Being married is more than simply saying I do and living your new life with the person you love. Marriage changes everything, even your taxes. In order to ensure you and your partner start off financially responsible, it’s a good idea to familiarize yourself with some of the changes you should expect when you begin filing your taxes as a married person.
Income and Tax Rate
Most people understand that the rate at which you are taxed is based on your income. However, most people don’t have a clue just how much an increase in their income can affect their rate. For example, you and your spouse have an annual salary of $45,000. As single people, you were taxed at a rate of 15%.
As a couple, your new combined income is $90,000. This income level comes with a tax rate of 26%. In simpler terms, your tax penalties will go from $6,750 a piece to $23,400 as a couple. While any tax credits you qualify for and any expenses can help lower this number, make certain you and your new partner are factoring this additional tax expense into your budget just in case.
Spouse transfers can aid in lowering you or your partner’s tax liability. If you or your spouse have non-refundable tax credits that you use partially or not at all, there is an option to transfer these credits to the other spouse in order to lower their liability.
For example, say you can deduct $4,000 in tuition expenses each year. However, you only have a tax liability of $2,000. You can apply $2,000 of these credits to eliminate your liability and transfer the remaining $2,000 in credits towards your partner’s liability. Keep in mind, only certain non-refundable tax credits are transferable.
If your partner was to lose their job at any point during the year, it’s important for you to understand spousal amount. Spousal amount is a tax credit that is applied when one spouse has to support the other spouse. If the supported spouse has a net income less than $11,138, the supporting spouse can receive a credit equal to the difference between the supported spouse’s income and the $11,138.
For example, if your spouse had a net income of $5,000, you could receive a credit of $6,138 to apply towards your liability. If the working spouse has a high income, this credit can really help to lower their tax liability.
As an important part of your financial responsibility, it’s imperative that you take the time to understand the changes being married will impose on your taxes. An accountant can assist you with further understanding these implications and benefits. Click here for more information on accounting services.
As a small business owner, you’re probably accustomed to taking care of all aspects of your business. But unless you have the time, skills and resources necessary to manage all aspects of your business financial concerns, you should hire an accountant for your small business as soon as you can afford to. Here’s why.
Accountants Help Protect You From Tax Errors
Personal tax returns are complicated themselves, but business tax returns can be downright incomprehensible. There are lots more things to understand about business tax filings, such as what qualifies as a deduction and what doesn’t, how to calculate business use area of your home office, etc. Having an accountant prepare your small business tax return can help you to avoid tax return errors and can also help you to maximize your fair share of deductions. Though an accountant is not legally culpable for tax errors, you’re in much better hands when you choose to have a trained and certified accountant prepare your small business tax return.
Accountants Can Help You Make Expansion Decisions
As your small business profits grow, you might get ideas about expanding. You may even be thinking about opening up a second location,or even setting up a franchise. Expanding too soon or expanding too big in a short period of time can quickly cause your business to fail. An accountant will be able to work with you to objectively look at your projections so you can better make a reasonable decision about expanding.
Accountants Take The Financial Burden Off You
If you’re really going to grow your small business, eventually you’re going to need to delegate some of the tasks. When you have an accountant on your team, you won’t have to worry about many of the monthly tax responsibilities that go along with owning a small business. Your payroll taxes can be taken care of, your 941s can be filed, and your annual state reports and 940s can all be handled by a certified accountant. Not only is this a timesaver, but it prevents you from incurring penalties if you ever forgot to file.
Skimping on hiring an accountant would be a poor small business move. The first person you should hire after yourself, is an accountant. They will more than earn their worth. Don’t feel shy about contacting an accountant while your business is very small. Accountants understand that your small business today may be a giant corporation in a few years. For more information, speak with professionals like Myron E Triska Chartered Accountant.