Income Tax Issues Solved by Pasadena’s Personalized Tax Preparation Services Consultants, Figco

Figueroa & Co. pride themselves on their caring and personalized financial and income tax preparation services. If you are based in the Pasadena area, you will find that Figco is passionate about what they do best. We aim to make your business expand and prosper through the best professional advice about everything to do with income tax.

The U.S. Federal Government views revenues derived from income taxes as one of their moist important source of funds. Overall, personal income taxes generally account for approximately 26% of federal revenue, while the largest source of federal revenue comes from borrowing.

Why Should You Pay Income Tax?

The answer is simple: it is your responsibility as a citizen of the United States. Taxation is consistent in a free society and is used to fund essential things as repairing or building roads, education and military defense. All of which would dwindle without everyone chipping in.

The majority of personal income tax is collected through money being withheld from your pay check, so that you don’t have to actually write a check or do an automated bank transfer and you get used to what gets deposited into your bank on pay day.

If you have completed your tax return, and it then indicates that you owe taxes which are more than the withholding and estimated taxes, you have an obligation to pay whatever taxes you owe and federal laws are laid down to ensure you abide.

What Happens If You Don’t Pay by the Deadline?

If you do not pay the tax owed, interest will have to be paid on the debt. Even though interest rates are actually quite low (3% at the end of 2012) it is an avoidable additional cost.

If you end up underpaying your taxes by too much, it is possible you may be required to pay an underpayment penalty. This penalty is a half of one percent of the amount of unpaid tax for every month that is past due, until it reaches a maximum penalty level of 25% of the unpaid tax amount. The penalty is an addition to any interest you still owe.

You Could Lose Your Property

If you fail to work out any payment arrangement with the IRS, for the penalties and interest, eventually the IRS could access your bank for the debt repayment. If the debt repayment still did not take place then the IRS could foreclose on your house to recoup the debt.

You May Not Get a Passport or it May be Cancelled

A bill put before Congress last year may mean you will not be able to get a U.S. passport if you owe any taxes. Anybody who owes $50,000 or more may have his or her passport cancelled.

If you owe any taxes but do not have the money to pay your bill, check out your payment possibilities, you could use your credit card or work out a means of paying through installments.

Personal Information Required by the IRS

The IRS needs to know who is filing in the tax return and who is included in it. In order to meet this requirement you will need all the social security numbers, the dates of birth of your spouse and any dependents.

Once you have got this far with the form, you will then have to fill in a large amount of information concerning your income.

This will include, income from jobs, investment income, stock information, income from state and local income tax refunds and any claimed from unemployment benefits, Social Security benefits, alimony payments, business or farm income, including a profit and loss statement and any capital equipment owned.

Businesses Run from Your Home

You will have to include information about:

  • Home size
  • Office size
  • Home expenses
  • Office expenses
  • IRA / pension details

If you own a rental property you will have to include:

  • All income and expenses
  • A profit and loss statement

If you own another property or sell a property you have to state the income you have gained and details about the sale of the property which will include the original cost and cost of improvements.

Other Income Derived from Jury Duty, Gambling Winnings, Medical Savings Account (MSA), Scholarships, etc.

There are ways that we can all reduce the amount of income that is taxed, which therefore increases any tax refund or lowers any amount that is owed and these are:

  • IRA contributions
  • Energy credits
  • Interest on a student loan.
  • Contributions to a Medical Savings Account (MSA)
  • Expenses when moving homes
  • Health insurance payments
  • Keogh, SEP, SIMPLE and other self-employed pension plans
  • Alimony payments
  • Education expenses

Specific Credits and Deductions

The government provides some deductions and credits which helps to lessen the tax load on individuals.  However, it will be necessary to provide all the necessary documentation to ensure you receive all of your entitlements including:

  • Advanced Child Tax Credit payment
  • Child care expenses; this must include the provider’s name and address, tax identification number and cash paid
  • Education expenses
  • Adoption expenses
  • Interest on home mortgage
  • Interest on investments expenses
  • Any charitable donations which could be cash or goods
  • Losses from theft, you must include the amount of damage, and any insurance paid to you.

There are other taxable deductions which include union subscriptions, and dental and medical expenses.

Taxes You’ve Paid

If you correctly record any other taxes you have paid already paid, it will keep your tax bill down. These taxes include: local and state income taxes, paid taxes on real estate and any other personal property taxes which include vehicle licensing fees.

The whole income taxation system devised by the IRS can be quite overwhelming at times, especially if you have many expenses and revenues that you have to deal with throughout the year. However, none of us wants to pay any more than we have to, so it is often better to pay for the services of a tax preparation agent who knows the ins and outs of the workings of the IRS and can ensure that laws are followed, taxes are paid and expenses are considered.

Based in Pasadena, CA. we at Figueroa & Co. have built up an enviable reputation for our financial consultancy and Income tax preparation services and are renowned for consistency and impartiality in both completing tax returns for clients and resolving difficult issues.