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Affordable Tax Prep & Bookkeeping Services LLC
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Some people might think that avoiding the IRS is good advice when it comes time to file your taxes, which of course would be a most inaccurate assumption. Rather than risk a potential legal issue with the IRS you should send in your tax forms on time, even if you don’t have the funds to pay the amount due.

The most important thing you can do to avoid serious legal repercussions is file your tax forms regardless of whether you can pay. The penalty for not paying your tax bill is far less severe than the consequences of failing to file. It is going to make your life a lot easier if you file straight away even if you don’t have the funds available to immediately pay off what you owe.

If you are above a certain income level, hiring Affordable Tax Prep and Bookkeeping Service could pay off. A tax professional will comb through your finances and find every possible deductible item. You might find that with their help, you owe a lot less than what you had calculated.
Borrowing money from a trusted individual or taking out a bank loan are choices to consider, but the IRS also has payment options that you may not be aware of.

The good news is that if you can’t afford the full amount that is due there are alternatives to paying everything all at once. The IRS offers you 120 days to pay off what you owe, but keep in mind this will add interest charges to your bill.
You can also make monthly payments by asking for an installment agreement. This requires some extra paper work and a small fee, but may be the best option for many who simply don’t have the money. The IRS has made great strides in the affordability and ease of the process, and anyone making less than $50k a year can apply. An “offer in compromise” may also be possible if you meet the right criterion.
Find an Affordable Tax Prep and Bookkeeping office in your area and ensure your tax bill is as low as possible. Work out a payment plan with the IRS. But, whatever you choose to do, file your tax forms on time.

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My Taxes - Can I claim my child as a dependent this year, if they had a job?

This can be a sticky question when you file your taxes, and it is often overlooked. If your child was mowing lawns or working at a drive-in this summer, can you still claim them as a dependent on your taxes?

When you are dealing with a dependent child, the tax rules are not the same as dealing with any other type of dependent. The first question you need to answer is if they provided more than half of their own support in items such as gifts, fun activities and entertainment, food, housing, their clothes and buying along with maintaining their own car. This can also include other forms of transportation and school expenses. Keep in mind, that if you claim your child as a dependent on your tax return, then they should not claim their own exemption, even if you chose not to claim them for other reasons.

It is important your child gets started off on the right foot with the IRS. To help them, you may want to include them in your meeting with your tax professional, when you go over your return filing. They will not only see the correct way to handle this question, but how they will probably be handing taxes in the future. It is also an important lesson in understanding the taxes being withheld from their paycheck; where that money is going, and the ramification of not checking the right box for dependent or tax exemption, when they do the paper work for their first employment experiences.

A lot of things change when your child starts working that first after school job. Another question to answer is, if you have to put their income on your statement, or if it might create an issue when applying for collegiate grants and loans. Laws are changing yearly on these questions, so they should be on your list for your tax professional. In the past, if a dependent earned income of more than $6,200, they had to file, and that could include dividends and interest from items such as grandparents purchasing whole life policies for your child.

Normally, it is best for your child to file a tax return if there is profit involved from an item such as dividends. They will have their own tax rate that will not be connected to your incomes rate. There is not a minimum age requirement for filing, so this is another good question to have ready for your tax professional.

A child dependent, under the age of 17, usually will still qualify for a child tax credit; but keep in mind the best option to help your child get started with their own tax situations, and keep your tax professional informed of any and all changes in employment and earned income. If you are looking for answers, we are always available at Affordable Tax Prep & Bookkeeping Services. #taxexemptions

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Divorce, who gets to claim tax credits
One of the common questions often asked by recently separated parents is, who can claim the child on their tax return and what credits they may claim. The other question is, if these tax credits can be shared. Several questions need to be answered by the parents.
The first question that must be answered is, which parent the child is spending the most number of nights with. Commonly, for tax purposes, the child is the qualifying child, of the custodial parent. The custodial parent is the one whom the child has lived the longest period-of-time with, during the calendar year. If you are not sure if you qualify as the custodial parent, the rules and definition are laid out clearly by the IRS on their web site, consult IRS publication 501.
Only one parent can claim the child as a deduction. However, there are exceptions, and a custodial parent can sign a release transferring the tax deduction to the other parent. These qualifications and exceptions are lined out in the IRS web site link It is important to keep record of the time spent at each residence.
The divorce paper work should be very clear as to which party is going to claim the dependent, and that it is done under the IRS guidelines in the link above. A release will still be advisable because the divorce decree is not always accepted as proof for ability to claim the dependent.
There are also tax credits that must be considered: the custodial parent is always entitled to the EITC and dependent care credit, regardless of who claims the dependent. The child tax credit can only be claimed by whomever claims the dependent.
It is wise to consult your tax preparer to be sure the qualifications are met before claiming a dependent. And to consult your tax preparer early, so you have enough time to adjust or to get the proper forms completed. #taxprep

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Will your tax refund be delayed this year?

The probable answer is yes, on certain refunds, and be careful not to fall for statements of early refund promises. The IRS is making a point of reminding taxpayers to note the new law now in place that requires the IRS to hold refunds until mid-February in 2017 for taxpayers claiming earned tax credit or additional child tax credit. The entire refund, including the portion not associated with the above claims will be held until mid-February. Part of this has come about due to new identity theft and refund fraud protection that has been put in place by the IRS.

The need to protect taxpayers from the tax fraud and identity issues has created the need for the better security. The IRS will also be implementing processing filters which may delay legitimate returns. This has been helping in that reported cases have dropped by more than fifty percent but we still are seeing as many as 275,000 victims, a couple weeks delay to help protect us all from this kind of theft is going to be necessary.

