Grinding Out Taxes

01/23/2019

For all you Word Lovers and Bay Shark lovers 😂

12/31/2017

Get Ready for Taxes: What to Do Before the Tax Year Ends Dec. 31 - this is a long read but it has some great information!

As tax filing season approaches, the Internal Revenue Service reminds taxpayers there are things they should do now to get ready for filing season.

For most taxpayers, Dec. 31 is the last day to take actions that will impact their 2017 tax returns. For example, charitable contributions are deductible in the year made. Donations charged to a credit card before the end of 2017 count for the 2017 tax year, even if the bill isn’t paid until 2018. Checks to a charity count for 2017 as long as they are mailed by the last day of the year.

Taxpayers who are over age 70 ½ are generally required to receive payments from their individual retirement accounts and workplace retirement plans by the end of 2017, though a special rule allows those who reached 70 ½ in 2017 to wait until April 1, 2018, to receive them.

Most workplace retirement account contributions should be made by the end of the year, but taxpayers can make 2017 IRA contributions until April 17, 2018. For 2018, the limit for a 401(k) is $18,500. For traditional and Roth IRAs, the limit is $6,500 if age 50 or older and up to $15,500 for a Simple IRA for age 50 or older. Check IRS.gov for more information about cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2018.

Taxpayers should be careful not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Taxpayers can take steps now to make sure the IRS can process their return next year.

Taxpayers who have moved should tell the US Postal Service, employers and the IRS. To notify the IRS, mail IRS Form 8822, Change of Address, to the address listed on the form’s instructions. For taxpayers who purchase health insurance through the Health Insurance Marketplace, they should also notify the Marketplace when they move out of the area covered by their current Marketplace plan.

For name changes due to marriage or divorce, notify the Social Security Administration so the new name will match IRS and SSA records. Also notify the SSA if a dependent’s name changed. A mismatch between the name shown on your tax return and the SSA records can cause problems in the processing of a return and may even delay a refund.

Some refunds cannot be issued before mid-February. By law, the IRS cannot issue refunds before mid-February for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb 27, 2018, if they chose direct deposit and there are no other issues with the tax return.

Some Individual Taxpayer Identification Numbers must be renewed. Any Individual Taxpayer Identification Number not used on a tax return at least once in the past three years will expire on December 31, 2017. Additionally, all ITINs issued before 2013 with middle digits of 70, 71, 72 or 80 (Example: 9XX-70-###X) will also expire at the end of the year. As a reminder, ITINs with middle digits 78 and 79 that expired in 2016 can also be renewed. Only taxpayers who need to file a U.S. federal tax return or are claiming a refund in 2018 must renew their expired ITINs. Affected ITIN holders can avoid delays by starting the renewal process now.

Those who fail to renew before filing a return could face a delayed refund and may be ineligible for some important tax credits. More information, including answers to frequently asked questions is available on IRS.gov/ITIN.

Keeping copies of tax returns is important. Taxpayers may need a copy of their 2016 tax return to make it easier to fill out a 2017 tax return. Some taxpayers using a software product for the first time may need to provide their 2016 Adjusted Gross Income, or AGI, to e-file their 2017 tax return.

Taxpayers who do not have a copy of their 2016 return and are existing users can log in to IRS.gov/account if they need their AGI. Otherwise the IRS will mail a Tax Return Transcript if requested online or by calling 800-908-9946. Plan ahead. Allow five to 10 days for delivery. Learn more about identification verification and electronically signing tax returns.

The IRS has a special page on IRS.gov with steps to take now for the 2018 tax filing season.

The Internal Revenue Service is the nation's tax collection agency and administers the Internal Revenue Code enacted by Congress.

12/30/2017

12/30/2017

Are you “In-The-Know” when it comes to the new tax legislation that’s rolling out for 2018?

Grinding Out Taxes is! And we will be ready to help you with all your tax questions and needs!

The tax reform legislation that Congress will consider this week contains many provisions affecting individuals—and many changes from both the House and Senate bills.

05/04/2016

It’s Never Too Early to Start Planning for Tax Season

Every year a majority of people are rushing to figure out their taxes at the last moment. It seem like very few of us are prudent enough to start thinking about tax season in December or January. But, why wait to start planning when we know it’s coming?

Its never too early to start thinking about your 2017 taxes. It would be prudent for all of us to sit down with a CPA or tax attorney early on to discuss our finances and ways we can reduce tax liabilities. It might save you some money in the long run. No matter how big or small your return might be, it is important to make sure you understand everything about your filing.

