Why Florida Residents Should Rely on Professional Guidance This Tax Season

There are not two ways around it – tax season is difficult to wade through, and tax advisors in Florida residents trust are more important than they’ve ever been. Florida may be a state that does not collect a state income tax, but it is by no means a breeze for its residents to file taxes. New federal tax codes, investment portfolios, retirement distributions, and the increasing number of remote workers are just a few nuanced challenges Floridians will need to navigate if they want to maximize their returns and financial fitness. Guided by an experienced professional, the risk of costly mistakes is minimized and every available credit and deduction is capitalized on.

The most widespread myth of all Florida myths is the belief that since we don’t have state income tax that means you barely have to file your taxes right? In truth, the federal tax system is enough of a tangled web to warrant help from a professional. The IRS tax code is more than 70,000 pages long, and even those who earn money in pretty straightforward scenarios can profit from some professional advice. Tax professionals know the current tax laws and how to optimize income, investments, deductions and such.

And one of the big tax obstacles many of Florida’s own residents face is on retirement income. Florida has a significant number of retirees, with many of them dependent on distributions from IRAs, 401(k)s, pensions and Social Security. Although Social Security benefits are not federally taxed at the below certain thresholds, distributions from other retirement accounts frequently are. There is also the requirement to begin Required Minimum Distributions (RMDs) at age 73 and if the wrong amount is not taken there can be substantial IRS penalties. This is where the tax advisors Florida retirees turn to for help can help make sure these distributions are utilized thoughtfully, remain in compliance with tax obligations, and that tax-advantaged plans—such as Roth conversions or charitable giving—are properly executed.

Another demographic change that involves an increasing need for professional guidance is remote workers living in Florida. The state is home to many employees of companies based in other states that switched to home office mode for a significant portion of the workweek. Such arrangements give way to issues of multi-state taxation, with citizens often unsure whether their income was earned where they lived, worked, or where the employer is. In the worst-case scenario, failure to file properly can lead to double taxation or unnecessary audits. Residents depend on tax advisors to understand reciprocity agreements, nexus rules, and file the correct state return when necessary. Finally, a growing part of the Florida economy consists of small business owners and freelancers. An increasing number of citizens work in freelance professions or maintain their business, such as contracting, consulting, and marketing, among many others. They have various obligations, such as estimated quarterly tax payments, self-employment tax, as well as tax deductions related to home office space, travel expenses, and equipment. At the same time, the IRS is paying more attention to self-employed filers, meaning a greater chance of getting audited and having to pay fines. Therefore, tax advisors can influence the tax rates businesspeople pay in Florida and ensure the correct claims.

Expert advice is also worth heeding when it comes to charitable giving. There may be deductions for Florida residents who give to specific entities, if they itemize. The rules are exacting, and documentation of the contributions is tough, and the rules are different for cash vs. non-cash contributions. Tax advisers can illuminate whether the standard deduction or itemizing is most beneficial, and how to organize donations for the greatest impact. They also help with grasping constraints, including a 60% of adjusted gross income limit on certain contributions.

Investment portfolios are also diverse, and increasingly include stock, mutual funds, real estate investments, or cryptocurrency for many Floridians. All of these asset classes come with varying tax consequences. Selling a stock held for the long term at a profit creates capital gains, which are taxed at a beneficial rate — but only if the asset was held for more than a year. Cryptocurrency, meanwhile, is considered property by the IRS, and therefore every little transaction must be recorded as a gain or loss. Lose some, win some Professional tax advisors assist in tracking cost basis, applying the correct capital gains rates and planning losses to offset gains.

So, let’s review: having no state income tax may look like an advantage for Florida; but the intricacies of federal tax, remote work, retirement planning, and investment income make filing a far from simple task. Amid rapidly shifting tax laws and more aggressive enforcement by the I.R.S., negotiating a tax minefield on your own can result in missed opportunities, unnecessary taxes or even legal problems. Opting to do business with reputable tax advisors in Florida experts offer, can only add to clarity, certainty and positive mind-set. So as we head into tax season, Florida residents will want to use expert advice to achieve the best possible financial results.