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Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services. What To Do if You Missed the Tax DeadlineTuesday, April 18, 2023, was the deadline for most taxpayers to file their income tax returns. If you haven't filed a 2022 return yet, it's not too late. First, gather any information related to income and deductions for the tax years for which a return is required to be filed, then call the office. If you are owed a refund, the sooner you file, the sooner you will get it. If you owe taxes, you should still file and pay as soon as you can, because it will stop the accrual of interest and penalties. Are You Eligible for Penalty Relief?Some taxpayers filing after the deadline may qualify for penalty relief. Those charged a penalty may contact the IRS by calling the number on their penalty notice and explaining why they couldn't file and pay on time. For 2022 tax returns due April 18, 2023, some taxpayers automatically qualify for extra time to file and pay taxes due without penalties and interest, including:
If You Don't File, You May Miss Out on a RefundEvery year, more than 1 million taxpayers choose not to file a return and miss out on receiving a refund due to potential refundable tax credits, according to the IRS. The most common examples of these refundable credits are the Earned Income Tax Credit and the Child Tax Credit. For example, the IRS estimates nearly 1.5 million people did not file a tax return for 2019 and missed out on an estimated median refund of $893 (i.e., half of the refunds would have been more than $893, and half would have been less). Taxpayers usually have three years to file and claim their tax refunds. If they don't file within three years, the money becomes the property of the U.S. Treasury. However, the three-year window for 2019 unfiled returns was postponed to July 17, 2023, due to the COVID-19 pandemic emergency. How To Make a PaymentIf you owe tax, there are several ways to make a payment: Check, money order or cashier's check. If you are paying along with filing your 2022 income tax return, you should not staple or paperclip the payment to the return. If you are paying an income tax liability without an accompanying income tax return, include Form 1040-V, Payment Voucher, with the payment. Mail the payment to the correct address by state or form. Indicate on the check memo line the specific tax year to which the IRS should apply the payment. Direct Pay. For individuals, IRS Direct Pay is a fast and free way to pay directly from your checking or savings account. Major credit card or debit card. There is no IRS fee for credit or debit card payments, but processing companies may charge a convenience or flat fee. Cash Payments. Individual taxpayers who do not have a bank account or credit card and need to pay their tax bill using cash can make a cash payment at participating PayNearMe Company payment locations (places like 7-Eleven). Individuals wishing to take advantage of this payment option should visit the IRS.gov payments page, select the cash option in the "Other Ways You Can Pay" section, and follow the instructions. What To Do if You Can't Pay in FullTaxpayers who cannot pay the full amount owed on a tax bill are encouraged to pay as much as possible. By paying as much as possible now, the interest and penalties owed will be less than if you pay nothing. However, if you continue to ignore your tax bill, the IRS may take collection action. The IRS will work with taxpayers suffering financial hardship. Taxpayers with a history of filing and paying on time often qualify for administrative penalty relief. A taxpayer usually qualifies if they have filed and paid promptly for the past three years and meet other requirements. Based on individual circumstances, a taxpayer could qualify for an extension of time to pay, an installment agreement, a temporary delay, or an offer in compromise. Most taxpayers can set up a monthly payment plan or installment agreement that gives them more time to pay. However, penalties and interest will continue to be charged on the unpaid portion of the debt throughout the duration of the installment agreement/payment plan. You should pay as much as possible before entering into an installment agreement. It is important to review all your options. For example, a credit card payment might make sense if the interest rates would be lower than the combination of penalties and interest imposed by the Internal Revenue Code. Don't hesitate to call if you have questions about these options. What Happens if You Don't File a Past Due ReturnIt's important to understand the ramifications of not filing a past-due return if taxes are due and the steps that the IRS will take. Taxpayers who continue not to file a required return and fail to respond to IRS requests for a return may be considered for various enforcement actions, including substantial penalties and fees. Need Help Filing Your 2022 Tax Return?If you haven't filed a tax return yet, don't delay. Call the office today to schedule an appointment as soon as possible. ![]() Changing Jobs? Don't Forget About Your 401(K)One of the most important questions you face when changing jobs is what to do with the money in your 401(k) plan. Making the wrong move could cost you thousands of dollars or more in taxes, penalties and lower returns. Consequences of Cashing OutLet's say you work five years at your current job. For most of those years, you've had the company take a set percentage of your pretax salary and put it into your employer’s plan. Now that you're leaving, what should you do? The first rule of thumb is to leave it alone. Resist the temptation to cash out. The worst thing you can do when leaving a job is to withdraw the money and put it in your bank account. Here's why: If you decide to have your distribution paid to you, the plan administrator will withhold 20 percent of your total for federal income taxes. So if you had $100,000 in your account, you're already down to $80,000. Furthermore, if you're younger than 59 1/2, you'll generally face a 10 percent penalty for early withdrawal come tax time. Now you're down another 10 percent from the top line to $70,000.
