Mark Smith Achieves Advanced QuickBooks ProAdvisor® Certification

Posted on June 21, 2012 | Comments Off on Mark Smith Achieves Advanced QuickBooks ProAdvisor® Certification

We are pleased to announce that Mark Smith has achieved his Advanced QuickBooks ProAdvisor® Certification.

Advanced QuickBooks ProAdvisor®As an Advanced Certified QuickBooks ProAdvisor® Mark is able to offer a full range of accounting services to make sure that clients get the best out of their investment in QuickBooks®. By working closely with his clients as part of their team he enables them to concentrate on what they do best, running their business, whilst he provides the financial expertise to help them grow their business.

To make an appointment with Mark call (480) 363-4808, email us, or book an appointment using the appointment manager on our web site.

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Key Tax Dates – June 2012

Posted on June 11, 2012 | Comments Off on Key Tax Dates – June 2012

Here are some key tax dates for your diary.

June 2012
15th – Individuals pay 2nd estimated tax installment
15th – Individuals outside the US file 1040
30th – Form TD F 90-22.1, FBAR needs to be filed

Even if you did not do or need to do the 1st estimated tax installment review your current year tax affairs to see if you need to start making estimated tax installments. Things to consider are:

  • Have your business profits increased significantly in the last couple of months
  • Have you made a large capital gain from investments or sold an asset
  • Has there been a significant change in your situation that reduces your deductions or exemptions

For individuals outside the US if you will not be able to file by the June 15th deadline make sure you file an extension by that date. For 1040 filers that will extend your filing deadline to October 15th and for 1040NR filers to December 15th.

If you own foreign financial assets such as bank accounts, brokerage accounts or defined contribution pension funds which in total exceeded $10,000 at any time in 2011 then you need to file the FBAR. Although not compulsory this year you can e-file this form as we explained in an earlier post on e-filing the FBAR.

Posted by Mark Smith an accountant and tax preparer with over 28 years accounting and tax experience. He is the owner of Cranmere Accounting and Tax Services LLC. He can be contacted on (480) 363-4808 or by email at info@cranmereaccountingandtax.com if you need assistance with any of the above.

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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Extension Of Time To File US Individual Tax Return

Posted on April 9, 2012 | Comments Off on Extension Of Time To File US Individual Tax Return

Are you struggling to get all the information together to file your 2011 tax return by the April 17, 2012 filing deadline? If so, make sure that your tax preparer submits form 4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return by the April 17, 2012 deadline.

Filing the extension will give you a 6 month extension to your deadline ( 4 months for taxpayers out of the country) so that your filing deadline becomes October 15, 2012.

The big reason for filing the extension is to save you the late filing penalty. If you do not file the extension you will be subject to a late filing penalty each month which is 5% of the tax due on your return up to a maximum of 25%. If the return is more than 60 days late the minimum penalty is the lower of $135 or the balance of the tax due. This penalty can get quite large if you don’t pay all your tax by April 17, 2012.

Even if you file form 4868 to get the extension to file the return, it does not extend the time to pay your tax. All your 2011 tax is still due by April 17, 2012. So one of the requirements to file form 4868 is to estimate how much tax is due and enter that information on the form.

If you do not pay the tax by April 17, 2012 you will be charged a late payment penalty of 1/2% per month up to a maximum of 25%. You will also be charged interest at the current rate of 3%. The late payment penalty will not be charged for the period of the extension if you have paid at least 90% of your tax by April 17, 2012.

If you estimate you are due a tax refund for 2011 you technically do not need to file the extension as there is no late filing penalty if there is no tax due. However, if there is any uncertainty over the refund you may still wish to file form 4868 in case you end up with a tax liability when the final return is prepared.

If you would like assistance with filing your extension call Mark Smith 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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Impact Of The 2012 UK Budget On UK Expats Living In The USA

Posted on March 24, 2012 | Comments Off on Impact Of The 2012 UK Budget On UK Expats Living In The USA

The 2012 UK Budget was delivered on March 21, 2012. A few of the provisions have an impact on UK expats who are Green Card holders or have become US Citizens.

Age Allowance To Be Abolished
Starting from April 6, 2013 the additional personal allowance will no longer be available for those who reach 65 after that date. Existing age allowances will be frozen at their 2012/13 level of £10,500 for those aged 65 and over and £10,660 for those aged 75 and over. Once the standard personal allowances reach these frozen levels there will just be one personal allowance.

