Personal income tax reporting is not always straightforward. Today’s wage earners are diversified. Outside of a regular paycheck, they may have taxable income that involves investments and income from rental property. As an accounting firm that specializes in personal income taxes, we look for ways to get our hard-working clients the best tax advantage possible. Generally, there are two areas of personal income tax returns that require continual attention.
Rental Property. Whether your real estate rental investment consists of one half of a duplex, or multiple apartment buildings, you must report the income – therefore keep track of all of your expenses to minimize the annual income tax you pay. At Picchi & Martel, we help you with putting all those costs in all the right boxes for annual income reporting.
When you are considering selling your real estate asset, talk to us first! There is a right way to do it to avoid paying excessive taxes through a capital gains tax and depreciation recapture rules. We will run different outcome scenarios so you have the best tax option possible before filing your 1035 exchange.
Schedule C. There are many self-employed individuals who file standard 1040 tax returns. In order to take advantage of all of the tax benefits available to self-employed persons, a Schedule C must be filed with that return. The Schedule C is a form in which expenses are broken out into categories. Some of the nuances we pay close attention to on the Schedule C form are:
Depreciation options – you’ve purchased an asset – or better yet – you are planning on purchasing one. Should you write it all off in one year, or spread it out over the useful life of the asset? We will present you with both options and advise you on which makes the most sense for tax purposes.
Personal vehicles – whether you are taking standard mileage rate or business percentage rate, you still must track the miles used for business purposes. We will present a cost comparison for you on mileage versus actual operating costs so you can decide on the best tax strategy for using your own personal vehicle in business.
Incentive Stock Options. Startup companies will sometimes provide generous stock options to key employees in lieu of a full salary. This keeps the company solvent as it grows and provides a valuable investment benefit to the employee. At Picchi and Martel we will set up an employee’s tax return to reflect this deferred form of revenue. We encourage our clients who have stock options to schedule a consultation with us prior to receiving any stock option payout.