In addition, because distributions are taxed as ordinary income, at the end of the year, you'll have to pay the difference between your tax bracket and the 20 percent already taken out. For example, if you're in the 32 percent tax bracket, you'll still owe 12 percent, or $12,000, which lowers the amount of your cash distribution to $58,000. (If your tax bracket is less than 20%, you may qualify for a refund, depending on your overall tax liability for the year compared to what was withheld or paid in estimated taxes for the year.) But that's not all. You also have to pay any applicable state and local taxes. Between taxes and penalties, you could end up with little over half of what you saved, short-changing your retirement savings significantly. Finally, you will miss out on any future tax-deferred growth those assets would have produced had they remained in the retirement plan. What Are the Alternatives?If your new job offers a retirement plan, the easiest course of action is to roll your account into the new plan. A "rollover" is relatively painless to do. Contact the 401(k) plan administrator at your previous job, who should have all the necessary forms. The best way to roll funds over from an old 401(k) plan to a new one is to use a direct transfer. With the direct transfer, you never receive a check, you avoid all the taxes and penalties mentioned above, and your savings will continue to grow tax-deferred. Many employers require that you work a minimum length of time before you can participate in their 401(k) plan. If that is the case with your new employer, one solution is to keep your money in your former employer's 401(k) plan until you are eligible for the new one. Then you can roll it over into the new plan. Most plans let former employees leave assets in their old plan for several months or longer. If you're not happy with the fund choices your new employer offers, you might opt for a rollover IRA instead of your company's plan. You can then choose from hundreds of funds and have more control over your money. But again, to avoid the withholding hassle, use direct rollovers. 60-Day Rollover PeriodIf you have your former employer make the distribution check out to you, the Internal Revenue Service considers this a cash distribution. The check you get will have 20 percent taken out automatically from your vested amount for federal income tax. But don't panic. You have 60 days to roll over the lump sum (including the 20 percent) to your new employer's plan or into a rollover IRA. Then you won't owe the additional taxes or the 10 percent early withdrawal penalty and, depending on your overall tax liability for the year, you might receive a refund of some or all of the 20% withheld. But keep in mind that in your rollover you will have to make up for the withheld 20% with funds from another source. Otherwise, the withheld amount will be treated as a distribution and subject to any applicable taxes and penalties. Leave It AloneIf your vested account balance in your 401(k) is more than $5,000, you can usually leave it with your former employer's retirement plan. Your balance will keep growing tax-deferred. However, if you can't leave the money in your former employer's 401(k) and your new job doesn't have a 401(k), your best bet is a direct rollover into an IRA. The same applies if you've decided to go into business for yourself. You can still continue to enjoy tax-deferred growth. Questions about IRA rollovers? Help is just a phone call away. ![]() What Are Estimated Tax Payments?Estimated tax is the method used to pay tax on income not subject to withholding, such as income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. You also may have to pay an estimated tax if the income tax being withheld from your salary, pension, or other income is insufficient. Here's what you should know about estimated tax payments: Filing and Paying Estimated TaxesBoth individuals and business owners may need to file and pay estimated taxes, which are paid quarterly. The first estimated tax payment of the year is ordinarily due on the same day as your federal tax return is due. If you are filing as a sole proprietor, partner, S corporation shareholder, or self-employed individual and expect to owe tax of $1,000 or more when you file your return, you generally have to make estimated tax payments. . If you are filing as a corporation and expect it to owe tax of $500 or more when you file its return, you generally have to make estimated tax payments for your corporation.. If you had a tax liability for the prior year, you might have to pay estimated tax for the current year. but, if you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings. To do this, file a new Form W-4 with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold. You had no tax liability for the prior year if your total tax was zero or you did not have to file an income tax return. Special rules apply to farmers, fishermen, certain household employers, and certain higher taxpayers. Please call the office for assistance if any of these situations apply to you. Who Does Not Have to Pay Estimated TaxYou do not have to pay estimated tax for the current year if you meet all three of the following conditions:
