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Monthly Archives: March 2012

Tax Refunds May Be Applied to Offset Certain Debts

Past due financial obligations can affect your current federal tax refund. The Department of Treasury’s Financial Management Service, which issues IRS tax refunds, can use part or all of your federal tax refund to satisfy certain unpaid debts.

Here are eight important facts the IRS wants you to know about tax refund offsets:

1. If you owe federal or state income taxes, your refund will be offset to pay those taxes. If you had other debt such as child support or student loan debt that was submitted for offset, FMS will apply as much of your refund as is needed to pay off the debt and then issue any remaining refund to you.

2. You will receive a notice if an offset occurs. The notice will include the original refund amount, your offset amount, the agency receiving the payment and its contact information.

3. If you believe you do not owe the debt or you are disputing the amount taken from your refund, you should contact the agency shown on the notice, not the IRS.

4. If you filed a joint return and you’re not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing IRS Form 8379, Injured Spouse Allocation. Attach Form 8379 to your original Form 1040, Form 1040A, or Form 1040EZ or file it by itself after you are notified of an offset. Form 8379 can be downloaded from the IRS website at www.irs.gov

5. You can file Form 8379 electronically. If you file a paper tax return you can include Form 8379 with your return, write “INJURED SPOUSE” at the top left of the Form 1040, 1040A or 1040EZ. IRS will process your allocation request before an offset occurs.

6. If you are filing Form 8379 by itself, it must show both spouses’ Social Security numbers in the same order as they appeared on your income tax return. You, the “injured” spouse, must sign the form. Do not attach the previously filed Form 1040 to the Form 8379. Send Form 8379 to the IRS Service Center where you filed your original return.

7. The IRS will compute the injured spouse’s share of the joint return. Contact the IRS only if your original refund amount shown on the FMS offset notice differs from the refund amount shown on your tax return.

8. Follow the instructions on Form 8379 carefully and be sure to attach the required forms to avoid delays. If you don’t receive a notice, contact the Financial Management Service at 800-304-3107, Monday through Friday from 7:30 a.m. to 5 p.m. (Central Time).

Link: Form 8379, Injured Spouse Allocation (PDF)

Contact : QuickBooks Expert

http://quickbooks-expert.us

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Eight Tax-Time Errors To Avoid

Issue Number:    Tax Tip 2012-58

Eight Tax-Time Errors To Avoid

IRS Tax Tip 2012-58, March 26, 2012

If you make a mistake on your tax return, it can take longer to process, which in turn, may delay your refund. Here are eight common errors to avoid .

1. Incorrect or missing Social Security numbers When entering SSNs for anyone listed on your tax return, be sure to enter them exactly as they appear on the Social Security cards.

2. Incorrect or misspelling of dependent’s last name When entering a dependent’s last name on your tax return, make sure to enter it exactly as it appears on their Social Security card.

3. Filing status errors Choose the correct filing status for your situation. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) With Dependent Child. See Publication 501, Exemptions, Standard Deduction and Filing Information, to determine the filing status that best fits your situation.

4. Math errors When preparing paper returns, review all math for accuracy. Or file electronically; the software does the math for you!

5. Computation errors Take your time. Many taxpayers make mistakes when figuring their taxable income, withholding and estimated tax payments, Earned Income Tax Credit, Standard Deduction for age 65 or over or blind, the taxable amount of Social Security benefits and the Child and Dependent Care Credit.

6. Incorrect bank account numbers for direct deposit Double check your bank routing and account numbers if you are using direct deposit for your refund.

7. Forgetting to sign and date the return An unsigned tax return is like an unsigned check – it is invalid. Also, both spouses must sign a joint return.

8. Incorrect adjusted gross income If you file electronically, you must sign the return electronically using a Personal Identification Number. To verify your identity, the software will prompt you to enter your AGI from your originally filed 2010 federal income tax return or last year’s PIN if you e-filed. Taxpayers should not use an AGI amount from an amended return, Form 1040X, or a math-error correction made by IRS.

Links:
• Publication 501, Exemptions, Standard Deductions and Filing Information  

Contact : QuickBooks Expert

Email: helpdesk@quickbooks-expert.us

 

Last Minute Filing Tax Tips for Business Owners

Last Minute Filing Tax Tips for Business Owners

 It’s that time of year again, with the due date for tax filing just around the corner. Working for yourself is ideal in many respects, but when it comes to tax time it can be a headache

Many W-2 employees have already filed their tax returns and are enjoying hefty refunds while you, lucky business owner, are sorting through receipts, and constructing accounting records, but it doesn’t have to be painful if you use Quickbooks and follow these tips.

If your business is incorporated and reports on the calendar year basis, as most do, your corporate tax return is due on March 15. If you own a partnership, LLC or sole proprietorship and you are not incorporated, your tax return isn’t due until April 17 this year.

