Individual and Business Tax Return Preparation Services in Canton
Individual and Business tax preparation has become more and more complicated, especially with the enactment of the Tax Cuts and Jobs Act (TCJA) of 2018, which has been considered the most significant change in tax law in decades. We stay updated with the new tax law changes, through attending seminars, webinars, and follow-ups with the IRS for any new regulations, revenue rulings, and procedures to ensure the proper application of the most recent law accurately.
Our thorough process begins with the initial interview with the client. We make sure that we are asking and collecting all the information needed to start the tax preparations process. We begin with filing a tax questionnaire that covers all the necessary taxpayer information and changes from year to year. Tax Avenger’s mission is to maximize the benefits the client is entitled to and minimizing their tax liabilities through a detailed analysis of their tax situation and needs. Our job does not end at the tax preparation stage, but we will go the extra mile to provide future tax planning and advice to the client throughout the year.
This is What You Can Expect
Personalized 1 on 1 meeting with a Tax Expert
We will discuss your tax and accounting needs
Peace of mind knowing your taxes are in expert hands!
We will provide personalized tax recommendations specific to your unique circumstance.
CPA in Canton
7365 N. Lilley Rd
Canton, MI 48187
Our Tax preparation services consist
of the following:
Business Tax returns:
Tax Avenger is one of the best tax firms in the Wayne County area providing tax services for small business. Our business tax preparation begins with the creation of a comprehensive plan based on an understanding of the client business’ type and operation. We work with clients to help them maintain tax compliance with federal, state, and local regulations. And ensure the client is receiving any and all deduction or credit available to them within the law.
The following are some tips and highlights of the Business tax forms that Tax Avenger prepare:
1120 – U.S. Corporation Income Tax Return (for C Corp)
- The Form 1120 is used for C Corporation, usually for a large corporation.
- C Corporation is considered a separate legal entity, as well as a separate tax entity.
- C Corporation gives limited liability protection to its shareholders
- C Corporations file their taxes using Form 1120 and pay taxes separately from its shareholders.
- There are no restrictions on the number of shareholders as well as the type of shareholders.
- Corporations that file the Form 1120 are subject to income tax on the business level. Also, the shareholder’s income from the corporation (dividend) is subject to income tax on the individual level, that is the double taxation concept.
- The TCJA has given big tax cut for the C Corporations, and the tax rate now is flat 21%, it was before the TCJA based on corporate income (Brackets), with the highest bracket subject to 35%.
1120S – U.S. Income Tax Return for an S Corporation
- Form 1120 S is used for the company that elects to be treated as S Corporation.
- Like the C Corporation, S corporation gives limited liability protection to its shareholders
- The main legal difference of C Corporation is that there is a restriction for the type and number of shareholders. The number of shareholders should not exceed 100, and shareholders must be U.S. citizens/residents.
- The main Tax difference with the C Corp, that even though the S Corp are required to file taxes at the end of the year, however, these types of entity are not subject to income tax on the corporate level.
- The income of the S Corporation flow to the shareholder through schedule K, and the shareholder will pay the tax that flows from the S Corp through Schedule K. That is why the S Corp is called flow-through entity.
- One important thing for the S Corp is something called reasonable compensation, where the IRS considered the entity owners or officers as employees and part of the company income should be allocated to the shareholders as wages, hence paying payroll tax (Social Security and Medicare ). On the other hand, the shareholder will have a deduction from their paychecks the amount of 7.65% payroll tax. Also, the company will match the same percentage 7.65% of payroll tax and pay both at the Federal level.
- Many factors will determine what is considered reasonable, including the shareholder time spent in the business, their competencies, and skills, and how much they are relying on the company for their living, as well as other factors.
- To compensate for the substantial tax cuts, that given to the C Corporation, the TCJA has introduced the section 199(a) deduction, which is a 20% deduction of the qualified business income of the S Corporation, Partnership, Sole proprietorship, and estate and trusts.
- To determine the eligibility to get the full or partial benefit of this 20% deduction, business owners need to consider the followings:
- What is considered Qualified Business Income or QBI? Typically any income that is derived from the core of the business will qualify; otherwise income such as interest, dividends, etc… will not be eligible.
- There are income limits, or thresholds, where the entity will lose part or all the benefit of this deduction and this limit, is calculated on the individual level ($315,000 for Married Filing Jointly and $ 157,500 for all other filing statuses).
- Wage and Asset limitations if the income exceeds the threshold, which is the greater of 50% of the company wages, or 25% of the company wages plus 2.5% of the company properties unadjusted basis
- There is a complete phaseout for SSTB’s (Special Service Trade or Business) (415,000 for Married Filing Jointly – and $ 207,500 for all other filing statuses).
- SSTB’s are companies that fall under the services of healthcare, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading.
- The deduction is given and calculated on the individual level in the Form 1040 and not on the business level in the Form 1120S.
1065 – U.S. Return of Partnership Income
- Most commonly used type of entity is an investment in financial assets as well as in real estate.
- This type is legally separated, and as an S corporation, it is considered a flow-through entity where all income will flow through to the shareholders.
- A partnership is required to file the Form 1065 at the end of the year. However, it is not required to pay taxes.
- Partners income from the partnership is subject to 15.3% self-employment tax.
