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It’s hard to believe, but the income tax filing season is just around the corner.  We’re already gearing up for the new season, and we are excited to make it the most convenient process ever for our clients.

Introducing Our New Client Portal — powered by Qount

We’re taking our technology to the next level for the 2020 tax season and beyond.  Our new and improved client portal includes tools that improve collaboration, information sharing, and document exchange.  The portal maintains the bank-level security and encryption you’ve always had with our practice, while providing a more organized and connected experience.

Here’s a few highlights on the great new functions we know you’ll love:

•  Your client portal access allows for multiple user accounts.  This means you and your spouse or business partner can share data within the portal.  This was a frequently requested option that our old portal could not support, and we’re excited to offer this new functionality.
• Now all your documents on the portal can be organized into folders.  Our prior portal only allowed segregation by year, and the new portal will allow documents to be maintained in folders by type.
• Finally, the entire engagement process is now a breeze.  All contracts, required signature files and billing will be housed in the new portal making it your one destination for all phases of your work with us.

All clients will receive an email invitation to create your free account on the new portal from the company email info@nextgen.tax.  Invitations will begin on Monday, December 9th.  To allow for a smooth transition process, groups of clients will be invited each week over a 6-week period and all clients should be transistioned by  January 15, 2020.  This will ensure all clients are plugged in with the new portal ahead of the tax season.  Please be on the look out for your invite, and feel free to contact us with any questions or concerns!

The Internal Revenue Service launched the new Tax Withholding Estimator, an expanded, mobile-friendly online tool designed to make it easier for everyone to have the right amount of tax withheld during the year.

The Tax Withholding Estimator replaces the Withholding Calculator, which offered workers a convenient online method for checking their withholding. The new Tax Withholding Estimator offers workers, as well as retirees, self-employed individuals and other taxpayers, a more user-friendly step-by-step tool for effectively tailoring the amount of income tax they have withheld from wages and pension payments.

“The new estimator takes a new approach and makes it easier for taxpayers to review their withholding,” said IRS Commissioner Chuck Rettig. “This is part of an ongoing effort by the IRS to improve quality services as we continue to pursue modernization and enhancements of our taxpayer relationships.”

The IRS took the feedback and concerns of taxpayers and tax professionals to develop the Tax Withholding Estimator, which offers a variety of new user-friendly features including:

• Plain language throughout the tool to improve comprehension.
• The ability to more effectively target at the time of filing either a tax due amount close to zero or a refund amount.
• A new progress tracker to help users see how much more information they need to input.
• The ability to move back and forth through the steps, correct previous entries and skip questions that don’t apply.
• Enhanced tips and links to help the user quickly determine if they qualify for various tax credits and deductions.
• Self-employment tax for a user who has self-employment income in addition to wages or pensions.
• Automatic calculation of the taxable portion of any Social Security benefits.
• A mobile-friendly design.

In addition, the new Tax Withholding Estimator makes it easier to enter wages and withholding for each job held by the taxpayer and their spouse, as well as separately entering pensions and other sources of income. At the end of the process, the tool makes specific withholding recommendations for each job and each spouse and clearly explains what the taxpayer should do next.

The new Tax Withholding Estimator will help anyone doing tax planning for the last few months of 2019. Like last year, the IRS urges everyone to do a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed this year. It’s also an important step for those who made withholding adjustments in 2018 or had a major life change.

Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income and those with complex tax situations.

To get started, check out the Tax Withholding Estimator on IRS.gov.

Source: https://www.irs.gov/newsroom/irs-launches-new-tax-withholding-estimator-redesigned-online-tool-makes-it-easier-to-do-a-paycheck-checkup

If you’re going to itemize specific expenses and deductions when filing your taxes this year but haven’t saved every single thing, you need to know which receipts you should prioritize having on hand. Find out exactly which receipts you should be saving and why — and how to be well-prepared when you have taxes due.

Receipts you need for itemizing deductions
If you are an individual filer, you might be able to use itemized deductions to receive a greater reduction in tax liability than if you use the standard deduction. Itemizing means you add up individual expenditures or donations throughout the tax year that can be subtracted from your adjusted gross income. Whether you do taxes online or not, you’ll need to refer to receipts for filing federal and state taxes.

To gauge whether you should itemize your tax return, you need to know the standard deduction for your filing status on your 2019 tax return. If your total itemized expenses are less than the standard deduction, then you should take the standard deduction.

