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💡 The Benefits of Tax Planning Throughout the Year

Sat, 08 Nov 2025 18:14:23 GMT

�� The Benefits of Tax Planning Throughout the Year

By Affinity Accounting & Tax | Albuquerque, NM

When most people think about taxes, they picture the stress of April deadlines and last-minute document searches. But here’s the truth: the best way to reduce that stress — and your tax bill — is to plan ahead. Year-round tax planning turns a once-a-year chore into a powerful financial strategy that saves money, time, and worry.

1. Avoid Surprises at Tax Time

Tax planning throughout the year helps you stay ahead of what you owe. Instead of getting hit with a large, unexpected bill, you’ll know where you stand — and can make adjustments before it’s too late. This proactive approach keeps your cash flow steady and your peace of mind intact.

2. Maximize Deductions and Credits

Many valuable deductions and credits are only available if you plan ahead. From home office expenses to retirement contributions and business write-offs, year-round guidance ensures you’re capturing every savings opportunity as life or business changes.

3. Stay Compliant and Confident

Tax laws change often, and it’s easy to miss updates that affect you. Working with licensed Enrolled Agents means you’ll always have expert eyes on your financial picture — ensuring compliance, accuracy, and protection from costly mistakes or penalties.

4. Smarter Business Decisions

For business owners, tax planning isn’t just about filing — it’s about strategy. Reviewing income, expenses, and payroll regularly allows you to forecast profit, make informed purchases, and decide when to invest or save.

5. Reduce Stress and Build Financial Clarity

When you manage taxes year-round, you’ll spend less time scrambling in spring and more time growing your goals. It’s peace of mind that pays off — literally.

�� Ready to Take Control of Your Taxes?

At Affinity Accounting & Tax , we make tax planning simple, affordable, and stress-free. Our Affinity Advantage Plan gives you monthly tax tips, quarterly checklists, and ongoing support from licensed Enrolled Agents — all for just $49/month .

Start today and turn tax season into year-round savings.
�� Learn More About the Affinity Advantage Plan

Maximize Your Small Business Tax Write-Offs: A Smart Guide for 2025 & Beyond | Affinity Accounting & Tax

Tue, 04 Nov 2025 22:47:31 GMT

Maximize Your Small Business Tax Write-Offs

A Smart Guide for 2025 & Beyond

By Affinity Accounting & Tax

Running a small business is rewarding—but let’s be honest: tax season can be stressful. The good news? With smart planning and the right knowledge, you can turn write-offs (aka tax deductions) into real savings. At Affinity Accounting & Tax, we’re committed to making the 2026 tax season your most stress-free one yet. Here’s our guide to the most valuable small‐business write-offs, what you need to prove, and how to use them to your advantage.

Understand What a “Write-Off” Really Means

In tax speak, a write-off is simply an expense that reduces your taxable income. You must show that the expense was ordinary (common in your trade) and necessary (helpful for your business) in order to deduct it.

Bottom line: If you purchase something just because you want it, and it’s hardly related to your business, you’re taking a risk.

The Most Common – & Most Valuable – Write-Offs for Small Businesses

Here are some of the key write-offs most small business owners should keep in mind:

Home office deduction : If you use part of your home only for business on a regular basis, you may deduct a share of your rent/mortgage, utilities, insurance, and more. You can use the simplified method ($5 per sq. ft. up to 300 sq. ft.) or actual expense method.

Office supplies, software, and equipment: Pens and folders count. So do laptops, industry-specific software, subscriptions and more. For certain larger purchases, you may depreciate or use special rules (e.g., Section 179).

Advertising and marketing: Website design, social media ads, business cards, branding—these are generally fully deductible expenses.

Vehicle expenses: If you use your vehicle for business, you can choose between two methods:

Standard mileage rate method – Track your business miles and multiply by the IRS standard rate (set annually). This method is simple and often advantageous for those with lower vehicle costs.

Actual expense method – Deduct the business percentage of actual costs such as gas, insurance, maintenance, and depreciation. This can yield a larger deduction if your vehicle expenses are high.