Below we have highlighted the top ten tax issues that individuals and small business owners face each year, as explained by tax attorney, Scott Estill.

1. Poor Recording Keeping
Individuals and business owners should keep receipts and cancelled checks for at least four years and keep tax returns forever. You never know when an audit will occur, and good record keeping will make an audit as painless as possible.

2. Not Understanding What is Tax Deductible
Small businesses frequently miss common deductions, according to Estill. These include the home office deduction, meals and entertainment, travel expenses, automobile expenses, salaries and retirement plans.

3. Failing to Properly Account for Payroll Taxes
All taxes withheld, along with the employer’s portion, must be deposited with the IRS every month electronically. Estill recommends that small businesses utilize a payroll service to understand and ensure compliance with all legal obligations.

4. Failing to Consider Choice of Business Entity
In picking an entity, you want to consider tax planning, asset protection, estate planning, and business planning. Meet with a tax professional to get it right, because changing from one entity to another can be expensive.

5. Failing to Use Professionals
"Pay today to avoid costly mistakes tomorrow," Estill’s advised. Professionals that can help save money in the long run include tax professionals, legal advisors, marketing firms, insurance agents, and financial planners.

6. Not keeping Current on Tax Laws
Tax laws change every day, warned Estill. Consult a professional to make sure you are up to speed on current obligations.

7. Failing to Use Retirement Plans
Retirement plans offer excellent returns on investment, both in terms of deductions and retirement savings.

8. Failing to Plan
In picking an entity, consider how long you plan to keep your business and what your vision is for the future.

9. Classifying Workers Incorrectly Employee versus Independent Contractor
Estill warned that the IRS scrutinizes independent contractors closely and that the more “control” you exercise over a worker, the more likely the worker is to be an employee. Check with a tax professional to avoid misclassification issues.

10. Failing to Pay “Reasonable Salary”
If you pay a reasonable salary, it’s deductible. So make sure the salaries you pay are similar to those paid to other employees in the same geographic area.

04/14/2016

Tax Day is fast approaching. Are you prepared?

If you waited until the last minute – you're not alone. Take a deep breath and start thinking back on personal life changes that occurred over last year such as a new job, marital or family status, or large purchase. Think about any major decisions you made that can have tax implications. Most importantly, look at last year's return and make sure you have similar documents to include this year and to support any of the deductions or income you include this year. Don't rush to file.

Grinding Out Taxes is always available to help/answer any questions you might have regarding your taxes! Please feel free to call or email with any questions!

You can also use these 11 last-minute tips from the EY Tax Guide 2016 as your checklist:

1.First and foremost, check your math, or input if you use software to file.

2.Be sure that your Form W-2 and all Form 1099s are correct. If not, have them corrected as soon as possible.

3.Check that you signed and dated your return and entered your occupation. If you are filing a joint return, be sure that your spouse also signs as required.

4.Double-check that your social security number is correct on the return.

5.Triple check that you have claimed all of your eligible dependents, such as elderly parents who may not live with you.

6.Attach all copies B of your W-2 forms to your return in order to avoid correspondence with the IRS. If you received a Form 1099-R showing federal income tax withheld, attach copy B of that form as well.

7.This year, retain for your records any health coverage tax forms you received (1095-A, 1095-B or 1095-C) from the IRS to prove you have health insurance and, therefore, aren't required to pay any tax penalties.

8.If you're married and both spouses work, look into whether a married filing separate return is more beneficial than a joint return.

9.If you are single and have a dependent who lives with you, consider the possibility that you might qualify for the lower tax rates available to a head of household or surviving spouse.

10.If you worked two or more jobs, see if you can claim a credit for any overpaid social security taxes withheld from your wages.

11.Keep copies of all documents you have sent to the IRS.

04/06/2016

Some random trivia for your beautiful Wednesday Afternoon - Why is tax day April 18th this year and not on April 15?

First person to answer correctly and lists their source will win a $10 gift card to Chick-Fil-A!

04/06/2016

Tax season ends in T - 12 days!!! Have you already filed yours? Are you still waiting to file? OR Do you need an extensions? Grinding out taxes can help you with any tax questions, issues or concerns that you might have with your 2015 filing!

If you need an extension, no problem, we can help get you some more time if you need it!

Seven Things about Getting More Time to File your Tax Return:

1. File on time even if you can’t pay If your return is completed but you are unable to pay the full amount of tax due, do not request an extension. File your return on time and pay as much as you can. The IRS will send you a bill or notice for the balance due. To apply online for a payment agreement, go to the IRS website at http://www.irs.gov and click “Apply for an Online Payment Agreement (OPA)” at the left side of the home page under Online Services. If you are unable to make payments, call the IRS at 800-829-1040 to discuss your options.

