Category Archives: Tax Preparation

Not Filing Taxes When You’re Owed Money Is A Bad Idea

I know a lot of people who say that if the IRS owes them money that they don’t file their taxes. Some of these folks are owed literally hundreds, even thousands of dollars. I can’t comprehend why they wouldn’t want their money, but from an accounting perspective it’s still a bad idea not to file yearly and on time.

One fact is that if you’re sure you don’t owe taxes, you’re exempt from filing by the yearly deadline. The magic word there is “sure”. If you file later in the year or the next year and they calculate that you indeed owed something, you’ll not only earn a penalty but it’ll be calculated monthly for every month you were delinquent. The rate won’t be the same each month either; the balance will compound like a credit card.
Continue reading Not Filing Taxes When You’re Owed Money Is A Bad Idea

IRS Tax Information for 2018

Suffice it to say, 2018 might become in interestingly confusing tax year, as the federal government is presently looking at making a lot of changes… if Congress ends up passing most of it. With that said, there’s a lot of tax information we presently have that’s going into effect at the beginning of the year. Our disclaimer is that some of these things might change during 2018, including health care taxes. The best we can do is share with you some of what we know right now.

For instance, the highest tax rate for those making more than $480,050 a year is currently 39.6%. That rate remains steady, but it’s possible with the new bill that it’ll come down. The flat tax rate is $134,244, which means if you make a million dollars in one year you’ll be paying around $340K to the federal government.
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What You Need To Know If You Have Even One Employee In New York State

Our state is pretty interesting; that’s a nice way to lead into employment and taxes when it comes to our business. This time around I’m talking about taxes for our employees. There are specific types of taxes I want to bring to your attention in case you’re looking to hire at least one person to work for you… legally that is. 🙂

Let’s begin with this reality; if you hire an employee and put that person on the payroll, you already know there are taxes that need to be taken out for both federal and state tax divisions. That’s not a surprise to anyone who pays taxes themselves… which is every single person who’s ever had a job.
Continue reading What You Need To Know If You Have Even One Employee In New York State

Tax Filing Changes For 2017

Time for our annual tax update for all of our clients. Those of you who aren’t our clients yet can read this and decide to become a client of ours; we won’t mind! 🙂

IRS 1040 Tax Form Being Filled Out
Creative Commons License Ken Teegardin via Compfight

As a reminder, New York State’s Corporate Minimum Fixed Dollar amount is based on Gross Receipts. Extensions should be filed by the beginning of March if possible to allow time for processing. For those of you who file extensions and may owe tax, it is important to note that the tax is due April 15 for personal returns, even if you do not file until October.

New for 2016: Affordable Healthcare Act.

Most of you are aware of the government mandated health insurance. There are many facets to this law, but for 2016, the penalty has increased to a minimum of $695, for those who are not covered by a health insurance plan. If you are married with dependent children it can be upwards of more than $1000, depending on how long you have been without coverage, etc. The penalty is calculated on and reflected on your tax return.

Here are a few of the of the credits/deductions that have been made permanent:

* Educator Credit $250
* Sales tax deduction on Schedule A Itemized instead of state and local income tax
* 179 Depreciation Deduction – Limit is set at $500,000 with a cap of 2 million
* Charitable distribution from and IRA (tax free) for individuals over 70 ½ years old
* Mortgage Insurance Premium – Deduction on Schedule A

For those of you who have children in college, the American Opportunity Credit is still available up to $2,500, which can be used for all four years of post-secondary education. Of the $2,500 40% may be refundable, up to $1000. The lifetime learning credit is based on the first 20% of the first $10,000 of qualified expenses.

The Student Loan interest deduction is still limited to $2,500 per year.

The maximum Earned Income Credit for 3 children is $6,269 and $5,572 for 2 children.

The standard business mileage rate for 2016 is 54 cents per mile, medical and moving are 19 cents per mile and charity is 14 cents per mile.

Please note the IRS is delaying all refunds that include EIC until February 15, 2017. Please see page 2 for more information.

As with any tax law change, there are always exceptions to the rules. If you have any questions, regarding any of the new tax law changes, please call us at the office and we would be more than happy to answer them.

The IRS has put more responsibility on the tax preparers regarding due diligence. We have more paperwork to process while doing a tax return, in addition to asking more questions of our clients that may be redundant.

For those of you that qualify for Earned Income Credit, Child Tax Credit or the American Opportunity Credit (College tuition Credit), please make sure you have the following information readily available when you have your taxes prepared:

1098T College Tuition statement (cannot get credit without form)
Child’s report card, medical records, child care provider record, or other documentation

Additional questions will be asked when your tax return is being prepared in-order to comply with the new rules implemented by the IRS. Thank you in advance for understanding the mandates that are put on us as we prepare your tax returns.

Every client of ours receives a copy of their return when it is prepared, and we’re adding a new feature this year. Each client will receive a CD with a PDF file of their tax return. We are hoping with this new addition you’ll be able to download the information to your computer and have your tax return readily available as needed. If an additional copy is needed throughout the year, the fee will be $15.

As always, we hope you’ve had a safe and healthy holiday season. We look forward to seeing you during tax season.

Writing Off Home Office Expenses

Most small business owners working out of their home knows they can write off expenses for their home office. Still, not all that many of them do, and they might not know how it all works. We’re going to offer a few bits of information that might help you save money on your taxes.

The first thing you should know if that you have write offs based on the dimensions of your office. If your office is 10×10 as an example, you get to write of $5 per square foot, which in this case comes to $500. There’s a maximum level of 300 square feet, or $1,500. This is called the “simplified method”. A more technical method involved figuring out the percentage of your house you’re using for work, such as if you’re running a day care out of your home or you have a studio where you work on projects that you want to claim. If you have extra complications like that it’s easier to work with an accountant to help you figure it out properly.

The qualifications for doing this is that you do a substantial amount of work from your home office, but it’s rare that anyone will check to see how much work you’re doing from your home. It’s supposed to only be used for business, but the definitions would be hard to prove either way. For instance, if you allow your children to use your office to do their homework it’s technically not allowed. If you use the room for other purposes, such as a laundry room (although no one would do this; just an example) then technically you’re not allowed to claim the deduction unless you have some kind of defined border showing which part is office and which part is home use.

By the way, if you’re an employee who works from home, you get to use this deduction as well. The same space rules apple as above. Strangely enough, you also get to write off expenses as it applies to your mortgage or if you rent an apartment.

Did you know if you decided to paint your office or change the flooring exclusively in there, you get to write off some of the expenses for this (you get to write off painting in full). Also, if you have a dedicated phone line for your business that counts as a write off.

If you have to store any type of inventory in your home and that room is used exclusively for that purpose you get to write that off. However, you can also write off some expenses if you use a portion of a room like a basement, as long as your home is the only location of your business.

There are a lot more exemptions you might qualify for, but truthfully it’s probably best to talk to a tax professional or your accountant to help you calculate these things and keep yourself from going crazy trying to figure it all out.