Contact Us
office@taxsherpa.com
(678) 944-8367
Follow Us:
Our Blogs
On our blogs you will find our Tax Sherpa Stories series as well as additional posts covering all manner of tax topics. Some items are timely as there are multiple tax filing dates throughout the year and some items are important larger concepts.
Frequently Asked Questions
Q:
What's the difference between tax advisory and just filing my taxes?
Filing your taxes each year is a necessary task, but it is always backwards looking. Tax advisory works with you throughout the year to make sure that you are on the right track when it comes to your taxes and have strategies in place to save money now.
Q:
I've heard about tax write-offs for small businesses. What exactly can I write off, and how does it benefit my business?
Tax write-offs, also known as tax deductions, are expenses that a business incurs that can be subtracted from its revenue to reduce the amount of taxable income. Common write-offs include office supplies, mileage, rent for a business location, and advertising expenses, among many others. By writing off legitimate business expenses, you can significantly reduce your taxable income, which can lead to a lower tax bill. It's essential, however, to maintain proper records and ensure that the expenses are truly business-related.
Q:
What's the difference between a tax deduction and a tax credit?
A tax deduction reduces the amount of your income that is subject to taxation, which in turn can lower your tax liability. Common deductions include expenses like mortgage interest, student loan interest, and business expenses. A tax credit, on the other hand, is a direct reduction of your tax bill. This means if you owe $1,000 in taxes and have a $200 tax credit, your tax due would be reduced to $800. Some popular credits include the Child Tax Credit, the Earned Income Tax Credit, and credits for energy-efficient home improvements.
Q:
I'm thinking of hiring an independent contractor instead of an employee. Are there different tax implications for each?
Yes, there are significant tax differences between hiring an employee and an independent contractor. When you hire an employee, you're responsible for withholding federal and possibly state income taxes, Social Security, and Medicare taxes from their paychecks. You also typically pay unemployment taxes on wages paid to employees. Independent contractors, on the other hand, are responsible for their own taxes. As a business owner, you'd provide them with a Form 1099-NEC (if you pay them $600 or more during the year) instead of a W-2, and they would be responsible for their own self-employment taxes. It's important to correctly classify your workers, as misclassifying can lead to penalties.
Get in touch with us
Have questions? Use the form here and one of our knowledgable staff will get back to you as soon as possible.
(678) 944-8367
office@taxsherpa.com
2302 Parklake Dr NE Ste 675
Monday - Friday, 10:00 am - 5:00 pm
Send us a message
Follow Us
Follow Us
Disclaimer: The content presented on this website is intended for informational purposes only and is not tailored to the needs of any specific individual or entity. It should not be considered as financial, investment, or tax advice. The information provided is general in nature and does not account for individual circumstances or financial positions. Before making any financial or tax-related decisions, we strongly advise consulting with a qualified professional who can provide guidance tailored to your individual situation. All information on this site is provided in good faith, but we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the site. Use of this site and reliance on its content is solely at your own risk.
Services
More
Contact Us
office@taxsherpa.com
(678) 944-8367
2302 Parklake Dr NE Ste 675
Atlanta, GA 30345
Monday - Friday, 10:00 am - 5:00 pm
© Copyright 2024. Online Tax Solutions Group LLC dba Tax Sherpa. All rights reserved.
Social Security: What You Need to Know
As we look ahead to 2025, there are significant changes on the horizon for Social Security, especially for high-income earners. In a recent discussion, Neal McSpadden, founder of Tax Sherpa, explored what an upper-class Social Security check might look like in the coming years and how these changes could impact your retirement planning.
Understanding Social Security and Demographic Shifts
Social Security operates on a pay-as-you-go basis, where current workers' taxes fund the benefits of current retirees. However, demographic shifts over the past several decades have altered this balance. There are now fewer workers paying into the system relative to the number of retirees drawing benefits. As a result, the Social Security Trust Fund has been drawing down its reserves, which are projected to run out within the next eight years.
Projected Benefits for High Earners
For high-income earners who have consistently exceeded the Social Security wage base, the projected benefits in 2025 are notable. For instance, someone who has earned above the maximum taxable earnings for 35 years could expect a monthly benefit of approximately $4,018 if they claim benefits at age 67. If they delay benefits until age 70, this amount could increase to $5,261 per month.
Strategic Tax Planning
Tax planning plays a crucial role in maximizing Social Security benefits and ensuring financial stability in retirement. For high earners, it's essential to consider strategies that balance minimizing current taxes with ensuring adequate Social Security benefits in the future. Additionally, for immigrants and their families, understanding the requirements for Social Security and Medicare eligibility is vital for long-term planning.
The Importance of Medicare Gap Coverage
Medicare and Social Security are closely linked, but they serve different purposes. As retirees transition to Medicare, it's crucial to secure gap coverage to avoid significant out-of-pocket expenses. Standard Medicare plans only cover 80% of qualifying expenses, leaving a 20% gap that can be substantial, especially in the final years of life when healthcare costs tend to spike.
Conclusion
Navigating the complexities of Social Security and tax planning can be daunting, but it's essential for ensuring a secure retirement. At Tax Sherpa, we specialize in helping high-income earners and small business owners develop strategies that optimize their financial outcomes.
To discuss your specific situation and explore how you can best prepare for the future, book an appointment with one of our Tax Sherpa experts today.
📅 Book an appointment: taxsherpa.com/book-an-appointment
By staying informed and proactive, you can make the most of your Social Security benefits and enjoy a financially secure retirement.
Neal McSpadden
Neal went from owing the IRS over $1,300,000 to Zero and in so doing discovered the world of tax planning. Since 2011 he's helped tens of thousands of clients save hundreds of millions of dollars on overpaid income taxes.