Header Right

Archives for November 2017

Getting the Most from Your Year-End Donations

by

Share This:

During the holiday season, many people look for ways to give to those who are less fortunate. If you plan to give to charity before year-end and want to make the most of the tax benefits, consider the following.

Donate Clothing and Household Items

Any clothing or household items you donate must be in good used condition or better to be deductible. However, you don’t have to meet this standard if the item is worth more than $500 and you include a qualified appraisal with your return. Make sure you receive written acknowledgement from the charity for all gifts worth $250 or more. Among other things, it should include a description of the contributed items.

Give Money

If you donate money, you must have a bank record or a written statement from the charity to deduct the contribution. The record must show the name of the charity, the date and the amount of the contribution.

Donate Appreciated Securities

If you have securities that have appreciated in value, donating the securities directly to a charity generally allows you to deduct the full fair market value of the securities but avoid paying tax on the appreciation.

Time Your Contributions

You can deduct charitable contributions in the year you make them.

Keep These Tax Tips in Mind

You can only deduct gifts you give to qualified charities, including religious organizations. And to deduct charitable contributions, you must itemize your deductions. If you claim the standard deduction, the charitable deduction is not available to you.

Talk with the Professionals

Consult with your financial, legal and tax professionals to learn more about making year-end charitable contributions that coordinate with your estate and tax strategies.

Connect with our team today for all the latest and most current tax rules and regulations.

7 Best Practices for QuickBooks Online

by

Share This:

Even if you’ve been using QuickBooks Online for a long time, it’s good to step back and evaluate your actions.

“Best practices” aren’t enforceable rules. They’re simply guidelines businesses commonly follow in one area or another. If you’re in retail, for example, one best practice might be to always ask customers checking out if they found everything they were looking for. This serves two purposes: It conveys a feeling of concern for the customer’s shopping experience, and it may also lead to increased sales.

QuickBooks Online has many best practices, some of which may serve multiple purposes, including these:

    • They keep your company data safe and clean.
    • They provide insight on your financial status.
    • They save time.
    • They can lead you to better relationships with customers and vendors.

Are any or all the following common practices for your business?

Reconcile accounts regularly.

One of QuickBooks Online’s most useful features is its ability to connect to your financial institution’s websites and download cleared transactions. QuickBooks Online also offers tools to help you keep your accounts reconciled online, like you used to do every month when your paper statement came. Reconciling accounts can help you uncover errors. It gives you a truer picture of your cash flow, and it improves the accuracy and timeliness of some reports.

It’s not a particularly pleasant process, but you should be reconciling your accounts regularly in QuickBooks Online. We can help.

Clean up your lists.

Some lists in QuickBooks Online aren’t overly long. You don’t have to worry about, for example, Payment Methods, Terms, or Classes. Your lists of customers and vendors, products, and services, on the other hand, can grow unwieldy over the years. This means it can take more time than it should to scroll through lists when you’re using those entities in transactions. It also puts unnecessary stress on your company file. If you can’t delete any, at least make them inactive.

Never leave QuickBooks Online open when you leave your work area.

This goes for everyone, even people who work alone and don’t access their company files away from their work areas. The obvious reason is to keep someone else from getting in and authorizing payments, for example, or otherwise compromising your financial information. It also protects the integrity of your data file in case your internet connection suffers some kind of outage.

Keep track of 1099 vendors.

Whether your company uses 10 vendors or a hundred or more, you may have to supply at least some of them with an IRS Form 1099 at about the same time you’re preparing W-2s for employees. Your 1099-related tasks will be much easier if those individuals and/or companies are earmarked. If you think vendors might need 1099s when you create their records in QuickBooks Online, click in the box to the left of Track payments for 1099 in the lower right corner. Not sure? Ask us.

Classify everything with care.

Every time you have to create a record or transaction where categories are involved (i.e., Classes, Customers and Vendors, Territories), check and double-check that you’ve assigned them the correct classification. Errors here can result not only in problems with daily workflow, but your reports will not be accurate. A related best practice: Create a meaningful group of Classes, and use them faithfully. They’ll help you make better business decisions.

To create your list of Classes, click the gear icon in the upper right and select All Lists | Classes | New.

View reports on a regular basis.

There are some advanced financial reports in QuickBooks Online that we should be creating for you on a regular basis, either monthly or quarterly. These include Profit and Loss, Balance Sheet, and Statement of Cash Flows. The mechanics of creating them aren’t difficult, but analyzing them is. You should be running reports on your own at frequencies that you think would be helpful, like A/R Aging Detail, Unpaid Bills, and Sales by Class Detail.

If you’ve been using QuickBooks Online for a while, you could probably come up with your own list of best practices. If you’re new to the site, consider scheduling some time with us to go over more of them. Develop good habits from the start, and there won’t be nearly as much need for troubleshooting down the road.

Get a Tax Credit when You Install a Home Renewable Energy System

by

Share This:

Thinking about installing a renewable energy system in your residence? Uncle Sam offers individual taxpayers a federal income-tax credit equal to 30% of the cost of qualified residential energy-efficient property (REEP).