If you miss those deadlines, you can apply for an extension for filing, but do you really want to have your taxes hanging over your head all summer? Best to knuckle down and get it done right now, if you can.

But in your rush to pull everything together for last-minute filing, don’t overlook some important deductions.

Organize your receipts – If you have tax receipts stashed here and there, carefully gather them together in one place and make a list of them. Add that information to the accounting records you create from your check register and credit card statements, being alert for duplications. Don’t ignore these extra deductions: tossing out $100 of deductible receipts is like throwing $30 in the trash. Don’t forget to include end-of-year credit card purchases. They are deductible when you charged them, even though you didn’t pay the credit card statement until the next year.

Home office deduction – Many business owners work from home – if you have space in your home dedicated to business activities, it is likely you are entitled to a home office deduction. QuickBooks Expert will lead you through a series of simple questions to be sure you qualify for the deduction. Take the deduction if you qualify – there is an urban legend that claiming a home office deduction will target you for an IRS audit, but that simply isn’t true.

Auto expense – Even if you work from home, you probably use your vehicle to visit clients, run to the post office or purchase supplies. Add up those trips and claim a deduction for the miles.

Save for retirement – If you’ve claimed all your deductions but your tax bill is still high, consider contributing to an IRA ,SEP or SIMPLE. Though pension plans have to be established before year end, IRAs, SEPs and SIMPLEs can be set up and funded any time before the due date of your tax return. QuickBooks Expert will compute the maximum contribution you can make, but even if you contribute less than that you still will enjoy some tax savings while securing your future retirement.

Hire your children – Now is the time to begin planning for next year’s tax filing. If you have older children, hire them to do office clerical duties and other routine tasks for your business. Children can earn income up to $5950 in 2012 if you claim them as a dependent before they have to file tax returns, and children employed by their parents aren’t subject to social security and Medicare taxes if the business is operated as a sole proprietorship or a partnership between the parents.

Pay estimated taxes – Unlike W-2 employees, business owners don’t have taxes withheld from their income, so to avoid penalties you are required to pay estimated taxes. When you prepare your return, QuickBooks Expert will ask you if you want to compute the estimated taxes you must pay for the rest of the year so you won’t owe penalties when you file your tax return next spring.

Contact : helpdesk@quickbooks-expert.us

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Work at Home? You May Qualify for the Home Office Deduction

Work at Home? You May Qualify for the Home Office Deduction

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. The IRS has the following six requirements to help you determine if you qualify for the home office deduction.

1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:

• as your principal place of business, or

• as a place to meet or deal with patients, clients or customers in the normal course of your business, or

• in any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.

2. For certain storage use, rental use or daycare-facility use, you are required to use the property regularly but not exclusively.

3. Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.

4. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.

5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on Form 1040 Schedule C, Profit or Loss From Business.

6. If you are an employee, additional rules apply for claiming the home office deduction. For example, the regular and exclusive business use must be for the convenience of your employer.

For more information see IRS Publication 587, Business Use of Your Home, available at www.IRS.gov

or by calling 800-TAX-FORM (800-829-3676).

Links:

By: QuickBooks Expert

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I Received a K-1. What Is It?

It’s mid-March. Nearly two months ago, you received your W-2. A short while later, the last of your 1099-INTs from your bank arrived.  Just when you thought you had all of your tax documents, you surprisingly received a corrected 1099-DIV. If you weren’t such a procrastinator, you would have filed your tax return a few weeks ago.  Good thing you hadn’t!

But the strangest thing happened today – you opened the mail and there, with your name on it, is a tax form you’ve never seen: Form K-1   You weren’t expecting it, you never received one before, and you just got it, only a month before the tax deadline.

You: What gives?

A K-1 is a tax form distributed by many partnerships, S-Corps, estates, and trusts.  If you are a general or limited partner of a partnership, a shareholder in an S-Corp, or the beneficiary of an estate or trust, you’re likely to receive a K-1.

You: But what is it?

A K-1 is just like a W-2 or other tax form.  You use the information provided on the form to accurately complete your tax return.  Except as illustrated in the opening scenario, K-1s are often distributed much later in the year than other tax forms.

You: Why do they arrive so late?

In order for the entity to send you the K-1, it first needs to complete its own tax return.

You: Huh?

For example, a partnership must prepare its taxes- its partnership tax return – before it sends out the K-1s to the partners.   The due date for most partnership tax returns is March 15. Consequently, K-1s are often received much later than other tax forms. Furthermore, like individuals, partnerships can request extensions of time to file, often until September 15.

You: So I might not receive a K-1 until after April 17, the deadline for my tax return?

Indeed, it’s not only possible, it happens routinely.

You: So how do I plan for that?

Most people who receive K-1s know they will receive them.

You: How do they know?

