Tax Tip

Beware of New Scammers Impersonating IRS Agents!

In the past few weeks a new scam has emerged where individuals posing as IRS agents are calling unsuspecting taxpayers and demanding money.  What sets this scam apart from prior episodes is that the caller ID on your phone will say “Internal Revenue Service”, thus adding some appearance of legitimacy to the caller.  The perpetrator will identify him or herself as an IRS Agent, recite your social security number, inform you that there is a problem with your tax return and that you owe money.  They will then tell you that they will have you picked up by the police if you do not give them credit card or checking account information immediately.  If you refuse to pay and hang up the phone, the next call that you receive will show up on your caller ID as your local law enforcement agency.  This caller recites what the phony IRS agent has already told you and threatens to arrest you if payment is not made.    Obviously, threat of arrest has caused many folks to unwittingly hand over their personal banking information to these criminals, only to find out shortly thereafter that their bank accounts have been raided and they have been scammed! 

 SCAM image

Don’t fall victim to this type of scam.  The IRS will NEVER CALL YOU asking for money.  The IRS will NEVER EMAIL YOU demanding payment.  If you receive a call or an email from someone claiming to be with a government agency, please forward it to your accountant before giving out any information.  Accountants can pull a transcript of your account and make sure that you are in good standing with the IRS or State Taxing Authorities.   Make sure you speak to older friends and family and inform them of this potential scam so that they can protect themselves as well!

 

 

photo courtesy of:  freedigitalphotos.net

Kids Summer Camps & Child Care May be Deductible!


Keep the Child Care Credit in Mind for Summer

If you are a working parent or look for work this summer, you may need to pay for the care of your child or children. These expenses may qualify for a tax credit that can reduce your federal income taxes. The Child and Dependent Care Tax Credit is available not only while school’s out for summer, but also throughout the year. Here are eight key points the IRS wants you to know about this credit.

1. You must pay for care so you – and your spouse if filing jointly – can work or actively look for work. Your spouse meets this test during any month they are full-time student, or physically or mentally incapable of self-care.

2. You must have earned income. Earned income includes earnings such as wages and self-employment. If you are married filing jointly, your spouse must also have earned income. There is an exception to this rule for a spouse who is full-time student or who is physically or mentally incapable of self-care.

3. You must pay for the care of one or more qualifying persons. Qualifying children under age 13 who you claim as a dependent meet this test. Your spouse or dependent who lived with you for more than half the year may meet this test if they are physically or mentally incapable of self-care.

4. You may qualify for the credit whether you pay for care at home, at a daycare facility outside the home or at a day camp. If you pay for care in your home, you may be a household employer. For more information, see Publication 926, Household Employer’s Tax Guide.

5. The credit is a percentage of the qualified expenses you pay for the care of a qualifying person. It can be up to 35 percent of your expenses, depending on your income.

6. You may use up to $3,000 of the unreimbursed expenses you pay in a year for one qualifying person or $6,000 for two or more qualifying person.

7. Expenses for overnight camps or summer school tutoring do not qualify. You cannot include the cost of care provided by your spouse or a person you can claim as your dependent. If you get dependent care benefits from your employer, special rules apply.

8. Keep your receipts and records to use when you file your 2013 tax return next year. Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your return.

For more details about the rules to claim this credit, see Publication 503, Child and Dependent Care Expenses. You can get both publications at IRS.gov or have them mailed by calling 800-TAX-FORM (800-829-3676).

photo courtsey of:  freedigitalphotos.net

Small Business End of Year Checklist

Now that the turkey has been carved and we have shopped until we have dropped, it is time to take stock of our small business records and get ready for the coming year.  As we wind down 2012 it is important to clean up any loose ends and make preparations for the coming tax season.  Some of you who may have filed extensions for taxes last year may feel as though you  have just been through tax season, but keep in mind that whether or not you plan to file your taxes on time, there are certain things that are required to be completed by the end of January.  Getting your records in order now will spare you the grief of having to chase down information after the first of the year.  So take these last few weeks of 2012 and get those i’s dotted and t’s crossed!

1.  Double check your records for current addresses and names for all of your employees.  Remember, some employees may have moved or changed their marital status over the course of the past year, so getting that infomration updated is important before you send out their W2′s.

2.  Make sure you have an updated list of all Vendor’s that you will be giving 1099′s to this year.  You want to make sure that you the correct federal ID number as well as current mailing address.

