Save Money & Sanity with These Tax Prep Tips 

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Navigating tax season effectively is critical, especially when working with an online accounting business. You can get help with Tax return preparation in Houston by consulting a professional today. You might use tax time to prepare for unexpected crises or plan for the future. Here are some tips to get you started.

Review your gifts and estate plans. 

Charity is vital, and now is an excellent opportunity to donate more. If you regularly contribute to a charity and claim deductions on your income tax returns, think about putting many years’ worth of donations into a donor-advised fund (DAF) for a single year. This allows for an immediate deduction while extending the contribution over several years. 

However, these possibilities should not be limited to taxation. Without Congressional action, the present high federal gift and estate tax exemptions will be cut to 2017 levels, possibly exposing millions of previously exempt people to gift and estate taxes beginning in the 2026 tax year. To plan, talk with your counsel and tax expert to establish the best ways to manage contributions, such as trust terms, trustee designations, and other aspects. 

Putting your losses to work for you 

Tax-loss harvesting is the practice of selling failing assets to offset capital gains in a portfolio. If losses outweigh profits, up to $3,000 in losses can be used to reduce ordinary income under federal income tax. If the economy and markets improve, losses can be carried over and used in a year with greater taxes. To avoid triggering wash sale laws, do not repurchase substantially identical assets within 30 days before or after the sale. 

If the losses involve marketable securities or shares of a privately owned corporation, more paperwork may be required. Loss harvesting tactics should only be used with long-term investing objectives in mind. Selling assets merely for tax purposes might be viewed as “the tax tail wagging the investment dog.” Claiming losses is determined by the tenure of asset ownership, replacement investments, and other considerations.

Keep track of where you have worked remotely. 

Remote work is becoming more prevalent for millions of workers, but it is critical to understand the tax ramifications, especially if you live in a different state than where your business is located. Different states define “residency,” which might include domicile, non-temporary presence, or a permanent place of habitation. When you reach 183 days in the state where you work remotely, the state may deem you a resident and tax your whole income. To avoid potential fines, carefully log your days spent working in various areas and consult with your tax adviser about the most recent legislation in the states where you live, where you work remotely, and where your business is situated. 

Implementing these tips can considerably minimize the time and stress associated with tax preparation. Remember that working with a trustworthy tax preparation professional may help to streamline the procedure even more.