FAQs
What is the minimum cost of your individual tax services, and what does that include?
Our minimum cost is $275, or $225 (a $50 discount) if you are also a client of WNY Asset Management. This cost includes tax planning and both federal and state filings for most “typical” tax situations (W-2s, most 1099s, 1098s). If there is more complexity to your return (i.e. rental or business income, K-1s, trust flow-throughs, sale of home, etc.), we will provide an estimated cost upon intake of your information.
What is tax planning?
Tax planning is the process of strategically organizing your finances to minimize tax liabilities while maximizing tax benefits. It involves analyzing various aspects of your financial situation, such as income, expenses, investments, and deductions, with the goal of optimizing your tax situation within the framework of existing tax laws and regulations. Effective tax planning helps individuals and businesses reduce their tax burden, plan for future financial goals, and ensure compliance with tax obligations.
How long should I keep my old tax returns and related source documents?
We would recommend that you keep the prior six years of tax returns and related source documents on file. The base statute of limitations that the IRS can audit is the prior three years. However, if there is a substantial understatement of income (25% of gross income), the audit period is increased to six years. There is no statute of limitations for fraudulently filed or never filed returns.
It is a good practice to keep W-2s on file until you collect Social Security. This will provide backup if there is a discrepancy with the Social Security Administration’s reported wages.
What is the standard deduction?
Most taxpayers take the standard deduction, which for 2023 is $13,850 for single and married filing separately, $27,700 for married filing jointly and qualifying surviving spouse, and $20,800 for head of household. For taxpayers who are 65 and older or blind, additional standard deduction amounts are available as well.
What are itemized deductions, and how can they be utilized?
Common itemized deductions include mortgage interest, real estate tax, charitable contributions, and medical expenses. Although most taxpayers take the standard deduction, we review all your potential deductions and analyze whether itemizing is best. Although the federal deduction for state and local taxes is limited (i.e., real estate taxes), there is no deduction limit on the New York State return. In some cases, claiming the standard deduction federally but itemizing deductions at the state level can minimize your tax liability.
What is the difference between a tax deduction and a tax credit?
A tax deduction reduces your taxable income, while a tax credit directly reduces your tax bill. For example, if you have a $100 tax deduction and your tax rate is 20%, your tax bill is reduced by $20 ($100 * 20%). If you have a $100 tax credit, your tax bill is directly reduced by $100. Common tax deductions include mortgage interest, real estate tax, charitable contributions, and medical expenses. Common tax credits include the child tax credit, the earned income tax credit, the American opportunity tax credit, and the lifetime learning credit.
Start maximizing your tax benefits and achieving financial success.
Discover the difference with WNY Tax Planners as your trusted partner for personalized tax planning solutions. Experience exceptional service and prioritize your financial goals with our dedicated team. From individual tax returns to trust & estate tax planning, let WNY Tax Planners tailor tax services to fit your unique needs.