Posted by admin on Sep 15, 2016 in Uncategorized |
Many tax filers pay education expenses for themselves or for their children. There is more than one potential tax treatment for the cost of education. Tax filers can usually obtain the most advantageous tax outcome by conceptualizing a hierarchy in which the various options are ranked relative to their financial benefit. American opportunity credit The most preferred tax benefit for the cost of education is usually the American opportunity credit, also known as the AOC. The AOC can be for as much as $2,500 per student. A portion of the AOC is referred to as being refundable. Up to $1,000 of the AOC may be refunded to you, even if there is no tax liability for it to offset. The cost of books is included along with tuition and mandatory fees to calculate total costs for the AOC. The AOC is only available to undergraduate students and can be claimed for a maximum of four years per student. For undergraduates continuing their classes beyond four years, as well as graduate students, another credit is available. Lifetime learning credit The lifetime learning credit (LLC) is 20 percent of up to $10, 000 in costs, so the maximum credit is $2,000. There is no refundable component of the LLC, so it is useful only to the extent that it offsets tax otherwise payable. There is no limit on the number of years you can claim the LLC. Unlike the AOC, the LLC may be claimed for the cost of a single class to improve job skills, even if the student is not pursuing a degree. Even though there is no limit on the number of students you can include for the LLC, $10,000 is the cost limitation for all students combined. If there are several students reported on your tax return, you might need to use an additional deduction to obtain the maximum tax advantage. Tuition and fees deduction Although there are differing tax benefits for the cost of education, each student is eligible for only one benefit each year. If your qualifying costs for the lifetime learning credit are near the LLC limit, you may claim the tuition and fees deduction for any students not already included on a tax credit. Unlike a credit that offsets actual tax dollar for dollar, a deduction simply reduces the amount of income that is taxable. The tuition and fees deduction has been extended through 2016 and may be claimed for up to $4,000 in qualified expenses. Itemized deduction If not already included to claim another tax benefit, education expenses incurred to improve your own job skills may be deducted as an itemized deduction. If married, the same would apply to your spouse. Contact an accountant, such as those found at Alexander & Associates CPA, for more specific information about the additional requirements of claiming tax credits or deductions for the costs of...
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Posted by admin on Aug 5, 2016 in Uncategorized |
Whether you do direct marketing or sales for a popular product brand or have a skill that you provide for local clients, your small business is important to you. Equally important are the profits and expenses your business accumulates over time, but these profits and expenses can make things confusing during tax season or cause you to lose track of how much money your company is actually making. A small-business accountant can help you keep your finances in order and keep your financial records accurate, even if your home business doesn’t look like a traditional brick-and-mortar company. Here are two reasons to hire an accounting company for your business needs. Tax laws Self-employment taxes can be confusing and very detailed, and you may not know what you can write off as expenses and what you have to pay on at the end of the year. Since you do not pay into social security and other state and federal taxes throughout the year, you must file taxes appropriately and on time to avoid penalties. Your accountant understands IRS laws on both a federal and state levels and will help keep your finances organized so you file taxes on time and get the most deductions you can to favorably offset anything you owe at the end of the year. Balancing You might be surprised how quickly your profits seem to disappear. Balancing what you put into your business versus what you get out of it is mind boggling at times. If you have employees, you have wages to pay out as well as other expenses for things such as marketing, supplies, inventory, shipping, and more. You may be under the false impression that you have more income that you really do based on what clients owe you rather than what they have actually paid, which can cause your finances to become imbalanced fast. When it comes to keeping your accounts positive and helping you stay on track with spending, an accountant can be a blessing for your small business. You hope that you have a home business that is so successful you have an income you can rely on. To protect your assets and your income, hiring a small-business accounting firm can be a wise investment for you. Whether you hire an accountant just to do your taxes or need someone to balance your books every month, an accountant such as Teri J Henderson, CPA, P.A. can keep your finances balanced and help keep surprises from taking your business...
