Category Archives: Tax Time Prep

IRS: Pay me now…I’ll pay you later.

The Internal Revenue Service has temporarily stopped sending out tax refunds, and the Tax Court has suspended operations during the federal government shutdown, as lawmakers in Congress continue their battle over delaying or defunding “Obamacare” (the Affordable Care Act) for a year.

The Internal Revenue Service reminded taxpayers that the October 15th deadline remains in effect for people who requested a six-month extension to file their tax return.

While the current government shutdown has shuttered many offices and turned off many services, it “does not affect the federal tax law, and all taxpayers should continue to meet their tax obligations as normal,” the IRS said in a statement.

Over 12 million people filed for automatic six-month extensions earlier in 2013, most of whom will have to file by the October 15 deadline. Some groups do have more time, the IRS noted, including members of the military and others serving in Afghanistan or other combat zones, as well as people in parts of Colorado affected by severe weather, flooding, landslides and mudslides.

The service encouraged taxpayers to e-file their returns, but said that it would accept returns both electronically or on paper, and accept and process payments accompanying either type of return. It will not be able to issue refunds, however, until normal government operations resume.

–from Accounting Today for the Web CPA

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IRS Rules All Legal Same Sex Marriages Will Be Recognized For Federal Tax Purposes – Forbes

After weeks of speculation about how the Internal Revenue Service will treat same-sex marriages, we have our answer: the IRS has announced that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. And that’s what we expected.

But here’s what we didn’t: the ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

via IRS Rules All Legal Same Sex Marriages Will Be Recognized For Federal Tax Purposes – Forbes.

Ask The Taxgirl: Taxing Social Security Benefits – Forbes

Taxpayer asks:

If you have turned full retirement age and are receiving your retirement and also still working full time, how does this effect your taxes?

taxgirl says:

This is a pretty common scenario these days – and a popular question!

Once you reach retirement age, whether your Social Security payments are taxable depends on your filing status and how much other income you receive. Check your federal form SSA-1099 for the total of your benefits. Once you have that number, here are a few key points:

If your only source of income is Social Security benefits, your benefits are generally not taxable.

If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income (MAGI) is more than the base amount for your filing status. Whether that income is taxable is based on a formula. The quick and dirty version of the formula is to add one-half of the total Social Security benefits you received (that’s what is reported on the form SSA-1099) to all your other income, including any tax exempt interest and other exclusions from income. Then, compare this total to the base amount for your filing status:

The base amounts (which are never adjusted for inflation) are:

•$32,000 for taxpayers who file as married filing jointly;

•$25,000 for taxpayers who file as single, head of household, qualifying widow/widower with a dependent child, or married filing separately who did not live with their spouses at any time during the year; and

•$0 for married persons filing separately who lived together during the year.

If the total is more than your base amount, some of your benefits may be taxable.

Ask The Taxgirl: Taxing Social Security Benefits – Forbes.

Affordable Care Act 101 Weekly Webinar Series | SBA.gov

The Small Business Administration and Small Business Majority are launching the Affordable Care Act 101 weekly webinar series. Each week, SBA representatives will walk through the key pieces of the law so that small business owners can understand the facts and make the most informed decisions they can about providing health insurance for their employees.

 

This free series will focus on both federal and state provisions to help small business owners understand how the law will affect them. Topics being discussed include:

 

  • Small business tax credits (available to businesses and tax-exempt non-profits)— who’s eligible for them and how to claim them
  • Marketplace updates
  • Shared responsibility
  • Cost containment
  • Tools and resources available for small businesses interested in learning more about the law

 

A question and answer period will follow.

 

The Affordable Care Act 101 will take place every Thursday from now through the opening of the marketplaces in October. Below are the registration links for the next four presentations. Registration for later webinars will be available shortly.

via Affordable Care Act 101 Weekly Webinar Series | SBA.gov.

Stress-Free Bookkeeping | Virtual Bookkeeping Company – Your Administrative Solutions

Stress Free Bookkeeping

laptop with numbersManaging your books is a cumbersome but critical task for any business. It can be very time-consuming, frustrating, and could mean working late hours. However, it has to be done to know the worth of your business and to satisfy the government for taxes. You also need to do this on a regular basis to get an accurate idea of your financial health.

 

How do you make this stress-free task work for you?

