Newark, NJ Tax Lawyers
Can you imagine how helpful and convenient it would be if you were allowed a whole extra year by none other than the IRS themselves on $11,000 of income? Basically, that would mean $2,750 over a period of 12 months (if and when your tax rate was 25%) before the IRS would actually request you to pay up.
Does it sound a little too good to be true? Well, according to Newark, NJ tax lawyers there is an accounting rule that facilitates exactly this. Business owners especially can use this rule in order to lawfully request a delay in paying their taxes for as much as a period of one year.
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Unfortunately, most small business owners and accountants simply do not use this and thus end up checking the wrong box and paying taxes through thick and thin when instead they could have taken more time to sort out their finances and then paid the taxes. Newark, New Jersey tax attorneys know this is not necessary.
How does this accounting rule work?
Reporting or declaring your salary to the IRS can either be done via reporting cash or reporting on an accrual basis. Depending on which you choose, it will determine whether or not you will be allowed the extra money to work with for a period of a year.
Cash is the more simple method of disclosing your income to the IRS and because it is a lot easier in terms of accounting. It is simple – cash going in is income and cash going out is expenses. Therefore, most small businesses resort to the case method of accounting even though it is not necessarily the best method simply because of the simplicity.
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On the other hand, according to New Jersey tax lawyers, the accrual method is a little more convoluted, but it certainly has its perks. In addition, under the right conditions, this method was also result in substantially improved tax results.
Choosing the accrual method will mean that you have another year to get your taxes paid out because under the accrual method income is not considered or accounted for until and unless you actually earn it and have it in hand or account. Therefore, you may receive the cash this year, but you are not required to owe taxes on it until next year.
Now the accrual method may work for some but it would not work for Skyler White (Anna Gunn) in the show Breaking Bad since her murderous and irrational husband was bringing in so much money that they could not wash enough cars to wash that much money. This is she why she has to rent a storage locker to hide all that cash. Eventually, as expected, this blew up in their faces and a lot more people were killed in the process.
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Accounting, doing your taxes, filing tax returns, being the target of a tax fraud or being suspected by prosecutors for having evaded taxes or of having committed tax fraud is all very intimidating. If you are not represented by a legal professional then you could potentially end up in a lot of trouble with the law and the IRS (which will soon be altered and gutted according to some people because this agency has proven to be corrupt but this is another topic), and not only will it have financial implications, but it will also mean you could be facing prison time.
Therefore, if you have any issues with taxes, you can always turn to a competent New Jersey tax lawyer for sound guidance and representation.
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