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Balancing Small Business

Poe's Accounting Service's blog for helping small businesses get more out of their financial accounting.

Balancing Small Business Tip #6

Reformation Productions - Tuesday, April 24, 2018

8 STEPS TO FOLLOW WHEN FILING AN AMENDED TAX RETURN

Reformation Productions - Tuesday, March 27, 2018

Sometimes people make errors when filing their federal income tax returns. In some instances, submitting an amended return is required. Here’s what to know about whether you need to refile and how to go about it.
 
1.Determining when to amend: Reasons include...
•Correcting filing status
•Altering the number of dependents
•Amending total income
•Claiming tax deductions or credits that weren’t claimed originally
•Incorrectly claiming a premium tax credit for health insurance
•Receiving a corrected or voided Form 1095-A health insurance statement
 
2.Determining when not to amend: The Internal Revenue Service (IRS) will correct math errors and notify you by mail of a form or schedule that is required to be submitted.
 
3.Selecting the right form to complete and what to insert: Amendments must be made on an actual paper copy of Form 1040X – it can’t be filed electronically.
3.1.Check the box at the top to show which year you’re amending.
3.2.Write the amount(s) from the original return in Column A.
3.3.Write the net increase or decrease in the amount(s) you’re changing in Column B.
3.4.Put the corrected amounts in Column C.
3.5.Explain what you’re changing and why on the back of the form.
 
4.Submitting amendments for more than one tax year: You must submit a separate Form 1040X for each amended year and mail each one in a separate envelope.
 
5.Attaching additional documentation: If your changes relate to other tax forms or schedules, attach them to Form 1040X to prevent delays in processing.
 
6.Timing submission of an amended return: If you’re waiting for a refund from your original tax return, don’t file the amended one until you receive the refund. (You may cash the refund check from your original return.) It takes up to 16 weeks to process an amended return.
You can claim a refund no more than three years after filing your original return or no more than two years after paying the tax, if that’s a later date.
 
7.Paying additional tax: If you’re refiling because you owe additional tax, submit Form 1040X and pay the tax as soon as possible to limit interest and penalty charges.
 
8.Tracking your return: Search “Where’s My Amended Return?” on the IRS website three weeks after you file.
 
Still confused by how or whether to refile a return and what to do about the health insurance tax credit? Your tax preparer or accountant can quickly determine if refiling is necessary and submit the relevant forms if required, thus ensuring that you avoid penalties and receive refunds promptly.

Balancing Small Business Tip #5

Reformation Productions - Tuesday, February 20, 2018

5 MUST-KNOW TIPS ABOUT THE HOME OFFICE DEDUCTION

Reformation Productions - Tuesday, January 23, 2018

Did you know that if you use your home for business, you may be able to claim some of your expenses as a tax deduction? This applies whether you rent or own your residence and can be a great advantage when you’re launching an enterprise. Here are some tips about what’s allowable and how you can calculate your deductions.
 
1. Regular and Exclusive Use: As a general rule, you must use a part of your home regularly and exclusively for business purposes. This means that if you utilize your dining room table as your work desk and for eating meals with your family, you can’t claim a portion of your dining room as your office. The area of your home that you use for work does not have to be marked off by a permanent partition. It must be
•Your principal place of business, or
•A place where you meet clients or customers in the normal course of business, or
•A separate structure not attached to your home, like a studio or garage
 
If you use part of your home as a daycare facility or for storage of inventory or product samples, however, you’re exempt from the exclusive use requirement.
 
2. A deduction limit applies if your gross income from the business use of your home is less than your expenses.
 
3. Employees must meet additional rules to claim the deduction. For example, your business use must be for the convenience of your employer and not for yourself. For instane, Justine is a sales representative whose employer provides her with an office to complete her paperwork but she prefers to take hers home. Justine would not qualify for a home office deduction.
 
4. The simplified option of calculating your expenses uses the square footage of your working space multiplied by $5, to a maximum of 300 square feet. So if your office is 200 square feet, your allowable deduction is 200 x $5 = $1,000.
 