Calculating Estimated TaxesTo figure out your estimated tax, you must calculate your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. If you estimated your earnings too high, complete another Form 1040-ES, Estimated Tax for Individuals, worksheet to re-figure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated tax for the next quarter. Try to estimate your income as accurately as possible to avoid penalties due to underpayment. Most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholding and credits or if they paid at least 90 percent of the tax for the current year or 100 percent of the tax shown on the return for the prior year, whichever is smaller. When figuring out your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for the prior year as a starting point. Use your prior year's federal tax return as a guide, and use the worksheet in Form 1040-ES to figure your estimated tax. However, you must adjust to any changes in your situation as well as recent tax law changes. Estimated Tax Due DatesFor estimated tax purposes, the year is divided into four payment periods, each with a specific payment due date. For the 2023 tax year, these dates are April 18, June 15, and September 15, 2023, and January 16, 2024. If you file your 2023 tax return by January 31, 2024, and pay the entire balance due with your return, you do not have to pay estimated taxes in January. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return. Electronic Federal Tax Payment SystemThe easiest way for individuals and businesses to pay their estimated federal taxes is to use the Electronic Federal Tax Payment System (EFTPS). Make ALL of your federal tax payments, including federal tax deposits (FTDs), installment agreements, and estimated tax payments, using EFTPS. If it is easier to pay your estimated taxes weekly, bi-weekly, monthly, etc., you can, as long as you have paid enough by the end of the quarter. Using EFTPS, you can access a history of your payments to know how much and when you made your estimated tax payments. Don't hesitate to call if you have any questions about estimated tax payments or need assistance setting up EFTPS. ![]() Saving for Education: Understanding 529 PlansMany parents are looking for ways to save for their child's education, and a 529 Plan is an excellent way to do so. Even better is that, thanks to the passage of tax reform legislation in 2017, 529 plans are now available to parents wishing to save for their child's K-12 education as well as college (two and four-year programs) or vocational school. The SECURE Act of 2019 expanded the 529 Plan to include fees, books, supplies, and equipment for apprenticeship programs and repayment of principal and interest on student loan debt for the designated beneficiary or the beneficiary's sibling, up to a lifetime limit of $10,000. You may open a Section 529 plan in any state, and there are no income restrictions for the individual opening the account. Contributions, however, must be in cash, and the total amount must not be more than is reasonably needed for higher education (as determined initially by the state). A minimum investment may be required to open the account, such as $25 or $50. Each 529 Plan has a designated beneficiary (the future student) and an account owner. The account owner may be a parent or another person and typically is the principal contributor to the plan. The account owner is also entitled to choose (and change) the designated beneficiary. Neither the account owner nor beneficiary may direct investments. Still, the state may allow the owner to select a type of investment fund (e.g., fixed-income securities) and change the investment annually as well as when the beneficiary is changed. The account owner decides who gets the funds (can pick and change the beneficiary) and is legally allowed to withdraw funds at any time, subject to tax and penalties (more about this topic below). Unlike other tax breaks for higher education funding, such as the American Opportunity and Lifetime Learning Tax Credits, 529 plans aren’t limited to funding only tuition. Room, board, lab fees, books, and supplies can be purchased with funds from your 529 Savings Account. However, individual state programs could have a more narrow definition, so check with your particular state. Tax-Free DistributionsDistributions from 529 plans are tax-free as long as they are used to pay qualified higher-education expenses for a designated beneficiary. Distributions are tax-free even if the student claims the American Opportunity Credit, Lifetime Learning Credit, or tax-free treatment for a Section 530 Coverdell Education Savings Account (ESA) distribution - provided the 529 plan distributions aren't covering the same specific expenses. Qualified expenses include tuition, required fees, books, supplies, equipment, and special needs services. Room and board also qualify for someone who is at least a half-time student. Also, starting in 2018, qualified expenses include up to $10,000 in annual expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school. Qualified expenses also include computers and related equipment used by a student while enrolled at an eligible educational institution; however, software designed for sports, games, or hobbies does not qualify unless it is predominantly educational in nature. Federal Tax RulesIncome Tax. Contributions made by the account owner or other contributor are not deductible for federal income tax purposes, but many states offer deductions or credits. Earnings on contributions grow tax-free while in the plan. Distributions for a purpose other than qualified education are taxed to the one receiving the distribution. In addition, the taxable portion of the distribution will incur a 10 percent penalty, comparable to the 10 percent penalty that applies to Coverdell ESAs. Also, the account owner may change the beneficiary designation from one to another in the same family. Funds in the account roll over tax-free for the benefit of the new beneficiary. Gift Tax. For gift tax purposes, contributions are treated as completed gifts even though the account owner has the right to withdraw them - thus, they qualify for the up-to-$17,000 annual gift tax exclusion in 2023 ($16,000 in 2022). One contributing more than $17,000 may elect to treat the gift as made in equal installments over that year and the following four years so that up to $85,000 can be given tax-free in the first year. Estate Tax. Funds in the account at the designated beneficiary's death are included in the beneficiary's estate - another odd result since those funds may not be available to pay the tax. Funds in the account at the account owner's death are not included in the owner's estate, except for a portion where the gift tax exclusion installment election is made for gifts over $17,000 ($16,000 in 2022). Here is an example: If the account owner made the election for a gift of $85,000 ($80,000 in 2022), a part of that gift is included in the estate if the owner dies within five years.