2. Extra time to file An extension will give you extra time to get your paperwork to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by the April 18 deadline, plus you may owe penalties.

3. Form to file Request an extension to file by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to the IRS by April 18, 2011, or make an extension-related electronic credit card payment. For more information about extension-related credit card payments, see Form 4868.

4. E-file extension You can e-file an extension request using tax preparation software with your own computer or by going to a tax preparer who has the software. The IRS will acknowledge receipt of the extension request if you file by computer.

5. Traditional Free File and Free File Fillable Forms You can use both Free File options to file an extension. Access the Free File page at http://www.irs.gov.

6. Electronic funds withdrawal If you ask for an extension via computer, you can also choose to pay any expected balance due by authorizing an electronic funds withdrawal from a checking or savings account. You will need the appropriate bank routing and account numbers. For information about these and other methods of payment, visit the IRS website at http://www.irs.gov or call 800-TAX-1040 (800-829-1040).

7. How to get forms Form 4868 is available for download from the IRS website or may be ordered by calling 800-TAX-FORM (800-829-3676).You can also obtain the form at your local IRS office. Telephone requests normally take 7 - 15 days to process and ship.

10/15/2015

Oct. 15 is the annual filing deadline for personal income tax filers who filed for an extension.

Here are some tips to guide the frantic, last-minute filer:

- Do not file online within the last hour of the deadline. If your software doesn’t work, or you have Internet problems, you will end up missing the deadline.

- If you are planning to file on paper, check with your local U.S. post office facilities to see which branches will be post-marking mail up until midnight. Do this in advance, so you know exactly where to go. And show up at least a half hour before closing.

- You still don’t have everything you need in order to file a complete return. Too bad! File anyway. There is a 5% per month late filing penalty if you miss the Oct. 15 deadline. There is no late filing penalty if you file something.

- Don’t file a frivolous return just into order to file something. Make reasonable estimates of the missing income, expense, or tax basis of assets you sold. Make written notes about how you arrived at those estimates and put those notes into the tax return files you keep at home.

- When you get the correct information later, file an amended tax return. Remember, you have up to three years to file an amended return, after you file the original return.

- If you are working with a tax professional, do not walk into his or her office proudly at the last minute and expect them to appreciate you. They are human, and their nerves are already stretched to the limit trying to help procrastinators. Expect to pay huge rush fees — or expect to be filing late. After all, while you might get away with filing a quick and sloppy tax return — they must do a diligent job.

- If you need to make a payment with your tax return, use the IRS’s Direct Pay tool. It’s free, draws the money directly from your account, and gives you proof that the IRS received your payment — and shows how the payment was applied.

- What if you don’t have the money to pay the taxes that are due? That’s one of the biggest reasons people avoid filing their tax returns. Forget it. File anyway. You will have to pay those taxes sooner or later. And isn’t it easier to pay the balance due without 25% worth of penalties — and the interest on those penalties and the taxes?

- If you can ultimately find the funds to pay your balance due within about three months, do so. If not, you can always arrange for an installment agreement with the IRS — often painlessly — using their Streamlined Installment Agreement tool online. This should work for most taxpayers, since the allowable tax debt to qualify is $50,000.

- Whatever you file, keep a printed (or PDF) copy of your tax returns and all the forms, notes, 1099s, W-2s, etc. that went into producing the information reported on your tax return. Make copies of all payments — printing out any online payments.

06/10/2015

Tax Season is Over! How to Prepare for the Next One

Tax season is over. Now that we’re beyond April 15, aren’t you excited to start thinking about tax season 2014?

I didn’t think so. Nevertheless, here are two key strategies to consider throughout the rest of the year in order to make next year’s filing simpler and potentially less costly.

Stay Organized: One of the more annoying parts of preparing to file your taxes is trying to locate your necessary documents and receipts received throughout the year, but if you stay organized you will make your life much easier.

Some people can spend a bunch of time just assembling all of the tax forms they receive in January or February (e.g., W-2s, 1098s, 1099s, etc.). But that’s nothing compared to the hours they spend assembling information that they received throughout the previous year. Such document sleuthing can include anything from discovering receipts for charitable donations and business expenses to finding the cost basis for investments they sold.

Of course, there’s an easier way: don’t wait until April to dig up all of your paperwork. For example, when you make a donation of clothing to a local charity, don’t take the receipt and leave it on the desk somewhere to contemplate later. Instead, fill it out right away— list what you donated and its approximate value. Put the date on it. Put it in a folder labeled “Taxes 2013.”

