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2022 Tax Tips for Families

It seems as though 2021 went by in the blink of an eye, which means that tax season is almost upon us! Understandably, many individuals are feeling a bit nervous about the upcoming tax season because it was another weird year that involved stimulus checks, child income credits, and other changes. Taking action now can help alleviate some of the stress you feel when tax filing in 2022.

To help you become a confident taxpayer, AA Tax & Accounting Services, LLC has outlined some important actions for you to take, including answers to common questions related to Economic Impact Payments and advance Child Tax Credits.

As we close out 2021 and head into the new year, keep these key factors in mind so you can feel less stress about the upcoming tax season.

Advance Child Tax Credits

If you have children under 18 and earn less than $75,000 annually or $150,000 for a married couple filing jointly, you are eligible to receive the advance Child Tax Credit payments this year. A benefit of this tax credit was that you did not need to wait until you filed your 2021 taxes to receive it — advance payments were sent to eligible households every month starting in July through December 2021 on the 15th of each month. Then the remainder of the tax credit will be claimed once the taxpayer files their 2021 taxes.

Before filing your 2021 taxes, take a look at the amount you’ve received from the advance payments so far and compare it to the total amount of the Child Tax Credit that can be claimed on your tax return. This allows you to determine if you will be able to claim the remaining tax credit or repay some if you received more than you’re eligible for. Understanding where you stand before filing your taxes allows you to set aside the payment in preparation for any amount you may need to repay.

If you are eligible for the Child Tax Credit and did not receive the monthly payments beginning in July 2021, you can opt to receive the payment when filing your tax return.

Economic impact payments

At the beginning of 2021, eligible taxpayers received a third Economic Impact Payment, also referred to as a stimulus check. If you were eligible and received a stimulus check, you will not be required to pay taxes on the payment when you file your tax return this year. Additionally, your stimulus payment will not be counted as income used to determine your eligibility for government assistance.

If you did not qualify for the third Economic Impact Payment or didn’t receive the full amount you were owed, you may be eligible for the Recovery Rebate Credit when filing your 2021 taxes as it is based on your 2021 tax information.

To receive the Recovery Rebate Credit, you must file a 2021 tax return.

Payment plan installment options

Filing your taxes can be a stressful time — especially if you’re expecting to owe money. If it is determined that you owe money to the Internal Revenue Service, you have the option to pay back the taxes through an IRS payment plan over time through short-term or long-term payments.

In most cases, you can determine the amount you want to pay directly to the IRS each month to pay off your tax bill. The only stipulation is that the payment amount needs to ensure that you will back off the debt within 72 months.

Tax consulting services in Cedar City, Utah

The past few tax seasons have been complicated, and this upcoming tax season isn’t any different.

Do you still have questions regarding the upcoming tax season?

Not sure if a payment plan is the right option for you?

AA Tax & Accounting Services can help you better understand the stimulus check process, child tax credits, and other variables and how they impact your tax returns. AA Tax & Accounting Services understands how pandemics, natural disasters, and legislative developments impact your tax return and are prepared to give you the answers you need.

No one should go into tax season with their questions unanswered. Our team of tax consultants has the experience of navigating the most effective strategies for maximizing their deductions and tax credits with our tax consulting services.

The AA Tax & Accounting Services team can help you execute the right tax strategies to save you money. Contact us to schedule an appointment.

New to eBay Selling? What You Need to Know About Taxes

Over the years, we find ourselves with hoards of belongings in our homes. It’s easy to keep adding to your belongings, but if you don’t purge anything, you will find yourself with little room for activities in your own home.

Instead, you may turn to the wonderful world of eBay, where you can resell some of your old belongings — freeing up space in your home while simultaneously filling your wallet!

Making some extra money on the side through eBay is an exciting venture, but it’s important to remember that taxes aren’t automatically deducted from your earnings, unlike a standard paycheck. This doesn’t mean that you are exempt from paying taxes on your eBay earnings. It just means you have a different process to follow.

The Internal Revenue Service (IRS) distinguishes you as a self-employed individual as an eBay reseller. This means that you are required to cover your income tax and self-employment tax when filing your taxes each year. If you aren’t prepared for this, you may find yourself with a large tax bill that you can’t afford.

AA Tax & Accounting Services, LLC has put together a quick guide on the tax implications of starting an eBay reseller account to help you prepare for taxes.

Utilize your 1099-K form

If you are selling items on eBay, you need to use a 1099-K form, a sales reporting form that includes the gross amount of all reportable payment transactions throughout the year. However, this is not something you need to fill out independently. The online platform, eBay, where you are selling your belongings, will fill out the 1099-K form if you meet the criteria.

You will receive the 1099-K form from eBay by January 31st each year if you have received payments above the minimum IRS reporting thresholds in the previous calendar year:

  • You received more than $20,000 in gross payments
  • You had more than 200 payment transactions

The provided 1099-K will include the gross amount of all reportable payment transactions and does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts. As a result, there is a chance the gross amount reported on your 1099-K does not match the final reportable amount on your tax return. When this happens, you should consult a tax advisor for financial reconciling.

We’d also like to note that certain states have minimum reporting thresholds lower than those outlined above. If you live in one of these states as an eBay reseller, it is recommended that you consult a tax advisor to understand which threshold applies in your state.

Form 1099-K and multiple eBay accounts

Depending on the items you are selling on eBay, you may find yourself with multiple accounts associated with the same Tax ID. If you have multiple eBay accounts, your annual thresholds are calculated by combining all payment transactions from each account.

If your combined sales across your accounts exceed these thresholds, you will receive a 1099-K for each account (even if the individual accounts don’t meet the thresholds).

Deductibles come in handy

Since you are viewed as a self-employed individual by the IRS when selling items on eBay, you should be mindful of the different deductibles available to you when filing your taxes.

Hold onto any invoices or receipts for business transactions related to the following deductions:

  • Cost of goods sold
  • Shipping costs
  • Home office costs
  • Mileage
  • Donations
  • Subscriptions
  • Related education courses
  • Software for taxes and inventory
  • Advertising materials
  • Employee salary and benefits
  • Consultant fees

Tax consulting services in Cedar City, Utah

We recommend consulting certified public accountants like AA Tax & Accounting Services to understand how much you should be paying to the IRS quarterly, especially if you’re new to eBay selling.

The AA Tax & Accounting Services team can help you execute the right self-employment tax strategies for peace of mind. Contact us to schedule an appointment.

2022 Business Taxes You Need to Know

The last year has flown by, which means that next year’s tax season is right around the corner. As a business owner, you need to begin considering how you can save money when filing your tax return.

From tax deductions to tax credits, there are a variety of ways for businesses to lower their taxable income in time for tax season. To ensure your business starts the new year on a high, follow along as ​​AA Tax & Accounting Services, LLC shares business tax tips you need to know.

Set up a retirement plan

Do you have a funded retirement plan for yourself or your employees?

Setting up and funding a retirement plan can save your business money on taxes. To benefit from a funded retirement plan, you need to make sure that it is a qualified plan recognized by the Internal Revenue Service (IRS) to allow deferment of taxes on earnings until the earnings are withdrawn.

This includes IRAs, as well as a 401(k) or 403(b). A qualified tax professional can assist you in determining which type of retirement plan best aligns with your business goals and needs.

Utilize tax credits

An effective way to lower your business income before tax season is to take advantage of the different tax credits available to you through the federal government. Tax credits are a way for the government to reward businesses doing things that affect the greater good.

Your business may be a candidate for tax credits for employee recruitment, green initiatives, disability initiatives, and more. Your business accountant can walk you through the list of tax credits available to you.

Understand tax write-offs

If you are planning to make any large purchases to benefit your business in the coming months, such as investing in new equipment, machinery, or vehicles, you may be able to take tax write-offs on these purchases.

Look into Section 179 deductions and bonus depreciation which can be utilized during the first year that a business owns and uses the vehicles, machinery, or equipment. If you’ve recently purchased any major assets or are planning to in the coming months, your business accountant can determine if you qualify for any related tax write-offs.

Deduct the cost of gifts

Depending on the nature of your business, you may provide customers or vendors with gifts — especially around the holidays. If you plan on gifting this year, keep all the related documentation because businesses can deduct up to $25 per person for the costs of gifts.

Reduce your taxable income

One of the easiest ways to lower what your business will owe come tax season is to reduce your taxable income. Spend some time towards the end of the year reviewing your accounts to check if there are any outstanding debts.

If you think any debts are unlikely to be paid, you can write off the amounts owed to your business as bad debts and deduct them from your business income.

Hire a tax advisor

Navigating tax season can be tricky, and this year is a bit trickier than most, with so many changes to tax credits and advantages for businesses. To ensure you’re getting the most money back and lowering what you owe, it can be extremely beneficial to hire a qualified tax advisor who can guide any decisions that may affect your business tax return.

Tax Consulting Services in Cedar City, Utah

We recommend consulting certified public accountants like AA Tax & Accounting Services when making any decisions or changes to your business tax return. We have the experience to guide businesses on the best strategies for maximizing their deductions and tax credits with our accountant services.

The AA Tax & Accounting Services team can help you execute the right tax strategies to save you money come tax season. Contact us to schedule an appointment.

Getting Ready for 2022 Taxes!

It feels like 2021 flew by, which means that tax season will be here before you know it. With the effects of the COVID-19 pandemic still looming, filing your taxes may be a bit more complicated than usual. From stimulus checks and tax credits, there are many variables that you need to be aware of that can impact your final tax return.

Instead of dreading tax season this year, you can go into it feeling prepared for what’s to come. To ensure you feel confident about filing your taxes, AA Tax & Accounting Services has compiled the ultimate guide for getting ready for 2022 taxes.

Tips to prepare for tax season

No one should feel stressed when filing their taxes — but we understand that it’s not many people’s favorite activity. To give yourself peace of mind, follow these tips to feel prepared come tax season.

Perform quarterly tax checkups

There is usually nothing major for you to stress over when it comes to your taxes, but it makes it a bit more daunting because you don’t likely look into your financials for a year. Instead of waiting an entire year, perform quarterly or a mid-year tax checkup, so you have visibility into how the year is shaking out for you.

By performing a tax projection based on the variables that may impact your taxes, such as tax credits, you’ll have a better idea of how your taxes will look different from the previous year. Looking into your taxes mid-year allows you to gain peace of mind or identify an issue and pivot accordingly.

If you don’t feel comfortable or confident checking in on your taxes quarterly yourself, you can rely on the experience of a tax professional to ensure everything is looking as it should.

Keep your tax documents organized

One of the easiest ways to alleviate some added stress around tax season is to have all of your important documents and information organized and readily available. Come tax season, you don’t want to be searching high and low throughout your house for important information strewn about — especially if you wait until the last minute to file your tax return.

With more factors to consider than a typical year, you will want to not only have your W-2s and other standard documents available. Still, you will need to quickly find stimulus numbers, child tax credit information, and unemployment benefits to streamline the tax process.

Whether you prefer to store your documents digitally or in a physical folder, save documents throughout the year as they become available to you, so they are ready to go come tax season.

Tax consulting services in Cedar City, Utah

The past few tax seasons have been a bit complicated, and this upcoming tax season isn’t any different. Do you still have questions regarding the upcoming tax season?

If so, AA Tax & Accounting Services can help you better understand the stimulus check process, child tax credits, and other variables and how they impact your tax returns. AA Tax & Accounting Services understands how pandemics, natural disasters, and legislative developments impact your tax return and are prepared to give you the answers you need.

No one should go into tax season with their questions unanswered. Our team of tax consultants has the experience of navigating the most effective strategies for maximizing their deductions and tax credits with our tax consulting services.

The AA Tax & Accounting Services team can help you execute the right tax strategies to save you money. Contact us to schedule an appointment.

Why You Need to Talk to an Accountant About Your Finances

Have you ever returned home after a day of errands only to realize all the money is gone from your wallet?

Or maybe you logged into your credit card’s online portal only to be shocked by a high card balance. Credit card debt is on the rise — the average American family has about $6,270 in credit card debt, according to the most recent data from the Federal Reserve’s Survey of Consumer Finances.

Although most people think about accountants helping out around tax season, they can also manage your finances all year long.

If you’ve noticed an uptick in your spending habits or you need help creating (and sticking to) a budget, a personal accountant can assist you in lowering your debt and increasing your net worth.

Whether you are a high-income earner, have multiple income streams, or are working your way out of debt, an accountant can help you take control of your finances.

Follow along as AA Tax & Accounting Services, LLC explains why you need to talk to an accountant about your finances.

Increase savings

No matter what your income is, you should be setting aside money into your savings. There is a lot to consider, from your emergency fund to your retirement savings, and it can be overwhelming trying to determine how much of your salary you can comfortably set aside.

When working with a personal accountant, you will sit down and examine your finances together, combing through where your money is going each month.

Are there areas where you are spending unnecessary money?

Do you pay for subscriptions or services where the amount you use doesn’t justify the cost?

Your accountant will work with you to determine where every dollar of your paycheck should go by creating a budget. By using a budget, you’ll ensure you aren’t spending too much in any given area while also putting money into your savings funds and paying off any debts.

Lower debt

While building up your nest egg is extremely important to set yourself up for success in retirement, you also want to focus on paying off any debts you’ve accumulated over the years.

Whether you have a couple of thousand dollars in debt or are in the six figures, it can seem daunting when looking at that number. Your accountant will work with you to put together a plan of action you can follow to pay off your debts, allowing you not only to put more money towards savings but improve your credit score simultaneously.

Analyze your investments

If you’ve put a portion of your savings into investments, you may be wondering if you made the right moves financially. An experienced personal accountant will be able to review your investment portfolio and identify which investments are worth keeping and which ones may be worth moving on from.

Their primary goal is to make sure you are investing in areas with good returns, helping you to become more profitable and increase your net worth.

Save time

Tax season can be a stressful time for many. Without maintaining the proper tax forms and financial records throughout the year, you may find yourself scrambling when it is time to submit your taxes.

Instead of tracking your expenses and keeping your financial records organized throughout the year, your accountant will handle the heavy lifting for you. This saves you both time and stress, allowing you to spend time generating more income, invest in new business ventures, or hang out with your family and friends.

Tax consulting services in Cedar City, Utah

If you’re looking to get out of debt (or prevent getting into debt), the certified public accountants at AA Tax & Accounting Services can help you get your finances in order. We have the experience to guide individuals on the best strategies for maximizing their savings and investments while lowering their debt-to-income ratio with our full-service accounting services.

If you have been looking for a full-service accounting firm, you don’t need to look any further than AA Tax & Accounting Services, LLC. Contact us to schedule an appointment.

Tax Implications of Starting an Amazon Reseller Account

Whether you resell items on Amazon as a full-time job or have picked it up as a side hustle over the last year, you’ve probably loved being your own boss and have some extra money in your wallet.

When you take on a business venture such as selling items on Amazon, you won’t have taxes automatically taken out of the money you earn — but you aren’t exempt from paying taxes on these earnings.

As an Amazon reseller, the Internal Revenue Service (IRS) views you as a self-employed individual, which means that you need to be prepared to cover your income tax and self-employment tax when tax season rolls around.

Without the proper planning throughout the year, you may find yourself with a hefty tax bill come tax season. To help you avoid this, AA Tax & Accounting Services, LLC has put together a quick guide on the tax implications of starting an Amazon reseller account.

Utilize your 1099-K form

A 1099-K form is a sales reporting form that includes the gross amount of all reportable payment transactions throughout the year. As an individual online reseller, you are not required to fill out this form yourself. When selling items on an online platform, such as Amazon, they will fill out the 1099-K form if you meet the necessary criteria.

For Amazon to provide you with a 1099-K form by January 31, you must meet the following criteria:

  • Completed more than 200 transactions
  • Generated more than $20,000 in unadjusted gross sales

If you haven’t completed more than 200 transactions or earned more than $20,000 in unadjusted gross sales as an Amazon reseller but have completed more than 50 transactions, you will not receive a 1099-K form from Amazon.

However, you are still required to submit your tax information to the Internal Revenue Service (IRS). If your tax information is not submitted to the IRS, you could lose your Amazon seller status.

File a Schedule C

Depending on where you live, you may need a business license to act as an Amazon seller. However, the rules vary from state to state and differ between those selling that have a team helping versus those running a one-person operation.

If you are required to get a business license and operate as a business, you will need to file a Schedule C, also known as Form 1040. This reports both your income or loss where you practiced as a sole proprietor of your Amazon reselling business.

Be mindful of sales tax

One of the trickiest aspects of starting an Amazon reseller account is managing sales tax collection in all states where you have nexus. Nexus means that your business has a physical presence in that state, such as an Amazon warehouse that stores the physical products you are selling.

You will not only have nexus in the state where you reside and operate your business but will be considered to have nexus anywhere you are fulfilling orders from. Make sure you are accounting for sales tax in all the areas in which you have nexus.

Deductibles come in handy

As a self-employed Amazon reseller, there are a variety of deductibles you can claim when filling out your taxes. These include a range of things, including home office expenses to mileage to education costs.

Keep track of all of your receipts for business transactions for the following possible deductions:

  • Cost of goods sold
  • Shipping costs
  • Home office costs
  • Mileage
  • Donations
  • Subscriptions
  • Related education courses
  • Software for taxes and inventory
  • Advertising materials
  • Employee salary and benefits
  • Consultant fees

Tax consulting services in Cedar City, Utah

If you’re operating an Amazon reseller account, we recommend consulting certified public accountants like AA Tax & Accounting Services to better understand what you will owe come tax season and how much you should be paying to the IRS quarterly.

The AA Tax & Accounting Services team can help you execute the right self-employment tax strategies for peace of mind. Contact us to schedule an appointment.

Pandemic Side Hustles – What Are Your Tax Responsibilities?

When the COVID-19 pandemic hit in March 2020, many individuals were left without a job or had their hours slashed. As a result, you may have decided to take on a side hustle to help you weather the storm and stay financially afloat throughout the pandemic.

From delivering food and selling items on Facebook Marketplace to freelance copywriting and online tutoring, there are many ways to earn a bit of extra cash on the side.

While pay earned from a side hustle is exciting, there are tax responsibilities you need to be aware of. Unlike a traditional paycheck that has taxes automatically deducted, your side hustle paycheck will not. The Internal Revenue Service views you as a self-employed individual, and you need to be prepared to cover your income tax and self-employment tax come tax season.

Without taking the proper steps during the year, you may end up with an expensive tax bill come tax season. Instead, you should be setting aside tax payments from every paycheck so that you can meet your side hustle tax responsibilities. Taxes are already complicated enough, and with a side hustle, they can be downright confusing.

To make prepping for your taxes as a self-employed individual a bit easier, AA Tax & Accounting Services, LLC has put together a quick guide on freelance tax responsibilities.

How to calculate self-employment taxes

Whether you found yourself offering handyman services, delivering groceries, or selling on Facebook Marketplace, you have tax responsibilities to account for.

As a self-employed individual, the Internal Revenue Service requires you to pay both income tax and self-employment tax. As both the employee and employer for your side hustle, you are responsible for all tax payments based on the generated income.

Self-employment tax is 15.3% of the first $142,800 of income you receive, plus 2.9% of anything you earn over this threshold.

As you bring in income from your side hustle, you should be setting aside a minimum of 25% of your income to cover these tax costs. The Internal Revenue Service allows you to make estimated quarterly payments on the taxes that you owe, helping you avoid having a hefty bill come tax season.

For more information on how much you should withhold from your freelance earnings, we recommend using IRS Form 1040-ES to calculate your estimated tax payments.

When to make estimated tax payments

Throughout the year, the Internal Revenue Service expects all self-employed individuals to pay estimated quarterly tax payments. Although you won’t know exactly how much you’ll owe when filing your taxes, if you plan to owe more than $1,000 in taxes due to your side hustle, you should be submitting a quarterly payment by:

  • April 15th
  • June 15th
  • September 15th
  • January 15th

By budgeting approximately 25% of your income towards the estimated tax payments, you can be stress-free when filing your taxes, knowing you won’t have a large tax bill.

Are you eligible for the advanced child tax credit?

When taking on a side hustle throughout the pandemic, you’re increasing your annual income. Keep in mind that there are income restrictions for tax credits, such as the Advanced Child Tax Credit.

With the Advanced Child Tax Credit, taxpayers with children under 18 can receive a tax credit if they earn less than $75,000 annually or $150,000 for a married couple filing jointly. Earners above this threshold will earn a smaller credit, ceasing for individual taxpayers earning $95,000 and married couples making $170,000 filing jointly.

If your standard income and side hustle income put you over this threshold, you may not be eligible to receive the tax credit. If you aren’t sure how your side hustle impacts your eligibility, we recommend consulting certified public accountants to better understand all the tax deductions available to you.

Tax consulting services in Cedar City, Utah

If you’ve taken on a side hustle throughout the pandemic, we recommend consulting certified public accountants like AA Tax & Accounting Services to better understand what you will owe come tax season and how much you should be paying to the IRS quarterly.

The AA Tax & Accounting Services team can help you execute the right self-employment tax strategies for peace of mind. Contact us to schedule an appointment.

Bank Reconciliations

How often do you review your monthly bank statements in-depth?

Have you ever reviewed your statements and felt as though your bank balances were wrong?

To have a complete picture of your finances, it’s important to reconcile your accounts regularly.

With only so many hours in the day, reconciling your accounts often falls to the wayside. Instead, you should consider having a certified bookkeeper manage your bank reconciliation so you can have a clear understanding of your finances.

At AA Tax & Accounting Services, LLC, we understand the importance of bank reconciliation, which is why it’s a core part of our bookkeeping services. By helping our clients have a better idea of their balances and cash flow, they’re able to make more confident financial decisions.

AA Tax & Accounting Services, LLC offers the following bank reconciliation services to all of our clients both locally and nationally:

  • Entrepreneur and Small Business Bank Reconciliation
  • Bank Reconciliation for Businesses and Corporations
  • Personal Bank Reconciliation for Individuals
  • Bank Reconciliation for Not-for-Profits (Non-Profits)
  • Bank Reconciliation for Start-Ups

If you need any of these bank reconciliation services, give our team a call. Keep reading to learn more about what our team can do for you.

What is bank reconciliation?

Bank reconciliation is the process performed by a company or individual to balance and match bank statements to the accounting records. This is done by comparing the amounts recorded by the company to the amounts on the bank statement to ensure that everything aligns and adds up accordingly.

When payments match up currently to the corresponding invoices, the transaction has been balanced. This process allows you to uncover any discrepancies and resolve any differences so that they become reconciled.

Without proper bank reconciliation, it’s difficult for an individual or company to have clarity over their finances.

How to perform bank reconciliation

At the end of each month, you receive a bank statement that details all of the transactions, deposits, and withdrawals that occurred over the previous month. Once you have the bank statement in hand, you can begin the bank reconciliation process at the place you left off last time.

Review deposits and withdrawals

Review your business records and match them up with the corresponding line item on the bank statement. If the amount of each deposit or withdrawal matches up, make a note.

If there is an item missing in your records, you will have to add it.

Account for income and expenses in your records

Compare your books against the bank statement to ensure that each transaction is properly accounted for. Any unexplained differences will need to be investigated, so you understand why the income and expenses aren’t aligning.

Adjust the bank statement

In certain instances, your bank statement may not accurately reflect your transactions for the same time period due to pending deposits, outstanding checks, or even bank errors.

If something is not accurately reflected on the bank statement, make the necessary changes.

Adjust the cash balance

Similar to adjusting the bank statement, you will also need to adjust your books to correctly reflect any transactions made in the cash account.

Review the end balances

Now that all necessary adjustments have been made to the bank statement and cash balance, you’ll need to review the end balances to verify that they are now the same.

If they align, you’ve completed the bank reconciliation process.

If the end balances are still not equaling one another, you’ll need to repeat the bank reconciliation process to resolve any remaining discrepancies.

Call AA Tax & Accounting services for bank reconciliation

There are only so many available hours in the day, and as a business owner, you have a long to-list that needs to get completed. To help you win back some time, AA Tax & Accounting Services, LLC offers various bookkeeping services, including bank reconciliation.

You can trust our team to deliver a level of service that the average bookkeeper cannot. AA Tax & Accounting Services is available to help you with all your bookkeeping needs. Contact us today to schedule a consultation.

Planning Your Monthly Budget With Inflation

Do you have a monthly budget for your family that you stick to each month?

If you’ve been doing it for quite some time, you may have noticed the increase in the price of food, gas, cars, and other necessities you need — this increase in cost is known as inflation.

What exactly is inflation and how does inflation affect my monthly budget?

Inflation is when the cost of goods or services goes up. While inflation can affect any purchases you make, it is most noticeable on items you purchase regularly. Ultimately, inflation means that the dollar doesn’t go as far as it once did, costing you more for the same amount in the long run.

Although minor inflation may not seem like a drastic change, inflation can make it challenging to meet your financial obligations, such as your monthly budget.

Follow along as AA Tax & Accounting Services walks you through a few steps you can take to deal with inflation in your monthly budget without relying on your credit cards and accumulating unnecessary debt.

Stick to a monthly budget

One of the most effective ways to beat inflation is to create a monthly budget and stick to it. By monitoring where your money is going and what it is being spent on, you’ll be sure to only spend the money you have in the bank (preventing a buildup of debt on your credit cards).

However, one of the biggest problems with monthly budgets is that people underestimate how much they will need for specific goals, causing them to go over budget each month.

Set realistic goals for groceries, dining out, gas, and other necessities to ensure your purchases align with your family’s needs. At the beginning of the month, allocate your money to each goal and stick to these spending limits to help beat inflation costs.

Because inflation is continually on the rise, use your budget to determine where you can curb your spending habits. If you decide you need to increase your grocery budget, you’ll need to pull that extra from another category or change your shopping habits.

Find ways to cut spending

Setting and sticking to a budget is one of the most effective ways to beat inflation — but you may also be looking for ways to increase the money being dispersed throughout the budget. If there isn’t a way to increase your monthly income streams, it may be time to get creative and determine where you can cut back or change your habits.

Easy changes include opting for store brands over name brands or utilizing coupons or discounts to determine your weekly groceries. By allowing your money to stretch a bit farther each month, you’ll be able to allocate those funds elsewhere in your budget.

Evaluate your monthly expenses

Another way to save some additional money in your budget each month is to evaluate all of your expenses.

Are you paying for anything that isn’t completely necessary?

Do you have monthly subscriptions to Netflix, Hulu, HBO, Spotify, or other subscription services?

Do you grab a specialty coffee on the way to work every day?

Are you letting groceries go to waste and eating out multiple times a week?

Spotting areas in your budget to cut back and eliminating those expenses will allow your money to go a lot further.

Don’t forget about savings

If you’re struggling to stay within your monthly budget due to inflation, you may find yourself cutting into your savings or skipping adding money each month. By utilizing tactics to lower your monthly expenses, you will still save money without accumulating debt.

Along with saving money, it’s important to continue saving towards your retirement goals. With the inflation you see today, you’ll also need to consider how inflation will affect your retirement goals. Make sure you’re considering your retirement portfolio as the rate of inflation increases over time.

If the thought of inflation is stressing you out, the AA Tax & Accounting Services team can help you execute the right tax strategies to maximize your nest egg for retirement. Contact us to schedule an appointment.

What to look for in a retirement planning app

Retirement may seem far away, but in reality, it’s right around the corner — and it’s never too early to start planning!

Although the thought of retirement may seem daunting, it’s important for you to take the necessary steps now, so you’re set up for success later in life. To do that, you need to have a good understanding of your financial investments and have the tools to track and predict their growth over time. Luckily, countless retirement planning apps make it a bit easier to manage.

With so many retirement planning apps at your disposal, how are you supposed to know which is the best to use?

To ensure you feel confident in your retirement planning choices, AA Tax & Accounting Services has done the heavy lifting to put together a list of what to look for in a retirement planning app, along with a few app recommendations from our team.

What is a retirement tracking app?

In preparation for retirement, you’ve likely opened up a few investment and savings accounts. Whether you have a single retirement savings account or multiple 401(k), or Roth IRA accounts, a retirement tracking app allows you to organize, manage, and analyze your investment in a single place.

This saves you from having to memorize multiple logins for different websites, and checking on each of your accounts individually. Instead, you can get a high-level (and in-depth) look at all your retirement investments at the click of a button.

Most retirement planning apps will even predict your estimated balance at the time of retirement based on your current account balances and asset allocation.

What to look for in retirement tracking apps

Although retirement tracking apps can be convenient for those tracking multiple accounts, not all apps are created equally, and you need to do your research to find one that meets your particular needs.

Consider the following qualities when choosing your retirement tracking app:

Mobile functionality – To effectively track and analyze your investments, you need to be able to access all of the retirement app’s tools no matter where you are. With this in mind, it’s important to find an app that offers full mobile functionality that doesn’t cut back on some of the tools or features available via the web or desktop platform.

For instance, if you need to buy or trade stocks from your phone, make sure the retirement planning app you pick allows you to do that.

Additional financial goals – Do you have savings goals other than retirement? If so, if you’re saving for big-ticket items like a down payment, higher education, or a vehicle, you may want to invest in a retirement tracking app that also allows you to track other goals as well. This will allow you complete visibility into your savings and investment balances without having to track them separately in another app.

Two-factor authentication – You’ve worked hard to earn money in your retirement accounts. The last thing you want is for the money to become compromised in a hack or phishing scheme. To protect yourself and your assets, look for a retirement tracking app that features two-factor authentication to ensure that only you will be able to access the data.

No hidden fees – No one likes hidden fees, especially when you are mindful of how you’re spending your money to maximize your retirement savings! While not all retirement tracking apps will be free, you should avoid those with hidden fees. Look for apps that are upfront with what you will be charged for, and look for an app that is all-in. You don’t want to set everything up and find out that the features that you need most require additional purchases.

The AA Tax & Accounting Services team can help you execute the right tax strategies to maximize your nest egg for retirement. Contact us to schedule an appointment.

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