Volunteering can be good for your soul and your business.

I have always been a supporter of spending some of my time volunteering for one cause or another. As many of you small business owners know, it’s a constant juggle of time;  work time, family time, and just other …..stuff.  Sorry, no other word really works.

Let me stop here for just a minute and say that my volunteer efforts have always come from the heart with only one intention, to help others. In no way was I expecting the outcome I received.

Ok on with my story, over the past few years I have become somewhat active with my local Chamber of Commerce. I volunteer my time with a few committees and some special projects within the Chamber. I also try to take advantage of their many networking opportunities.

Several months ago I attended a ‘Business After Hours’ networking event sponsored by one of our local Technical Colleges. It was held at an old elementary school that the college recently took over.  Part of the school had been converted into a satellite college campus and the newspaper was there to write a story about it. As the chamber members chatted and enjoyed the food and drinks, the newspaper people were walking around taking candid shots of the crowd. Thankfully, I did not have my mouth full of food when the photographer snapped my picture, usually that’s the case. He asked the typical questions, name, business name, our impression of the school, etc. About a week later the article appear on the front page of the newspaper. The article was good but it must have been a slow news week to end up on the front page.  I got a few emails from colleagues who noticed the article and my picture but no requests of autographs…..huh

Shortly after that, I received a call from the Chamber. They wanted to see if I would be available to have my picture taken and answer a few questions for an article that would be in the newspaper. The article was about a success story on a business owner I had helped through my volunteer work in the RSVP program. The RSVP program is a mentoring program for small business owners just starting out. I have been a volunteer with the program for the last two years and completely enjoy it. The article along with my picture and the mentored business owner’s made the front page. It really was a good article and this time the story did deserve to be on the front page.

Here’s the rest of the story as they say, within 2 weeks from that article getting published, I got three new clients. All three had seen my picture in both articles and somehow this gave me credibility. I think it established in their minds that I have good values and therefore can be trusted.  As you can imagine in my line of business, accounting, establishing trust with your client is key.

So like I said, volunteering can be good for your soul and your business.  You just never know what positive affect your volunteering efforts will have!

For all of you newbie business owners, here is a link to more information about the RSVP mentor program and it’s absolutely free.

So how important is getting your QuickBooks Data correct?

In this week’s NSAlert published by the National Society of Accountants, they reported that the IRS recently purchased 1,100 copies of QuickBooks® Accounting Software for some of their revenue agents. The purpose, according to the article, is that it will allow IRS Revenue Agents to more quickly audit a taxpayer since they will be able to review records maintained in QuickBooks.

This could cause some concern for taxpayers who have been using QuickBooks for several years since all of the records are maintained in one QuickBooks data file. In other words, the IRS agent may have access to financial records for years which are not under audit and that may not be such a good thing. Also many audits are done just on specific lines of a tax return. Again, taxpayers may feel uneasy about providing ALL financial records during that time period instead of just the financial records for the tax return lines which are being audited. I will tell you that there are ways to limit the dates of a data file but if you are not an advanced QuickBooks user you may not want to try this on your own.

So as you can see, the correct answer to the question, “How important is getting your QuickBooks Data correct”  is,  very important. It could cost you in a big way if it’s not. In addition to making sure your financial transaction are recorded accurately, it is also important to make sure any adjusting entries that your tax return preparer has done are also entered into your QuickBooks data file. The bottom line, pun intended, is that financial records in QuickBooks need to support what is being reported on your tax return.

Here is my suggestion as a preventative measure. Get a QuickBooks data file review. This can be done by most Certified QuickBooks ProAdvisors® as well as accountants who have expertise in working with clients who use QuickBooks.

The moral of this story is, it’s better to be safe than sorry.

I will be a better blogger……..I will

For those of you who have been tracking my blogs, you are in for what I hope will be a great surprise.  After attending a Blog workshop presented by Rebecca Bowman of WSI and Beth Hermes of eIRISMARKETING, I realized that my blog format was all wrong. Well let’s just call it stiff or boring is another good word. Since I am analytical by nature, i.e. an accountant, I posted very technical documents. Not at all, from what I understand now, in blog or conversational style.  

So here is my first attempt at changing my format. I hope after reading it you let me know what you think.

Five Tips to Avoid Tax Time Stress

Issue Number:    IRS TAX TIP 2010-50

Five Tips to Avoid Tax Time Stress 

Filing your tax return doesn’t have to be stressful.  The IRS has put together five stress-relieving tips to help you.