The right choice depends on which method provides a greater deduction and is easier for you to maintain throughout the year. We can help you evaluate this during your tax planning session. Regardless of the method you use, the IRS still requires a mileage log be kept for all business travel.

Business travel and meals: Travel expenses are deductible when they are directly related to your business — such as airfare, lodging, and transportation while away from your tax home on business. Meals incurred during business travel or meetings with clients are 50% deductible, as long as the business purpose is clearly documented (who, what, and why).

Company social event exception: There’s one important — and often overlooked — exception: meals and entertainment expenses for recreational or social events primarily for employees, such as holiday parties or team-building activities, are 100% deductible. These are excellent ways to boost team morale while taking advantage of a full deduction.

Insurance, utilities and rent: Your business’s rent, utilities and insurance premiums are deductible when they relate directly to operations.

Start-up and organizational costs: If you launched a business recently, you may deduct up to a certain amount of the expenses incurred before you began operations.

Pro Tips to Make These Write-Offs Work for You

Keep excellent records: Receipts, invoices, mileage logs, purpose of expense—these matter. The stronger your documentation, the safer your position.

Use a separate business account: Mixing business and personal finances creates confusion and increases audit risk.

Choose the right method for things like home office or vehicles: For example, the simplified method for a home office may be easier, but actual expenses might yield a larger deduction—depending on your situation.

Review frequently (not just once a year): The sooner you organize and track your expenses, the better position you’re in—especially with complex items like depreciation or big equipment purchases.

Your Next Steps

Implement bookkeeping software and hire an accounting firm.
Schedule a planning session to cover your tax strategy for the year ahead.
Make sure your vehicle/business travel and home office usage are logged and documented accurately.

Conclusion

Write-offs are powerful tools—but only when used correctly. With the right guidance and preparation, they can significantly reduce your tax liability while keeping you compliant and audit-ready. At Affinity Accounting & Tax, we’re here to help you leverage every eligible deduction in the smartest, most strategic way.

Ready to get started? Book your consultation today!

Tax-Saving Strategies for Private Practice Owners

Tue, 04 Nov 2025 05:24:48 GMT

How to Avoid Common Tax Mistakes and Find Hidden Savings for Your Private Practice ✅

Tax-Saving Strategies for Private Practice Owners

You didn't start your mental health practice to get bogged down by bookkeeping and complicated tax rules. As a dedicated professional focused on your clients, it's easy to miss opportunities to save money and reduce your tax burden. However, with the right strategies, you can minimize your taxes and reinvest those savings back into your business and your financial future.

Here are some of the most effective tax-saving strategies for private practice owners, from foundational practices to advanced planning.

1. Master Your Business Structure

The right business structure can be your biggest tax advantage. Many mental health practitioners start as a sole proprietorship or LLC, which is the default option. However, for a successful practice, this can be a costly mistake.

Consider an S-Corporation: If you are a higher-earning practice owner, electing S-corporation status could result in significant tax savings. You can split your income into a reasonable salary (subject to payroll taxes) and distributions (not subject to self-employment taxes), reducing your overall tax liability. An expert can help you determine if and when this structure is right for you.

2. Maximize Your Retirement Contributions

Investing in your future is one of the most powerful ways to reduce your taxable income now.

Solo 401(k): This is an excellent option for self-employed individuals with no employees (other than a spouse). You can contribute both as an employee and an employer, allowing for significantly higher annual contribution limits compared to a traditional IRA.
SEP IRA: A SEP IRA is another retirement plan that allows business owners to make tax-deductible contributions. While a Solo 401(k) often allows for higher contributions, a SEP IRA is easier to set up and administer.

3. Take Advantage of All Deductions

Many private practice owners overlook legitimate business expenses that could be reducing their taxable income.

Section 179 Deduction: You can deduct the full purchase price of certain qualifying equipment, including computer software, office furniture, and medical equipment, in the year you buy it.
Home Office Deduction: If you use a portion of your home exclusively and regularly for your business, you can deduct related expenses.
Augusta Rule: This clever tax strategy, sometimes known as the "Masters Tournament Rule," allows you to rent your home to your business for up to 14 days per year for meetings or retreats and collect the rental income tax-free. The business can then deduct the rental cost as a business expense.