The standard deductions for 2019 are:

• $12,200 for an individual filer
• $18,350 for a head of household
• $24,400 for married couples filing jointly or a qualifying widower

The goal in saving receipts is to have paperwork that proves the numbers in your forms for state and federal income taxes are correct. Here’s a list of expenses you can itemize and receipts you should hold on to:

• Business use of your car: Most business owners elect to use the mileage deduction for tax purposes. You’ll need to keep a record of the miles driven for business on your vehicle. If you chose to deduct actual expenses, you’ll need to maintain receipts for gas, oil changes, repairs, and parking expenses.
• Charitable donations: Whenever you donate an item — whether it’s clothing or a car — ask for a tax-deductible receipt or tax receipt for donations, which provides an official record of your donation. An estimated value for the item must be determined and recorded by you on the receipt.
• Childcare expenses: If you have a dependent child age 12 or under, and paid someone to care for him, take advantage of the childcare credit and keep your receipts or paperwork for what you spent.
• College savings plans records: Keep records of savings accounts, including college savings plans. These kinds of savings plans are not tax-deductible, but if you have a 529 plan, your investment will grow tax-deferred.
• Educational expenses: Hold on to receipts from tuition paid, books, supplies, lab fees, research expenses, and transportation and travel costs.
• Homeowner expenses: Keep receipts for expenses related to the home you own; this includes closing documents for buying a home, invoices for home improvements, and statements for property taxes paid. Plus, if you operate a home-based business you’ll want to keep track of your monthly home operating expenses (utilities, phone, internet, etc.)
• Local and state income taxes: Keep tax forms from years you want to claim.
• Medical and dental expenses: Keep track of prescriptions and medical bills paid, including co-pays, lab tests fees, and emergency room visits. Alternative therapy might qualify for a deduction since the IRS considers payments made to nontraditional medical practitioners as a deductible medical expense.
• Mortgage interest or taxes: Keep receipts from mortgage and tax payments made for your home throughout the year.
• Unreimbursed business travel and entertainment expenses: Hold on to receipts from food purchases for clients, as well as oil changes, repairs, gas, and mileage for business or work if you were not previously reimbursed.

Why you should always keep tax records
When organizing your receipts, especially as a business owner, the IRS recommends developing and maintaining a record-keeping system that clearly shows your income and expenses. It’s also a good idea to keep track of dates and receipts of amounts paid if you often donate money or pay expenses for your job and would like to claim itemized deductions for taxes.

We advise our clients to snap pictures of their receipts and upload them to their client portal all year long. You can also create a photo album in your phone and snap pictures

If going through and cataloging all your receipts is not part of your ideal solution to how to prepare for taxes, you might need to employ professional help with your taxes. Contact us to learn more about how we work with clients all year long.

It’s summer-time! For most small business owners that means your kids end up logging some time at your workplace. Even if that’s not in your plans, perhaps it should be a part of the summer plans. There are plenty of benefits to engaging your child to work for the family business, but one you may not have considered is that:

Employing your minor child offers some excellent tax advantages.

If your small business hires your children to work in the business, there are significant tax benefits if the children are not yet 18 years of age. You can pay your child for the work done without subjecting them to federal or state income taxes. Plus, in many instances you are not required to withhold Social Security, Medicare or unemployment taxes.

The tax law allows owners to pay their children up to $12,200 in 2019 and if done correctly, all of this amount may be paid tax-free. This creates a tax deduction for you as the business owner and allows you to divert cash flow from your business and into your household in a tax advantaged way.

This approach is one of the fundamental elements of successful tax planning for business owners. Many parents will use the child’s “earnings” to pay for extra-curricular activities, private school tuition, and other expenses that would typically be paid from their after-tax dollars.   This approach allows those expenses to be met using funds that are untaxed.

However, using this tax tip is not as simple as it seems. We highly recommend engaging us to set you up for successes, and partner with a payroll provider to ensure it is managed properly. Further, the law requires the child to be doing age-appropriate work. This means the business cannot hire a 5-year-old to maintain the corporate financial records. Instead the child should be paid based on a practical job relevant to the child’s age.

Contact us if you would like to set up a consult to guide you on how to employ this tax strategy for you and your family.