State Tax. State tax rules are all over the map. Some reflect the federal rules, and some are quite different. For an overview of each state's 529 plan, see: College Savings Plans Network (CSPN). Looking AheadStarting in 2024, 529 college savings plans maintained for at least 15 years can be rolled over to a Roth IRA. Any contributions (and earnings on those contributions) to the 529 plan made within the last five years are not eligible. The rollover must be trustee to trustee, with a lifetime limit of $35,000 per account beneficiary. Rollovers are subject to Roth IRA annual contribution limits. Seek Professional GuidanceConsidering the differences among state plans, the complexity of federal and state tax laws, and the dollar amounts at stake, please call the office and speak to a tax and accounting professional before opening a 529 plan. ![]() Check the Status of a Tax Refund Using This IRS ToolTaxpayers can start checking their tax refund status 24 hours after e-filing their 2022 federal income tax return. The easiest and most convenient way to do this is by using the "Where's My Refund?" tool on the IRS website. The tool provides a personalized refund date after the return is processed and a refund is approved. There are two ways to access the "Where's My Refund?" tool - visiting IRS.gov or downloading the IRS2Go app. To use the tool, taxpayers will need the following information:
The tool displays progress in three phases: when the return was received, when the refund was approved, and when the refund was sent. When the status changes to approved, it means that the IRS is preparing to send the refund as a direct deposit to the taxpayer's bank account or directly to the taxpayer in the mail, by check, to the address used on their tax return. The IRS updates the "Where's My Refund?" tool once a day, usually overnight, so taxpayers don't need to check the status more often than that. Calling the IRS won't speed up a tax refund. The information available on "Where's My Refund?" is the same information available to IRS telephone assistors. Taxpayers should remember to allow time for their financial institution to post the refund to their account or for the refund to be delivered by mail. As always, please contact the office with any questions about tax refunds, tax returns, or other tax matters. ![]() IRS Tax Debt Could Affect Passport RenewalAs a reminder, individuals with "seriously delinquent tax debts" could have their passport application or renewal denied or even have their current passport revoked, courtesy of the Fixing America's Surface Transportation (FAST) Act, signed into law in December 2015. These provisions went into effect in February 2018. Background The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. It also requires the State Department to deny their passport application or renewal. In certain instances, the State Department may revoke their passport. Taxpayers affected by this law are those with seriously delinquent tax debt, generally, an individual who owes the IRS more than $51,000 in back taxes, penalties, and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired, or the IRS has issued a levy. What Taxpayers Can Do Taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt by doing the following:
However, a taxpayer's passport won't be at risk under this program if an individual:
For taxpayers serving in a combat zone and who also owe a seriously delinquent tax debt, the IRS postpones notifying the State Department, and the individual's passport is not subject to denial during this time. Payment Options for Delinquent Taxes Taxpayers who are behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS and may qualify for one of several relief programs, including the following:
If you owe back taxes and are worried your passport could be revoked or your application or renewal be denied because of unpaid taxes, please call. ![]() Certain Taxpayers May Need to File an Amended ReturnTaxpayers who reported certain 2022 state payments or state tax refunds as taxable income may benefit from filing an amended tax return. Affected taxpayers include those who filed before February 10, 2023, and meet certain requirements. Taxpayers who used a tax professional should consult with them to determine whether an amended return is necessary. Background Details clarifying the federal tax status regarding special payments made to taxpayers by 21 states in 2022 were clarified by the IRS on February 10, 2023. During their review, it was determined that the IRS would not challenge the taxability of state payments related to general welfare and disaster relief in the interest of sound tax administration and other factors. As a result, taxpayers in many states did not need to report these payments on their 2022 federal tax returns and could be owed a refund for taxes paid. Which Taxpayers are Affected? Taxpayers in the following states do not need to report these state payments on their 2022 tax return: Alaska (applies only to the special supplemental Energy Relief Payment), California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island. Also, many people in Georgia, Massachusetts, South Carolina, and Virginia will not include special state 2022 tax refunds as income for federal tax purposes if they meet certain requirements. For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and the recipient either