4. Implement Strategic Quarterly Tax Planning

Waiting until April to deal with taxes can be costly. For self-employed individuals, it's crucial to pay estimated taxes quarterly to avoid penalties.

Create a System: Use accounting software to track income and expenses throughout the year. Setting aside a percentage of your income each month into a separate savings account for taxes is a smart habit.
Automate Payments: The IRS Electronic Federal Tax Payment System (EFTPS) allows you to schedule automatic quarterly payments, ensuring you never miss a deadline.

5. Utilize a Health Savings Account (HSA)

For self-employed individuals with a qualifying high-deductible health plan (HDHP), an HSA offers a triple tax advantage.

Triple Tax Benefit: Contributions are pre-tax, the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. It's a powerful tool for managing healthcare costs and saving for retirement.

The Bottom Line

Proactive tax planning is crucial for the financial health of your mental health practice. While these strategies can make a significant difference, navigating the complexities of tax law is challenging. By partnering with a dedicated accounting firm that understands the unique needs of private practice owners, you can find peace of mind and ensure you're taking advantage of every opportunity to save.

Contact Affinity Accounting & Tax for more info! We serve clients all over the nation and are licensed in all states.

The Hidden Cost of Cheap Bookkeeping: Why Growing Businesses Need a Real Partner

Tue, 21 Oct 2025 18:30:12 GMT

The Hidden Cost of Cheap Bookkeeping: Why Growing Businesses Need a Real Partner

Your Business Is Growing, But Your Bookkeeping Is Stuck in the Past

For a startup, budget bookkeeping can seem like the perfect solution. The price is low, and the promise of a hands-off, automated process is appealing when you have a million other things to manage. But as your business grows, that budget solution can become a liability.

What works for a small-time operation with minimal transactions simply won't cut it when your business begins to scale. You need a bookkeeping partner, not just a transaction tracker.

The hidden costs of budget bookkeeping

At first, a low monthly fee from a national, 1-800 number bookkeeping service might feel like a win. But that seemingly cheap price comes with hidden costs that stunt your growth and create headaches down the road:

Inaccurate and generic reporting: Many budget bookkeeping services use a "one-size-fits-all" approach that relies heavily on automation and poorly implemented artificial intelligence. This can lead to miscategorized expenses and unreliable financial reports. When your reports are based on flawed data, you can't make informed decisions about your business's future.

A financial blind spot: Some services limit or deny direct access to your financial software, leaving you disconnected from your own data. You are dependent on the reports they send, which severely limits your ability to analyze your financial health and react quickly to market shifts.

Missed tax deductions: Without an expert eye examining your books, you are more likely to miss out on valuable tax deductions. Budget services aren't designed to proactively find tax savings. That's a job for experienced Enrolled Agents, and it's a difference that can save you thousands of dollars annually.

Costly mistakes and audit risks: Sloppy, impersonal bookkeeping creates a higher risk of costly errors and penalties from the IRS. When tax time comes, you could face delays, fines, or even a full audit due to disorganized or inaccurate records.

The communication breakdown: A national bookkeeping company won't know your business

When you have a question about your books, you don't want to explain your entire business to a new person every time. You need a trusted partner who knows your history. With large, national services, you're likely to experience:

Limited availability: Trying to reach customer support on a generic, 1-800 number often means dealing with frustrating delays and long wait times.

Inconsistent service: Many companies reassign bookkeepers without notice. This lack of continuity means you constantly have to get a new team member up to speed on your business.

No local expertise: Tax laws and business regulations can vary by city and state. A generic, one-size-fits-all bookkeeping service won't have the on-the-ground knowledge to ensure you stay compliant with all local requirements in Albuquerque and New Mexico.

The Affinity Accounting & Tax difference: Personalized service for real growth

Your growing business deserves more than a faceless, hands-off service. As an established part of the Albuquerque business community, we offer a true partnership focused on your success.

