Key Tax Deadlines – December 2013

Posted on November 24, 2013 | Comments Off on Key Tax Deadlines – December 2013

The usual employer tax deadlines continue through the month for paying over tax payments to the IRS. If you have been paying quarterly remember to check each quarter that you are still eligible to do so. The test only goes back one quarter. Also, check your state withholding rules as many of these need to be checked on a monthly basis.

Other tax deadlines this month include:

December 10 – Employees must report to their employer all tips for November if they total more than $20.
December 16 – Corporations should deposit their fourth installment of 2013 estimated taxes, if they are a calendar year filer. Generally a C Corporation is required to pay estimated taxes if the expected tax liability for the year exceeds $500.
December 16 – Non resident aliens who filed an extension before June 15, 2013 must file their 2012 1040NR.

This is your last chance to do some year end tax planning. With Thanksgiving and Christmas coming up, there are a reduced number of days left to implement any planning strategies. Talk to your tax advisor sooner rather than later.

Remember, that many transactions need to be done before December 31, 2013 to be effective for the 2013 tax year.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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Key Tax Deadlines – November 2013

Posted on October 30, 2013 | 1 Comment

The usual employer tax deadlines continue through the month for paying over tax payments to the IRS. If you have been paying quarterly remember to check each quarter that you are still eligible to do so. The test only goes back one quarter. Also, check your state withholding rules as many of these need to be checked on a monthly basis.

Other tax deadlines this month include:

November 12 – Employees must report to their employer all tips for October if they total more than $20.
November 12 – If you have timely made all payroll withholding payments you have until this date to file your form 941 for the quarter ended September 30, 2013.

With only two months left to the end of the tax year for individuals and most small businesses, this is a good time to review your tax position. There have been many tax changes for 2013 so it is well worth contacting your tax advisor to undertake some year end tax planning.

Remember, that many transactions need to be done before December 31, 2013 to be effective for the 2013 tax year.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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2014 Tax Filing Season Delayed

Posted on October 22, 2013 | Comments Off on 2014 Tax Filing Season Delayed

UPDATE JANUARY 22, 2014
The IRS has announced that the 2014 tax filing season for individuals will start on January 31, 2014. E-filing will open that day and it will also be the earliest day the IRS will start processing mailed in returns.

ORIGINAL POST
Here we again. The IRS has announced in IR-2013-82 that the 2014 tax filing season will be delayed by about one to two weeks. Hopefully the delays will not be as bad as they were for the 2013 filing season.

This is a result of the recent Government shut down which lasted 16 days. With 90% of the IRS shut down during that period, they are behind on their timetable for testing the systems for the next filing season.

The 2014 tax filing season, for filing 2013 tax returns, was due to start on January 21, 2014. It is now likely that it will start no earlier than January 28, 2014 and no later than February 4, 2014. The IRS will announce a firm start date in December 2013.

There will be no advantage in filing before the revised start date as e-filed returns will not be accepted before the start date and paper filed returns will not be processed by the IRS until that date. The filing deadline will remain as April 15, 2014 with the option to get an automatic extension to October 15, 2014.

I will be keeping clients informed as we get nearer to the tax season on the best way for them to proceed. As for previous delays if clients have all their information in early to mid January I will be able to start processing their returns, ready to file on the IRS start date.

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Key Tax Deadlines – June 2013

Posted on June 10, 2013 | Comments Off on Key Tax Deadlines – June 2013

The usual employer tax deadlines continue through the month for paying over tax payments to the IRS. If you have been paying quarterly remember to check each quarter that you are still eligible to do so. The test only goes back one quarter. Also, check your state withholding rules as many of these need to be checked on a monthly basis.