Unclaimed income tax refunds totaling almost $1.4 billion may be waiting for an estimated 1.2 million taxpayers who did not file a 2015 Form 1040 federal income tax return, according to the Internal Revenue Service.

To collect the money, these taxpayers must file their 2015 tax returns with the IRS no later than this year’s tax deadline, Monday, April 15, except for taxpayers in Maine and Massachusetts, who have until April 17.

“We’re trying to connect over a million people with their share of $1.4 billion in potentially unclaimed refunds for 2015,” said IRS Commissioner Charles Rettig. “Students, part-time workers and many others may have overlooked filing for 2015. And there’s no penalty for filing a late return if you’re due a refund.”

The IRS estimates the midpoint for the potential refunds for 2015 to be $879 — that is, half of the refunds are more than $879 and half are less.

In cases where a federal income tax return was not filed, the law provides most taxpayers with a three-year window of opportunity to claim a tax refund. If they do not file a tax return within three years, the money becomes the property of the U.S. Treasury.

For 2015 tax returns, the window closes April 15, 2019, for most taxpayers. The law requires taxpayers to properly address, mail and ensure the tax return is postmarked by that date.

The IRS reminds taxpayers seeking a 2015 tax refund that their checks may be held if they have not filed tax returns for 2016 and 2017. In addition, the refund will be applied to any amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or past due federal debts, such as student loans.

By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2015. Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2015, the credit was worth as much as $6,242. The EITC helps individuals and families whose incomes are below certain thresholds.

Current and prior year tax forms (such as the tax year 2015 Form 1040, 1040-A and 1040-EZ) and instructions are available on the IRS.gov Forms and Publications page or by calling toll-free 800-TAX-FORM (800-829-3676).

Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2015, 2016 or 2017 should request copies from their employer, bank or other payer. Taxpayers who are unable to get missing forms from their employer or other payer can order a free wage and income transcript at IRS.gov using the Get Transcript Online tool. Alternatively, they can file Form 4506-T to request a wage and income transcript. A wage and income transcript shows data from information returns received by the IRS, such as Forms W-2, 1099, 1098, Form 5498 and IRA contribution information. Taxpayers can use the information from the transcript to file their tax return.

If you need help with your current year or a prior year filing, please contact us.  With your authorization we can can pull prior year transcripts and use those to prepare your prior year returns.

*Excluding credits

Source: IRS Newsroom

The Tax Cuts and Jobs Act (TCJA) brought wholesale changes to the tax code. Taxpayers are starting to feel the effects of this bill as they file the first year’s tax returns affected by the changes in the tax law. While this law increased certain credits and deductions, it eliminated others. Fortunately, in some cases a minor adjustment can allow you to still take advantage of deductions that would ordinarily be eliminated by the TCJA.

Prior to TCJA, taxpayers could report a itemized deduction for unreimbursed employee-related expenses. In short, these are expenses deemed ordinary and necessary for your employment. This was the deduction used by teachers for any expenses incurred for supplies and classroom materials purchased out of pocket. Specific examples of unreimbursed business expenses include travel, transportation, meal expenses, dues to professional organizations, safety equipment and small tools or supplies. Further, the IRS allowed you to deduct certain expenses for the business use of your home, subscriptions to professional journals and some educational expenses.

One of the most common unreimbursed business expenses was mileage driven in a personal vehicle as a required part of your job. The IRS previously allowed you to deduct unreimbursed mileage related to business trips or situations where an employer required you to drive to multiple job sites.

For many taxpayers these expenses added up to a significant amount and therefore a significant tax deduction. Based on the new tax law they are completely eliminated.

However, there is a simple way to regain the deduction for these expenses. You can start a business related to your profession and write them off as business expenses. This is a very simple change that will create the structure needed to take full advantage of the expenses you already incur. Plus, the costs associated with forming the business are also 100% deductible.

Bear in mind, it is not advisable to simply report these expenses in a schedule C without a proper business structure. Expenses included in a schedule C with no related income are one of the favorite targets of the IRS for review and disallowance of the expense. You need to formalize a business to safely take advantage of these expenses without putting yourself at risk for further review by the IRS.

Check out our blog post from January 2019 that outlines the 3 easy steps to form your business and position yourself to take back your employee-related deductions. Need help with your set up? Contact us, we’d love to help!