Promises of early refunds can-not circumvent these laws, so don’t be fooled by promotions or gimmicks. Affordable Tax can help by making sure your return is clear and concise which does help. However, an expectation of two-weeks on your normal refund time should be expected.

If you have questions or concerns, don’t hesitate to contact us, we’re always here to help. #2016taxprep

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Get that Tax Deadline Calendar on the wall
A common issue in small business is missing important tax related deadlines. This creates fines and stress that are easily avoided with simple preparation, now, at the end of the year. Every business should have a “Dead Line Calendar”. A simple wall calendar dedicated to business related deadlines for government issues. Federal and State taxes often change, and as your business grows, new laws may apply to you.

We all know that the government does not give any credit if you miss a filing date that has been changed. It is your responsibility to check the new filing laws for 2017. Here are some of the important changes regarding tax deadlines:
• Partnership Returns (1045 returns) are due March 15th instead of April 15th, and the extension period is still September 15th.
• C-Corp Returns (1120 returns) with year end of June 30th or December 31st, are due April 15th instead of March 15th, and the extension period is still September 15th.
• C-Corp Returns (1120 returns) with any other end of year dates, are due the 15th day of the 4th month after year end with an extension date of the 15th of the 10th month after year end.
• Exempt Organizations (990 returns) no longer have to file a 90-day extension, it is only a 6-month extension due November 15th.
• Information returns, such as W2s and 1099-miscs are now due to the government the same day as they are due to employees. That means they must be sent out by January 31st, even if you file them electronically. That means they are due one to two months sooner than they were before.

If you found your business type or situation has been affected, contact your tax professional to make sure there are no other items you need to address before those deadlines.

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New Overtime law for Salaried employees...what does that mean for you!

Labor costs are one of the biggest expenses most businesses face. It can be a constantly moving target affecting your bottom line every month. Overtime has a huge impact on that bottom line, and now with new overtime laws undergoing change, it is vital you plan for what could happen in the second quarter of 2017.
In the past, the salary threshold for mandatory overtime was $23,660 a year or $455 per week; with the new law it will raise that number to $47,476 or $913 per week. To put that into perspective for your specific company, employees that were making $24,000 a year were not subject to the overtime law. If you have an employee making $500 a week, or let’s look at that hourly at $12.50 an hour; if they worked an extra hour a day to complete a task, you were paying $62.50 a week more. If the new law is implemented you’ll be paying $93.75, or $125 more a month - $1,500 more a year.

That will have a direct reflection on your profit and loss statement. What are your options? First is to support lobbyists trying to educate legislatures on how this will affect your business, there still is hope that the law will be stopped. However, you need to build a plan around this new situation if it does go into effect.

Start with a labor cost analysis tracking production and what could be changed to lower possible overtime. Sometimes what starts as a detriment can be turned into a leap forward. One change in a production procedure can often reduce wasted time that has been a drain on your company for years.

This is a process that must include the employees. If they are challenged and motivated to find a way to speed up their work load, they usually can find it.

So either way, use this situation as a way to motivate everyone to make your business leaner and stronger for the times to come.

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Sole Prop, LLC, Partnership, S-Corp, C-Corp…what's all this mean?

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Taxes are inevitable, but how much we have to pay can be greatly affected by the knowledge level of the tax preparer.

Anyone with an IRS tax identification number or PTIN is authorized to prepare your federal taxes, but keep in mind that anyone with that qualification is not necessarily at an education and experience level to give you the best information on how to take the most advantage of current tax laws.

One of the key things to consider when determining what level of the tax professional to use is “representation rights”. A preparer with unlimited representation rights credentials can represent their clients on audits, collection accounts and any matters along those lines. This may not be critical if your tax situation is simple but as you grow in assets and income you may need to consider a representative with more education on those matters.
Although theoretically, an enrolled agent can prepare your taxes, you may be missing out on certain legal rights within the IRS guidelines that allow you to put yourself in a better tax situation. So how do you know when it is time to find a preparer with higher qualifications?

You will be aware if your income level is changing or if there has been a substantial change in assets. Taxes are all about what you have. So you do have the ability to know when you may need more help. However, even without a change in income, your retirement, health insurance and property taxes can all change year to year and have a major effect on your tax liability. Most Certified Public Accountants will review your last year’s tax returns for a reasonable fee and be able to give you an idea of any areas that could have been handled differently.

It is advisable to have a tax review whenever you get any indication of legal changes or major tax revisions by the IRS and to use a preparer with the most knowledge about your type of personal or business environment.

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Why businesses should outsource bookkeeping rather than doing it themselves.

Tax law changes happen every year and with those changes we have laws and regulations that can drastically affect your realized income.

A small start-up business usually tries to save money by purchasing an accounting software that promises it will be easy to keep their books. If you’ve been down this road you already know that accounting has a language of debit, credit, depreciation, balance sheets, the list goes on, that you have to know, to make any software work properly. One mistake in that input ripples through the rest of your books creating a loss of time if not a liability in the event of a tax audit.

Does it really cost you more to hire a bookkeeping service?

If you write down the amount of time you are spending in trying to keep your books, versus doing what you do best, your business; you will find you actually are making more money by hiring the service out. This is in just time spent and does not include a bookkeeper doing proper depreciation of equipment, mileage on your vehicle and what you can legally write off in business expenses. That become actual income that stays in your pocket instead of being paid out to the internal revenue service.

Other aspects often missed is quarterly tax payments to protect you from a severe tax bill at the start of a new year as well as fines for not making those payments.

It may at first seem like an expense you cannot afford but when you look at it from a dollars and sense standpoint you realize it is an expense that is critical to your success.
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