Our firm offers preparation of tax returns of any level of complexity. This can include business income, income from rent, dividends, interest, capital gains, etc. We will make sure that all necessary federal and local returns are filed on time and that all available credits and deductions are fully utilized. We will also advise you on estimated tax payments to ensure that you will not be a subject of IRS penalties for not paying the taxes evenly throughout the year. As part of our service we will show you potential deductions to limit your tax liability for next year.

Income tax on individuals is usually charged at the federal level, at the level of states where they live, and sometimes even at the level of individual regions and cities. There is no state tax in Washington State however. Federal taxes are imposed on all types of income unless specifically excluded by law. This includes wages or salaries, pensions, bonuses, commissions, business income, dividends, interest, capital gains, rent, royalties, etc. Often the amount of taxes paid on investment income is lower due to more favorable rates and because Social Security and Medicare taxes do not apply.

At the federal level, income tax rates are determined by the nature and the amount of income and marital status of the taxpayer. There is an exempt amount of income, which depends on marital status, and number of dependents in the family.  Typically, there is no need to file a tax return if the annual income is lower that the exempt amount.  However, tax return must be filed if $400 or more was earned from self-employment, or $108.28 or more was earned as church employee income.  There are many situations, where it might be beneficial to file a tax return even if it is not required, in particular, if there is an opportunity to claim Earned Income Tax Credit.

There are numerous credits and deductions that can reduce the amount of federal tax liability.  It is possible that the amount of credits exceeds the liability. I such cases, the taxpayer receives a certain amount of money from the federal government instead of paying the tax. The most beneficial credits usually relate to raising children or taking care of family members with disabilities, and to expenses to obtain the higher education. People with low income are eligible to Earned Income Tax Credit. The most common deductions include relocation costs, pension contributions within the prescribed limits, mortgage interest on the first and second homes, and states property and income taxes.

The payment of sales and properties taxes can be used as a credit when calculating federal income tax liability. Because of this, it is important to carefully keep records and documents related to the payment of property taxes and sales taxes paid on large purchases especially for the taxpayers in WA state, where there is no state income tax.

Taxpayers are required to pay taxes on the income that they received evenly throughout the year. Typically, the employers withhold income and FICA taxes from wages and salaries and remit the appropriate amounts to the IRS. If income is derived from sources from which taxes are not withheld (for example, self-employment, rents or investments), taxpayers themselves are required to estimate their tax liability and remit it to IRS. To avoid potential penalties, the remaining tax debt for the current year should not exceed $1,000. Estimated tax should be remitted four times a year by the due dates the specified by the IRS.