The effect of this will be to increase the tax on the elderly. For UK expats over 65 living in the USA who receive UK income that remains taxable in the UK they may pay more tax than they would have done in the past. Examples of income covered by this would include interest, dividends, rental income or business income. Note that under the UK/US Tax Treaty, UK state pension, company pension and personal pension income is only taxable on the US tax return.

Statutory Residence Test
The introduction of a statutory residence test has been delayed until 6 April 2013. The UK Government will publish draft legislation in the spring.

Any UK expat living in the US who intends to have extended visits to the UK will want to keep an eye on this test. It will set out detailed rules on how to determine if somebody is a UK resident for tax purposes and so potentially subject to a wider range of UK taxes than they might otherwise have been.

Inheritance Tax and Spouses/Civil Partners Domiciled Outside The UK
Currently there is a £55,000 IHT-exemption for transfers to a non-UK domiciled spouse or civil partner. This compares to unlimited transfers if they are UK domiciled.

The UK Government will consult on increasing the £55,000 exemption and also on allowing individuals domiciled outside the UK but with a UK domiciled spouse or civil partner to elect to be UK domiciled for Inheritance Tax purposes.

How this affects UK expats living in the USA will depend on which assets they still have in the UK, how long they have lived in the USA and whether they have changed their domicile.

In summary, although there were not too many changes in the 2012 UK Budget that would affect UK expats living in the USA it will be worthwhile keeping on eye on these to make sure they do not adversely affect your own situation.

Posted by Mark Smith a tax preparer and accountant with over 28 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC. Contact Mark on (480) 363-4808 or by email at info@cranmereaccountingandtax.com.

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 Dates – April 2012

Posted on March 24, 2012 | Comments Off on Key Tax Dates – April 2012

Here are some key tax dates for your diary.

April 2012
10th – Employees need to report to their employer tips earned in March of more than $20
17th – Individuals file forms 1040, 1040A and 1040EZ and pay tax for 2011 calendar year. To get automatic 6 month filing extension file form 4868 by this date.
17th – Individuals pay first estimated tax installment for 2012.
17th – Partnerships file form 1065 and give Sch K-1 to all shareholders by this date. To get automatic 5 month filing extension file form 7004 by this date.
20th – Chandler Sales Tax Return needs to be filed
20th – Arizona Sales Tax Return needs to be filed

It is that time of year again!!!

This year the tax return filing deadline is on April 17, 2012 due to April 15 falling on a weekend and April 16 being a holiday in Washington DC.

Remember if you are not ready to file by the filing deadline then file the automatic 6 month extension so that you do not incur the late filing penalty. If you file the extension the tax is still due by April 17 so try to make as good an estimate as you can and pay the tax by the filing deadline of April 17 to minimize the penalties and interest for late payment of the tax.

For partnerships, if you fail to file the automatic extension the penalty for late filing of the form 1065 starts at $195 per month times the number of partners. Plus there is a $100 penalty for each failure to timely issue Schedule K-1 to each partner. These penalties can add up significantly if there is any delay in filing the form 1065.

Posted by Mark Smith a tax preparer and accountant with over 28 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC. He can be contacted on (480) 363-4808 or by email at info@cranmereaccountingandtax.com if you need assistance filing your tax returns by the deadline.

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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Mandatory E-Filing Of FBAR Delayed

Posted on March 23, 2012 | Comments Off on Mandatory E-Filing Of FBAR Delayed

The Financial Crimes Enforcement Network (FinCEN) has announced that mandatory e-filing of the Report of Foreign Bank and Financial Accounts (FBAR) has been delayed until July 1, 2013.

The FBAR is an annual form (TD F 90-22.1) that certain US persons need to file with the US Treasury Department by June 30 of each year. Note, it is not filed with any tax return.

The form needs to be completed if a US person has a financial interest or signature authority over foreign financial accounts exceeding an aggregate value of $10,000 at any time in the calendar year. Financial account is widely defined and includes not only bank accounts, mutual funds and brokerage accounts but also defined contribution pension funds. This final category will often be the reason that many Green Card holders and those who have acquired US Citizenship will be required to file the FBAR.

US person includes not only US citizens and residents but also US corporations, partnerships and LLCs.

