Quality Tax, Bookkeeping & Payroll Services
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Please feel free to read our client newsletter. It is provided to keep you up to date on the latest tax and accounting news.
As the temperatures reach the highs that come with summer, so too is the peak impact of inflation. As in past months, topics continue to focus on ways to fight these trends.
One of the topics covered is the ever increasing property tax burden and how to increase the odds of getting yours lowered. There is also an article discussing the impact of the increasing federal interest rate and what it means to you. Plus an interesting read for small business owners to help identify and plan for unexpected expenses.
But this month is lead off with answers to common tax questions. Included here are five of the most common including whether those free airline miles on credit cards are taxable or not.
As always, please feel free to pass this newsletter to anyone who may find it valuable and call if you have any questions or concerns.
What everyone is wondering
During tax season, there are a number of areas that generate questions. Here are five of the most common and their answers. But like most things, there can be exceptions, so if in doubt always ask for help.
Have your own question? Reach out. The answer could surprise you.
Higher property tax bills have accompanied the rising market values of homes over the past several years. If your property taxes have reached the stratosphere, here are some tips to knock them back down to earth.
Property taxes typically lag the market. In bad times, the value of your home goes down, but the property tax is slow to show this reduction. In good times, property taxes go up when you buy your new home, but these higher prices quickly impact those that do not plan to move.
To make matters worse, you can only deduct up to $10,000 in taxes on your federal tax return. That figure includes all taxes - state income, property and sales taxes combined! Here are some suggestions to help reduce your property tax burden.
Your best bet is usually to approach your local tax assessor and ask for a property revaluation. Here are some ideas to cut your property tax bill by reducing your home's appraised value.
While going through this process, remember to be aware of the pressure these taxing authorities are under. This understanding can help temper your position and hopefully put you in a better position to have your case heard.
Financial experts are bracing for more interest rate hikes by the Federal Reserve over the remainder of 2023. Any interest rate revision - either increasing or decreasing - can cause a ripple effect throughout the economy. Accordingly, the Federal Reserve's actions will probably exert at least a moderate influence over financial choices you may make at home and in your business in 2023.
Here are several ways that you could be affected by interest rates that are continuing to trend upward.
As a consumer, you stand to gain from rising interest rates because you’ll likely earn a better return on your deposits. Over the last ten years, placing your money in a certificate of deposit or passbook savings account has been hardly more profitable than stuffing it under a mattress. On the other hand, the cost of borrowing money will likely increase. As a result, mortgages, car loans, and credit cards will demand higher interest rates. That’s not a big deal if you’re already locked into low-interest fixed-rate loans. But if you have a variable rate loan or carry balances on your credit cards, you may find your monthly payments starting to increase.
On the investment front, market volatility may continue because rate increases are not completely predictable. Market sectors will likely exhibit varied responses to changes in interest rates. Those sectors that are less dependent on discretionary income may be less affected – after all, you need to buy gas, clothes, and groceries regardless of changes in interest rates.
As you adjust your financial plan, you might only need to make minor changes. Staying the course with a well-diversified retirement portfolio is still a prudent strategy. However, you may want to review your investment allocations.
Rising interest rates can also affect your business. If your company’s balance sheet has variable-rate debt, rising interest rates can affect your bottom line and possibly your plans for growth. As the cost of borrowing increases, taking out loans for new equipment or financing expansion with credit may become less desirable.
Please call if you have questions about deciding on the most beneficial response to potential future changes in interest rates.
Getting a bill for an unexpected expense can put a dent in your business’s cash flow. Here are some tips your business can use to handle these unforeseen bumps in the road.