What Systems Can Qualify?

Credit-eligible property includes:

  • Solar electric
  • Solar water heating
  • Geothermal heat pump (uses ground or ground water as a thermal energy source for heating or cooling)
  • Small wind energy (generates electricity using a wind turbine)
  • Fuel cell (generates electricity from hydrogen and oxygen through an electrochemical process)

The credit covers the cost of both the equipment and its installation, including labor and any piping or wiring necessary to connect it to your home.

The system must meet specified standards for energy efficiency. You should obtain a certification from the manufacturer that the component you are purchasing meets the relevant requirements for the REEP credit. Note that the manufacturer’s certification is different from the U.S. Department of Energy’s Energy Star label; not all products with the Energy Star label meet the credit requirements.

When available, the tax credit is quite generous. For example, let’s say you spend $6,000 on year on a home solar water heating system that meets all requirements for the REEP tax credit. After considering the $1,800 credit ($6,000 × 30%), the system costs you only $4,200.

Restrictions

The home you are installing the equipment in must be located in the United States and you must use it as your residence. The credit is not available for equipment used to heat a swimming pool or hot tub.

Solar, geothermal, or wind energy property can qualify for the credit whether it is installed in your principal residence or another residence. The credit for fuel cell property is limited to equipment installed in your principal residence.

As for cost, the tax law generally places no dollar limits on the credit. However, there is an exception for fuel cell property: The maximum credit is $500 for each 0.5 kilowatt of capacity.

Some states and public utilities offer incentives to encourage the purchase of energy-efficient property. Certain types of incentives may require an adjustment to your purchase price or cost for credit calculation purposes.

Connect with our team today for all the latest and most current tax rules and regulations.

Are You Protecting Yourself from Tax Identity Theft?

by

Share This:

The IRS has thwarted some identity theft attempts, but thieves are still stealing billions of dollars every year from taxpayers.

Another annual income tax deadline has come and gone. Maybe you had to pay in, but perhaps you were owed a refund. If the latter is true, did you receive it?

A lot of taxpayers didn’t because hackers swooped in and stole their sensitive tax-related information. Tax identity theft is a serious problem, despite the IRS’s efforts to stop it.

But there are steps you can take to keep from being a victim, some of which are simply a matter of common sense. For example, consider the security of any wireless network you use when you’re working on your taxes. Don’t ever do so on a public network, and make sure your home or office wireless is password protected.

Offline Risks

You don’t have to be online to be at risk for tax identity theft. Hackers can grab your personal information in other ways. For example, do you ever carry your tax-related papers back and forth to work or some other location? Know where they are at all times; don’t ever leave them laying around where someone can copy your Social Security number and other details.

Always be aware of your surroundings. If there are other people around when you’re working on your taxes—if you’re in a coffee shop or library, for example—make sure no one is reading over your shoulder.

Phone calls can be risky. A good rule of thumb is never provide someone who calls you with any sensitive personal data – unless you can verify it was a call you were expecting, like one from your bank or a medical office. When you place a call to a legitimate number, it’s generally okay.

Other Traps

You’d think that a call from the IRS would be safe. In reality, the IRS doesn’t ask for personal information over the phone. They send letters through the U.S. Mail. If you ever get a phone call from someone who claims to be from the agency and is demanding some sort of payment immediately, hang up. This is a popular phone scam. You can always contact the IRS directly to see if there is some sort of issue.

Don’t make a practice of carrying your Social Security card with you. Keep it in a safe place unless you absolutely need it away from home for some reason. Also:

  • File your return early to keep a hacker from getting in line for your refund in front of you.
  • Reduce your refund by adjusting your withholdings at work. It’s nice to get that big payment after you file, but couldn’t you use that money throughout the year?
  • Request direct deposit of your refund. That way, no one can steal your check out of your mailbox or somehow re-route a paper payment.

Online Thieves

Be especially careful if you’re preparing your taxes on a website. Before you even begin, investigate the publisher’s security protocols to ensure that your very sensitive tax-related data will be treated with great care. Also, update any applications that will be involved, including your browser and antivirus/anti-malware tools.

The IRS will never send you an email out of the blue asking you to click a link or download an attachment or fill in fields to update personal information. In fact, it’s a good idea to avoid taking those actions anytime unless you’re expecting an email and can verify the sender’s address.

Finally, use a very strong, unique password, one you don’t use anywhere else. You’re probably tired of hearing that piece of advice, but it’s absolutely critical when you’re working with a tax preparation application.

Take Action Quickly

It’s possible to get stung by a tax identity thief even if you’re being careful. If it happens to you, you’ll need to complete and submit IRS Form 14039, Identity Theft Affidavit, and watch for responses from the agency. Contact your credit bureaus and financial institutions to apprise them of the situation. Tax identity thieves sometimes try to open new credit cards, for example. You should also file a report with the FTC.

Recovering from tax identity theft isn’t a quick process nor an easy one. If you have questions about it or simply want to talk to us about your year-round tax planning and preparation process, be sure to contact us.