5. The regular method of calculating your expenses allows you to claim certain expenses like part of the mortgage interest, taxes and utilities, or a portion of your rent if you don’t own your home. The amount you can deduct usually depends on the percentage of your home used for business.
 
Determining eligibility can be complicated. A qualified tax preparer will ensure you take advantage of all deductions.

 

At Poe's Accounting Services and Lightning Tax Services, we specialize in simplifying our client's financials and taxes and taking the anxiety and confusion out of the accounting process.

Balancing Small Business Tip #4

Reformation Productions - Tuesday, December 19, 2017

5 FACTS YOU SHOULD KNOW ABOUT EMPLOYEE BUSINESS EXPENSES

Reformation Productions - Thursday, November 23, 2017

It’s always a pleasant surprise to find ways of saving on taxes. Did you know that if you paid for work related expenses out of your own pocket, you may be able to deduct the amount of those costs that is more than 2% of your adjusted income? Adjusted income is your total wages plus other income such as interest and alimony, less adjustments like student loan interest and retirement contributions, and is different from taxable income.

 

Here are 5 facts you should know:

 

  • 1.Only unreimbursed ordinary expenses can be claimed. These must be common and accepted in your industry and necessary and appropriate for your business or work. They can include:
  •  - Supplies and tools
  •  - Business use of your car
  •  - Business meals and entertainment
  •  - Business travel
  •  - Use of your home for business purposes
  •  - Work related education
  •  - Uniforms and clothes you wouldn’t wear in your leisure time
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  • 2.You must keep proper records. You may use an account book, diary, statement of expense or similar. You also need to keep the documentary evidence that will support each element of the expense such as receipts, canceled checks or bills. 
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  • 3.K-12 teachers may be able to claim up to $250 of expenses. Examples include supplies, books, equipment and other materials used in the classroom. They must be claimed as an adjustment on your income tax return rather than an itemized deduction.  
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  • 4.You must report your expenses on the correct forms. In most cases, form 2106 should be completed. If you use the standard mileage rate for claiming vehicle expenses (57.5 cents per mile in 2015), you can use 2106-EZ. Once you’ve calculated your allowable expenses, you should list the total on IRS Schedule A as a miscellaneous deduction.  
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  • 5.You may be able to deduct some of your costs as a charitable contribution if you work as a volunteer for a qualified charity.

 

Some people find it confusing to figure out what qualifies as a deduction or the correct form to submit. A qualified tax preparer can help you complete your income tax return, calculate all of your possible savings and ensure you receive possible refunds quickly.


At Poe's Accounting Services and Lightning Tax Services, we specialize in simplifying our private and corporate client's financials and taxes, taking the anxiety and confusion out of the accounting process.

 

Balancing Small Business Tip #3

Reformation Productions - Tuesday, October 24, 2017

5 Actions You Can Take if You Can't Pay Your Taxes

Reformation Productions - Tuesday, September 26, 2017

Many people are intimidated by the Internal Revenue Service (IRS), which is why they get duped by fraudsters threatening them with imprisonment if they don’t pay their taxes immediately. They forget or may be unaware that they have the right to be informed of IRS decisions about their tax accounts and to receive clarification of the outcomes. They’re also entitled to courteous assistance and clear explanations of issues and queries. While it’s always preferable to pay as quickly as possible to avoid penalties and interest, the IRS does offer various options to assist people who are unable to pay part or all of their taxes. Here are 5 actions to take if you find yourself in that situation:

 

 

1.Ensure that you still file your return by the deadline and pay as much as you’re able to.  

Procrastination or avoidance will only add to your stress. Filing on time demonstrates good faith and may reduce additional charges such as a failure-to-pay penalties.

 

 

2.Contact the IRS to discuss various alternatives.