Some small and medium businesses either employ part-time bookkeepers or do the work themselves. No matter how it is done it is still a mundane task involving shuffling papers and working extra hours. Often there is a twinge of doubt that you are not doing something quite right or are missing important information.

Ask any entrepreneur why they went into business and you’ll get a hundred different answers. Odds are that “do bookkeeping” was not on the list even though bookkeeping is the core of any successful business. It is the way to measure growth, keep cash flow positive and track expenses.

Bookkeeping is like learning to play a musical instrument. The secret is to learn the fundamentals and create a system that works for the company.

Here are a few tips that could prove helpful to make the right decision for bookkeeping and accounting needs:

 

Don’t mix business and pleasure:

Get a business credit card to enable you to separate your business expenses from your personal. By this time you have already started your business checking account. So adding that business credit card will help you establish and build business credit and points. Co-mingling funds between personal and business is not a productive or efficient way of doing business and can prove to be a headache at tax time.

 

Keep it simple:

When creating your business in your accounting software doesn’t create too many categories in the chart of accounts. For example, office supplies will be a sufficient category rather than separate categories for paper, letterhead, printer supplies, etc. This complicates profit and loss and adds time to the day-to-day activities when items are being expensed.

 

Automate your invoicing:

There are many online invoicing services that allow you to schedule invoices for clients who are charged on a regular basis. You will find that most accounting software has the ability to memorize invoices that reoccur monthly. The day of the re-occurrence can even be set such as the first of the month.

 

Use the right accounting software:

There are many accounting software packages out there that you can use to assist you with your accounting and bookkeeping needs. Of course, I highly recommend QuickBooks but there is also a wide variety of Open Source software which is free to download. Additionally there are a wide variety of free manuals and tutorials online.

 

Outsource to a virtual bookkeeper:

Outsourcing to a virtual bookkeeper saves time, money, worry, and headaches. Many business owners take two common approaches to tackling the issue of bookkeeping. They try to do it themselves – which is time consuming and can lead to costly mistakes. They pay large firms to do it – which is unnecessarily expensive. A professional bookkeeper has the skills and experience to do the job right. There are many advantages to outsourcing your books. Save money, save time, and the need for extra help. The biggest benefit is your bottom line.

  • Books that are inaccurate do not reflect the true health of the business
  • Being clueless at any level about where the money is going is not being in control of your business.

Business people need to focus on the business:

There are many aspects to running a business and the most important is earning money. Some things just have to be delegated in order to maximize time and productivity. Bookkeeping can be a painful and time consuming process and many business owners do not have the expertise or knowledge to get the job done right. Time spent on bookkeeping activities is time away from making money.

If you liked this article by Fran McCully, you’ll want to hop on over to http://www.YourAdministrativeSolutions.com where you can find more articles, resources and strategies to help manage the finances of your business. We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation.

Mid-Year Tax Planning: Do It Now to Save Later | SBA.gov

With just about half of the year already in the books, now is the ideal time to take stock of your business activities year-to-date. This will enable you to take wise tax actions that will pay off on your tax bill when you file your 2013 income tax return next year.

What to look for in your books

Determine whether you’ve been profitable so far, and whether your numbers meet, exceed, or fall short of your estimates at the start of the year. Also, face up to losses that you may have experienced to date. If your analysis shows:

Better than expected, you’re looking for ways to reduce your taxes, so explore traditional actions such as:

Setting up a qualified retirement plan, such as an SEP or 401(k) plan, to save for your retirement in a tax-advantaged way

Buying new equipment and machinery to better run your business while capturing tax write-offs (explained later)

Also, make sure that your remaining estimated tax payments for 2013 are increased to avoid underpayment penalties.

Lower than expected, tax savings can still be helpful but may not be the most important action now. If your profits aren’t what you expected, or you experienced losses, reduce your remaining estimated taxes to conserve your cash and avoid making an interest-free loan to the government. (You can%E

via Mid-Year Tax Planning: Do It Now to Save Later | SBA.gov.

Do I Need an Accountant?

If you are bootstrapping, or starting a small business on a limited budget, you have probably spent some time trying to figure out where you can cut business costs and do more on your own in order to stretch the funds you have available.

One area you may consider doing it yourself instead of hiring it out is accounting. If you have an accounting background and a solid understanding of business finances, then this may be a good place to cut costs. However, if you lack experience in managing the books of a business and expect to learn as you go, you should think twice. Managing your own accounting system incorrectly can hurt your business not only now, but also in the long-term.