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Posted by admin on Jun 21, 2016 in Uncategorized |
If you have been able to quit working for another employer and work solely for yourself as an e-book writer, you need to make sure that you have your finances together. As an e-book writer, you are essentially running your own business with yourself as the sole proprietor, and you need to to treat your writing and productivity as a business. Here are four tips that will help you keep your finances together as a professional e-book writer. Get A Tax ID The first thing you need to do is get a tax I.D. for your business. That way, when you set up accounts with book sellers, such as Amazon or Barns & Noble, instead of providing them with your social security number and making that information more readily available for someone to gain unauthorized access to, you can provide them with the tax I.D. for your business. This will also help establish that you are running a business and will help you separate your business and personal expenses. Open A Business Account Second, you need to open a business banking account. This will be the account where all of your earnings from your e-book sales will be deposited into. This will also be the account you use to pay any expenses related to your e-book writing career. Having all of your earnings and expenses come out of one account will help you keep better track of how you are doing financially with your e-book writing business. Set Up A Pay Date Third, you need to make sure that you pay yourself. Set up a specific pay schedule for yourself, such as once a week or once a month. You’ll want to coordinate your pay date to line up with when you get paid from the various companies that distribute and sell your e-book. When you pay yourself, you’ll want to make sure that you are also setting aside a set percentage of your income for state income taxes, federal income taxes, and self-employment taxes every payday. You should make quarterly payments for your state and income taxes. Track Your Expenses It can be easy to feel like you don’t have that many expenses as an e-book writer, depending on the topic that you write on. However, all those little expenses add up, and they can be subtracted from your overall earnings, which will lower your income for the year. Set up a spreadsheet to keep track of your earnings. This spreadsheet should keep track of the following information: Date Of Expense Amount Of Expense Payment Method Reason For The Expense Payee Additionally, you should scan all your receipts and create both a digital and physical file so that you have a detailed recored for tax purposes of all of your expenses. Your business expenses include anything related to creating e-books, such as payment fees for editing programs, subscriptions to industry magazines, software programs, and research expenses. Set Aside Time To Keep Your Finances In Order It can be tempting to not keep track of your expenses and income, and just wait till the end of the year to do so. However, it is smart to sit down once a week and dedicate ten to fifteen minutes towards looking at your finances. This gives you a dedicated time each...
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Posted by admin on May 20, 2016 in Uncategorized |
If you have always been self-employed with your own business and you worked as a one man team, but you know you’re going to expand and create a larger business for yourself, there are some experts you want help from along the way. You want to make sure you are doing everything the right way, and it’s important to know your finances are in order. Here are a few things you’ll want to consider doing before you add more people to your staff. Employment Paperwork Sit down with a lawyer and create the necessary employment paperwork for the people that will work for you. These documents should include the details of their pay, their obligations as an employee, non-disclosure agreements, future non-compete information and more. The lawyer will know what is supposed to go into the documents, and make sure that everything in the documents is legal and binding. This makes hiring the employees less stressful, and you should have contracts that are specifically created for your business and industry of work. Payroll Taxes and Banking Doing the payroll and dealing with taxes and banking concerns can be very time consuming and confusing, especially if you don’t know a lot about the tax laws in your state. Hire a professional accountant, like Blueback Accounting, that specializes in payroll services for small businesses, so they can make sure that all taxes are being withheld from paychecks, and to make sure that you’re saving the right amount for taxes throughout the year. This can end up saving you from a lot of complications down the road. Workers Compensation Insurance Workers compensation insurance is great for protecting you financially against liability problems. You don’t want to get sued and lose your business because one of your employees has an accident while on the job, or because something happens to them that they try to blame on you. An insurance agent can talk with you about other coverage you’ll need when you take employees on. If you are ready to start making more money and you need to hire more professionals to work for you, make sure that you cover these three areas before you begin. Trying to figure all of these things out on your own can be difficult, and small errors can end up costing you big time. Hire the right professionals to work with you and start finding your new employees to expand your business right...
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Posted by admin on May 10, 2016 in Uncategorized |
Do you run a small retail store? Is keeping up with the bookkeeping a struggle? If so, don’t feel bad. You know your business and can be successful with your sales, but you do not have to be an accountant, too. Outsourcing your accounting is smart business! Why Outsource Your Accounting? Letting a professional take care of your accounting will allow you more time to focus on sales. On top of that, here are some more benefits you will reap. As long as you have the funds, your bills will be paid on time. Your receivables will always be up-to-date and should you have past-due accounts, they will be dealt with. Bank statements will be reconciled in a timely manner. You will always have current reports such as: Profit and loss statement Balance sheet A budget, should you desire Budget versus your actual receivables and expenses Detailed account of your receivables Accounts payable aging Vendor reports Your merchant statements from credit card transactions will be reconciled and recorded for you. Sales taxes will be filed. Your accounting professionals will handle tax filings for any taxable business property you have. Come tax time, you will be presented with accurate information including year-end adjustments such as depreciation on qualifying assets. Your taxes will be easy to file. No more last minute scurrying around, trying to find everything your accountant needs. You Still Have Control You will work with the accounting service to set up a plan that works for you. If there are any aspects of your bookkeeping that you would like to retain in-house control over, you should be able to. For example, if you want to continue paying your bills, you should be able to do that. You may want to ease into relinquishing tasks over time. Your accounting service might use a web-based software that allows you to have access at any given time. Any bookkeeping tasks you have retained can be completed online. This gives you and your outsourcer the ability to see what each has done. If you are like many retail business owners, you spend time after hours working on your bookkeeping. Imagine not having to do that anymore. You deserve to be able to focus on your customers and selling during business hours, and you deserve to have free time when your store is closed. Why not outsource your accounting to a professional service and get back to doing what you enjoy and do best? Contact a company like Broutman & Co., P.C. for more...