claimed the standard deduction for tax year 2022 or itemized their tax year 2022 deductions but did not receive a tax benefit. Taxpayers can also view a listing of individual states and the federal tax treatment of their special state refunds or rebates listed on this State Payments chart at IRS.gov. What Taxpayers Should Do Next Before filing an amended return, taxpayers who filed before February 10 in these areas and met these requirements should check their tax return to make sure they paid tax on a state refund. If an amended return is needed, taxpayers who submitted their original 2022 tax return electronically can also file their amended return electronically and may select direct deposit for any resulting refund. Electronic filing cuts out the mail time, and including direct deposit information on an electronically submitted form provides a convenient and secure way to receive refunds faster. Taxpayers also have the option to submit a paper version of Form 1040-X, Amended U.S Individual Income Tax Return, and receive a paper check. Direct deposit is not available on amended returns submitted on paper, however. Taxpayers should follow the instructions for preparing the paper form and mail the amended return to: Department of the Treasury As always, don't hesitate to contact the office if you have questions about this or any other tax topics affecting your tax situation. ![]() Small Business: Choosing a Payroll Service ProviderWhen outsourcing payroll responsibilities, employers should choose a trusted payroll service that will help them avoid missed deposits for employment taxes and other unpaid bills. Typically, the employer remains legally responsible for paying the taxes due, even if the employer sent funds to the payroll service provider for required deposits or payments. Employers are encouraged to enroll in the Electronic Federal Tax Payment System (EFTPS) and make sure the payroll service provider uses EFTPS to make tax deposits. EFTPS is free and gives employers safe and easy online access to their payment history, provided they make deposits under their Employer Identification Number (EIN). Using the EFTPS enables them to monitor whether their payroll service provider meets its tax deposit responsibilities. Employers have two options when finding a trusted payroll service provider: A certified professional employer organization (CPEO). Typically, CPEOs are solely liable for paying the employer's employment taxes, filing returns, and making deposits and payments for the taxes reported related to wages and other compensation. An employer enters into a service contract with a CPEO, and then Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement, is submitted to the IRS. Employers can find a CPEO on the Public Listings page of IRS.gov. Reporting agent. A reporting agent is a payroll service provider that informs the IRS of its relationship with an employer using Form 8655, Reporting Agent Authorization, that the employer signs. Reporting agents must deposit an employer's taxes using the EFTPS and can exchange information with the IRS on behalf of the employer if issues arise. Reporting agents are also required to provide employers a written statement reminding them that the employer, not the reporting agent, is ultimately responsible for the timely filing of returns and payment of taxes. Employers should contact a tax professional about any bills or notices received, especially payments managed by a third party. They can also call the phone number on the bill, write to the IRS office that sent the bill, or contact the IRS business tax hotline at 800-829-4933. Most payroll service providers provide quality service, but some don't. Each year, a few payroll service providers don't submit their clients’ payroll taxes, close down abruptly, and leave employers on the hook. Don't get caught short. Choose a payroll service provider you can count on - and don't hesitate to call the office with any questions about payroll and other business-related taxes. ![]() 5 Tips for New and Confused QuickBooks UsersLearning new software is always a challenge. You have to learn the lay of the land before you can start working with it. How do I do this? How does the menu system work? How can I enter data without making a mistake? The learning process for financial software for your small business can be especially unnerving. Your livelihood depends on getting everything right. A mistake in an invoice you're creating is more serious than using incorrect grammar or punctuation in a letter. That is why a good introduction to QuickBooks is necessary. You'll need to set up the program correctly and learn the most basic, often-used functions. You can contact the office any time if you need help with this, but in the meantime, here are five things you can do to start getting your feet wet. Familiarize Yourself With QuickBooks' ListsYou'll consult and use lists a lot in QuickBooks. Transaction forms offer access to data you've already created and will use. For example, when you need to select a customer, you can just open a drop-down list and click on one. QuickBooks also provides free-standing lists that you might need to use outside of transactions, though they're often available there, too. Open the Lists menu to see them. They include Item List, Sales Tax Code List, and Class List. Click on one to open it, and you'll see a series of