Proactive, personalized service: Our team gets to know you and your business. You get a dedicated point of contact who understands your specific financial situation and goals.

Real, local experts: Our Enrolled Agents proactively review your books to find strategic tax savings, not just categorize transactions. We understand the local market and help you stay compliant with all regional regulations.

Consistent, reliable support: Say goodbye to frustrating 1-800 numbers and inconsistent service. Our team is available with accessible hours to answer your questions and provide the peace of mind you need.

Invest in a partner, not just a service

Don't let budget bookkeeping hold your growing business back. Invest in a financial partner that will help you thrive. For personalized bookkeeping and strategic tax guidance that works for your Albuquerque business, contact Affinity Accounting & Tax today. Now serving clients virtually nationwide.

Understanding New Mexico's Gross Receipt Tax: A Guide for Albuquerque Businesses

Tue, 21 Oct 2025 14:07:45 GMT

Understanding New Mexico’s Gross Receipts Tax: A Guide for Albuquerque Businesses

For business owners in Albuquerque, navigating taxes is part of the job. But in New Mexico, we don't have a traditional sales tax. Instead, we have a gross receipts tax (GRT), which is a key financial factor you need to understand. Here’s a breakdown of what the GRT means for your Albuquerque business and how to manage it effectively.

What is the Gross Receipts Tax?

Unlike a sales tax, which is a tax on the final consumer, the GRT is a tax on the business itself for the total receipts received from selling property or performing services in New Mexico. This means that the business is the one legally responsible for paying the tax to the state, not the customer. While many businesses choose to separately list the tax on their customer invoices to pass the cost along, they are not legally required to do so.

How is the GRT calculated?

The total GRT rate for your business is a combination of state and local rates, which means it varies by your specific location. The statewide rate is currently 5.125%, but municipalities and counties add their own rates on top of that. For businesses in Albuquerque, this means you must use the combined rate for your specific location. These local rates can change twice a year, in January or July, so staying up-to-date is crucial.

GRT vs. sales tax: what's the difference?

This is a common point of confusion for those new to New Mexico. While the GRT functions similarly to a sales tax in that businesses can pass the cost to the consumer, a fundamental difference lies in who is liable for paying it. With a sales tax, the business collects the tax as an agent for the state. With the GRT, the business is directly responsible for paying the tax. For businesses, this distinction impacts accounting and liability.

Why does this matter for your business?

Financial planning : Accurate GRT calculation is essential for proper financial planning and pricing strategies. It directly impacts your bottom line and profitability.

Compliance : As the responsible party, your business must ensure accurate and timely filing and payment of GRT to avoid penalties. Given that local rates can change, this requires vigilant tracking.

Customer transparency : Choosing whether to absorb the tax or pass it on to customers as a separately stated line item is a business decision. Being transparent can build customer trust.

Economic nexus : Even if you don't have a physical presence in New Mexico, if you meet the state's economic nexus threshold (over $100,000 in annual gross revenue from sales in NM), you are obligated to collect and remit GRT.

Need help with your GRT?

Understanding the intricacies of the New Mexico gross receipts tax is just one of the ways we can help you with your business accounting and tax needs. Whether you need help with bookkeeping, tax preparation, or long-term financial strategy, our expert team at Affinity Accounting & Tax is here to help your Albuquerque business thrive.

Why Choose an Enrolled Agent?

Mon, 29 Sep 2025 00:51:07 GMT

Understanding the Role, Expertise, and Value of Enrolled Agents for Individuals and Businesses

Whether you’re an individual taxpayer or a small business owner, navigating the world of taxes can be challenging. The stakes are high, and the rules are complex. That’s why many people turn to expert tax professionals for support. Among the most qualified are Enrolled Agents (EAs)—specialists licensed by the Internal Revenue Service (IRS) to represent and guide taxpayers through every aspect of federal tax matters.

What Is an Enrolled Agent?

