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Tag: Taxes

Use the Paycheck Checkup if You Have Other Sources of Income

 

If you’re working for an employer and have other income sources outside your job, you should get a Paycheck Checkup. For more information, go to https://www.irs.gov/newsroom/time-for-a-paycheck-checkup.

Doing a paycheck checkup with the Withholding Calculator may help you avoid paying taxes at tax filing time. Go to https://apps.irs.gov/app/withholdingcalculator/.

Other income sources may come, for example, from the exchange of products and services in a sharing economy, interest, dividends, self-employment, capital gains, prizes, or awards.

Taxpayers may find the calculator especially important this year in the wake of changes to the tax code from the Tax Cuts and Jobs Act.

Here are some items to consider if you’re thinking about changing your withholdings to avoid a tax bill:

  • You should pay at least 90% of your income tax through withholding.
  • You can use Form W-4 to make adjustments to your income if the Withholding Calculator estimates you will have to pay taxes. Go to https://www.irs.gov/pub/irs-pdf/fw4.pdf.
  • If you’re generating income from other sources, you can still reduce or eliminate the possibility you’ll owe further taxes when you file your return by claiming fewer withholding allowances on your Form W-4.
  • You may also request your employer withhold an additional amount of money from your paycheck if you anticipate having to pay taxes at filing.
  • If you have to make additional tax payments through your paycheck, you may use Form 1040-ES, Estimated Tax for Individuals, to calculate an appropriate amount. Go to https://www.irs.gov/pub/irs-pdf/f1040es.pdf. Other details may apply, and you can find more information on the IRS website.
  • Tip adapted from the IRS.gov[i]
  • This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
  • For additional questions, go to https://www.irs.gov/payments.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

 

[i] https://www.irs.gov/newsroom/employees-with-other-sources-of-income-should-do-a-paycheck-checkup

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Tips for Managing Your Annuity Income

Tips for Managing Your Annuity Income

Many retirement planners find that utilizing annuities may be a good way to generate guaranteed income. Annuities allow you to set retirement distributions based on their type and how much you contributed.

Like all investment and insurance products, annuities are subject to fees and expenses. Generally, you will have to pay fees on distributions. Using fixed index annuities as an example, here are two fees to consider:

  • Surrender charge: If you collect income before the designated distribution date, you’ll have to pay a surrender fee. While charges may vary by provider and type of annuity, you should expect to pay around 10% of your total contract price for the first year. Surrender fees may drop by around 1% each year.[i]
  • Administrative fees: Annuity managers typically charge fees to cover the administrative costs of managing your accounts. Fees will vary by firm.[ii]Purchasing certain annuities allows you to defer paying taxes on your investments. This applies to annuities that are held in traditional IRAs, 401(k)s or other qualified retirement accounts. However, once you start receiving annuity income from a tax-deferred source, you should be mindful of the following:[iii]

Remember to Prepare for Taxes

  • Ordinary income tax: You will have to pay ordinary income taxes when you collect annuity income. Taxes may vary depending on if you receive a lump sum or ongoing payments.[iv]
  • Early-withdrawal tax: You may incur a 10% tax penalty if you withdraw money early, prior to age 59½, from your annuity fund.[v]

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information. This material has been prepared for planning purposes only and is not intended as specific tax or legal advice. Tax and legal laws are often complex and frequently change. Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

You may also have to address other tax issues, so researching tax rules or consulting with a tax professional is important. Taxes and fees depend on the type of annuity you bought and how much you contributed to it. If you would like to discuss your options and potential financial and tax obligations, we’re here to help.

[i] http://www.investopedia.com/terms/s/surrenderfee.asp?lgl=myfinance-layout

[ii] https://www.fidelity.com/viewpoints/retirement/shoppers-guide-to-annuity-fees

[iii] https://www.annuity.org/annuities/taxation/

[iv] http://www.investopedia.com/exam-guide/series-26/variable-contracts/annuity-distributions-charges.asp

[v] https://www.irs.gov/newsroom/early-withdrawals-from-retirement-plans

Tax Act May Affect Small Business Depreciation Deduction*

Tax Act May Affect Small Business Depreciation Deduction*

The passage late last year of the Tax Cuts and Jobs Act may lessen the tax load on small business by expanding deduction allowances, the IRS states.

Tax deductions on depreciation increased, which means small business owners may see their taxes decline.

Businesses are allowed to depreciate “tangible property except land, including buildings, machinery, vehicles, furniture and equipment.”

Highlights include:

  • The act increases the number of items businesses may list as expenses, which includes the cost of any business property. Businesses may deduct the property in the year it is put in service.
  • The maximum deduction rose from $500,000 to $1 million.
  • The phase-out threshold went from $2 million to $2.5 million.
  • Taxpayers may choose to include improvements made to nonresidential property. The improvements must have been made after the property was initially put in service.
    • A building’s interior
    • A roof
    • Heating and air conditioning systems
    • Fire protection systems
    • Alarm and security systems

These improvements do not qualify:

  • Building enlargement
  • Elevator or escalator service
  • The building’s internal structure framework

These changes apply on property put into use after December 31, 2017.

Other details may apply, and you can find more information on the IRS website.

*This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.irs.gov/newsroom/tax-reform-changes-to-depreciation-affect-businesses-now

 

 

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