menus running across the bottom of the window. They allow you to, for example, add or edit items, take actions like entering a sales receipt, and run related reports. ![]() Figure 1: The Item List Troubleshoot TransactionsWhat do you do when you know you've entered a transaction but can't find it? QuickBooks has good search tools, but sometimes you don't have enough details to hunt effectively for the missing invoice, bill, etc. Two reports can help. The transaction you're seeking may have been accidentally voided or deleted. Open the Reports menu and select Accountant & Taxes | Voided/Deleted Transactions Summary or Detail. If you know when the original transaction was entered, change the date range at the top of the screen. You really shouldn't have many of these. If you do, you must determine why this is happening so frequently. You can get into trouble if you void or delete transactions to solve a problem that should be resolved another way. While you're in the Accountant & Taxes report list, open the Audit Trail to view a listing of transactions that have been entered or modified, when, and by whom. You should get to know this report if you have multiple users accessing and working with QuickBooks data. Work With WindowsEvery time you open a window in QuickBooks, it stays open. You can always close it by clicking the X in the upper right corner of the window - not the program X in the farthest upper right corner. If you have a lot of windows open, all of that clicking can become tiresome. Open the Window menu to see your options there. You'll see a list of all the open windows. Click on one to go there. You can also "tile" the windows vertically or horizontally so they overlap on the screen or "cascade" them, which places them on top of each other with only the window label showing. And you can close all of them at once by clicking Close All. Use "Local" MenusMost QuickBooks windows provide ways to take related action. But most also offer "local" menus or right-click menus. Open an invoice form to see how this works (Customers | Customer Center | Transactions | Invoices). Right-click in the header of the invoice. Your menu options here include:
You'll also find these commands and more in the toolbar at the top of the window. ![]() Figure 2: The Basic Customization window also displays these options for your forms. Practice With a QuickBooks Sample FileBefore you enter real data in QuickBooks, or if you've already done so and want to try out a new feature without risking an error, use one of QuickBooks' sample files. That's why they're there. You can open one of these when loading QuickBooks. You'll see a window labeled No Company Open. Click the arrow in the box on the lower right that says Open a sample file. You can choose between a product - and service-based business. Once you're in QuickBooks, you can switch back and forth between your company file and a sample file by opening the File menu. Click Open Previous Company and select from the list. It should be obvious, but be sure you're in the correct QuickBooks file before doing anything. How's It Going?If you've been using QuickBooks for a while, how are you doing with it? Are you struggling with any functions? Feeling like you're not using as much of the software as you should? Thinking that you're outgrowing it and need to move up to a more senior version? Or are you having a hard time upgrading to QuickBooks 2023? Help is available for all of these situations. Contact the office to set up a meeting or a series of them to make your accounting experience more productive, effective, and faster. ![]() Tax Due Dates for May 2023May 1Employers - Federal unemployment tax. Deposit the tax owed through April if more than $500. Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the first quarter of 2023. Deposit any undeposited tax. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until May 10 to file the return. May 10Employees who work for tips - If you received $20 or more in tips during April, report them to your employer. You can use Form 4070. Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the first quarter of 2023. This due date applies only if you deposited the tax for the quarter in full and on time. May 15Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in April. Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in April. ![]() Top 5 Tips for First-Time Investors![]() Inflation is marching forward at a dizzying pace. In the last year, it’s risen to an alarming 4.5% and higher, so that savings account you rely on for your financial security is constantly being outpaced. One important strategy to outrun inflation is putting your money to work through intelligent investments. If you’re a first-time investor, don’t let the prospect intimidate you. There are several ways to hedge your investments against risk. Here are five tips for you to keep in mind as you take your first steps into the world of investing. 