MARIELA RUIZ, CPA, PLLC

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Tag: tax preparation

Expenses That You Didn’t Know Were Tax Deductions!

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Tax deductible expenses are basically work or company expenses in which the government allows tax relief. During tax season, it is much better to come prepared and have all your books and records straight for a successful financial audit. You can claim tax deductions on expenses that are exclusively made in the interest of the business as per HMRC. The following is a list of tax deductibles that you can claim this tax season.

1. Expenses of Your Business

If you have invested a significant amount of capital on the expenses of a startup or your business, you can claim it all as a tax deductible by showing it as a business expense. All the hardware and supplies like computers and office stationery necessary to set up your business, the cost of business registration as a licensed product, the web domain fees, and advertising are all under the umbrella of tax deductibles. Any expenses that are paid for using personal funds can be claimed when the company or legal entity starts trading, so be sure to keep receipts and maintain accurate records.

2. Office Maintenance

For any repairs and maintenance work for your office, the amount is tax deductible. If you are working from an office, you can also file your rent for the premises as a tax deductible as well. This also includes small business owners who work in a home office. In this case, you would have to report what percentage of your home is used for your business and measure your work space.

3. Electricity, Water, and Gas Bills

Due to the spread of COVID-19, people were assigned to work from home. If you also work from home, you can easily claim a certain percentage of your electricity, water, and gas bills as tax deductibles. Determine how much of your home is used for professional work purposes. The said amount will be registered as a tax deductible amount from all your expenditure. This includes power bills, council tax, and even some part of the interest on your mortgage payment.

4. Subscriptions

If you are paying for subscriptions strictly for professional purposes, it can also be stated as a tax deductible. For example, a production company will have access to multiple editing and animation software products.

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Conclusion

Claiming tax deductibles is a technical aspect and should be left to seasoned professionals to take care of it. Are you looking for a public accountant to take care of your financial affairs? Let a professional do it for you. MARIELA RUIZ, CPA, PLLC offers professional accounting, bookkeeping, and tax preparation services at affordable rates in Mission, TX. Visit our website to learn more about our services or simply give us a call at (956) 997-0067 for further assistance.  

How to File Your Taxes in 2022

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Tax season is upon us. It can be a daunting and tiresome experience, especially for the people who are filing taxes for the first time. So, if you are in a jam thinking about how you are going to file your taxes, we have a cheat sheet for you to follow up with. Read the following article and get the basics of filing your taxes.

1. Select Your Tax Filing Method

There are basically 3 ways to file your taxes. The first one is that you fill out an IRS Form 1040 and send it through mail. We don’t recommend it because paper processes take up to 6-8 weeks.

The second way is to file taxes online through a tax software. It is a fairly easy method that covers all the areas that are under inquiry during the audit. IRS also offers access to tax preparation software. You must have an adjusted gross income of $75,000 or less to avail this service.

The third one is to hire a professional tax expert or tax preparer. The professionals are well-aware of everything that goes in the system. They are familiar with all the requirements and technicalities involved in the process of the IRS audit. You might want to seek the guidance of a professional if you have a healthy earning side gig.

2. Have a Clear Understanding of How Taxation Works

Your payable tax amount is determined by dividing your taxable income in to tax brackets. Each bracket gets taxed at a corresponding tax rate. This system ensures fairness. So, a person with a high taxable income will pay more taxes and a person with a low taxable income will be subject to a small amount of tax as per the laws.

3. Know Your Tax ABC

You need to gather all the right documents and get them organized or you will be scrambling for everything at the last minute. It is good to be prepared and ready for everything. Here is a list of must-have documents that you will need during the process.

  • Social Security Numbers (Yours and the dependents)
  • W-2 Form (Form that states your annual earnings from last year and how much tax you have already paid)
  • 1099 Forms (Records that a person or entity gave or paid you money)
  • Contributions towards retirement
  • Proof of state and local taxes you paid
  • Educational expenses
  • Unreimbursed medical bills

4. Settle Your Score With the IRS

If you have outstanding balance against IRS, now would be a great time to pay it all back. You can use cash, electronic payment methods, wire transfers, checks, and credit/debit cards to clear whatever you owe to the IRS.

If you can’t pay your taxes in one go, you can opt for an IRS payment plan. You can choose between a long-term plan or a short-term payment plan. Both come with their own pros and cons. Whatever you select, you will be making monthly payments after this.

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Conclusion

As discussed in our blog, it is quite helpful if you hire the services of a professional tax expert to file the taxes for you. This will give you the freedom of mind so you can focus on better and more productive things in your life. MARIELA RUIZ, CPA, PLLC offers professional accounting, bookkeeping, and tax preparation services at affordable rates in Mission, TX. Check our website to learn more about our services or simply give us a call at (956) 997-0067 for further assistance.

A Homeowner’s Guide to Tax Deductions

Being a homeowner means you can potentially benefit from multiple tax breaks if itemizing deductions on your tax return makes financial sense. However, itemizing your deductions are only beneficial if it exceeds the IRS standard deduction. To decide whether or not it’s worth it, start by adding up all the deductions you qualify for and compare it to the standard. No one wants to pass up an opportunity to save on taxes, so read on to learn more about tax deductions that may apply to you.