1. Don’t Procrastinate Resist the temptation to put off your taxes until the very last minute. Rushing to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error. 

2,. Visit the IRS Website In 2009, more than 296 million visits were made to IRS.gov.  Make 1040 Central your first stop to learn the latest news and find answers to your questions.

3. File Your Return Electronically Last year, two out of three tax returns were filed electronically. More than 800 million tax returns have been processed safely and securely over the past 20 years. Use e-file and direct deposit to get your refund in as few as10 days. E-filed returns have a much lower error rate. Taxpayers receive a fast acknowledgement that the IRS received the return, a service not available to paper filers. You can e-file through your tax preparer or commercial software. Or, you can use Free File, a service offered by the IRS and private sector partners to prepare and e-file your federal return for free. Again, see IRS.gov for more information.

4. Don’t Panic if You Can’t Pay If you cannot pay the full amount of taxes you owe by the April 15th deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You should also contact the IRS to discuss your payment options at 1-800-829-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise.

More than 75 percent of taxpayers eligible for an Installment Agreement can apply using the Web-based Online Payment Agreement application available on IRS.gov.  To find out more about this simple and convenient process type “Online Payment Agreement” in the search box on the IRS.gov homepage.

5. Request an Extension of Time to File – But Pay on Time If the April 15 clock runs out, you can get an automatic six-month extension of time to file until October 15. However, this extension of time to file does not give you more time to pay any taxes due. If you have not paid at least 90 percent of the total tax due by the April deadline you may also be subject to an Estimated Tax Penalty. To obtain an extension, just file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. The easiest way to file a Form 4868 is through Free File at www.irs.gov/freefile. Form 4868 is also available at IRS.gov or you can call 800-TAX-FORM (800-829-3676) and have a paper form mailed to you.

Suspicious E-mails from IRS

Issue Number:    IRS TAX TIP 2010-49

Inside This Issue

Five Facts You Need to Know about Suspicious E-mails 

There are many e-mail scams circulating that fraudulently use the Internal Revenue Service name or logo as a lure. The goal of the scam – known as phishing – is to trick you into revealing personal and financial information. The scammers can then use your personal information – such as your Social Security number, bank account or credit card numbers – to commit identity theft and steal your money.

Here are five things the IRS wants you to know about phishing scams.

1.  The IRS does not send unsolicited e-mails about a person’s tax account or ask for detailed personal and financial information via e-mail.

2. The IRS never asks taxpayers for their PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

3. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site,

• Do not reply to the message.
• Do not open any attachments. Attachments may contain malicious code that will infect your computer.
• Do not click on any links. If you clicked on links in a suspicious e-mail or phishing Web site and entered confidential information, visit IRS.gov and enter the search term ‘identity theft’ for more information and resources to help.

4. You can help shut down these schemes and prevent others from being victimized. If you receive a suspicious e-mail that claims to come from the IRS, you can forward that e-mail to a special IRS mailbox, phishing@irs.gov. You can forward the message as received or provide the Internet header of the e-mail. The Internet header has additional information to help us locate the sender.

5. Remember, the official IRS Web site is http://www.irs.gov/. Do not be confused or misled by sites claiming to be the IRS but end in .com, .net, .org or other designations instead of .gov.
Link:   Suspicious e-Mails and Identity Theft

The IRS Passes Sweeping Legislation to Protect Tax Payers

Issue Number:    IR-2010-1

Inside This Issue

IRS Proposes New Registration, Testing and Continuing Education Requirements for Tax Return Preparers Not Already Subject to Oversight
 
Higher Standards to Boost Protections and Service for Taxpayers,
Increase Confidence in System, Yield Greater Compliance with Tax Laws

WASHINGTON –– The Internal Revenue Service kicked off the 2010 tax filing season today by issuing the results of a landmark six-month study that proposes new registration, testing and continuing education of tax return preparers. With more than 80 percent of American households using a tax preparer or tax software to help them prepare and file their taxes, higher standards for the tax preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term.

To bring immediate help to taxpayers this filing season, the IRS also announced a sweeping new effort to reach tax return preparers with enforcement and education. As part of the outreach effort, the IRS is providing tips to taxpayers to ensure they are working with a reputable tax return preparer.