With business expenses, write down the business purpose on the actual receipt right away. For business meals, I suggest doing so while still at the restaurant. When you fill in the tip, just write the purpose at the top of the customer copy of the receipt. Bring it home and put it in that same “Taxes 2013” folder. To make your life much easier if you’re a business owner, enter tax-related transactions in your accounting software as they occur.

Monitor Your Payments: As a taxpayer, your goal is to pay enough taxes throughout the year to avoid an underpayment penalty but not so much that you end up providing a sizable interest-free loan to the government. To do so, you need to ensure that you pay at least the lesser of the following two numbers during the course of the year:

•100% of the taxes you owed for the previous year (110% if your Adjusted Gross Income was $150,000 or greater)
•90% of the taxes you will owe for the current tax year

Note that the phrase, “taxes you owe,” in the above paragraph is not the amount you might pay with your tax return; it refers to the total amount of federal income tax paid throughout the year.

What’s the key takeaway? Many people receive the majority of their income as employees and have it reported to them on Form W2. Furthermore, most people’s income does not vary greatly from year to year. If that description sounds like you, consider your last tax return. If you received a sizable refund, consider lowering your withholding by increasing your allowances.

To do so, simply re-file Form W4 with your payroll department. You can do so anytime throughout the year and use TurboTax W-4 calculator to estimate your exemptions. When you change your allowances in this way, your next year’s income tax refund will decrease or possibly be eliminated. On the other hand, implementing this strategy means you will receive an increase in net pay right away.

To take it to the next level, use some of your new money to increase your IRA or 401(k) savings. Doing so not only prepares you for your future retirement, but also lowers your taxes next April.

05/06/2015

Post Tax Season To-Dos.... What’s on your to-do list? We’d love to hear from you!

Now that clients aren’t coming through the door at a constant pace, it’s time to wrap up tax season with a nice big bow. While people will still need their taxes prepared, returns amended, and payment extensions filed the busiest part is over. For the most part, tax season is over, however, as a tax business owner, there’s still much to be done. Here are some things you should be doing this time of year.

Clean office(s) to project a professional appearance: Now that the traffic has died down, it’s time to give the office a good scrub to help maintain a professional appearance.

Shred old tax records: Shred any tax records that are no longer required to be retained (take advantage of local free shredding events).

Prepare a monthly projection and cash flow budget: This budget should be for May 2014 through April 2015.

Develop a plan to keep in touch with clients during the off-season: There are many ways to keep in touch with clients and add that personal touch to your client relationships. Here are some ideas:
•Monthly or periodic newsletter
•Office open house
•Picnic or party
•Greeting cards

Determine ways to cut off-season expenses: Now that you don’t have a steady stream of revenue coming in, you’ll need to cut your expenses during the off-season.

Determine ways to generate off-season revenue: While you are finding ways to cut expenses, you should also be thinking of ways to generate revenue. This could include diversification of your service offerings to include things like accounting and payroll.

Secure a bank line of credit to finance off-season losses if necessary: If you’re struggling to cut expenses or generate off-season revenue, securing a line of credit is an option.

Evaluate results of 2014 tax season marketing campaigns: While everything is fresh in your mind, go over what you did and the results of your efforts. Don’t keep running the same marketing campaigns year after year if they aren’t working. The off-season is a great time to evaluate all marketing efforts from the previous season.

Attend networking events: Networking is important. Get out into the community, build relationships and shake lots of hands! Come tax season next year, you’ll be remembered as the go-to person for taxes.

Begin planning for next tax season: Planning is important and now is the time to do it. Here’s what you should plan for:
•Plan to recruit and train new tax preparers for 2015 tax season if necessary
•Consider operating an income tax school to train new tax preparers
•Develop a marketing and PR plan for next tax season
•Develop an expansion plan for next tax season if desired
•Begin relocating or new office site selection
•Renew tax software or shop for new software if appropriate
•Renew tax refund banking relationship if applicable
•Make enhancements to your website

Attend an IRS Tax Forum and/or Tax Professional Association conference: These conferences are important for professional development. There’s always more to learn, and it’s important to meet others from the industry.

Complete continuing education for you and your tax preparers: Build upon your expertise by taking continuing education courses in the summer. If you have a staff be sure to send to them, as well. The Income Tax School has a wide variety of CE Courses to choose from. Here is a link to our course.

04/15/2015

Guess what day it is??? Guess what day it is???

REMEMBER - today is the last day to file UNLESS you have filed for an extension! Grinding out taxes can help with either route you choose!