An Enrolled Agent (EA) is a federally-authorized tax professional empowered by the U.S. Department of the Treasury. Unlike many tax preparers, EAs earn their credentials directly from the IRS after passing a rigorous three-part examination known as the Special Enrollment Examination (SEE). This comprehensive exam covers individual and business tax returns, IRS procedures, ethics, and the rules governing taxpayer representation. This process ensures that EAs possess in-depth knowledge of the tax code and are well-equipped to serve a wide range of taxpayer needs.

The Rigorous Path: The IRS Special Enrollment Examination

To become an EA, candidates must successfully complete the Special Enrollment Examination, which is divided into three main parts:

Individual Taxation: In-depth questions on federal individual tax returns, deductions, credits, and tax law.
Business Taxation: Topics including partnerships, corporations, sole proprietorships, and specialized tax issues for businesses.
Representation, Practices, and Procedures: Ethics, IRS procedures, and the rules for representing taxpayers before the IRS.

This challenging exam ensures that only those with comprehensive tax knowledge and ethical understanding can earn the EA credential. In addition to passing the exam, candidates must undergo a background check to verify their suitability to represent taxpayers before the IRS.

Unlimited Practice Rights: What Does It Mean?

One of the most significant advantages of working with an Enrolled Agent is their “unlimited practice rights.” This means EAs are authorized to represent any taxpayer—individuals, businesses, estates, trusts—before the IRS, for any tax matter, and in any state. Whether you’re dealing with a tax audit, collection issues, or an appeal, an EA can stand by your side and communicate directly with the IRS on your behalf.

Core Services Offered by Enrolled Agents

Enrolled Agents are tax professionals dedicated to handling a variety of tax-related needs for both individuals and businesses. Their core services include:

Tax Preparation: Completing and filing accurate federal and state tax returns for individuals, businesses, estates, and trusts.
Tax Planning: Helping clients develop strategies to minimize tax liability and plan for future tax obligations.
IRS Representation: Representing clients during IRS audits, collections, and appeals, ensuring their rights are protected throughout the process.

With their deep expertise in tax law and IRS procedures, EAs are exceptional advocates and advisors for all tax matters.

Continuing Education: Commitment to Excellence

To maintain their EA status, Enrolled Agents must complete at least 72 hours of continuing education every three years. This requirement ensures that EAs stay up to date with the ever-evolving tax laws and regulations, allowing them to provide accurate and effective advice to their clients year after year.

Enrolled Agents vs. CPAs: What’s the Difference?

While both EAs and Certified Public Accountants (CPAs) can offer tax services, there are important distinctions. EAs are tax experts, specializing exclusively in taxation and IRS representation. In contrast, CPAs are licensed by individual states and may focus on a broader range of accounting services, such as auditing, financial statement preparation, and management consulting, in addition to tax work. Not all CPAs choose to represent clients before the IRS, and some may not concentrate solely on taxes. EAs, on the other hand, are laser-focused on tax matters and are authorized by the IRS to represent clients in all federal tax issues, making them a top choice for those seeking tax-specific guidance and representation.

Verifying EA Credentials: The IRS Directory

If you’re considering hiring an Enrolled Agent, it’s important to verify their credentials. The IRS maintains a public Directory of Federal Tax Return Preparers with Credentials and Select Qualifications, which allows taxpayers to search for and confirm the status of EAs and other credentialed tax professionals. You can access the directory on the IRS website to ensure the tax professional you’re working with is in good standing and properly licensed.

Conclusion: Why Choose an Enrolled Agent?

Enrolled Agents are among the most qualified tax professionals in the United States. Licensed by the IRS, tested on their comprehensive tax knowledge, and required to maintain their expertise through ongoing education, EAs are uniquely equipped to represent taxpayers before the IRS for any tax issue. Whether you need help with tax preparation, planning, or resolving IRS matters, an EA is a trustworthy advocate committed to your financial well-being. For peace of mind and expert guidance, consider partnering with an Enrolled Agent the next time tax season approaches.

