Tips

Sure getting married means you’ll more than likely change your filing status, but there are also some other administrative things that need to happen as well.

Congrats on getting married! And now there’s some paperwork that needs to get done. Here’s a list of some steps you need to make before filing your taxes with your new spouse.

1. The first thing you’ll want to do is update your information with the USPS so any tax information will be sent to the right address.

2. If you’re changing your name, you want to make sure you update the Social Security Administration. This is so your name will match on your return. And you’ll want to get a new Social Security Card as well. If you the name the Social Security has on record doesn’t match your name on your return, this could create a delay in processing your return, not to mention the hassle.

3. If you moved, you’ll also want to make sure you fill out a change of address form with the IRS.

It’s always best to work with a seasoned tax professional like us so you can take full advantage of your new tax status. We’ll help you decide the best way to file for your unique situation. Give us a call!

Not sending out 1099s can be costly. Here’s what business owners are responsible for.

If you used independent contractors such as graphic designers, consultants, and attorneys, you are required by the IRS to send a 1099 if you paid them more than 600 dollars in the tax year at hand. Not doing so can result in a penalty of 250 dollars; that can really rack up quick if you used several contractors throughout the year.

The consultant will need to have received their 1099 from you by January 31st. You have until February 28th to turn it in signed by the contractor to the IRS. If you are filing electronically, you have until March 31st.

Note: you don’t have to send a 1099 out to an entity you paid that is a corporation.

You can learn more about 1099s here on the IRS’s site.

Everyone’s tax situation is different and we’re here to help you meet your legal requirements and navigate any complex tax issue. Give us a call today so we can help.

The distinction between capital expenditures and expenses may seem obvious. But the IRS may see it differently.

There are capital expenditures and there are expenses. And most of the time, the line between them seems pretty clear to business owners come tax season. But there can be some gray areas.

If you bought new equipment like a computer, a bulldozer, or a coffee shop espresso machine, you probably know that these are capital expenditures you can write off in one year or deduct and depreciate over the years it is in use. Essentially, capital expenditures are assets that help you generate revenue for years to come but go down in value.

Expenses on the other hand, are simply the costs that occur in a year for supplies consumed doing business within that year. These are expenses like paper, breakroom coffee, travel costs, business cards and so on.

But because businesses are unique and everyone’s situation is different, there are gray areas that filers don’t always quite understand and improperly file as a result which can send a red flag to the IRS—especially in the Digital Age. What about a website? Or software? Where do these fall in relation to Capital Expenditures and Expenses?

Deductions for business owners can be tricky. It’s always best to use a qualified tax professional like us to help you ensure your chances of filing properly and minimizing your chances of an audit. Give us a call today!

If you’re taking care of a parent in their sunset years, you may be able to claim them as a dependent.

It doesn’t have to be a parent per se, it can be a family member that you are giving care to. It can be a family member such as an aunt or uncle.

Obviously you’ll need to meet some requirements to be eligible to claim them. Although, they don’t necessarily have to live with you. There are four tests that must be met to qualify. Here’s a list of the tests and you can see Publication 501 for more details:

• Not A Qualifying Child Test
• Member of The Household or Relationship Test
• Gross Income Test
• Support Test

We’re more than happy to help you understand if your unique situation qualifies for claiming your parent or elderly family member as a dependent. It’s always best to go with a qualified tax professional like us to relieve any ambiguity and help you from claiming someone when you’re not eligible for it.

Image courtesy of wiremoons on flickr; reproduced under Creative Commons 2.0

Did you invest in making your home more energy efficient last year? If so, you may qualify for a tax credit.

If you bought new insulation, doors, windows and/or roofing that improved the efficiency of your home, you may be able to get a credit of up to 10% of your costs. If you went really green and installed some serious energy savers such as solar panels or installed a wind turbine, you may get a credit for up to 30% of the installation costs.

As a bonus, if you traded in the gas guzzler for a hybrid or electric vehicle, you may be able to claim that purchase as well.

To make these deductions, you’ll need to file form 5695 with the IRS. We’ll be more than happy to take care of that for you to make sure you get all of the deductions you have coming to you—as well as making sure you don’t take deductions you’re not allowed to.

If you’re self-employed, there’s a treasure trove of expenses you can deduct.

There are all sorts of expenses you can deduct as a result of being self-employed. It’s important to note that even if you’re a full-time employee at a company but have a business on the side you can still deduct those expenses.