“As tax season begins, most Americans will turn to tax return preparers to help with one of their biggest financial transactions of the year. The decisions announced today represent a monumental shift in the way the IRS will oversee tax preparers,” said IRS Commissioner Doug Shulman. “Our proposals will help ensure taxpayers receive competent, ethical service from qualified professionals and strengthen the integrity of the nation’s tax system. In addition, we are taking immediate action to step up oversight of tax preparers this filing season.”

Based on the results of the Return Preparer Review released today, the IRS recommends a number of steps that it plans to implement for future filing seasons, including:

• Requiring all paid tax return preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.
• Requiring competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.
• Requiring ongoing continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.
• Extending the ethical rules found in Treasury Department Circular 230 — which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS — to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct.

Other measures the IRS anticipates taking are highlighted in the 55-page report released today.

Currently, anyone may prepare a federal tax return for anyone else and charge a fee. While some preparers are currently licensed by their states or are enrolled to practice before the IRS, many do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee.

First Step: Letters to 10,000 Preparers

The initiatives announced today will take several years to fully implement and will not be in effect for the current 2010 tax season. In the meantime, the IRS is taking immediate action to step up oversight of preparers for the 2010 filing season.

Beginning this week, the IRS is sending letters to approximately 10,000 paid tax return preparers nationwide. These preparers are among those with large volumes of specific tax returns where the IRS typically sees frequent errors. The letters are intended to remind preparers to be vigilant in areas where the errors are frequently found, including Schedule C income and expenses, Schedule A deductions, the Earned Income Tax Credit and the First Time Homebuyer Credit.

Thousands of the preparers who receive these letters will also be visited by IRS Revenue Agents in the coming weeks to discuss their obligations and responsibilities to prepare accurate tax returns. This is part of a broader initiative by the IRS to step up its efforts to ensure paid tax return preparers are assisting clients appropriately. Separately, the IRS will be conducting other compliance and education visits with return preparers on a variety of issues.

In addition, the IRS will more widely use investigative tools during this filing season aimed at determining tax return preparer non-compliance. One of those tools will include visits to return preparers by IRS agents posing as a taxpayer.

During this effort, the IRS will continue to work closely with the Department of Justice to pursue civil or criminal action as appropriate.

Steps Taxpayers Can Take Now to Find a Preparer

In addition to the stepped-up oversight of preparers, Shulman also announced a new outreach effort to help make sure taxpayers choose a reputable preparer this filing season. That’s particularly important because taxpayers are legally responsible for what is on their tax returns — even if those returns are prepared by someone else.

“Taxpayers should protect themselves from unscrupulous preparers,” Shulman said. “There are some simple steps people can take to choose a reputable tax preparer.”

Most tax return preparers are professional, honest and provide excellent service to their clients. Shulman offered the following points for taxpayers to keep in mind when selecting a tax return preparer:

• Be wary of tax preparers who claim they can obtain larger refunds than others.
• Avoid tax preparers who base their fees on a percentage of the refund.
• Use a reputable tax professional who signs the tax return and provides a copy.
• Consider whether the individual or firm will be around months or years after the return has been filed to answer questions about the preparation of the tax return.
• Check the person’s credentials. Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
• Find out if the return preparer is affiliated with a professional organization that provides its members with continuing education and other resources and holds them to a code of ethics.

More information about choosing a tax return preparer and avoiding fraud can be found in IRS Fact Sheet 2010-03, How to Choose a Tax Preparer and Avoid Tax Fraud.

CRITICAL ALERT on QuickBooks 2009 R9 and Sales Tax Reports

Year End Tax Agency Shutdown Schedules

Just a reminder -

The following tax agencies will be shutting down as part of their year-end get ready process.

IRS Announces 2010 Standard Mileage Rates

Issue Number:    IR-2009-111

Inside This Issue

IRS Announces 2010 Standard Mileage Rates

WASHINGTON — The Internal Revenue Service today issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

As published by the 

Internal Revenue Service · 1111 Constitution Ave. N.W. · Washington DC 20535 · 800-439-1420

2009 Year End Tax Planning

Once December 31st has come and gone, your tax liability for the 2009 tax year will be set in stone. Until then, and especially now that your final tax picture for 2009 is becoming more clear, year-end tax planning presents a unique last chance to lower your tax bill. It is an investment in time well worth considering.