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Posted by admin on Apr 26, 2016 in Uncategorized |
Are you worried about your tax bill but don’t know what to do about it? Strategic tax planning isn’t just something for high earners or the inherently rich. It’s also something that middle income families can put into practice to lower their tax costs. So, what strategies can you do in your own situation? Here are 5 tips to help lower taxes both now and in the future. Use Tax-Advantaged Accounts. This is an obvious first step, but it’s one that not enough taxpayers take advantage of. By contributing the maximum amount to your employer’s 401k, you can reduce your taxable income and receive the most amount of company matching funds possible. In addition, many middle-income earners can also contribute to an HSA (Health Savings Account), IRA (Individual Retirement Account) and/or a Roth IRA. Traditional IRAs help reduce your taxable income now, and Roth IRAs create tax-free income during retirement. Know Your Tax Brackets. The United States tax system is progressive — meaning that you pay more taxes as your income increases. By knowing when your income level will trigger a higher percentage of taxes, you can stay under these limits. You should also know the earnings limitations on any tax credits or deductions you receive. For example, by knowing that there is a higher investment tax (the Net Investment Income Tax) for filers who are married and earn more than $250,000, you can avoid paying this extra tax by keeping your taxable income under this threshold. Max Out Deductions. Itemizing your deductions instead of taking the standard deduction is a great way to reduce your taxable income. However, many filers don’t accumulate enough deductions to itemize each year. Avoid this problem by making strategic purchases and donations. For example, if you don’t always have enough medical expenses to use them as a deduction (the minimum amount of medical deductions is 10% of your income), combine any voluntary medical expenses into one year instead of two. You can often do the same with charitable deductions and unreimbursed employee expenses. Look for Tax-Free Investments. Most investment income is fully taxable, but there are some on which you don’t have to pay taxes. One of the easiest nontaxable investments is municipal bonds. Many such bonds are not taxed at the state level, at the federal tax level or both. You can also sell underperforming stocks before the year ends to claim the losses against your normal taxable income. Gift Assets. Rather than giving money to family members or children, try gifting assets — especially income-producing assets — instead. For example, if you give stocks or bonds as a gift to your elderly parent or young adult child, this gift is nontaxable to you and can reduce your future income. And since many people who receive family financial help are in a low tax bracket, the money will be taxed less than it would as your own income. Be sure to keep your gift under the annual tax exclusion amount ($14,000 for...
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Posted by admin on Apr 18, 2016 in Uncategorized |
As the end of each tax season approaches, tax preparers get a lot of questions from worried or procrastinating taxpayers. One of the most common is what to do if they haven’t filed taxes in recent years. Once you miss a year filing your income taxes, the problem can often balloon into several years and may become overwhelming. The good news is that it’s often not as hard or as expensive as you may think. Here’s a handy guide to filing prior years. Where to Get Your Information If it’s been more than a year or life has been hectic, taxpayers often cannot find their W-2 or Form 1099 information. You can still file by collecting these documents again. If you have several years to file, focus on putting together the most recent 3 calendar years’ worth of documentation. This is because you forfeit any refunds if you file more than 3 years late. Start by contacting employers from the year in question if you can remember all of them. Call your brokerage companies or use your online accounts to locate tax statements for any taxable investment accounts. Do the same for college tuition expenses and student loan expenses (if applicable). If any employers have dissolved or you cannot locate contact information, you can then turn to the IRS for W-2 information. The IRS gets copies of all W-2s and Forms 1099 sent to you, so you can request a copy of these directly from their website. Due to recent security problems, you will have to wait for copies to arrive by mail. If you’ve moved since your last tax return was filed, either change your address or use Form 4506-T to request your transcript be sent to a different address. If you were self-employed or have other income, you may need to rely on your own records to determine income and expenses. This can involve looking at bank statements and credit cards statements from prior years. Reconstruct mileage by using records of jobs you did. Check with vendors to see if they can provide copies of sales receipts for large business purchases. How to File Now that you’ve gathered as many records and information as you can, it’s time to get it filed. You will likely need to consult with a professional tax preparer to do this for two reasons: first, it can be difficult to find do-it-yourself software that can file prior years and secondly, you may need further help reconstructing past information. The good news is that most taxpayers can use a regular tax preparer to file missing years and will not need to pay a tax attorney or even a CPA. Unless you haven’t filed for more than 7 years, have unusual tax situations or need to respond to IRS audit paperwork, you should be able to file with any qualified professional. For more information, contact HBE Becker Meyer Love LLP or a similar...