3.   Pull out your mileage log and check it against your calendar.  You want to document any business travel, even if you were just running to the office supply store.    By cross checking you may discover client appointments that were not added to your mileage log.

4.  Clean up your QuickBooks!  If you haven’t been reconciling or have un-coded transactions, be sure to get that information cleaned up before turning your QB over to your accountant.  The time that your accountant has to spend cleaning up these loose ends translates into billable hours.  Save yourself some money and do it before hand. 

By taking some time over the next month to clean up your 2012 records, you can hit the ground running in 2013!

 photo courtesy of:  www.freedigitalphotos.net

Don’t be shocked by tougher rules for auto and meal deductions!

The IRS is cracking down on deductions for meals and auto expenses.  The best way to make sure that you can continue to deduct these items is to make sure that your documentation is accurate and complete.  Luck favors the prepared! 

For auto expenses to be used as a business deduction, a mileage log must be maintained.  The log should include the beginning mileage, the date, the total trip mileage, the beginning and ending points of the trip and the business purpose.  Simply asserting that the vehicle is used 100% for business is not adequate to deduct the mileage or expenses.   Keep a mileage log handy to document your business miles or go mobile and use an app to track the mileage.  Trip Cubby and TripLog/1040 are two mileage tracking apps that have great reviews.

Meals & entertainment expenses are another area that the IRS is requiring detailed documentation to claim deductions on.  If you are taking a client out for a business lunch, be sure to document the date, time and business discussed as well as who attended the event.  We found a Google app called Biz-Meal & Entertainment Tracker that allows you to send the information to your email and print it when it is time to prepare your taxes. 

Mileage and dining expenses can add up quickly.  The deductions could mean big savings on your tax bill, so take the time to document properly and you will be able to reap the financial benefits come April 15th!

photo courtesy of:  www.freedigitalphotos.net

 

Why Your Tax Professional Should Be An Enrolled Agent

What is an enrolled agent & why do I need one?  An enrolled agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals.

In short…if you have an issue with the IRS… no matter how big or small, and enrolled agent is authorized and trained to handle complex tax matters.  Only enrolled agents, attorneys & CPAs may represent taxpayers before the IRS.  (Trust me, the enrolled agent will charge about 1/3 of the fees that the attorney’s and CPAs charge for the same representation!)

Enrolled agents can help with all aspects of dealing with the Internal Revenue Service.  Enrolled agents advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. Enrolled agents’ expertise in the continually changing field of taxation enables them to effectively represent taxpayers at all administrative levels within the IRS.

You can be sure that your enrolled agent is on top of all the latest tax laws.  In addition to the stringent testing and application process, the IRS requires enrolled agents to complete 72 hours of continuing education, reported every three years, to maintain their enrolled agent status. NAEA members are obligated to complete 90 hours per three year reporting period. Because of the knowledge necessary to become an enrolled agent and the requirements to maintain the license, there are only about 46,000 practicing enrolled agents.

Our sincere hope is that you will never need representation before the IRS.  If you do find yourself in this position, seek the advice of an enrolled agent for all your taxation matters.  Remember that unlike attorneys and CPAs, who are state licensed and who may or may not choose to specialize in taxes, all enrolled agents specialize in taxation.  Make sure you are using an expert to assist you with these issues.

Wendy Corlett of Acclaim Professional Services, Inc. has been an enrolled agent since 2003.

photo courtesy of:  www.freedigitalphotos.net

Sources:  National Association of Enrolled Agents

 

Business Miles Add Up to Big Deductions!

CB008180While you are driving all over town this year growing your business, don’t forget to track your mileage.   This often overlooked deduction can add up to big bucks if documented properly.  Check out the 2012 Standard Mileage Rates.


Business Miles …………55.5 cents per mile
Medical Miles…………….23 cents per mile
Charity related Miles……14 cents per mile
 
Be sure to keep a written account of all miles driven and give them to your tax professional at the end of the year.

1099K Misc, why did I get this?

Due to recent IRS filing requirements, you may receive several  1099K Misc. forms from your payment processing or merchant services company.

How do I know if I should receive one?

If you accept credit card payments from your clients or customers you may receive this form.

Who sends these forms?

The most common payment processors are –

  • MasterCard
  • Visa
  • Merchant Service Providers
  • American Express
  • PayPal

What should I do with it?