1. DiversifyDiversification is the single most important way to minimize risk. A well-diversified portfolio should contain a wide variety of investment vehicles, from stocks and bonds to real estate and exchange-traded funds. As the old adage goes, never put all your eggs in one basket. A diversified portfolio mixes and matches investments across industries, investment vehicles, and even different countries. This way, a national recession won’t leave you penniless, nor will a devastating stock market drop. 2. Let Your Money Work for YouIf you’re a first-time investor, it can be terrifying to see your stocks and bonds diminish in value, but a diversified portfolio doesn’t need to be adjusted every time the wind blows. Don’t be tempted to sell your property or stocks the moment your luck changes. A healthy marketplace comes with small rises and falls, and reactivity will only lose you money. If you’ve chosen your investments wisely, have some faith in your choices. Keep your emotions in check and try to rebalance your portfolio quarterly at most. Trying to beat the market through active management rarely pays off and will leave you frequently anxious, so make a commitment not to sell unless you have a compelling reason to do so. 3. Be Alert to ScamsEvery person who invests dreams of making a fortune overnight, but unfortunately, the marketplace is rife with scams and false promises. Be wary of unsolicited emails and calls, especially when the person on the other side of the line uses hard sales tactics. Great investment opportunities don’t need to be pitched in telemarketing, so research everything you’re told and give yourself at least a day to consider purchasing decisions. 4. Choose Between Pensions and ISAsPensions come with some impressive tax benefits, but ISAs offer tax-free access to your investment. Pensions don’t offer liquidity, though, so if you’re looking for a flexible solution, ISAs are your best bet. You may also consider mixing your investable assets in a combination of the two. If you’re unsure of which to choose or what’s a good balance for your goals, consult with a financial advisor who can consider your situation and develop a personalized strategy. 5. Choose a Good PlatformInvestment platforms offer a huge array of fee structures and brokerage offerings. While fees are an unavoidable part of the process, don’t let them eat into your returns. As a beginner, it’s best to choose a hands-on platform that can support your decisions. Look for comprehensive technical analysis tools so that you can take full control of your portfolio. Remember that the most recognizable platforms earned their place in the market, so they’re well worth using. The investment world might seem impenetrable and difficult to understand, but in time, you’ll find out that you can achieve a lot with patience, research, and a bit of common sense. It’s also worth consulting with an experienced financial advisor who knows the patterns of the market and can help you take your investments to profitable heights. While there’s no surefire investment strategy, being smart about your approach will help you to find opportunities you might have overlooked before. The post Top 5 Tips for First-Time Investors first appeared on www.financialhotspot.com.![]() Personal Finance Tips for Young Professionals![]() Money management and financial planning topics don’t always get the attention they deserve. Many people regard personal finance as a sensitive subject best avoided in day-to-day conversations. However, it’s a crucial topic that significantly impacts everyone’s long-term success story. As a young professional looking to build a better future for yourself, there’s a lot to learn about managing your money. While it may seem overwhelming at first, prioritizing personal financial management early on will have a significant impact on your financial well-being down the line. In the sections below, we outline some basic ideas that are integral to gaining a solid financial footing. Importance of Financial EducationWhen you hear the words “financial education,” you might imagine getting a formal education in accounting, economics, or other academic financial topics. However, a solid financial education doesn’t require a diploma. Simply put, financial education involves acquiring the necessary knowledge and skills to make informed financial decisions, and it begins with the basics of how money works and what it takes to build wealth in the simplest of circumstances. These core concepts of financial literacy include budgeting, investing strategically, and avoiding common financial pitfalls. The decisions you make now will majorly impact your future financial success. This is why financial education should be one of your top priorities when you first begin earning a paycheck. Financial literacy is important because it offers:
Tips for Financial SuccessAt the core of financial success is planning how to use the available resources to make the most impact. Here are some golden rules you can use to build a strong financial foundation and achieve your financial goals:
