With each tax season comes the hope of a substantial refund, or at least the chance of not owing too much in taxes. So, how can you be sure you are getting back as much as you should? With the many new changes to deductions and other tax laws made in recent years, it can be difficult to navigate the complexities of a tax return, especially when attempting it on your own.

While you’ll likely hear a great deal of information through media channels and on the Internet detailing how you can get more money back, you should first consider these 5 ways to maximize your tax refund.

1. Choosing the Itemized Deduction over Standard Deduction

When preparing your taxes, you have the option of choosing either the itemized deductions or the standard deduction to lower the amount of taxable income. The Tax Cuts and Jobs Act (TCJA) has made it more difficult to itemize, eliminating or restricting many items. It also raised the standard deduction amounts for 2019:

• $12,200 for individual filers
• $24,400 for joint returns
• $18,350 for heads of household

However, it might still be beneficial to choose to opt for the itemized deductions if, for example, you have a high amount of medical expenses and/or charitable contributions to claim.

Be sure to save and organize all your receipts and records of medical expenses, taxes, & charitable contributions. Significant amounts can work in your favor.

Note: Consider “bunching” charitable contributions. Donate your yearly amount every two years to maximize the itemized deduction.

2. Save Money for Medical Expenses Through a Health Savings Account

A Health Savings Account (HSA) is designed to help you save money for future medical expenses. Any money contributed to an HSA for the year can be claimed as an expense, reducing your taxable income.

The money contributed to an HSA is typically pre-tax when done through an employer, or post-tax when done on your own. Individuals seeking to set up an HSA on their own can do so at any financial institution.

Note: The limit for claiming HSA contributions for 2019 is $3,500 for individuals and $7,000 for families.

3. Build Retirement Savings

Aside from ensuring you build your retirement savings, contributing to qualifying retirement plans also has tax benefits. Like contributions made to an HSA, contributions made to retirement plans can also be claimed and serve to reduce your taxable income. Also similar, you can contribute pre-tax through participating employers or post-tax on your own to a financial institution.

Note: Contribution and income limits do apply for certain types of plans.

4. Education Expenses

The IRS allows various education-related expenses to be used in calculating your deductions. These expenses include:

• Tuition paid to post-secondary education
• The cost of books and supplies needed for the course of study
• Fees and other related expenses, such as student activity fees, required for enrollment or attendance at an eligible educational institution
• Interest on student loans (with limitations)

Costs associated with room and board, medical expenses, transportation, and insurance do not apply.

Note: Income limits and limits of deductions/credits do apply, and expenses for an academic period must be claimed during the tax year that the academic period begins.

5. Seek Help if Necessary

As mentioned above, navigating and learning all the new tax laws, understanding limits, and ensuring you’ve deducted everything correctly in order to maximize your tax refund can be difficult. That’s why it’s recommended that you seek assistance from a qualified tax professional. They will possess the knowledge needed to help you identify deductions or credits that you might have otherwise missed.

Additionally, many tax laws also have last minute changes throughout the course of the year and even during tax season. Tax professionals can consult on more complicated tax issues as they arise, and help you better prepare for future tax years.

Starting a business can be easy. Knowing how to make sure that you are in compliance with state and federal laws is a little more difficult. You probably already know that you need to register to collect sales tax in your state when you set up shop, but what may be less clear is that you could have to file for sales tax in other states as well. This blog will help you understand when you should register for sales tax and how to do it.

What is Nexus?

Nexus is a word that means “connection.” In the world of sales tax, nexus means a connection between your company and a state. The word implies that your business has a connection with a particular state and, therefore, needs to collect state sales tax on any goods sold there. That means that if your company has a physical presence in the state, such as where you employ people or where you store inventory, you would have nexus. This includes the state where your business is located, but it may also include other states. For example, Amazon collects state sales tax in its home state as well as the states where it has warehouses or distribution centers.

Nexus also includes economic nexus under the new Supreme Court ruling in Wayfair  If a state has adopted the economic nexus standards of $100,000 in sales or 200 transactions in to a state in a 12 month period, the company may have economic nexus.

About Sales Tax Nexus

That might all seem straightforward – but wait!

Technically, you should start collecting state sales tax the first time you make a sale in that state. However, you should not collect sales tax without first registering. It is actually illegal to do so and you could face a fine if you charge state sales tax without first registering your business in that state.

DO NOT try to file in every state and just collect sales tax as a matter of course. When you file your sales tax registration, you automatically create nexus in that state. Now, you will have to keep collecting sales tax in that state as long as you are in business AND you will have to file returns for each of those states. So, only file for sales tax registration in states where you actually have nexus, otherwise you will be wasting your time and money.

Registering for Sales Tax

Before you register your company to collect sales tax, review the state’s requirements for registration:

What is the nexus standard for the state?

Different states have different definitions which may include physical as well as economic parameters.

Does the company meet the requirements of the nexus standard?

Next, look at whether your company meets those standards. You may not have to file in all the states where you think you should.

Are the products or services you provide taxable under the state statute?

Pay attention to which products and services you provide too. Some are not taxable by certain states.

If the sales items are not taxable, does your company have a Use Tax liability?

Also, remember that you could be subject to Use Tax. This is a special tax you would have to pay if you bought something in a different state that your company will use in the state where it is located, you may have to pay sales tax on that item.

Deciding to Register for Sales Tax

Once your company has nexus and decides to register, you will need to keep a few things in mind:

1. Most states allow online registration;
2. Depending on the amount of tax to be collected, your company may be able to file annually, quarterly or monthly; and,
3. After sales tax registration, your company should review your operations to see if any other state registrations are required such as secretary of state, income tax, unemployment.

In a nutshell, there are a few things you need to know about sales tax registration:

• Companies can be required to pay sales tax to a state even if they don’t collect it but should have collected the tax.
• You can file a sales tax registration in any state, but you may not need to register in every state.
• Collecting sales tax in every state is unnecessary for many companies.
• You need to register for sales tax in any state where you have nexus.

Overall, registering for sales tax can be confusing. If you need help determining nexus or figuring out which registrations your company needs, contact us today. We can go through your books and help you complete all of your required registrations.