Here’s a list of expenses you can deduct:

• Home office: If you use your office for just an office, you can figure out what you pay for mortgage or rent by the total square footage of your home and then take the portion that is your home office to figure out what you pay for your office. It has to be an office though, a bedroom, kitchen or living room doesn’t count.
• Office supplies/Computers etc: Be careful of writing off that big screen TV you bought. You may need to prove that it was bought for the primary purpose of your business.
• Business Books: Books that are geared toward your industry or professional development like Good To Great.
• Subscriptions: This can be for software like Adobe Creative Suite and website hosting, or things like industry periodicals.
• Mileage: Commuting is not considered deductible. However driving to a client meeting is a deductible. The standard IRS rate is .55/mile as of 2013.
• Travel: Travel expenses such as flights, hotels, and meals can be deducted when traveling primarily for conducting business.

Check out the IRS’ self-employment tax center for more information. And of course, we are always ready and willing to help you with any questions about what you can and can’t deduct as a self-employed individual. It’s a best practice to always work with a professional like us to clear up any ambiguity around your unique situation.

Budgeting the same for all the months is a pitfall. Here’s some things unique to January that you should be budgeting for.

Christmas

What? Already? Yes. Saving for Christmas starts now because the alternative is paying off the previous Christmas. Saving for Christmas is much cheaper than paying interest on credit cards.

Staying or Getting Fit

If you’ve made the New Year’s resolution to hit the gym, you’re going to want to make sure you account for what you’re spending on it every month.

Valentine’s

If you want to treat your spouse to a nice gift on Valentine’s Day, you may want to spread that expense out over the next few paychecks rather than putting on a credit card a few days before valentine’s because you don’t get paid until the 15th and the special day lands on the 14th—just like every year.

Staying Warm

January can be the coldest month some years and this year is looking to be a very cold one across parts of the United States. This means heating bills will be at their peak. You may also want to invest in down comforters that can keep you warm enough you can turn the heat down at night. A good comforter can be pricey but you can get a nice return on investment over the next few years.

Receiving a notice from the IRS can be daunting. Here’s some facts to eliminate the fear of the unknown.

There are a multitude of reasons the IRS sends notices to millions of taxpayers per year.

More times than not, a notice sent by the IRS is specific to one issue. The most common reasons are:

• Request for Payment
• Notification of Account Changes
• Request for Additional information

Notices from the IRS are always sent by mail, so no need to fret missing an email from the IRS.

Notices from the IRS can also be to notify you of a correction they made after your taxes had been processed. This notification is sent to you to ensure you agree with the correction. If if is correct then there is usually no action you need to take. However, if you disagree, you're best bet is to contact us. We can help you craft a proper explanation that will increase your chances of have the correction solved in your favor. The IRS will respond in up to thirty days.

It’s best to notify us of any notice you receive from the IRS so we can help you choose the right response to begin with.

Children may raise your blood pressure but they can lower your taxes. Here’s how:

Depending on your situation, there are a few ways children can lower your taxable income.

• For children under seventeen, you may be eligible for the Child Tax Credit or the Additional Child Tax Credit.
• Starting in the year your child is born, you can also claim them as a dependent up until 26 if they are in school.
• If you pay for childcare while working or looking for work, you may be eligible for the Child and Dependent Care Credit if your child is under thirteen. You’ll want to make sure you have receipts for your childcare however.
• There are also expenses that can be deducted when adopting a child under the Adoption Credit.
  The Earned Income Tax Credit is for taxpayers that work and have earned income from wages, self-employment, or farming. The Earned Income Tax Credit (or EITC) lowers the amount of tax you may owe and it might also result in a refund.
• For children in college, there are also credits for student loan interest as well as the higher education tax credits.

 
We can help you make sure you are getting all the tax benefits available to you. Contact us for help!

Image courtesy of Sharon Drummond on flickr; reproduced under Creative Commons 2.0

Dealing with unfiled past taxes isn’t as stressful as it you might think.

The longer you go without paying your taxes and filing a claim, the more expensive it gets. So it’s best to take care of it now. Even if you know you can’t pay all you owe, it’s best to make sure you file on time as you may qualify for a payment plan. However, paying by the due date is the way to go about paying the least.

And if it’s already late, here’s what you need to do:

• You most definitely want to see a tax professional like us. We know just how to deal with situations like the one you’re in. Get together all possible tax information you have relevant to the year you need to file for and set up an appointment with us.
• Then you need to make some sort of a payment when we file for you. Ideally, you’ll want to pay all that you owe. If not all, there are a few options such as an installment plan, an extension or perhaps a settlement.

 
Continuing to neglect filing your taxes can lead to serious enforcement actions taken by the IRS. We’ll take good care of you though. Let us help you through this time. Calling us now is the best first step you can take.