
Qualifying surviving spouse.

If you’re married, you may wonder if you should file joint or separate tax returns. It depends on your individual tax situation.

In general, you should choose the filing status that results in the lowest tax. But keep in mind that, if you and your spouse file a joint return, each of you is “jointly and severally” liable for the tax on your combined income. And you’re both equally liable for any additional tax the IRS assesses, plus interest and most penalties. That means the IRS can come after either of you to collect the full amount.

Although there are “innocent spouse” provisions in the law that may offer relief, they have limitations. Therefore, even if a joint return results in less tax, some people may still choose to file separately if they want to only be responsible for their own tax. This might […]

By Linkenheimer LLP|2024-02-09T15:06:08+00:00February 8th, 2024|tax implications, tax planning|0 Comments

If You Gave to Charity in 2023, Check to See That You Have Substantiation

Did you donate to charity last year? Acknowledgment letters from the charities you gave to may have already shown up in your mailbox. But if you don’t receive such a letter, can you still claim a deduction for the gift on your 2023 income tax return? It depends.

What the law requires

To prove a charitable donation for which you claim a tax deduction, you must comply with IRS substantiation requirements. For a donation of $250 or more, this includes obtaining a contemporaneous written acknowledgment from the charitable organization stating the amount of the donation, whether you received any goods or services in consideration for the donation and the value of any such goods or services.

“Contemporaneous” means the earlier of:

The date you file your tax return, or
The extended due date of your return.

Therefore, if you made a donation in 2023 but haven’t yet received substantiation from the charity, it’s not too late — as long as you haven’t filed your 2023 return. Contact the charity now and request a written acknowledgment.

Keep in mind that, if you made a cash gift of under $250 with a check or credit card, generally a canceled check, […]

By Linkenheimer LLP|2024-01-31T17:09:24+00:00January 31st, 2024|charity, tax planning|0 Comments

Answers to Your Tax Season Questions

The IRS announced it will open the 2024 income tax return filing season on January 29. That’s when the tax agency will begin accepting and processing 2023 tax year returns.

As the 2024 tax season approaches, we understand that you may have several questions regarding the latest tax laws, deductions, and how to navigate your filings efficiently. At Linkenheimer, we are committed to guiding you through this season with ease and expertise. Here are answers to some of the most frequently asked questions:

1.What are this year’s deadlines?

The filing deadline to submit 2023 returns or file an extension is Monday, April 15, 2024, for most taxpayers. Taxpayers living in Maine or Massachusetts have until April 17, due to state holidays. If taxpayers reside in a federally declared disaster area, they may have additional time to file.

2.When is my return due if I request an extension?

By Linkenheimer LLP|2024-01-23T16:01:15+00:00January 22nd, 2024|tax deadlines, tax planning|0 Comments

4 Ideas That May Help Reduce Your 2023 Tax Bill

If you’re concerned about your 2023 tax bill, there may still be time to reduce it. Here are four quick strategies that may help you trim your taxes before year end.

Accelerate deductions and/or defer income. Certain tax deductions are claimed for the year of payment, such as the mortgage interest deduction. So, if you make your January 2024 payment in December, you can deduct the interest portion on your 2023 tax return (assuming you itemize).

Pushing income into the new year also will reduce your taxable income. If you’re expecting a bonus at work, for example, and you don’t want the income this year, ask if your employer can hold off on paying it until January. If you’re self-employed, you can delay sending invoices until late in December to postpone the revenue to 2024.

You shouldn’t follow this approach if you expect to be in a higher tax bracket next year. Also, if you’re eligible for the qualified business income deduction for pass-through entities, you might reduce the amount of that deduction if you reduce your income.

Take full advantage of retirement contributions. Federal tax law encourages individual taxpayers to make the […]

By Linkenheimer LLP|2023-12-05T16:55:42+00:00December 5th, 2023|individuals, tax planning, year-end|0 Comments

Key 2024 Inflation-Adjusted Tax Amounts for Individuals

The IRS recently announced various 2024 inflation-adjusted federal tax amounts that affect individual taxpayers.

Most of the federal income tax rate bracket thresholds are about 5.4% higher than for 2023. That means that you can generally have about 5.4% more income next year without owing more to the federal government.

Standard deduction

Here are the inflation-adjusted standard deduction numbers for 2024 for those who don’t itemize:

$14,600 if you’re single or use married filing separate status (up from $13,850 in 2023).
$29,200 if you’re married and file jointly (up from $27,700).
$21,900 if you’re a head of household (up from $20,800).

Older taxpayers and those who are blind are entitled to additional standard deduction allowances. In 2024 for those age 65 or older or blind, the amounts will be: $1,550 for a married taxpayer (up from $1,500 in 2023) and $1,950 for a single filer or head of household (up from $1,850 for 2023).

For an individual who can be claimed as a dependent on another taxpayer’s return, the 2024 standard deduction will be the greater of: 1) $1,300 (up from $1,250 for 2023) or 2) $450 (up from $400 for 2023) plus the individual’s earned income, not […]

By Linkenheimer LLP|2023-11-27T14:11:21+00:00November 27th, 2023|inflation, tax planning|0 Comments