The Firm of Edward M. Osinski Jr., CPA PC

“Notes Receivable” is a collective term for written promissory notes that are due in less than one year and are held by the entity to whom payment is promised.

The Business or Legal Entity is the legal structure, or type, of a business. Common company formations include Sole Proprietor, Partnership, Limited Liability Corp (LLC), S-Corp and C-Corp. Each entity has a unique set of requirements, laws, and tax implications.

Self-employed workers need to account for F**A taxes. In addition to your income taxes, remember to also account for your Social Security and Medicare taxes. Creating and funding a savings account for this purpose can help avoid a possible cash flow hit each quarter when you pay your estimated taxes.

“It’s not the load that breaks you down, it’s the way you carry it.”

When you win a prize, fill out a sheet outlining the details of the event. Record the identity of the sponsor, the date, a detailed description of what was won, copies of documentation, photos of the items won, and the approximate retail value assigned to the prize by the sponsor.

Your adjusted gross income (AGI) is your taxable income minus certain deductions. It’s a key number because the IRS uses your AGI to determine whether you qualify for other tax credits or deductions.

Below-the-line deductions are amounts you can claim to reduce your overall taxes. Generally, there are two types of below-the-line deductions: itemized deductions and the standard deduction. However many people do not typically refer to the standard deduction as a below-the-line deduction. You may choose the deduction that lowers your tax bill the most.

“All our dreams can come true, if we have the courage to pursue them.”

A limited liability company (LLC) is a business structure in the U.S. that protects its owners from personal responsibility for its debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.

Keeping tax returns and the documents you used to complete them is critical if you’re ever audited. Typically, the IRS has three years to decide whether to audit your return, so keep your records for at least that long. You also should hang onto tax records for three years if you file a claim for a credit or refund after you filed your original return.

Tax deductions and tax credits may be the best part of preparing your tax return. Both reduce your tax bill, but in very different ways. Knowing the difference can create some very effective tax strategies that reduce your tax bill.