This time of year, everyone is a bit cautious when they receive correspondence that claims to be from the IRS. You are completely justified in your concerns, as there often instances in which taxpayers are contacted by fraudulent individuals claiming to be from the IRS. Here are some tips to make sure you are well informed regarding correspondence from the IRS.

First, the IRS will only contact you by mail. Any phone calls, texts, or emails claiming to be from the IRS are fraudulent.

Second, the most common correspondence from the IRS this time of year is a form 5071C. The IRS 5071C letter is a letter sent to taxpayers by the IRS to verify a taxpayer’s identity after the IRS received a tax return with the taxpayer’s name and Social Security number. The letter is used to help identify potential identity theft.  This letter has become more and more common in recent years due to increased efforts by the IRS to curb identity theft.

Do not ignore the 5071C letter from the IRS.

If you receives a 5071C letter, it will provide you with two options on how to respond, and both options allow you to securely verify your identity so the IRS can continue to process the tax return. The return, and therefore the resulting refund, will not be processed until you have completed this identity verification.

This letter will be clearly identified via an IRS envelope and on IRS letterhead.

If you ever receive correspondence and you are unclear as to if it came from the IRS please don’t hesitate to reach out to us to confirm its validity BEFORE taking action.

Yes, you aren’t imagining this. It’s true. As part of the Tax Cuts and Jobs Act… 

Entertainment expenses are no longer deductible against business income.

Say goodbye to expensing happy hours after work with co-workers, or even clients. Say goodbye to expensing front row seats at the ball game with prospects you’re trying to close. This applies to everyone. Sole proprietors, LLCs, S-Corporations, and C-Corporations.

How does this work?

I’ll give you an example: Jim is a paper salesman for Dunder Mifflin. He takes one of his clients, Pam, golfing and out to lunch to discuss their new paper products. Write off?

·        If the meeting occurred in 2017, absolutely! 50% deduction

·        In 2018….no!! And arguably the meal isn’t a write-off either

The meal they ate is considered “dining out with others” and this is deemed entertainment in the eyes of the IRS. Dining out with others is no longer an allowable deduction in 2018.

In 2017, the meals and entertainment deduction was alive and well. As long as the expense was related to, or associated with conducting your business, you were allowed a deduction for meals and entertainment expenses. The level of deduction varied, however.

In 2018 businesses need to be mindful of the changes in the tax law and how it may affect their day-to-day operations. Let’s talk details:

·        Dining out with others – for instance, you take a client out to eat after work one night. You have some drinks, some cheese fries, and your entrees. All of this was 50% deductible in 2017. In 2018, this is gone under the entertainment rules.

·        Dining by yourself – ONLY when you are traveling for business are you allowed to deduct personal meals. Dining by yourself in a restaurant at the bottom floor of your office building would not fall under this 50% deduction category. This deduction is still intact for 2018 ONLY when traveling outside of your normal commute.

·        Holiday parties/team events – in 2017, these could have been classified as required business team meetings. Whether or not it was at a restaurant, you could arguably write off the entire expense. In 2018, this could be considered entertainment, and in that case…0% deduction. If this event or party is a required business meeting and a presentation is given beforehand, then this would be an allowable business expense and 50% would be deductible against your business income.

In some cases, business owners were allowed a full deduction for certain meal related transactions.

·        A required meeting with employees in the office where food is brought in…100% deduction for that food in 2017 and years prior. In 2018, only 50% of t he expense is deductible.

·        You have a cafeteria at your office and pay for the food for your employees, 100% deductible in previous years. Now, in 2018, only a 50% deduction is allowed.

·        All of the food in the fridge, coffee and snacks in the kitchen were all 100% deductible in 2017 and years prior. In 2018, only a 50% deduction is allowed.

·        If food is brought to a project site or in the office where the business operates (“business premises”), in 2017 100% of the expense was deductible in some cases. In 2018, a maximum of 50% is allowed.

These were the golden days. Business owners were allowed either a 50%, or, in some cases, a 100% deduction for certain meals and entertainment related expenses.

Think about all of the business that happens on the golf course, or at that ballgame, or even at happy hour after work. You can certainly still operate this way in 2018, but keep in mind, you won’t be able to submit that receipt to your accountant for the 50% tax deduction.