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Posted by admin on Apr 7, 2016 in Uncategorized |
If you are thinking about filing an extension for your taxes, you need to make sure that you understand how the process really works before you go through with your extension. This Year’s Tax Date Is Extended Traditionally, tax day is April 15th. However this date can be moved around a little bit based on when the IRS releases certain paperwork and guidelines. This year, the IRS extended the deadline for filing taxes to April 18th, 2016, so you have three additional days to get everything together. You Still Have To File By April 18th, 2016 If you plan on asking for an extension on your taxes, you have to get that paperwork in by April 18th. The IRS expects all taxpayers to either file their taxes or ask for more time by the tax filing deadline. You Can File Electronically To request an extension, you have to send the Form 4868 to the IRS. You can print out this form, mail it in, and wait to get a response via snail mail from the IRS. Or, you can submit Form 4868 electronically through the IRS website. You will not have to pay any fees if you file directly through the IRS website. One of the benefits of filing online is that you will get an email within a couple of days that will confirm your extension from the IRS . Your Extension Could Be Denied Most people are granted extensions. However, the IRS does not have to grant your request. Make sure that all of your information is correct on your form before you submit it. If the information is incorrect, you could be denied your extension and fax a failure to file penalty as well. So, double and triple check your Form 4868 before you submit it. You Still Have To Pay On Time Many people wrongly assume that when they file for an extension, they are getting an extension on paying their taxes as well. However, that is not true. When you file for an extension, you are getting an extension on completing the paperwork, you are ot getting an extension on meeting your tax obligations. Although you may not know exactly how much you owe since you still need time to complete your taxes, have your tax account come up with an estimate of how much you owe. Then, submit your estimated tax payment on April 18th, 2016 to the IRS. Once you complete your taxes, send in the difference that you owe right away. The sooner you send in the difference, the less interest, fees and penalties you will owe. If you overestimated your taxes, when you actually file, you will get a refund check from the IRS. You Have To File An Extension Separately With Your State If you are not ready to file your state taxes either, you are going to need to figure out the process for filing an extension for your state. Filing an extension with the IRS only applies to your federal taxes, not your state taxes. If you need more time to get your taxes done, make sure that you file for an extension by April 18th, 2016 and send in your estimated taxes by that date as well. If you need help, talk to your tax accountant. For more information,...
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Posted by admin on Mar 22, 2016 in Uncategorized |
If you have decided to undertake the exciting task of opening your own small business, you will need to make taking care of your finances a priority. Often those who start their endeavor without taking the steps to prepare for the monetary aspect of their business may find their finances become too difficult to organize as time goes on. Here are some steps a new business owner can take before they open their doors to the public so their money is tracked properly from the very start. Get Your Personal Finances In Line In the beginning, you will need to use personal finances to get your business up and running. You may need to apply for a loan to get money for startup costs. Take the time to obtain a credit report of your financial situation so you can work on any areas that may hold you back from getting a business loan at a favorable rate. If your credit is dicey, work at paying off personal credit cards or having inaccurate information removed from your credit report before you head to the bank to ask about a loan. When your personal finances are in order, set aside a predetermined amount to use for the startup of your business. Pay this money back to yourself when a profit is apparent. Know How Much Your Expenses Will Be Make it a priority to know exactly how much your monthly expenses will cost before you start your new venture. Write a list of all the money you will need to pay each month out to run your business properly. This would include rent, electricity, payroll, and supplies. Once you have a ballpark figure needed each month to keep your business afloat, you can price your wares or services appropriately to pay these bills as they come in. Determine When Profit Will Begin When you are first starting out, you may find your profit is nowhere near enough to pay the expenses. You can determine your break even point by utilizing a calculator to figure out how much you need to sell each month to make enough to pay that month’s bills in full. Your fixed costs would need to be paid first. After these are paid, approximate how many products or service calls you believe your business is capable of handling in the month. This will help you find what variable cost you have available to provide the goods or services to your customers. When you find you are selling more than the amount you had projected, you will be on your way to seeing a profit margin form. Get Some Needed Help Often a new business owner finds they struggle to come up with the time to go through their paperwork to figure out finances. It is important to track each expense and sale so you do not have inaccuracies in your numbers when tax time comes around. To get a better handle on your money, consider hiring a business consultant to help you get on track with the ebb and flow of money within your business. A consultant will help you make decisions in how to handle your finances so you obtain a profit quickly. Call reputable business consulting services before you have your grand opening so you are prepared to stay organized with your money intake and expenses from day...
