Certified Public Accountants

Tax Guide

This guide provides essential insights on various tax-related topics, tailored for your accounting firm's "Taxes" subpage under the resources section. The content is organized to enhance readability and user engagement.

Self-Employed Deductions

  • Deductible Business Expenses: Must be both ordinary (common and accepted in your trade) and necessary (helpful and appropriate for your business).

Capital Gains Management

  • Handling Large Capital Gains: Consider deferring gains or selling off losing investments to claim losses.

Tax-Deferred Investments

  • Investments for Tax Deferral: State and local bonds (exempt from federal income taxes) and Treasury Bonds (exempt from state and local income taxes) can be beneficial, especially for those in high tax brackets.

Retirement Plans for Tax Deferral

  • Retirement Plans Options: Employer-deferred earnings contributions, matched savings, and options for self-employed individuals like Keogh, SIMPLE, or SEP IRA.

Income Deferral Strategies

  • Deferring This Year's Income: Postpone invoicing or accelerate expenses to manage tax brackets.

Record Keeping for Taxes

  • Essential Tax Records: Keep all receipts and records of income and expenses, categorize expenses, and consult the Retention Guide for specific document retention periods.
  • Duration to Keep Tax Documents: Keep tax returns indefinitely and other documents for three to seven years depending on the type.

Education Expenses

  • Tax Breaks for Education: Utilize various tax breaks for higher education, choose between American Opportunity Tax Credit and Lifetime Learning Credit.
  • Coverdell (Section 530) and Section 529 Plans: Differences between these education savings plans, including contribution limits and eligible expenses.
  • IRA Funds for Education: Using traditional or Roth IRA distributions for education without a 10% tax penalty.
  • Tax Deductions for College Education: Limited deductions for higher education and related expenses.
  • Student Loan Interest Deductibility: Conditions under which student loan interest is tax-deductible.
  • Workplace Education Deductions: Deductions for education that maintains or improves skills for your current job.
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