The cost of doing business just increased dramatically with the tax reform. Sure, there is the 20% deduction for flow-through entities, and the new 21% corporate tax rate, but, the entertainment line item on income statements is gone. Not to mention, the entertainment industry is likely to take a HUGE hit in 2018. Sure, the Apple’s and Google’s of the world

may still maintain their season ticket positions for employees and clients (because they can), but, smaller companies that relied on the tax breaks associated with entertainment expenses are now more likely to eliminate these outings completely.

Stay tuned as we see the implementation of the new law. As audits occur and court cases happen, we will have a better understanding of the ramifications handed out and the loopholes people will find.

Be mindful of the new tax law and make sure to keep track of the expenses that still qualify for the meals deduction. It’s not completely gone! Yet…

If you’re unsure if certain expenses are still deductible, be sure to consult with your accountant. If you don’t have an accountant, feel free to shoot me a message with any questions you may have.

Here’s to making money and KEEPING that money!

Source: AZ Moyer, CPA

https://www.linkedin.com/pulse/entertainment-expense-gone-tax-reform-az-moyer-cpa/

The Tax Cuts and Jobs Act of 2017 (TCJA) brought sweeping changes to the tax code.  One of the most significant impacts of the TCJA is the changes in how small businesses can be taxed.  In short, it incentivized small businesses to be taxed as an S-Corporation in order to take advantage of a long list of new tax breaks.  This resulted in a lot of business owners taking the advice of their CPA and electing to be taxed as an S-Corporation during 2018.  Here are the top 3 things business owners need to know to ensure they can take full advantage to the new tax law. 

1.       You need to be taxed as an S-Corporation

It only takes a quick google search to see the overwhelming benefits that taxation as an S-Corp has over a sole proprietorship.  Many people mistakenly think that if they have created an LLC, that they have created the structure needed to obtain the tax benefits of business ownership.  While the LLC creation is a crucial first step, it is also important to elect to have that LLC taxed as an S-Corporation.  Need guidance on how to do that?  Check out our blog post here that steps you through how to file the election.

2.       As an S-Corporation, you now have 2 tax returns.

Once you have formalized your business, and filed the S-Corp election, you’ll now need to file both a business and personal income tax return each year.  While it in an additional return, the related costs for filing the return is completely offset by the decrease in taxes created by establishing this structure.   If this is a change from your prior year status as a sole proprietorship, you need to be aware that you now have two separate returns to file.

3.       Your S-Corporation return is due March 15^th and must be filed FIRST.

The IRS deadline for the S-Corp return is a month before the deadline for your personal return.  This timing is by design, because the S-Corp return must be filed BEFORE the personal return.  In short, the income and expenses for the business are reported in the S-Corp return.  The resulting net profit or loss is then captured on a form called the Schedule K-1.  The K-1 is then a utilized in the preparation of your personal return.  Therefore, the S-Corp return must be done first to allow the Schedule K-1 to be issued and used in the personal return.

 If you are a year one filer of a S-Corp return, we highly recommend that you consult with us.  We will work with you to ensure your small business takes advantage of the new tax law, and are fully compliant with all filing requirements.

This is the time year when everyone’s thoughts about taxes are centered on the filing of their prior year tax return.  While that’s an important matter, the fact is that the book is already closed on the prior tax year.  There is very little that can be done to effect change to your tax position for a year that is already over. 

Therefore, we would like to encourage you to start looking forward to the current year.  Any major improvements to your tax position require you to take action during the tax year.  The best action you can take is to…

Start.  A. Business.

Statistics estimates that over 70% of working Americans have a side business — it may be a multi-level marketing business, home-based baby-sitting services, or photography for family and friends.  However, those same statistics indicate that less than 20% of working Americans formalize that business to actually work for them.  That leaves a whopping 50% of working Americans who have the makings of a business, and the related expenses of a business, but that are not taking advantage of the great benefits that business can provide related to taxation.  That’s why we have outlined the simple 3-step process that will allow you to formalize your business, and turn it into a great tax savings vehicle.

Bear in mind, this “new business” does not require you to quit your day job.  We certainly don’t advocate quitting your job to start a business.  While this new venture will not replace your day job (for now), in the meantime it makes sense to use this “side hustle” to your benefit for tax purposes.

Step 1: Form a legal entity

The most cost-effective business entity is the limited liability corporation (LLC).  In Oklahoma this entity can be filed with the Secretary of State on-line, costs $100, and takes less than 10 minutes to complete.  Once the filing is submitted electronically it takes 48 hours or less for your business to be official.  Use the link below to form your domestic limited liability company in Oklahoma.

