Articles Posted in Tax

Tax season is coming up, and you may be due a refund. In the simplest of scenarios, this is handled in the course of filing your annual tax return, but in some cases, there may be an error that means you still paid more than you technically owed. Businesses and those with more complex financial profiles may find themselves overpaying due to certain oversights or situations.

Common Errors

Errors on taxes are common, and the IRS generally does a decent job of double checking your returns and refunding overpayments. If you made math errors on your return or when calculating certain taxes, or if you forgot to take certain obvious exemptions, you will usually be refunded the amount overpaid with no effort on your part.

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A major part of the estate planning process is making sure you shield your estate from taxes as much as possible. In many cases, this isn’t too much of a problem, but you do need to plan everything carefully. Oversights can lead to excess tax exposure, the result of which would be a significant reduction in what you pass on to your heirs.

One of the questions you’ll have to deal with is whether a tax return needs to be filed for your estate. In many cases, it may not be strictly necessary, but it’s often a good idea to do so anyway.

Technical Requirements for Filing an Estate Tax Return

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Corporate Taxation Basics

If you are forming a corporation in the state of Illinois, one of the matters you’ll need to be aware of is how your taxes will be affected. In most cases, you’ll have some familiarity with business tax obligations since most corporations are formed from existing entities, such as partnerships or limited liability companies.

Here, we’ll examine what taxes are imposed upon corporations and how those might best be handled.

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April 15th has come and gone, and if you haven’t filed your taxes, there will likely be penalties assessed. These can become significant, especially if you’re also behind on tax payments. There are a number of ways to deal with this situation, however, and while it’s best to avoid filing late in the first place, the IRS is typically willing to work with those who face difficulty making the deadline.

Late Filing Vs. Late Payments

Before going into what happens if you’re late filing, it’s important to know that filing late is not the same a paying late. You can file on time and be late paying the taxes you owe, or vice versa.

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How Illinois Businesses Can Prepare for an IRS Audit

The IRS may choose to audit a business based on certain inconsistencies or abnormalities on their tax return. Each return is run through a system that automatically compares it with other returns from similar businesses in the area. If it scores high enough in the system, it’s selected for audit. Additionally, other returns are selected purely at random, so it is possible to be audited after having done nothing wrong.

While there is a fairly low chance that any business will be audited, it’s still important to be prepared in case the IRS sends you a letter.

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Earlier this November, a plan was introduced in the U.S. Senate that can significantly impact the way taxes are handled throughout the nation, and particularly in Illinois. Among the changes it proposes are elimination of federal deductions for state and local taxes.

The SALT Deduction

State and local taxes, also known simply as SALT, have until now been deductible from federal taxes. In other words, you can take the total amount you pay in SALT and subtract that from your taxable income on your federal tax return as an itemized deduction. This helps relieve the tax burden on all states, but it is especially beneficial for Illinois residents who have among the highest property and income tax rates in the nation.

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The recently passed school funding bill is going to increase property taxes in Cook County, most significantly in Chicago. Within the city, the amounts homeowners owe on their property taxes each year could increase by as much as 10%. The increases are smaller in the suburbs around the city, ranging from 3.9% to 6.5%, but will still exact hundreds in taxes from their owners every year.

Businesses aren’t faring much better, with city commercial property going up by over 9%. While a few areas will see taxes on commercial properties go down slightly, the overall result is higher tax obligations throughout the county.

Renters may not escape this either since the extra taxes paid by their landlords will almost inevitably be passed on to them in the form of higher rent.

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In order to fulfill their purposes as efficiently as possible, various organizations can operate tax free under federal and Illinois laws. To create a tax-exempt organization, one must follow certain rules and procedures. Otherwise, it can result in messy legal entanglements that will debilitate your organization.

Types of Tax-Exempt Entities

There are numerous types of tax-exempt entities, but most of them fall under the 501(c)(3) distinction. This corporation structure includes the following types of organizations:

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The end of the year is fast approaching, and if you haven’t already done so, it’s time to plan for 2018. Business planning can be a complex process, especially when it comes to setting financial goals and minimizing tax obligations. However, when you have access to all the information you need and consult with your attorney about the intricate legal implications of your business operations, you can put together an ironclad plan to implement in the new year.

Get Your Books Together

Your first item of business is to make sure your books are in order. Careful record keeping is key to effective tax planning, and having all your financial documents, receipts, invoices, and other records in one place will help considerably when it comes to minimizing obligations to the IRS and preserving your bottom line.

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