💇‍♀️ How to Start a Salon in New Mexico: Step-by-Step Guide 🏜️

Sun, 28 Sep 2025 21:58:33 GMT

��‍♀️✨ How to Start a Salon in New Mexico: Step-by-Step Guide + Launch Steps

Launching a small salon in New Mexico requires a methodical approach, beginning with comprehensive business planning and ensuring compliance with state and local regulations. Whether operating in a commercial location or from home, all practitioners must hold individual licenses. Below is a step-by-step guide to establish your salon business successfully.

Step 1: Develop Your Business Plan

A well-crafted business plan serves as your blueprint for success. It will clarify your objectives, outline financial requirements, and assist in securing funding if necessary.

Identify your niche: Determine the primary focus of your salon—will you offer hair styling, manicures, pedicures, skincare, or a combination of services? Specialization can help differentiate your business within the market.
Research the market: Evaluate competitors in your area and understand the preferences of your target customers in New Mexico. Consider factors such as pricing strategies, the range of services, and brand positioning. Brand positioning is what you want your business to be known for and what makes your business special.
Establish a budget: Calculate startup expenses, including licensing fees, equipment purchases, supplies, and marketing efforts. Make realistic assessments of your financial needs and what you can afford.
Create a marketing plan: Develop strategies to attract and retain clients, such as leveraging social media platforms, local advertising, and referral programs.

Step 2: Fulfill New Mexico Licensing Requirements

Adhering to New Mexico’s licensing regulations is essential for both the business and its practitioners.

Obtain a personal license: Each professional working in the salon—including cosmetologists, hairstylists, and estheticians—must be individually licensed by the New Mexico Board of Barbers and Cosmetologists. For example, a full cosmetologist license requires 1,600 hours of training and successful completion of both written and practical exams.
Register your business:

Choose an appropriate legal structure, such as sole proprietorship or LLC. Selecting an LLC can offer personal liability protection.
Register your business with the New Mexico Secretary of State. Obtain a Business Tax ID (BIN) number from the New Mexico Taxation and Revenue Department.
Secure a salon license for your establishment from the New Mexico Board of Barbers and Cosmetologists.

Check local permits and zoning: Investigate additional requirements imposed by your city or county, especially for home-based businesses. Review local zoning laws before finalizing your location.

Step 3: Set Up Your Business Operations

Once your business is legally established, focus on the operational elements necessary for running your salon.

Choose your location: For commercial salons, select a site that is visible and accessible with adequate foot traffic. If operating from home, create a dedicated, professional space that complies with local zoning regulations.
Purchase equipment and supplies: Invest in high-quality, professional-grade tools, furniture, and products tailored to your salon’s specialty and brand identity.
Set up operating systems:

Open a business bank account to separate personal and business finances.
Implement scheduling software to manage appointments, send reminders, and track clients.
Obtain business liability insurance to safeguard against potential claims, regardless of your location.
Set up operating controls, bookkeeping, and proactively work with a tax advisor.

Prioritize sanitation and safety: Comply with New Mexico’s strict infection control and safety standards by:

- Using EPA-registered hospital-level disinfectants.

- Maintaining a log of disinfection procedures.

- Utilizing single-use items where required, such as porous nail files and buffing blocks.

Step 4: Promote and Grow Your Business

After setting up operations, focus on attracting and retaining clients to grow your salon business.

Create an online presence: Develop a professional website and establish business profiles on social media platforms like Instagram and Facebook. Display your work in an online gallery, using high-quality photos and videos.
Offer promotions: Entice new customers with grand opening deals, referral discounts, and loyalty programs.
Focus on the client experience: Deliver outstanding service by fostering a welcoming atmosphere, personalizing treatments, and consistently seeking client feedback to ensure retention.

💡📊 Get Ahead: Smart Ways to Prepare for the 2026 Tax Season

Sun, 28 Sep 2025 16:15:44 GMT

Get Ready for the 2026 Tax Season: Proactive Steps for a Stress-Free Experience

The 2026 tax filing season is just around the corner, and getting an early start on your 2025 tax returns can help you avoid last-minute stress and ensure you maximize your refund or minimize your tax liability. With ever-evolving tax laws and potential changes in personal circumstances, taking a proactive approach to tax preparation is more important than ever. This blog post will guide you through practical steps to get ready for the upcoming tax season and set yourself up for success.