Form an LLC in Oklahoma

Step 2: Obtain an employer identification number (EIN) from the IRS

The IRS assigns EIN number absolutely free.  Using the link below you can apply for an EIN directly from the IRS’ website in less than 10 minutes.  You’ll simply enter the exact name and address information used to file for your LLC and you’ll have your EIN in minutes.

Obtain an EIN with the IRS

Step 3: Elect to have your LLC taxed as an S-Corporation

This is the most tax advantaged entity for small businesses.  This step in the process requires you to complete IRS form 2553 using the name and EIN you obtained in steps 1 & 2.  The instructions to the form are relatively easy to follow and once the form is complete you can fax or mail the form to the IRS and your business set up is complete.  The IRS takes up to 60 days to confirm your election, and you will receive a letter in the mail once the election if accepted.  Use the link below to complete the form.

Complete IRS Form 2553

This really is the simple process that lays the foundation for you to reduce your tax obligations for this year and many years to come.  Now… with the 3-step process to your new tax savings vehicle, comes three new responsibilities as well:

1.       Your LLC needs to renewed with the state each year.  The renewal fee is $25 and is due on the anniversary date for which the LLC was formed.  You’ll go back to the SOS website to do so each year.

2.       You will now have a business tax return that is due on March 15^th of each year.  This is a second return in addition to your personal return.  Your first business return will be due 3/15/2020.

3.       You will want to get a CPA involved to help you take full advantage of your new tax savings vehicle and to prepare your new business tax return.  While you can do the first steps in this process alone, you will have the best results when you consult with a professional to obtain all the benefits, and avoid the pitfalls that come with having a business geared toward tax savings.

Connect with us when you’re ready to take your new tax savings vehicle to the next level.  And of course, consult with your attorney and/or your CPA (us) if you need help with this process.  We can complete your new business set up for you at our standard rates and have you on track for success within a matter of days.

The IRS just announced some important details about 2019’s tax season.

To the relief of millions of Americans expecting tax refunds in the next few months, the IRS and the Trump administration recently announced that the start of tax season and the issuance of tax refunds would not be affected by the government shutdown, even if it lasts well into the start of tax season. 

If you’re wondering when you’ll be able to file your taxes, or if you want to know when you can expect your tax refund to appear in your bank account, here’s a rundown of the latest available information from the IRS regarding 2019’s tax season.  

The start of tax season 

There has been rampant speculation that the start of tax season would be delayed in 2019 due to the government shutdown, but that doesn’t appear to be the case. The IRS just announced that it would start processing tax returns on Jan. 28, 2019, which is consistent with the start of tax season in recent years.  

To be clear, Americans can start submitting their tax returns as soon as they have all of the necessary information to do so. In fact, it’s a good idea to file your return as early as possible in order to minimize the risk of identity theft. However, the IRS will not begin processing any tax returns until Jan. 28.  

Will refunds come on time? 

That’s the million-dollar question. Historically, the IRS has said that it would not pay tax refunds during a government shutdown. With no end to the current government shutdown in sight, there has been widespread concern that refunds could be significantly delayed. This could be a big blow to the U.S. economy, as tax refunds injected over $147 billion into Americans’ pockets in early 2018. 

However, the White House specifically said on Monday that the IRS would be allowed to pay tax refunds during the shutdown. Shortly after, the IRS confirmed this in a newsletter, stating that it would provide refunds to taxpayers as scheduled. According to IRS Commissioner Chuck Rettig, “We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown.” 

Adding a bit more color to the Trump administration’s remarks, the IRS said that it would be recalling a “significant portion” of its furloughed workers to allow for the on-time processing of refunds.  

When can you expect your tax refund? 

If you’re among the vast majority of Americans who file their taxes electronically, the IRS advises that it pays out most e-file tax refunds within 21 days of processing. For taxpayers who file taxes by mail, the IRS says that a refund can be expected within six weeks of mailing the return. According to the IRS’s latest guidance, it looks like this timetable should be accurate for the upcoming tax filing season.  

Also, it’s important to mention that there are some factors that could cause your refund to take longer, such as claiming the Earned Income Tax Credit (EITC). The IRS has yet to release specifics for 2019, but last year the IRS advised taxpayers that the earliest EITC-related refunds wouldn’t be available until late February.

