TaxAssurances Blog

Executive Summary

Being a first responder is one of the most important jobs that you can have. Helping someone in their time of dire need is about as important as it gets. That’s the job of one of TaxAssurances’ 2022 tax clients. So, while they are treating people and helping save lives, they also have to worry about doing their taxes. This case study walks through the details of that tax return preparation.

Background

• The EMT had 2 jobs with W2s and a total income of $119K. $6K was from their work with a major sports team. $113K came from another company.
• They are single and have a non-dependent child.
• They rent the home and do not own it.
• They live in Westchester County NY which is a suburb of NYC
• They had no other income including any cryptocurrency investments.
• They went to college and paid $8.5k.
• They gave almost $11k of charitable donations to a religious organization.

Results

• They owed under $200 to the IRS.
• They owed under $300 to the state of NY.
• It was more beneficial to Itemized their deductions than to take the standard deduction because of the state taxes they paid and the charitable donations they made.
• They couldn’t take the american opportunity credit because made more than $90k

Challenges & Solutions

Their federal marginal tax rate was 24% and their federal effective rate was 17.9%. Their regular job took out federal taxes at an effective rate of 15.8%. Their sports team employer took out federal taxes at an effective rate of 2.4%. Their total federal effective rate taken out was 15.1%. That’s why they owed the IRS and state at the end of the tax season. Not enough taxes were taken out of their paychecks during the year.

Solution #1

They would have owed more in taxes however we were able to uncover the charitable giving that they made during the year. It was a huge help in reducing what would have been a larger tax bill.

Solution #2

In going over the details of the return I recommended that they talk to their second employer who is the sports team and have them take more taxes out of their future paychecks. They can do that by adjusting their W4. They can also do that with their everyday employer.

Solution #3

As it relates to the tax bill that was due in 2022, the client simply went online to pay off the bills at the IRS and NYS tax websites.

Conclusion

In summary, this case study illustrates how TaxAssurances was able to successfully prepare the taxes for a busy first responder with two jobs and a complex tax situation. While the client owed taxes to both the IRS and New York State due to insufficient withholding, we were able to minimize the amount owed through claiming eligible deductions for charitable contributions. We also provided solutions for the client to adjust their withholding going forward to prevent a tax bill next year.

This exemplifies TaxAssurances’ ability to handle multifaceted tax situations for clients with demanding careers like first responders and provide tailored recommendations to reduce their tax burden. Our expertise in deductions and credits as well as withholding calculations allows busy taxpayers like EMTs to focus on their crucial work serving the community while we handle their taxes efficiently.