Here is a rundown of the things an accountant can do for a small business owner. Review the list carefully, especially if you’re still unsure why an accountant may be a good resource to add to your small business team.

During the Start-Up Process

When you start a business, there are a number of actions you need to take and systems you need to set up in order to create the foundation of a successful business. Here are some ways an accountant can help:

via Do I Need an Accountant?.

Rules for 2013 Summer Hiring

Obtain W-4s from all summer employees, even the owners’ children, students working part-time and foreign students.

 Withhold FITW from all employees, including the owner’s spouse/children, unless a W-4 claims exempt.

Withhold FICA from all employees, even high-school students and those who receive SS benefits. Exception: Employees under 18 working for sole-owner parents.

Pay overtime for hours actually worked over 40 hours in the workweek. You are not required to include as hours worked paid time off (holidays, vacation days). Do not substitute paid nonwork hours for work hours to make all hours straight time, thus avoiding overtime pay.

Example: Eric works 12 hours a day, 4 days of the workweek. He is off the 5th day, a holiday, but is paid for 8 hours. He is correctly paid 40 hours’ straight time + 8 hours’ overtime + 8 holiday (nonwork) hours. Eric’s employer is not allowed to substitute the 8 hours’ holiday pay for Eric’s 8 hours of overtime to avoid paying the overtime rate.

Paid holidays and vacations

Under federal law, paid holidays for part-time and summer help are always optional, but check state laws.

No paid vacation is required—but if you provide paid vacation, some federal and state laws apply.

Benefits

For temps and part-timers, benefits are optional; if offered, they should be explained in a written benefits plan.

–The American Institute of Professional Bookkeepers (AIPB)

Three Things I’ve Learned From Warren Buffett by Bill Gates| LinkedIn

Know how valuable your time is.

No matter how much money you have, you can’t buy more time. There are only 24 hours in everyone’s day. Warren (Buffett) has a keen sense of this. He doesn’t let his calendar get filled up with useless meetings. On the other hand, he’s very generous with his time for the people he trusts. He gives his close advisers at Berkshire his phone number, and they can just call him up and he’ll answer the phone.

(Good advice for all business owners…spend time doing what you do best, and leave the other details to those who know those details best. Contact us today (moorebookkeeping@msn.com) if you’d like to stop dealing in the bookkeeping details!)

via Three Things I’ve Learned From Warren Buffett | LinkedIn.

Money Mistakes You Might Be Making – 360 Degrees of Financial Literacy

Mistake 1: Only saving what’s left over

Do you continue to worry that you’re not saving enough? Do you routinely rely on credit rather than cash to pay for the things you want or need? Rather than blame your financial inertia on your income, look a bit deeper, because the real culprit may be the lack of financial priorities. If you don’t know exactly how you’re spending your money and you haven’t set financial goals, it’s unlikely that you’ll see much financial progress.

Go back to basics by preparing (or reviewing) your budget. If you tend to save only what you have left over every month, you can put yourself on a more disciplined course by having a fixed amount taken out of your paycheck automatically for retirement. Or, you can set up automatic transfers from your checking account to a savings or investment account.

Mistake 2: Not having an emergency fund

One lesson that you may have learned over the past few years is that the job market isn’t stable. That’s a major reason why one of your savings priorities should be an emergency fund. While it isn’t glamorous, this underappreciated workhorse really pulls its weight during hard times. Having cash on hand that you can use for an unexpected expense, or to pay bills if you lose your job, is vital because it can help you avoid having to rely on credit or tap your retirement savings. If you don’t have emergency savings to fall back on, a minor money shortfall can quickly turn into a major cash crisis.

Mistake 3: Not asking for help

Even if your finances are in good shape right now, you may be overdue for a checkup. Reviewing your finances is especially important during periods of volatility because it can help reveal potential strengths and weaknesses, and identify changes you might need to make to adjust to the current economic climate. And if you’re already in financial trouble, don’t let fear or shame prevent you from asking for help. Facing financial problems early may help you make a full recovery. Many creditors are willing to work with you, but this may be much easier while your credit is still good, and while you still have time to turn things around.

via Four Money Mistakes You Might Be Making – 360 Degrees of Financial Literacy.