1. Stay Inf ormed About Tax Law Changes

Tax laws can change from year to year, impacting deductions, credits, and filing requirements. Recent legislation known as the "One Big Beautiful Bill Act" extended and modified many tax provisions that affect the 2025 tax year.

Increased standard deduction: The increased standard deduction amounts from the 2017 Tax Cuts and Jobs Act (TCJA) have been made permanent. For tax year 2025, the standard deduction is $31,500 for joint filers and $15,750 for single filers.
Permanent tax brackets: The TCJA's seven individual income tax brackets (10%, 12%, 22%, etc.) are now permanent. The income thresholds for these brackets have been adjusted for inflation for 2025.
Boosted child tax credit: The maximum child tax credit for 2025 was raised to $2,200 per qualifying child.
New bonus deduction for seniors: For the 2025 tax year, individuals aged 65 and older can claim an additional $6,000 bonus deduction, though it is subject to income phaseouts.
Increased SALT deduction cap: The limit on state and local tax (SALT) deductions has been raised to $40,000 for joint filers, with phase-downs at higher income levels.
Energy tax credits: OBBB eliminates most of these tax credits by December 31, 2025.

For additional changes, and proactive tax planning, make sure to contact a tax pro early in the year.

2. Organize Your Financial Documents Early

Start gathering all necessary documents now, so you’re not scrambling at the last minute. Common documents you’ll need include:

· W-2s from employers-you will need a summary of all overtime and tips paid out in 2025.

· 1099 forms for freelance or investment income

· Receipts for deductible expenses (charitable contributions, medical expenses, etc.)

· Records of retirement plan contributions

· Mortgage interest statements

· Documentation for educational expenses or student loan interest

Create a dedicated folder (physical or digital) to collect these items as they arrive, making it easier when it’s time to file.

3. Review Your Withholding and Estimated Taxes

If you experienced significant life changes in 2025—such as a new job, marriage, divorce, or the birth of a child—review your tax withholding. The IRS offers a handy Tax Withholding Estimator tool online. Adjusting your withholding now can help prevent a large tax bill or an unnecessary refund next year. If you’re self-employed or have other sources of income, ensure your estimated tax payments are up to date.

4. Maximize Deductions and Credits

Take time to review potential deductions and credits that may apply to you for the 2025 tax year. Common opportunities include:

· Contributions to retirement accounts (IRA, 401(k), etc.)

· Health Savings Account (HSA) contributions

· Child and dependent care expenses

· Education expenses (American Opportunity or Lifetime Learning Credits)

Planning ahead allows you to make eligible contributions or incur qualifying expenses before the end of the tax year, maximizing your tax benefits.

5. Plan for Life Events That Affect Taxes

Major life events can have a significant impact on your taxes. If you anticipate changes such as selling a home, having a child, or starting a business in 2025, research how these could affect your tax situation. Planning ahead lets you take advantage of new tax benefits or avoid surprises.

6. Consider Professional Help

Tax preparation software can make filing easier, but if your financial situation is complex, consider consulting a tax professional. Early in the season, tax pros have more availability to review your situation, suggest tax-saving strategies, and help you avoid costly mistakes.

7. Mark Your Calendar with Key Dates

Don’t let important tax deadlines sneak up on you. For most individuals, the 2025 federal tax filing deadline is April 15, 2026. Mark these dates on your calendar and set reminders so you have plenty of time to file or request an extension if needed.

Proactive preparation is the key to a smooth and stress-free tax filing season. By staying informed, organizing your documents, reviewing your financial situation, and seeking help when needed, you’ll be ready to tackle your 2025 tax return with confidence. Start today and set yourself up for a successful tax season! Affinity Accounting & Tax is accepting new clients in Albuquerque, NM, Santa Fe, Rio Rancho and nationwide.

UNDERSTANDING SELF EMPLOYMENT TAXES

Tue, 03 Nov 2020 17:37:57 GMT

How Much Will I owe In Self-Employment Taxes?