By taking certain steps now, before 2009 draws to a close, you can reduce the size of your tax bill otherwise due when you file your return next year. Especially this year, when Congress has inserted a handful of powerful but temporary tax breaks to get the economy moving again, you do not want to overlook any deduction or credit that you can take in 2009 to lower this year’s tax bill. Managing what income you recognize or defer also can pay dividends as you focus on balancing your tax rates between 2009 and 2010, and beyond, with tax reform on the horizon.

Year-end tax planning is made more urgent in 2009 because of some significant tax law changes, both those that have taken place to stimulate the economy and those now on the horizon to pay for the recovery.

Many of the tax breaks in recent stimulus tax bills will expire at the end of this year. At this point, Congress cannot be counted on to extend any of them for 2010:

• For individuals, these expiring provisions include the itemized state and local sales tax deduction, the $4,000 higher education tuition deduction; the additional standard deduction for real property taxes; and the above-the-line $250 teachers’ classroom expense deduction.
• For businesses, bonus depreciation and enhanced “section 179 expensing,” both designed to temporarily encourage business to make capital investments, likely will be headed for extinction at the end of 2009.

These are examples of the tax incentives set to expire. There are many more. As a result, accelerating qualifying expenses into 2009 to take advantage of these incentives, rather than incurring them early in 2010, may make a significant difference in your overall tax bill.

What is on the horizon, for 2010 and beyond, is also crucial to effective year-end tax planning this year.

In 2010, the opportunity to convert any IRA into a Roth IRA without the long-time $100,000 income restriction has many individuals already setting aside funds. Some individuals, however, may do better to convert to a Roth IRA before the end of 2009, when the value of their accounts, and the consequential income that must be recognized on conversion, are at historic lows.

Effective for 2011, the Obama administration has proposed to increase the income and capital gains tax rates on single individuals with incomes of more than $200,000 and married couples with incomes exceeding $250,000. For taxpayers in those groups, including unincorporated small businesses from which their owners recognize income on their individual returns, following the traditional year-end planning maxim of deferring income into next year may not work well this year. Deferring too much income into 2010 could result in overloading income next year if you are looking to accelerate income into 2010 to escape the expected higher rates in 2011.

Year-end tax planning is not only about what is happening in Congress and at the IRS. Addressing the changed circumstances in your life has always been a large part of year-end tax planning. What you planned for at the beginning of 2009 may not be what you are faced with now. Changes in your employment status, family, investments, or retirement plans raise new tax issues:

• Self-employment, severance pay, sign-on bonuses, stock options, moving expenses, and COBRA health benefits, to name a few employment-related events, all present unique challenges.
• In your personal life, marriage, divorce, a larger family, and child care or eldercare expenses arising in 2009 can impact your tax situation.
• Investments, too, generally benefit from year-end tax strategies. You can take steps to balance out gains and losses. You also should take a year-end tally of dividends and interest to make certain that are paying the correct estimated tax.

Working to rebuild a retirement nest egg through maximizing deductible 2009 contributions, and making certain that rollovers from former employers are done correctly, should also be a top priority at year end 2009.

A special word about losses, especially as this difficult year draws to a close. Matching losses with gains is not necessarily a simple task in the tax law. Different rules apply to different losses. Losses can be ordinary losses, passive losses, at-risk losses, capital losses, hobby losses, casualty losses, gambling losses, or Code Sec. 1231 losses. Knowing the differences and acting before year-end to match them correctly can mean significant tax savings.

Planning for deductions and credits at year-end can also get complex but can be equally as rewarding. Timing and qualification rules create traps and opportunities:

• Pre-paying certain expenses, such as real estate taxes or mortgage interest, do not necessarily translate into a larger deduction this year.
• Paying a spring college tuition bill in late December instead of early January, however, can impact whether you maximize the benefit of the new American Opportunity Tax Credit for both 2009 and 2010.
• Year-end charitable giving generally has always been a smart way to reduce current year taxes but strict timing rules and revised substantiation requirements for property donations cannot be overlooked.
• Homeowners should also not ignore taking advantage of the new residential energy property credit, which has a unique set of rules on qualifying expenses and deadlines for installations.

Especially during 2009 — a year of tumultuous change for our economy and our tax laws — this office considers a year-end tax checkup an essential service for our clients. If you would like more information on any of the planning strategies described in this letter, or if you would like to explore how year-end tax planning can be customized to your individual circumstances, please call this office