SOURCE: https://www.fool.com/taxes/2019/01/08/its-official-heres-when-you-can-file-your-tax-retu.aspx

Part 3 of 3

Starting your own small business could lead to great benefits when you file your taxes next year. Owning a small business positions you to take advantage of some great tax benefits.  These benefits will help you this year and serve to reduce your tax liability on an annual basis.

This is the perfect time to officially start your small business.

 Forming a small business is very simple, and many people can do it on their own.  There are 3 key steps you’ll need to take to form your business:

 1.      Create a limited liability company (LLC) with the Secretary of State.  In Oklahoma, and most states, this can be done online for a fee of $100.

2.      Obtain a tax ID number for the new legal entity with the IRS.  This can also be done online at using the IRS website (www.irs.gov).

3.      File the tax elections to have your new LLC taxed as a pass-through entity that best aligns with your business.  The related forms (form 8832 or form 2553) are available for free on the IRS website (www.irs.gov).

While many clients can do this work independently, it’s always our recommendation to get a professional plugged in to ensure you set everything up correctly.  Contact us if you would like to get us plugged in to help you.  We offer a SmartStart program that can help you with your set up, or even complete the entire process for you.  And the good part, the costs associated with this set up are 100% tax deductible. 

Creating a formal business is a great option for individuals who are involved in multi-level marketing businesses who are earning some commissions.  This structure will allow you to take advantage of a long list of deductions that you may otherwise not qualify for.  The five most common deductions are listed below, and there are even more that you can take advantage of by establishing your own business. 

•  The New Small deduction equal to 20% of your business’s net taxable profit 
  • Nearly every small business will qualify for this tax cut just by being a small business
• Start-up Costs
  • This includes LLC filing fees and professional fees to create your business
•  Business Use of Personal Vehicle
  • Miles driven to conduct business are deductible at 54.5 cents per mile in 2018
•  Business Use of Personal Cell Phone         
  • If your cell phone is used to conduct business, you can deduct a % of each month’s bill
•  Home Office Deduction              
  • Doing work from home? Your home office, and a % of all home expenses are deductible           

Part 2 of 3

When it comes to taxes, often times the 4th quarter of the year can be make or break time for taxpayers. We’re here to make sure this is a time of year for you make decisions that will set you up for a success at tax time.  Remember…

If you only think about taxes around April 15th, you’re going to pay too much in taxes.

Often times there are strategies we can recommend to you that simply restructure the spending that you already had in mind but making that spending tax deductible.  That’s why we want to help you to review the tax implications of your current spending to see if there is a way to use that spending to your advantage.  For example, we can help you make charitable gifts the smart way.

If you plan to make a significant cash gift to charity, consider giving appreciated stocks or mutual fund shares that you’ve owned for more than one year instead of cash.  Doing so supersizes the saving power of your generosity. When you donate an investment, your charitable contribution deduction is the fair market value of the securities on the date of the gift.  That means, your gift is not limited to the amount you paid for the asset, you can include the gains in the amount of the gift.  That also means you never have to pay tax on the capital gains earned by the investment.   This approach means you maximize your deduction while minimizing the associated tax.  It’s a win-win for you and the charitable organization.

On the flip side, you should not donate stocks or fund shares that lost money. You’d be better off selling the asset, claiming the loss on your taxes, and donating cash to the charity from that investment.  Check out part 1 in this series for the benefits of selling losing investments before the end of the year.

Also, don’t forget about your non-cash gifts to charity before the end of the year.  You can turn your unused household items, clothing and other items to give you an extra tax break.  Your non-cash charitable gifts to non-profit and/or faith-based organizations are also tax deductible.  Making those donations before December 31st will allow you recognize that tax deduction during the 2018 tax year.

As always, if you need specific guidance on what you should be doing before the end of the year to set your self up for success at tax time please contact us.

Part 1 of 3

When it comes to taxes, often times the 4th quarter of the year can be make or break time for taxpayers. All too often we connect with taxpayers at tax time and learn details that will have a significant impact on their tax position. Learning these details after the end of the year means there is not much we can do to help improve a client’s tax position. However, learning the same details before the end of the year could allow client’s the opportunity to save big at tax time.

Fact: Don’t wait until tax time to think about taxes; take action before the end of the year.