The penalty for failing to file the FBAR by the deadline of June 30, can be up to $10,000 or a minimum of $100,000 for willfully failing to file the FBAR.

Even though the mandatory e-filing of the FBAR has been delayed, FinCEN is encouraging all filers to e-file their FBAR.

If you want to e-file your FBAR it is a relatively simple process of setting up a user account on the FinCEN web site and then using their forms reader to complete the form. Currently they only support one signature. So if a married couple want to e-file a FBAR for jointly owned foreign financial accounts they will each need to register and file separate FBARs.

Here is the link for the user enrollment on the FinCEN web site.

One final point to remember. Even if you have already reported your foreign financial accounts with your tax return on Form 8938, Statement of Specified Foreign Financial Assets you still need to report them on the FBAR. The reporting obligations are completely separate.

The IRS has a useful comparison chart showing the differences between the two reporting requirements and which assets are covered by each form.

Posted by Mark Smith a tax preparer and accountant with over 28 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC and can be contacted on (480) 363-4808 or by email at info@cranmereaccountingandtax.com if you need any assistance with filing your FBAR.

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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2008 Income Tax Refund Deadline Approaching

Posted on March 8, 2012 | 2 Comments

UPDATE SEPTEMBER 20, 2012 – Although the deadline for claiming a Federal tax refund for 2008 has passed it is still possible to claim an Arizona income tax refund for 2008. Arizona allows four years to claim refunds so it may still be worth filing an Arizona state income tax return or amended Arizona state income tax refund if you overpaid your state tax for 2008. Call (480) 363-4808 for a free no obligation review of your 2008 tax position to see if you might be due an Arizona state income tax refund.

ORIGINAL ARTICLE
The April 17, 2012 deadline to claim a 2008 income tax refund is fast approaching. Recently the IRS announced in IR-2012-26 that more than $1 billion of potential tax refunds have still to be claimed for 2008. In Arizona for example it is estimated that 29,000 individuals have not filed a 2008 tax return to claim refunds with a median value of $558.

To claim a tax refund an income tax return must be filed within three years of the normal filing deadline. For the 2008 tax year that means the 2008 income tax return must be filed by April 17, 2012. If the return is not filed by that date any refund due to you becomes the property of the U.S. Treasury.

Even though you will be filing the 2008 income tax return after the normal due date of April 15, 2009 there is no penalty for late filing if you are due a tax refund.

Many of those who have not filed may have done so because their income was below the filing limit. However, if you are not required to file a 2008 income tax return it may still be beneficial to do so for several reasons, including:-

  • Recover excess withholding from your wages
  • Recover quarterly estimated tax payments that exceed your tax due
  • Based on your income you may be entitled to earned income tax credit
  • If you did not receive the 2008 economic stimulus payment you may qualify for the Recovery Rebate Credit

If you have unpaid taxes or have not filed income tax returns for 2009 and 2010 any 2008 tax refund will be held back until the outstanding returns are filed or will be offset against unpaid taxes. This will also apply if you have student loans or child support in arrears. However, even in these situations it will be beneficial to file for the refund to help you reduce any liabilities.

If you have not filed a 2008 income tax return and think you might be entitled to a tax refund for the 2008 tax year call us on (480) 363-4808 for a free no obligation review of your 2008 tax position. If we identify you are entitled to a tax refund and you would like us to prepare your 2008 income tax return we can do so for our normal fee rates.

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 Dates – March 2012

Posted on March 6, 2012 | Comments Off on Key Tax Dates – March 2012

Here are some key tax dates for your diary.

March 2012
12th – Employees need to report to their employer tips earned in February of more than $20
15th – Corporations file form 1120 and pay tax for 2011 calendar year ends. To get automatic 6 month filing extension file form 7004 by this date.
15th – S Corporations file form 1120S and pay any tax for 2011 calendar year ends. Give Sch K-1 to all shareholders by this date. To get automatic 6 month filing extension file form 7004 by this date.
15th – If electing S Corporation status starting with 2012 calendar year, file form 2553
20th – Chandler Sales Tax Return needs to be filed
20th – Arizona Sales Tax Return needs to be filed

The big one this month for small businesses is the S Corporation 1120S Tax Return filing deadline. If you do not think you have all your accounting information ready to meet the filing deadline make sure that your accountant or tax preparer files the automatic 6 month extension, form 7004, before March 15th. If you do this, let your shareholders know that you have filed the extension so that they can file an extension for their own individual tax returns if you do not anticipate filing the 1120S before the April 17th individual tax return deadline.