They may be able to provide some relief through the following options:

 - A short-term extension to pay – up to 120 days

 - An installment agreement allowing you to make monthly payments

 - An offer in compromise, which resolves a taxpayer’s liability in the event of economic hardship or other special circumstances by payment of an agreed-upon reduced amount

 - A delay of the due date by flagging your account as not currently collectible

 - A waiver of penalties

 

 

If your circumstances change down the road and you’re unable to make the payments required under the installment agreement or offer in compromise, contact the IRS again as soon as possible. You may be able to reduce the monthly payment to reflect your current financial condition.

 

 

3.Collect and retain all documentation proving you had reasonable cause to not pay or delay.

Examples include letters from physicians or proof you were impacted by a natural disaster like a flood or hurricane.

 

4.Consider paying by credit card or through a home equity loan.

You should consider financing the full payment of your tax liability through loans, such as a home equity loan from a financial institution, or by using a credit card. The interest rate and any applicable fees charged by a bank or credit card company are usually lower than the combination of interest and penalties imposed by the IRS.

 

 

5.Find a qualified tax preparer.

Don’t assume that using the services of a tax professional is a luxury only the wealthy can afford. We can assist you by

 - Negotiating with the IRS on your behalf

 - Finding savings like credits or deductions that could reduce your tax bill

 - Dealing with your tax bill quickly to alleviate stress and attain a swift resolution

 - Assessing your whole financial situation (Significant life events like a change in marital status, loss of employment or home ownership all impact your taxes)

 

In many cases, our fees are lower than the interest or other penalties you’d incur by delaying filing your tax return. And at the end of the day, peace of mind is priceless.

Balancing Small Business Tip #2

Reformation Productions - Tuesday, August 22, 2017

5 MAJOR IDENTITY THEFT PROSECUTIONS

Reformation Productions - Tuesday, July 25, 2017

The IRS has warned that identity theft is no longer the domain of small time thieves. Rather, it's increasingly undertaken by multinational criminal enterprises that obtain personal information online. Here are 5 of the largest cases of identity theft in 2015, including several involving residents of Georgia:


    • 1.Keisha Lanier of Newnan, Georgia, and Tracy Mitchell were handed stiff sentences by a court in Alabama for heading a large identity theft ring which filed over 9,000 individual tax returns. The sources for the stolen identities included the US Army, several Alabama state agencies and a call center in Georgia. After receiving the refunds from financial institutions, the fraudsters printed out checks from check stock that had been sent to their homes. When the institutions stopped this practice, the thieves recruited US Postal Service employees who supplied them with addresses on their routes. The postal employees then handed over the checks for a fee. Via a sophisticated money laundering operation, the $10,000,000 in refunds received was cashed at businesses in Alabama, Georgia and Kentucky.

      • 2.Georgia residents Patrice and Antonio Taylor, Jarrett Jones and Victoria Davis were convicted of filing over 1,100 fraudulent tax returns. A cellphone belonging to Patrice Taylor was used to call the IRS’s Automated Electronic Filing PIN Request 114 times. Taylor, who was employed at Tift Regional Hospital, stole the personal information of five patients and 531 sixteen year olds and used it to submit fake returns.

      • 3.Three men based in Miami, Florida, stole personal identity information and filed hundreds of fake tax returns using online tax preparation programs. They requested that the refunds be placed on prepaid debit cards which were mailed to addresses they had supplied.
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      • 4.Stacy Williams of Statesboro, Georgia, was the last of 15 Georgia residents charged under a large identity theft and tax fraud scheme. Williams was sentenced to 94 months in prison and ordered to pay restitution.

      • 5.A career criminal, his wife and other participants in Tampa, Florida, used lists and medical records of 7,000 people to obtain stolen names, social security numbers and dates of birth. They filed fake tax returns and opened prepaid debit cards to obtain $3,000,000 in refunds over three years.


To protect yourself from tax-related identify theft, ask your tax preparer or accountant about the expanded new security strategies implemented by the IRS, states and the tax industry for the 2016 filing season.


At Poe's Accounting Services and Lightning Tax Services, we specialize in simplifying our client's financials and taxes and taking the anxiety and confusion out of the accounting process.

 

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