If there is a question that I have heard before this is it. How much will my self-employment taxes be? Why do I pay them? How do I calculate them? When do I pay them? How do I pay them?

Self-employment tax is both the employer and the employee parts of payroll taxes which go towards Social Security and Medicare. The tax rate is 15.3%. Social Security has a wage limit of how much can be taxed however the 2.9% that goes towards Medicare doesn't have a wage cap. If you have a high income than you may be paying an additional 0.9%.

Lets break it down even more. You would normally pay 6.2% towards Social Security from your paycheck if you were an employee. Your employer would normally pay 6.2% also towards Social Security. This is their portion of payroll taxes. The same applies to Medicare, you pay 1.45% and your employer pays their portion of 1.45%. So when your self-employed you have to cover both these portions, hence 15.3%.

Self-employment taxes exist so that the Federal government can still collect taxes on self-employed individuals just like employed individuals who work for an employer. Almost everyone pays taxes and that's the bottom line.

So how much do you owe? If you had net earnings of $400 or more then you pay SE tax. Just remember that self-employment taxes (SE tax) are based on your net earnings . So your income minus your expenses minus the would be employer share of these taxes. The would be employer portion is 7.65% because half of 15.3 well is 7.65. This means you pay self employment taxes on 92.35% of your net earnings. So if you make $30,000 in net earnings multiplied by 92.35%, then you would pay taxes on $27,705. However, you get a deduction of one-half of self-employment tax so multiply your self employment tax amount by 50%. This what you call an above the line deduction.

Let's look at the calculations.
$30,000*92.35%=$27,705
$27,705*15.3%=$4,239
$4,239*50%=$2,119

So your SE tax liability for the year would be $2,119. If you estimate that you will owe more than $1,000 (this will include your SE tax and income tax) in tax liability in the year then you should be making quarterly estimated tax payments. These are due April 15, June 15, Sept 15 and Jan 15. If you do not make these estimated tax payments you could be subject to a penalty from the IRS.

You don’t have to pay estimated tax for the current year if you meet all three of the following conditions.

You had no tax liability for the prior year
You were a U.S. citizen or resident for the whole year
Your prior tax year covered a 12-month period

Here is what the IRS states about making payments, "Using the Electronic Federal Tax Payment System (EFTPS) is the easiest way for individuals as well as businesses to pay federal taxes. Make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement and estimated tax payments using EFTPS . If it’s easier to pay your estimated taxes weekly, bi-weekly, monthly, etc. you can, as long as you’ve paid enough in by the end of the quarter. "

There may be more variations and additions to the above steps if you are a church employee, a farmer, or receive social security income. Look for Form 1040-ES instructions for more detailed information.

The question then becomes, "how do I lower my SE tax liability?" This answer is simple. Take every deduction that you possibly can and talk to a tax professional about restructuring your business in a way that optimizes tax savings!

BE PREPARED FOR TAX SEASON BEFORE YEAR END

Wed, 10 Jul 2019 20:40:05 GMT

Don’t wait until the end of 2019 to get your taxes in order. Mid year is a great time to make changes.

Did you get married? Have a child? (Congrats!) Get divorced? (I’d say I'm sorry, but you may be celebrating) all these life decisions affect your tax liability. Remember to ask your employer for a new W-4 to complete whenever life changes happen.

Please, please, please start getting your paperwork in order now. Don’t wait until the beginning of next year comes around and your pulling your hair out because you can’t find anything, and worse you can’t remember what your missing. Save your documents and save your poor hair. Scan everything into a free Dropbox account and name it 2019 Tax Folder. Don’t have a scanner? No problem, download a scanner app on your phone… for free. Yes I said it, for free.

What documents should I even be saving your wondering (I’m not a mind reader, I just know things). Save your donation documents, child care receipts, closing documents from a home purchase, contributions to college savings plan (these kids have no idea, right?), and home improvement invoices, receipts, etc.

Call us if you need any advice preparing for your 2019 tax season!
(505) 800-5690

Affinity Accounting Solutions LLC

Something to Think About

Sun, 10 Feb 2019 21:25:51 GMT

“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” -Albert Einstein