You may get several 1099K Misc, one from PayPal and one from your payment processing service. You should include them with the tax information that you provide to your tax preparer. When the regulation was first released, tax preparers were told that these forms needed to be listed separately on the tax return however on January 31, the IRS changed the reporting requirement and they no longer have to be reported individually.

You do need to make sure that you are reporting your gross credit card sales, not net of credit card fees.


For more information, visit the IRS Website


QuickBooks® 2012 – What’s in it for me?

QuickBooks® 2012 – What’s in it for me?

There are several new features in  QuickBooks® Pro & Premere 2012 Software that came out two months ago.  If you are deciding on whether or not to upgrade or are interested in becoming a new user, take a look at what QuickBooks 2012 has to offer.

Check out our October QuickBooks® Client Newsletter for more detailed information and screen shots. Below are a few of the new features and updates.

New Features:

  • Document Center: A large change for Quickbooks is the no charge capability to attach documents locally from your computer system or Outlook messages.
  • Global “To-Do” List: There is now more widespread accessibility within the program including obvious steps to create Quickbooks closer to be a mini-CRM product. 
  • Lead” Center: This new center manages the contacts who are no yet clients; it includes an option to easily convert teir status to clients, if needed.
  • Calender: This feature organizes your “To-Do’s,” invoices, transactions, and bills by their individual due date. 

Many of the new features are exciting, but there are also some very needed updates.

 Updates:  

  • Improved Excel Integration: This feature provides better integration with Microsoft Excel and QuickBooks. The new option is that you can update your already existing excel sheets inside of exporting information and creating an entirely new spreadsheet.  
  • Improved Help and Search:
  • New Condense Date (formerly Clean Up Computer Data) 
  • Shipping Manager: This integrates USPS along with UPS and Fed-Ex into the Quickbooks Program.

For more information or to schedule a training session on QuickBooks®2012, give us a call.

Year-End Task List and Due Dates

Here are a few Year-End tasks and due dates that you may want to consider before you get ready to close out your books for the year.

- Verify Employee Data:  Make sure you verify your employees current address and social security number. You may also want to make sure that you update any name changes (i.e married or divorced).  This goes for active employees as well as non-active employees. This is a good time to review all the employees that you had for the year and make sure you are not missing any required information for their W2.

- Provide Active Employees with a  2012 W4 to complete- This will give them the opportunity to update their filing status and exemptions for 2012.

- Verify and Review Benefit Information for your Employees- Make sure all required employee and employer retirement and 401K contributions are made. Update the vaction and sick time benefits if if they renew at the beginning of the year.

- Update Your State Unemployment Rate – each state sends out an annual rate sheet usually at the end of December. If you did not get one or cannot find yours, you can call the state office that handles Employer Unemployment. In Georgia that is the Georgia Department of Labor at 404-232-3300.

 - Verify 1099 Vendor (Subcontractor)  Information  – There are several new requirment for the 2011 filing season. Here is a link to the IRS website with a summary of who needs to file 1099- Misc.  You may also want to review the information on the new 1099-K. You may not be required to file one but you may be required to report it on your business tax return.

  - Make a year-end backup of your accounting software – This is always a good idea once you have completed updating all the information above. Remember that you are required to maintain payroll and retirement records for 7 years. Here is a link to our resource page which has the complete listing of how long to keep what.


Important Due Dates

January 31: Final Dates for…

  1. 1.) Furnish W-2′s to your employees 
  2. 2.) Final day to distribute 1099s to your vendors
  3. 3.) Final day to file 943 and 944
  4. 4.) Final day to file 941 

-February 28: Final Dates for…

  1.  Last day to file 1096 and 1099 paper forms with the IRS by mail
  2. Last day to file W2 and W3 to Social Security Administration by mail

 -March 31st:

  1. Last Day to file electronically W2 & W3 forms
  2. Last day to file electronically 1099 & 1096 forms

 

One other thing to consider, if you outsource your payroll to ADP or Paychex and are thinking about doing it in-house; or you are currently doing it in-house and would like to explore some automated options to handle payroll, give us a call. There are several on-line services that may save you both time and money plus allow you to process payroll from anywhere.

2012 Standard Mileage Rates

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 55.5 cents per mile for business miles driven
- 23 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations

IRS Notice 2012-01