- Partner owners are called Partners instead of shareholders in a corporation, and the partnership can have as many partners as needed.
- One crucial difference with the corporation is that the partnership can allocate profit and loss differently than the ownership percentage. Whereas the C and S Corporation profit or loss allocation must be consistent with the ownership percentage.
- As mentioned in the S Corp section, section 199(a) deduction is available for the Partnership and partners could get the benefit of this deduction if they meet all the requirement.
- Used for sole proprietorship (One Owner) or disregarded entity, where the taxpayer uses this form to report their business income and expenses under their tax return 1040.
- Schedule C net income is subject to 15.3% self-employment tax.
- Even though the business is legally separated from the owner, however, there is no tax separation between the owner and the company.
- As mentioned in the S Corp and Partnership sections, section 199(a) deduction is available for sole proprietorship, and the taxpayer could get the benefit of this deduction if they meet all the requirement.
Form 990 – Return of Organization Exempt from Income Tax
- Small tax-exempt organizations, whose gross receipts are usually $50,000 or less, are not required to file Form 990, Return of Organization Exempt from Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.
- These small tax-exempt organizations are required to file electronically the e-Postcard Form 990-N with the IRS annually.
- Exceptions to this requirement include organizations that are included in a group return, private foundations required to file Form 990-PF, and section 509(a)(3) supporting organizations required to submit Form 990 or Form 990-EZ.
- In addition, this filing requirement does not apply to churches, their integrated auxiliaries, and conventions or associations of churches.
The big question that almost all our client ask, is which type of entity is the best. The answer is and will always be “It Depends.”
Of course, each type of entity will fit better a specific business.
Knowing the business and knowing all the characteristics and the differences between each type of entity is crucial in tax planning.
Tax Avenger is experienced and will provide businesses with the utmost assistance and support to make sure they maximize benefit and ensure all their reporting are done in a timely manor to ensure compliance will all city, state, and federal guidelines.
Individual Tax Returns:
We process tax return quickly and accurately manner, making sure taking advantage of all the right credits and deductions to which you’re entitled. We take the time to evaluate your type of income and work with you to find plans that will benefit you in both the immediate future and the long term. Whether you are an independent contractor looking to deduct business expenses or a salaried worker with deductible retirement savings, we can help.
Our Canton tax services also include estate planning. We review yours or your loved one’s official documents, including wills, power of attorney, trusts, and healthcare proxies. Once we have a complete understanding of the status of your estate, we can help to ensure that to have the right plan for yours and your family’s long-term well-being.
The following are some tips and highlights of some of the Individual tax forms that Tax Avenger prepare:
1040 – U.S. Individual Income Tax Return:
- More than 150 million Americans and resident in the United States use the Form 1040 to file their individual tax return filing at year-end.
- Five filing status, identified at year-end Single, Married filing separately, Married Filing Jointly, Head of Household, and Qualifying Widow/er.
- Filing due dates are April 15, with an extension of 6 months is available by filling the Form 4868.
- It is one page that summarizes all the six schedules (1 through 6) as well the other schedules, such as Schedule A, B, C… and other worksheets.
- Individuals must file tax returns if their income is above the standard deduction, or they have income from self-employment above $400 or wants to claim a refund.
- The standard deduction is $24,000 for Married Filing Jointly, $ 18,000 for Head of Household, $12,000 for Single and married filing separate.
- Additional deduction of $ 1,300 for Elderly (65 year and above) and $1,300 for Blind, and $2,600 for both.
- Tax rates is brackets range between 10% (Income up $9,700 for Single) and up to 37% (Income above $510,301 for Single)
- Child tax credit is worth $2,000 per child, $ 1,400 is refundable.
- A child must have SS to claim the credit.
- Another Dependent Credit is worth $500.
- For Schedule A or Itemized deduction, the big chunk of it which is the State tax and Property taxes are limited both up to $10,000, hence a lot of people will not get any benefits from the Itemized deductions
- The 20% qualified business deduction for pass-through entities are reported under line number 9 on the Form1040.
- AOC (American Opportunity Credit) is up to $2,500 per year, and it is available for the first four years in college.
- LLC (Lifetime Learning Credit) is up to $2,000 per year, and it is unlimited.
1040 – NR U.S. Nonresident Alien Income Tax Return
- Used by Non-Resident Alien (Non-U.S. or Green Card Holder) that engaged in a trade or business in the US, or Received Income from the US
- Filing due date is April 15 if you received income from employment subject to U.S. Tax, otherwise filing due dates is June 15.
- A 6-month extension can be filed using the Form 4868.
- Nonresident which mean you do not meet the substantial presence test.
- Substantial presence test: Must be physically present in the U.S. at least, 31 days of the current year, and 183 days during the past three years period including the current year and the two years immediately before that. And all the days you were present in the current year, and 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year
- Special instruction for dual-status taxpayers, who change their status between resident and nonresident.
- If you are a nonresident alien, you cannot claim the standard deduction.
- You may be eligible for some deduction and tax credit (i.e. Self-employment Tax deduction, Foreign tax credit…)
Tax Avenger will help you maximize your benefits and minimize your tax liabilities within the applicable tax law. We will work diligently to ensure your proper and timely tax filing.
are you looking for Affordable Tax Preparation Services? Get a Free Consultation Today!
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7365 N. Lilley
Canton, MI 48187