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Posted by admin on Mar 17, 2016 in Uncategorized |
If you have worked for someone else your entire life but are now going out on your own to start your own business and don’t know much about finance, hiring a professional could be the key to success. There are a lot of financial concerns you need to have when starting a business and maintaining the finances. Most people don’t know anything about the taxes in their city or state, or how to do federal business taxes, which is important. Here are a few reasons why you need to hire a consultant before you start taking new business. Payroll The payroll system can be one of the most confusing for business owners. You need to take out federal and state taxes, take out money for health insurance, and you need to pay into taxes, all at the same time. Have a professional accountant do all of the bookwork to make sure payroll is correct, and then have them deposit the funds for wages with direct deposit weekly, bi-weekly or whenever you think it’s best. Tax Savings Account You have to save for your taxes all year long so you aren’t stunned by what you owe when you go to file. The accountant can help you find the best type of savings account to put all the money into, so you can make a little money while you’re saving for your taxes. They will determine an estimate of what you owe quarterly so you can put it away. Budgeting The accountant will see what you can afford to pay yourself, and may suggest that you pay yourself a check like the other staff. You can give yourself a distribution at the end of the year if there is a lot of money left over, but you don’t want to overpay yourself while you’re trying to get on your feet. The accountant will see where you are spending too much, where you can use more money, and when you buy, rent, or take a loan for business needs. Using a financial professional to help you manage your finances is going to cost you money, but it’s well worth the investment because you won’t get hit with financial surprises or problems that could unexpectedly tank your business. Talk with a few small business bookkeepers in your area to see who is taking on more work, and who can help you get the financial aspect of your business started. Contact a company like Waggoner Frutiger & Daub CPA’s to get...
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Posted by admin on Mar 8, 2016 in Uncategorized |
Merging two households into one is an exciting time for newlyweds. But it can also come with hidden challenges. One of those is the financial challenge when one spouse owes debt. How will you be affected by your partner’s debt? Can your money be affected by creditor calls, garnishments, liens, tax offsets? Here’s a handy guide to how your spouse’s debt affects you, based on each type of debt incurred. Civil Debt Generally, debts incurred before you were married are the legal responsibility of only the person whose name is on the debt. Unscrupulous creditors may attempt to convince you that you must pay such debt, so it’s important to understand your rights and obligations. As for debts incurred during the marriage, a lot depends on where you live. Some states rule that assets and debts taken out during the marriage are “community property” of the married couple and may be the responsibility of either party. These so-called “community property states” include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. If you do not live in a community property state, you are generally only responsible for your spouse’s debts if the debt is considered to have benefited the marriage (such as food, clothing or shelter) or both spouses undertook the debt together. Tax or Child Support Debt Tax debt or delinquent child support debt can be difficult to prevent from damaging the new family. When a couple files taxes jointly, the IRS or the state’s taxing authority may keep the couple’s refund (if there is one) to pay the delinquent debt of one or both parties. This is known as an “offset.” Some taxpayers only find out about federal debts held by their partners when their refund is confiscated to pay the debt. If you suspect your refund may be offset, it’s beneficial to talk with the agency to whom money is owed and begin a payment plan to get back in good standing or ask if there is a deferment option. This may prevent refunds from being taken come tax season. If this is not possible, there is a provision to protect your portion of the tax refund. It’s called “Injured Spouse Allocation” and it allocates the income, expenses, deductions and tax due or refunds between both parties. Injured Spouse Allocation can be claimed using Form 8379. You may need to work with a qualified tax preparer or CPA to complete Form 8379, since it can be a little complicated to separate all tax-related items. Student Loan Debt Federally-backed student loans or child support may also be subject to the Federal Offset Program. The best way to protect your assets from these debts is to get them back into good standing before tax season begins. If your debt is for student loans, be sure to look into all repayment or consolidation options and see if any changes could get you out of default status. These options include: Consolidating existing debt into one new loan may reduce your payments and clear the slate on old debts. Forgiveness programs, such as the Public Service Loan Forgiveness program may qualify you to have the remainder of your loan written off after 10 years working in public service. Income-based repayment plans (including Pay-As-You-Earn), cap payments based on your current...
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