Other tax deadlines this month include:

June 10 – Employees must report to their employer all tips for May if they total more than $20.
June 17 – Second 2013 estimated tax installment is due. Even if you did not need to do the first installment check if a change in your circumstances requires you to start now. For example, your business profits have increased, you sold an asset for a large gain or you won a prize.
June 17 – If you were out of the US on April 15, 2013 this is the deadline to file your 2012 1040 tax return. If you are still not ready, file form 4868 by this date to get an automatic extension to October 15, 2013.
June 17 – If you are a US Non-resident reporting income such as rental income this is the deadline to file your 2012 1040NR tax return. If you are still not ready, file form 4868 by this date to get an automatic six month extension to December 16, 2013.
June 30 – Form TD F 90-22.1, otherwise known as the FBAR needs to be filed with the US Treasury. This is the form for US citizens and green card holders to report their foreign accounts. There are substantial penalties for not filing this form. Also, unlike most tax returns the deadline is the date the form needs to be at the US Treasury, not the last day you can mail it. This is the last year that the FBAR can be mailed in. Starting next year it will need to be e-filed.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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All 2012 Individual And Business Tax Returns Can Now Be Filed

Posted on March 4, 2013 | Comments Off on All 2012 Individual And Business Tax Returns Can Now Be Filed

The IRS announced on Monday March 4, 2013 that all 2012 individual and business tax returns can now be filed. They have successfully tested the outstanding forms that needed to be updated.

So, the eventful and delayed 2013 tax season is now fully up and running.

As far as most Corporation and S-Corporation returns are concerned, the filing deadline is only a few days away on March 15, 2013. For any clients that do not yet have the information available to complete their returns, I will be filing an automatic 6 month extension. The filing deadline will then be September 15, 2013.

However, note that any tax due, still needs to be paid by March 15, 2013 otherwise penalties and interest will be charged.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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More 2012 Tax Forms Can Now Be Filed

Posted on February 9, 2013 | Comments Off on More 2012 Tax Forms Can Now Be Filed

Update Monday March 4, 2013 – The IRS is now accepting all 2012 individual and business tax returns.

The IRS announced on Friday February 8, 2013 that they are now ready to accept 2012 tax returns with some of the forms that were previously delayed.

Starting on Sunday February 10, 2013 the IRS will start accepting 2012 tax returns with Form 4562 Depreciation. It is pleasing to see that the IRS has managed to get their testing done on this form much quicker than expected. This means that most Schedule C filers should now be able to file their 2012 tax return as well as a lot of corporations and partnerships.

On Thursday February 14, 2013 the IRS will start accepting returns with Form 8863 Education Credits.

There are are still several forms that can not be filed. These are shown on the IRS notice linked above. The IRS has indicated that it will probably be the first week of March when returns with these forms can be filed.

So far I have clients with Form 8582 Passive Activity Loss Limitations and Form 5695 Residential Energy Credits who will need to wait to file their returns.

As I have mentioned in previous articles if you are due a tax refund without using these forms and you need the refund sooner rather than later you could file now without the forms. Then, in March file an amended return using the delayed forms.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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1099-K IRS Notices

Posted on February 5, 2013 | Comments Off on 1099-K IRS Notices

If you run a business you may have received a Form 1099-K for the tax year just ended. It is also possible that some time during the year you may receive a notice from the IRS inquiring about your 1099-Ks. In this article I will discuss why Forms 1099-K are issued and what to do if you receive a 1099-K IRS notice.

What Is A Form 1099-K

A 1099-K is issued by what are called payment settlement entities such as merchant service providers or companies like PayPal. On the form they are reporting the total of either the credit or debit card transactions they processed on your behalf, or in the case of a company like PayPal the sales transactions processed through them.

The form was introduced as part of the IRS’s continuing efforts to close the “Tax Gap”. By getting these organizations to report the sales transactions to them, they have more information to match up with the sales reported on a taxpayer’s tax return. For people using PayPal or similar services this is quite important because in the past this would not have been reported to the IRS so many people running small sideline businesses were under reporting their income. Now the IRS will know more of the business income you had.

