FSBC TAX

Disaster Preparation Reminders – Did You Know?

September is National Preparedness Month, the perfect time for all Americans to check their readiness for storms, floods, fires and other disasters. To help with that checkup, the IRS recently reminded taxpayers of important steps to include in their disaster preparation plans.

Store key documents in a secure, waterproof and fireproof container. These documents include birth certificates and/or Certificates of Naturalization, Social Security cards, tax returns, home deeds and vehicle titles. If you do not have a suitable storage option in your home, you may wish to rent a safe deposit box. In either case, make copies of these documents and store the copies in a separate location from the originals, such as at a relative's home. You may also wish to scan documents if you have access to a secure digital storage option.

To facilitate making insurance claims and/or claiming disaster loss tax deductions, individuals and businesses should maintain accurate inventories of their valuables. One simple way to document your possessions is to regularly take photos or videos around your home. Store the photos or videos securely, and include written notes like the year, make and model of key items.

Recovering from a disaster is always challenging. However, the right preparation can make the process a little simpler, and less stressful.

IRS Fourth Quarter Interest Rates for 2023 – Did You Know?

The IRS recently announced an interest rate increase for the fourth quarter of this year, October 1 - December 31. For that period, the annual interest rate for individual taxpayers will rise to 8%. Individual taxpayers who owe overdue tax will be charged interest at an annual rate of 8% on any unpaid balance beginning October 1, with interest compounded daily.

If you have not yet paid your 2022 tax, or tax from a previous year, paying as much as you can as soon as possible will help minimize the effect of this rate increase.

Summer Life Events and Taxes – Did You Know? (2/2)

People often make life changes during the summer, both short-term and long-term. Many of these changes may require adjustments to your tax planning, and some create opportunities for significant tax savings.

Students who work part-time over the summer may have more federal income tax withheld from their pay than they owe. Make sure that working youngsters in your home are prepared to file a federal tax return next spring to claim any refund they have coming. Taxpayers of all ages who take on gig economy work should also be aware that they may owe self-employment tax. In general, any extra income may necessitate adjusting your withholding or estimated tax payments. The IRS Withholding Estimator tool (link below) can help you with the calculations.

Summer home improvements projects that reduce energy use, like installing Energy Star-certified windows, may make you eligible for the Energy Efficient Home Improvement Credit. Tax credits also exist for clean energy conversions, like installing rooftop solar panels. All of these tax-reducing opportunities require carefully documenting each expense.

A tax professional can help you determine whether you qualify for tax savings based on your summer activities.

IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator