Income Planning

In the blog titled “Types of Income”, we talked about earned and unearned income. In today’s blog, I want to discuss ways to increase your earned income. Earnings come from either working for someone else or working for yourself or both. The one advantage to working for someone else is that they pay half of your social security and medicare taxes. That’s .0765 of the gross wages. This is an overlooked employee benefit.

You can increase earnings by working longer hours, getting a raise, or taking on a second job. Remember that mileage from Job 1 to Job 2 may be deductible if you otherwise qualify to itemize your deductions. You can also earn additional tips, bonuses, fees, or compensation for personal services.

Types of Income

There are two major types of income. Earned and unearned. Examples of earned income include wages, tips, and compensation. Unearned income comes from what you own rather than from what you do such as interest, dividends and rents. Earned income is classed as active income. Unearned income is classed as passive income. Passive income is not subject to self-employment tax which means that the money you earn from your rentals is not going to be adding to your social security retirement in the future. Passive losses are limited.

For an opportunity to earn passive income speak to a realtor at www.santacruzlands.com

Tax Resources

Why you need a Professional Tax Preparer

When you are looking for tax information don’t forget to seek the advice of your CPA and/or Enrolled Agent. Sometimes you can post your questions directly to their website. They may feature your question on their blog.

Be sure to check out my website at www.etaxwiz.com

The reason you seek the advice of a competent professional is to make informed decisions about the tax treatment of your transactions, to learn if you qualify for the latest credits or deductions and if so where to claim them on your return.

Another reason is to save money either now or in the future.

And yet another reason is to avoid costly tax audits by having the return prepared correctly the first time.

And finally, it shows you are managing your business in a business like manner. It will be less likely to be classed as a hobby and render losses non-deductible.

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