Remember, if you fail to file the automatic extension the penalty for late filing of the form 1102S starts at $195 per month times the number of shareholders. Plus there is a $100 penalty for each failure to timely issue Schedule K-1 to each shareholder. These penalties can add up significantly if there is any delay in filing the form 1120S.

Posted by Mark Smith a tax preparer and accountant with over 28 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC and can be contacted on (480) 363-4808 or by email at info@cranmereaccountingandtax.com.

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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Partnership K-1s Can Now Be Provided Electronically

Posted on February 23, 2012 | Comments Off on Partnership K-1s Can Now Be Provided Electronically

Continuing its embracing of electronic communication the IRS has issued Revenue Procedure 2012-17 which allows partnerships to provide K-1s to their partners electronically.

The partnership schedule K-1, Partner’s Share of Current Year Income, is a summary of the partner’s distributive share of the partnership’s income, gains, losses, deductions and credits. The partner uses the information on the K-1 to prepare their own tax return.

Prior to the issue of Revenue Procedure 2012-17 partnerships had to give a physical copy of the K-1 to each partner on or before the due date for filing the partnership tax return. For calendar year partnerships that would normally be April 15, although for 2012 the deadline is April 17.

Now partnerships can issue the K-1s electronically. Although this will have the most benefit for partnerships with a large number of partners it will still help small partnerships who are working towards paperless operations.

To be able to issue K-1s electronically there are some key requirements to follow:-

  1. Each partner needs to give consent to receive their K-1 electronically. This can be given by paper or electronically. The partner needs to confirm the consent electronically to demonstrate that they will be able to access the electronic K-1. If no consent is given or the consent is withdrawn then a paper K-1 needs to be issued.
  2. If the way to access the electronic K-1 changes due to changes in hardware or software then notice needs to be given to the partners and a new consent obtained.
  3. Prior to or at the time consent is given the partnership must make various disclosures about giving the consent.
  4. The format of the electronic K-1 must contain all the information required for a K-1 and substitute statements or be an exact copy of the official IRS K-1.
  5. If the electronic K-1 is being made available on a website there are requirements about the format and means of giving notice to the partners to download the K-1. There are also rules on how long the forms need to be made available.

Even for small partnerships there will be benefits to adopting electronic K-1s including easy access for partners to their K-1s wherever they are located, saving paper and mailing costs.

If you decide to issue electronic K-1s make sure you read and follow all the rules in Revenue Procedure 2012-17 or get help from your accountant or tax preparer.

Posted by Mark Smith a tax preparer and accountant with over 28 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC and can be contacted on (480) 363-4808 or by email at info@cranmereaccountingandtax.com.

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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Payroll Tax Holiday Extended To End Of 2012

Posted on February 21, 2012 | Comments Off on Payroll Tax Holiday Extended To End Of 2012

Our political leaders have finally got around to extending the payroll tax holiday to the end of 2012. That means for the rest of 2012 the employee social security rate will be 4.2% (2% lower than the normal rate). For the self-employed the social security portion of the self-employment tax remains at 10.4% rather than the normal 12.4%.

The original social security payroll tax holiday ran in 2011 and replaced the Making Work Pay tax credit that was available in 2010. Late in 2011 Congress agreed to extend the holiday until the end of February 2012 and now with two weeks left they have extended it until the end of December 2012.

For different earners the monthly impact is:-

Annual Earnings $20,000 $40,000 $60,000 $80,000
Monthly Saving $33.33 $66.66 $100.00 $133.33

The monthly amounts are what you are keeping in your pocket as a result of the social security holiday. If the holiday is not extended beyond the end of 2012 these are the amounts that will not be available for you to spend so bear this in mind if you are making financial plans for 2013.

The 2% recapture tax that was introduced in December 2011 has been repealed and does not apply now.

The extension of the payroll tax holiday was not funded by Congress and will add to the deficit. So enjoy this extra money in your pocket whilst it lasts as eventually it will more than likely be taken back to fund the deficit.

Posted by Mark Smith a tax preparer with over 28 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC and can be contacted on (480) 363-4808 or by email at info@cranmereaccountingandtax.com.

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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