Often clients experience major life changes during the year, but do not consider how those changes will affect them from a tax standpoint.  Then, when the they learn the impact the change will have on their taxes, it’s too late to prepare for that change.  Our hope is that you will do your own 4th quarter self assessment to ensure you’re informed about life changes that may impact your tax position.

We’ve listed below a sample of major life changes that you need to consider for tax purposes:

• Change in marital status
• Change in dependents
• Dependent turned 16 during the tax year
• Dependent starting or finishing college during the tax year
• Moving more than 50 miles
• Bankruptcy
• Purchasing a home
• Selling a home
• Property losses due to accidents
• Property losses due to natural disaster
• Starting a business
• Selling/closing a business

Beyond life changes, there are other changes in your finances that could also have significant tax implications.  Often times, the financial matters that may be deemed as a negative, can be turned into a positive for tax purposes.  For example, if you have unrealized investment losses, it may be practical to recognize those losses within the current tax year in order to offset other taxable gains.

There is a long list of changes that you need to consider before the end of the tax year.  Contact us if you want to evaluate the tax impact of changes in your life this year to avoid surprises at tax time.

Do you want to pay less in income taxes?   Every taxpayer in America would offer a resounding YES! to that question.  Everyone is looking to pay less in income taxes.  However, the big question is – How?

There is a critical first step that cannot be skipped if you’re serious about saving money on taxes.

You need to start by having a clear picture of your finances.

It’s that simple, even before your CPA can evaluate your options, you need to have the information that reflects your income and expenses for the current year.  The best way to do that is to select a cost effective, user-friendly accounting software.

If you’re an employee – you need to get connected to financial management software that allows you to have an accurate picture of your finances.  There is free software for personal finances like Mint that can help you do just that (www.mint.com).  This software lets you connect your bank accounts and credit card accounts to easily track your income and expenses.  Using this software, you can generate personal financial statements that are the basis for a tax savings plan.  Before a CPA can even begin to develop tax savings strategies, we’ll need an accurate picture of your financials.

If you’re a business owner – you need to get connected to accounting software that allows you to have an accurate picture of your business.  The most cost-effective software is Quickbooks self-employed that starts as low as $5/month (www.quickbooks.intuit.com/self-employed).  It also connects to bank accounts to allow you to generate business financial statements.  Having an accurate picture of your business’ profit or losses is the first step before any tax savings strategies can be evaluated.

Bear in mind, tax savings plans are not “one size fits all.”  What will save you tax dollars, may not be the same approach that creates savings for your neighbor.  That is why we need to start with obtaining a clear financial picture in order to craft a tax savings strategy that works best for you.

While you’re working on getting that clear financial picture, there are some initial tax savings measures that will be beneficial to all tax payers in all financial scenarios.  That is to maximize your pre-tax deductions.  Pre-tax deductions will reduce the taxable income of an individual which also reduces your taxes.  Examples include:

• Retirement contributions
• Flexible Spending or Health Savings accounts
• Dependent Care Flexible Spending accounts
• Life Insurance

Maximizing these options will make a noticeable difference in your tax bill.  And remember, when you’re serious about saving money on taxes, your first step is to get a clear financial picture.  Please contact us if you need help with tackling that first step.

The Department of Defense (DoD) began notifying veterans that they may eligible for an immediate tax refund.  Under federal law, veterans who suffer combat-related injuries and who are separated from the military are not supposed to be taxed on the one-time lump sum disability severance payment they receive from the military.

Unfortunately, for years, the DoD improperly withheld taxes on these payments from thousands of unsuspecting veterans, who were typically unaware that their benefits were being improperly reduced.

Earlier this month, the DoD began notifying veterans that they may be due a refund.

Affected veterans can submit a claim based on their actual disability severance payment by submitting an IRS Form 1040X, the Amended U.S. Individual Income Tax Return.

The IRS also has approved a simplified method for obtaining the refund, in which veterans can claim the standard refund amount on Form 1040X based on when they received the disability severance payment. Those standard refund amounts are:

• $1,750 for tax years 1991 to 2005,
• $2,400 for tax years 2006 to 2010, and
• $3,200 for tax years 2011 to 2016.

Estates or surviving spouses can file a claim on behalf of a veteran who is now deceased.

You may be eligible for this refund even if you have not received a letter from the DoD. Visit the IRS website and search “combat injured veterans” for further information.

If you need help filing your amended return, please contact us and we can take care of it for you.

Source: www.military.com