Property Tax

A property tax deductible is one of the benefits of being a homeowner. You can deduct up to $10,000 or $5,000 if you’re married filing separately. You might also be able to deduct property and real estate taxes on vacation homes, land, vehicles, etc. The IRS does not allow deductibles on property you don’t own and property taxes you haven’t paid yet. If you rent a home, you also cannot write off any property taxes.

Mortgage Interest Rates

A mortgage interest deductible allows you to reduce your taxes by how much interest you’ve paid during the year. Most homeowners are able to deduct all of their interest expenses. However, it’s important to seek the advice with a financial advisor because there are certain limits. According to NerdWallet, “the deduction is limited to interest on up to $750,000 of debt”. If it exceeds this amount, then you may not qualify for a tax deduction.

Rental Income Deductions

If you’re paying a mortgage with renters living on the property, then you qualify for a rental income deduction. The money you receive for rent can be considered taxable in the same year your receive it. Repairs, such as painting, fixing utilities, and other maintenance, is a deductible expense. However, improvements that add value to the property, such as a completely new roof or patio, are not deductible.

Home Office Expenses

You can only deduct home office expenses if you are self-employed and are working out of your home. These expenses can be divided into two categories: direct and indirect. Direct expenses apply only to the area designated as your home office and is used only for business. Maintenance and repairs applied to only that area can be considered as fully deductible expenses. On the other hand, indirect expenses involve the maintenance of your entire home. These expenses are only deductible to a certain percentage based on the square footage of your office.

Home Medical Equipment

If you have healthcare or medical equipment installed in your home for you, your spouse, or a dependent, then you can get this deducted. This also includes home improvement costs for installing ramps, rails, an escalator system, widening doorways, and so on. Be sure to keep the documents of your medical equipment including those that confirm it was approved or recommended by a medical specialist.

Solar Power

Did you know adding solar power panels to your roof can be added to your tax deduction? Not only is it better for the environment but it will also benefit as tax credit. Beginning in 2021, homeowners can take 22% of the cost of installing solar systems. However, this benefit will be lost by 2023, while commercial and utility users can only claim 10%. Homeowners should take advantage of this benefit while they can.

Conclusion

Overall, there are many potential tax breaks that you may benefit from. Always be sure to keep your documents of proof organized and safe. If you need help compiling your deductibles or are in need of financial advice, rely on MARIELA RUIZ, CPA, PLLC. We are here to make the process easy and stress-free. Learn more about our services by visiting our website or calling us at (956) 997-0067.

Accounting for Small Business Owners

One of the most challenging jobs entrepreneurs and small business owners are responsible for is accurately managing their finances and taxes up to legal standards. From payroll services to tax preparations most small business owners find that investing in expert outside help is well worth ensuring meticulous perfection throughout the books. Below we review some key points you or your CPA should be aware of when managing the finances for your small business.

Bookkeeping

It’s crucial for small business owners to keep accurate financial records regarding all aspects of their business through bookkeeping. Bookkeeping can include anything from payroll services and financial statement preparation to reviewing invoices and managing expenses and revenue. It provides vital data that can help with management decisions, taxes, and getting approved for business loans.

Audits

Nearly all successful businesses will perform regular internal and external audits to ensure authenticity and search for any inconsistencies. External audits are more effective than internal audits than because they eliminate any possible conflicts of interest, must be completed by a CPA, and provide impartial results.

Taxes

When it comes to small business taxes there is so much more involved than just the tax preparation itself. Many small business owners benefit from strategic tax planning and audit representation to further ensure their business is safeguarded by the best. Texas is home to the second largest economy in the country and with that comes unique tax conditions for franchise owners, limited liability companies, sole proprietorships and other small business owners.

Final Thoughts

Over the years Mariela Ruiz, CPA, LLC has provided countless business owners in Hidalgo County, TX with affordable and convenient bookkeeping and payroll services including audits, tax preparations, financial consulting, forensic accounting and much more. Visit our website for a full list of our array of services or call (956) 997-0067 for any questions you may have.

Steps to Take Before Filing Your Taxes

Before you contact your tax preparer, ensure you have the necessary documents to hand over. It’s important to have previous year’s tax information, as well as current receipts and documents. Getting an early start on gathering these items will not only speed up the process, but give your tax preparer more time to double check all of your information. Learn more about which forms you will need to file a complete tax return.

The Essentials

Forms from employers, banks, and other businesses need to be filed your tax return, so have these documents ready to go. Some of the most common forms include Form W-2, Form 1099, and Form 1098. These documents indicate the income you’ve received from the previous year. If you are unsure about which documents need to be filed, get in contact with your tax preparer for confirmation.

The Receipts

Receipts act as a form of proof to show so you can properly itemize your deductions. Whether you choose itemize or claim the standard deduction, it’s a good idea to compare your findings and see which one has the greater write-off. Your list of expenses may include anything from medical costs and mortgage interest to charitable contributions. Consult with your tax preparer if itemizing is worth it.

The Tax Return from Last Year

Grab your tax return from last year, even if you are using the same tax preparer. You can look over it for any inconsistences and ensure your current tax return is up to date. It can also provide details about forms you received from last year, and that you have these forms from this year too. Investopedia also comments, “If you made small gifts, you may not have received any acknowledgment from the organization, but you can still deduct these contributions as long as you have a canceled check or other proof.”

Conclusion

The process of filing taxes can be confusing, so let our certified public accountants do the work for you. We are here to prep your tax documents and handle all forms with the utmost professionalism. Refer to MARIELA RUIZ, CPA, PLLC for tax preparation services today.