It’s rare to own a partnership or be a trust fund kid and not know it.

You: I suppose you’re right. So if get one of these K-1s, what would I do next?

Once you’re ready to start your tax return, collect all your tax forms, including any K-1s. If you’re using tax software, the program will tell you what you need to do with each form. QuickBooks Expert easily guides you through entering items reported on your K-1 and puts the information on your proper tax forms.

So, don’t lose too much sleep; the K-1 is, ultimately, just another form used to complete your taxes and report your income to the IRS.

Contact: helpdesk@quickbooks-expert.us

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QuickBooks (Bookkeeping Tips) of Mistakes My Clients Have made

QuickBooks (Bookkeeping Tips) of Mistakes My Clients Have made

  • Not reconciling their bank statements – this error has left clients with overdrawn accounts because they thought they had more money in their bank account than they really did. At about $30 per bad check, this can add up quite quickly, not to mention you can mess up your credit rating. If all your checks and debit charges aren’t added to your bookkeeping system in a timely manner, you won’t know what your balance is. If you have duplicate deposits, your account balance will be overstated. By reconciling your bank statements every month, you will catch errors or omissions you have made. In a rare instance, you might catch errors the bank has made.
  • When using the bill payment feature of QuickBooks, make sure to pay the correct vendor. Double check who you are paying. By paying the wrong vendor, you will screw up you accounts payables balances and get in hot water with the vendor you didn’t pay.
  • If you use a bill payment feature, assuming your accounts payable balances are correct, don’t pay vendors with a regular check. If you do this as opposed to using a bill payment check, your payment won’t get applied to the vendor balance. This will result in the vendor payable balance being larger than it really is and you will eventually overpay the vendor in the future.
  • If your vendor accounts payable balance is different than they say it is, reconcile the account against the vendor’s invoices or latest statement. If your vendor accounts payable balance is larger than they say it is and you keep making bill payments, you will eventually overpay your vendor.
  • Undeposited Funds – If you invoice your customers/clients, you will have accounts receivables balances. As you process customer receipts, the money received will show up in an account called Undeposited Funds. When it’s time to process your deposits, make sure to check off which payments are to be applied in the Undeposited Funds account. This will keep your Undeposited Funds balance accurate.
  • Debit charges – Although debit cards are used like credit cards, don’t set up debit charges as a separate credit card account. They are part of your checking account.
  • Entering personal credit card accounts in QuickBooks – This shouldn’t be done especially if you have a corporation. You can’t co-mingle your funds. Furthermore, the credit card balance will show up on your balance sheet, which would effect your net equity.

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Posted by on 03/03/2012 in Bookkeeping

 

Get an Online Business Tax Extension! Extend your IRS tax deadline to September 15

If you fail to file either a tax extension or return by the appropriate filing deadline (March 15th for businesses and April 17th for individuals), the IRS may assess interest charges on any unpaid federal taxes owed, as well as impose a failure-to-file penalty. The IRS may impose a failure to file penalty of up to 5 percent per month, or part of a month, of the taxes due, up to a maximum of 25 percent of the total tax due. If your tax return is more than 60 days late, the minimum penalty is $135 regardless of whether you owe taxes or not. The sooner you file either a tax extension or return, even if you can’t pay all or some of the taxes due, the less you are likely to ultimately owe the IRS.

How It Works: Filing a Business Tax Extension

You’re only a few minutes away from getting a 5-to-6-month tax extension for your business. Here’s how to extend your IRS business income tax deadline to September 15 using to e-File Form 7004.


Step 1:
Provide the business data the IRS requires for you to file a tax extension. This includes the business name, address and Tax-ID/EIN. Prior year tax returns and all of those complicated tax forms are not required! All of the information provided is kept secure and not shared with anyone but the IRS, period.

Step 2: Estimate the total income tax payment for the filing year, and provide the amount already paid to the IRS through quarterly payments if applicable. Many business customers simply multiply their profits by last year’s tax rate to estimate the total tax liability for the year. If you expect to owe, and want to make a tax payment to avoid potential IRS interest and late payment penalties, we can help you make that payment directly to the IRS via Electronic Funds Withdrawal from your business bank account (EFT).

Step 3: Once you submit your business tax extension, we will electronically e-file it to the IRS for approval.

 

That’s all it takes. In about a day, when we hear back from the IRS, we’ll send you an email notifying you that your business income tax extension was approved by the IRS. If for any reason your tax extension is rejected, we’ll tell you why, and you can resubmit for free after making any changes. Almost all rejections are caused by a Tax-ID not matching IRS records (caused by typos or change of filing information not on records with the IRS). As long as you submit your information accurately and on time, it should be approved – that’s why the IRS calls it an “Automatic Extension”.

If you have any questions, our support staff is standing by to help! E-File Form 7004.

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