PHILADELPHIA, PA, August 20, 2013 /24-7PressRelease/
-- As a certified public accountant, Arnold McClellan
understands the role that taxes play in both personal and business finances. With changes in federal policies and laws, it is important to understand what that means for taxes. A recent article in the Times Union highlights the importance of the mid-year tax review to help keep things organized and stay on top of changing laws and their effects.
Even though it is still the middle of summer and it seems as though taxes were just filed, it is never too soon to prepare for next year. After all, the year is already more than halfway over. Taking the time to review taxes mid-year can pay off when it comes time to file. For example, the rules of the American Taxpayer Relief Act of 2012 have changed and this will affect those people in higher-income tax brackets. The top income tax bracket is no longer 35 percent, it was raised to 39.6 percent. Also, the tax rate on long-term capital gains and dividends increased as well. Instead of 15 percent, it is now 20 percent. These are things that it is helpful to know because it has already affected those who pay estimated taxes throughout the year.
According to the article, these changes affect single taxpayers with a taxable income greater than $400,000 and those who are filing jointly with a taxable income greater than $450,000. Mark Luscombe, principal tax analyst at CCH Tax & Accounting North America, explains, "The higher rates are already in effect, and affected taxpayers should be paying estimated taxes based on those rates." Reviewing taxes mid-year can help taxpayers to make sure they are paying the appropriate amounts so that they do not owe even more later.
Estimated taxes are paid by those whose income is not subject to withholding. Income from self-employment, interest, dividends, alimony, rent and gains from the sale of assets, prizes, and awards, are all included. In addition, people who do not have enough income tax withheld from their salary, pension or other income may also have to pay. Penalties are often charged to people who do not pay enough in estimated taxes or have enough withheld from their income. Understanding changes to tax rates is essential in determining how much to pay.
Individuals and couples who paid for summer child care may qualify for the Child and Dependent Care Tax Credit, which can help to save them money on their tax bill. They also may qualify if they paid for childcare throughout the year so that they could work or actively seek work. In addition, if one's spouse is a full-time student or is physically or mentally incapable of caring for themselves, this may count toward the tax credit.
"Understanding what taxes apply and what deductions you may be eligible is helpful in the planning process," says Arnold McClellan. "It can help you to better determine how much you should be making in estimated payments, and what tax breaks or credits you can claim when filing your taxes. By reviewing these things periodically throughout the year, you can become better prepared for when you file for the year." Arnold McClellan recommends seeking professional assistance for anyone who is unsure about filing their taxes or wants assistance planning.
is the Merger and Acquisitions Services Partner-in-Charge at Squar Milner, one of the top 75 largest accounting firms in the nation. Prior to working at Squar Milner he gained experience at both Deloitte LLP and Arthur Andersen, two global firms. He is a licensed Certified Public Accountant in California and Georgia, and is a member of the American Institute of Certified Public Accountants and the California Society of CPAs.