The 1099-K interacts with Form 1099-MISC. You will receive a 1099-MISC from a business customer if in general you performed services for them worth more than $600 in the year. However, the customer should only report on the 1099-MISC services they paid for by check, cash or any other non payment card means. If they used a debit or credit card to pay you they should not include those payments on the 1099-MISC. That is because those payments will be included on the 1099-K issued by your merchant services provider.

So, check your 1099-MISCs to make sure that the correct payments are being reported otherwise the IRS will think you have received more income than you are reporting.

What To Do With The 1099-K

Resist the temptation to just bin it or file it away.

Firstly, check that all the details like your name, address, tax ID number and other details are correct. Next, if there is an entry in box 2 for merchant category code, make sure that is the correct code for your business. If it isn’t, get the issuer of the 1099-K to change the code. This is important because the IRS will be using the code to see if the percentage of your income reported on 1099-Ks is normal for your type of business.

If your accounting system can do it, try and reconcile the figures on the 1099-K to your accounting records. If not, make sure that the figures look reasonable based on your knowledge of your business.

Reporting The 1099-K On Your Tax Return

Currently the IRS does not require the 1099-K income to be shown separately on your tax return. Some tax software allows you enter the 1099-K but be aware of one or two gotchas. The figures reported on the 1099-K are gross, so if you collect sales tax on your income that needs to be taken out to get to the income on your tax return. Similarly the 1099-K figures may not include refunds or other charge backs.

IRS 1099-K Notices

Once the IRS receives their copy of the 1099-K they match it to the business income reported on your tax return. If this indicates to them that you may have under reported your business income they might send you a notice. There are four possible notices you could receive.

I advise all of my clients in this situation to firstly not panic and secondly contact me. Getting professional help to respond to the notice will help ensure you get a satisfactory result.

All of the notices are headed up “Notification of Possible Income Underreporting” but each has a different letter number.

Letter 5035 – This is just an information letter or shot across the bow. Based on statistical analysis the IRS thinks you might have not reported cash or check business income. Double check that you did not miss any income. If you didn’t then file the letter and forget about it. If you did miss some income you will need to file an amended return.

Letter 5036 – This letter requires you to respond to the IRS. If you have no additional income to report you need to explain why you have a greater proportion of card or 1099-K transactions than other similar businesses. This is why you need to check box 2 on the 1099-K to make sure the merchant category code is correct. If you did miss some income then you will need to file an amended return.

Letter 5039 – This letter starts to get in to more detail about your business income. The IRS requires you to complete a Form 14420 to provide more information about your business income and to verify if the 1099-Ks have been correctly filed. After submitting the information the IRS will review it and decide if your explanation is reasonable or if they need more information.

Letter 5043 – This one is similar to the Letter 5036 where you need to explain why you have more 1099-K transactions than is normal for your business. The difference from the 5036 is that with this letter the IRS will review your response and may come back with more questions.

So, as you can see you don’t want to ignore your 1099-Ks. Make sure they are correct and be prepared to explain why your income profile is different from other businesses in the same industry. Finally, don’t forget to include your cash and check sales in your business income.

If you need assistance with checking the 1099-Ks you have received or dealing with an IRS 1099-K notice you can call me on (480) 363-4808.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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More 2012 Business Tax Returns Can Now Be Filed

Posted on February 4, 2013 | Comments Off on More 2012 Business Tax Returns Can Now Be Filed

Update Monday March 4, 2013 – The IRS is now accepting all 2012 individual and business tax returns.

Update February 9, 2013 – Returns that include Form 4562 can be filed from February 10, 2013.

As of February 4, 2013 the IRS is now accepting many 2012 calendar year business tax returns. This includes the corporate tax returns in the Forms 1120 series and partnership tax returns Forms 1065.

However, businesses that need to complete Form 4562 to claim depreciation or are claiming certain business credits can not file until late February or early March. This will mean that a large number of businesses filing as a corporation on Form 1120 or as a S-Corporation on Form 1120S will not be able to file until very close to the March 15, 2013 filing deadline.

I am advising my business clients to let me know as soon as possible if they will have their accounting information ready to be able to meet the March 15, 2013 filing deadline for corporations or April 15, 2013 filing deadline for partnerships. If they will not be ready I will file an extension so that we will not need to worry about the delay in being able to file some of the business tax returns.

For those clients who will soon have their accounting information available I will be able to prepare the return as my tax software can work out the depreciation. We just will not be able to file the completed returns until late February or early March.

If you need assistance preparing your business tax returns do not hesitate to contact me on (480) 363-4808 or read my business tax preparation page.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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2013 Tax Season Now Started

Posted on January 30, 2013 | Comments Off on 2013 Tax Season Now Started

Three cheers for the IRS, the 2013 tax season has now started. As of 9.00am ET today, January 30, 2013, the IRS opened their computers to start processing individual 2012 tax returns. For most taxpayers that means you can now file your tax return and get your tax refund.

If you e-file today you can expect to see your refund by about mid February.

As I have previously discussed, some taxpayers will still need to wait to file their return.

These include those claiming education credits or filing certain forms like the depreciation Form 4562.

I am offering client’s maximum flexibility to assist them with the preparation and filing of their tax returns. For the tax season I am open in the evenings Monday to Friday until 9.00pm, on Saturdays I am open until 6.00pm and I am also open on Sundays from 12.00pm to 6.00pm.

As an added bonus I save clients time and hassle by offering a mobile tax service if they live in the Phoenix metro area, including Chandler, Gilbert, Tempe, Mesa, Queen Creek, Scottsdale, Phoenix and Glendale.

For those clients who live outside of Phoenix I can prepare their tax returns from the information they upload to my secure client portal or mail to me.

To see more information visit my personal tax services page or call me on (480) 363-4808.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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ASU Students Claiming Education Credits Face Tax Refund Delay

Posted on January 29, 2013 | Comments Off on ASU Students Claiming Education Credits Face Tax Refund Delay

Update March 17, 2013 – On March 12, 2013 the IRS released a statement about the problems with some Education credit claims. In the statement they say they are working hard on sorting out the problem, but it may take up to 4-6 weeks to complete. In the mean time there is not much that affected taxpayers can do, other than wait for their refund to be released once the IRS has completed sorting out the problem.

Update February 9, 2013 – Educations credits claimed on Form 8863 can be filed from February 14, 2013.

If you are a student at Arizona State University (ASU) claiming education credits you might find that your 2012 tax refund will be delayed.

As I reported in my recent article the IRS has announced that 2012 Tax Returns claiming eduction credits on Form 8863, cannot be filed until mid February. This will mean that if you e-file your tax return you will not see the refund until late February or early March at the earliest.

For a lot of ASU students the credit they will be looking to claim is the American Opportunity Tax Credit. This is a credit for undergraduates in the first fours years of their post secondary education. Provided they satisfy the qualifying conditions the credit can be worth up to $2,500 with up to $1,000 repayable to the student even if they have no tax liability. It is the refundable part which makes the American Opportunity Credit so beneficial. Note, that in certain circumstances only the student’s parents can claim the credit.

For my clients I am recommending that they still book their tax preparation appointment as soon as they have all their information ready including the 1098-T from ASU. I can then check which education tax benefit is the best for them. Depending on which benefit is best I can either file their return at the start of the tax season on January 30, 2013 or the return will be ready to go once the IRS gives the all clear to file returns with Form 8863.

If you are an ASU student and would like assistance with preparing your 2012 tax return and claiming the American Opportunity Tax Credit, you can book an appointment by calling me on (480) 363-4808. For most students my fixed fee for preparing the return is $95. This includes the Federal Return, one resident State Return and e-filing of the returns. I also save you time and hassle by coming to you to prepare the return.

Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.

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