Get Started TodayThe beginning of your career is an exciting time filled with potential. In order to make the most of your earning opportunities, you should have a solid understanding of money management principles and clear goals for how you want to spend and save your money. By taking a proactive approach to financial literacy, you can lay a solid foundation for a lifetime of good financial health. The post Personal Finance Tips for Young Professionals first appeared on www.financialhotspot.com.![]() Understanding the Difference Between FBAR and FATCA![]() When it comes to international tax reporting, you’ll undoubtedly come across these two acronyms: FATCA and FBAR. While both FATCA (Foreign Account Tax Compliance Act) and FBAR (Foreign Bank and Financial Account Reporting) are forms related to reporting foreign assets, investments, accounts, and income to the U.S. government, they have several notable differences. Depending on your unique tax situation, you could be required to file one form, both forms, or neither of them. Understanding the requirements of each form is key to avoiding problems with the IRS or the FinCEN (Financial Crimes Enforcement Network). Let’s take a look at the difference between FBAR and FATCA. FBAR Filing RequirementsThe FBAR (Foreign Bank Account Report), also known as FinCEN Form 114, is an annual report that Americans with non-US bank accounts must file with the U.S. Treasury Department. The FBAR is not a tax. Rather, it’s a report designed to combat tax evasion and money laundering by making it harder for U.S. citizens to hide assets overseas. Individuals filing FinCEN Form 114 are not taxed on any balance of their accounts. While the FBAR was enforced by the IRS in 2003, it has been around since 1970 under the Financial Crimes Enforcement Network (FinCEN). Legally, you are required to file FBAR if both of the following are true:
This filing requirement applies even if the balance hits the $10,000 threshold for just one day. FBAR filing requirements cover various forms of accounts maintained overseas, including security accounts, bank accounts, assets, and certain foreign retirement arrangements. Ignoring FBAR requirements can result in serious legal consequences and penalties. FATCA Filing RequirementsThe FATCA (Foreign Account Tax Compliance Act) is part of the jobs legislation known as the HIRE Act. It was designed to combat offshore tax evasion by individuals with foreign assets and accounts. FATCA Form 8938 generally requires certain foreign financial institutions and non-financial entities to report accounts and assets held by U.S. persons to the IRS. A U.S. person can be a citizen or resident, a domestic corporation, a domestic partnership, any estate other than a foreign estate, or any person that is not a foreign person. If you live in the U.S. for the entire tax year, you are required to file Form 8938 if you have:
Expats living abroad have a higher reporting threshold:
Failure to file FATCA information could attract steep penalties and interest. The Bottom LineWhile the FATCA and FBAR reporting requirements are similar, there are several key differences. The FBAR is required by the IRS for expats and other citizens with foreign financial accounts. FBARs must also be filed on behalf of domestic entities, estates, and trusts with interest in foreign bank accounts. FBAR pertains to foreign account balances of $10,000 or more. FATCA applies to individual citizens, non-resident aliens, and residents. It pertains to foreign account balances between $50,000 and $600,000, based on the filers’ marital status. Individuals holding foreign accounts and living in U.S. territories must file FBAR but may not need to file FATCA. The post Understanding the Difference Between FBAR and FATCA first appeared on www.financialhotspot.com.![]() What Are the Benefits of Using a QuickBooks ProAdvisor?![]() QuickBooks is a versatile accounting technology that is revolutionizing the accounting and bookkeeping industry. Using this software solution and its intuitive functionalities can help you get more organized internally and run your business confidently. Even if you know a little about accounting and can manage your software, there will likely be situations you haven’t encountered before. QuickBooks ProAdvisors are specialized accountants who hold certifications in software mastery and can help you get around any obstacle successfully. By working with a ProAdvisor, you can learn more about your company and make intelligent decisions for the future. The following are some excellent benefits of using a QuickBooks ProAdvisor. Expert Setup & TroubleshootingA QuickBooks Certified ProAdvisor can help you set up your software and get you up and running in no time. These experts have advanced knowledge of how QuickBooks works and take lessons and courses that equip them with all the tricks and nuances of the software. They also know how to troubleshoot everything, including fixing out-of-balance balance sheets and other technical issues with bank feeds. With their expert training of your in-house staff, you can boost the efficiency and productivity in each department of your business. Access to ExpertsHaving the right skill to use QuickBooks isn’t the entire picture when it comes to accounting. You need access to a professional with relevant knowledge in your specific business and industry. QuickBooks ProAdvisors often have particular expertise and experience to help your company address its unique goals and challenges. Your Software Can Be CustomizedWhen your accounting software is designed specifically for your business needs, you can achieve smoother and more productive results. A QuickBooks ProAdvisor can customize your software, and they are a valuable source of advice. They can provide tax estimates, rectify mistakes, process payments, and remove the hassle out of many other accounting operations. You will always have a QuickBooks version that caters to your enterprise and helps you grow. Frees Up Your Time and ResourcesThere is no doubt that hiring a QuickBooks ProAdvisor frees up lots of time and resources for your organization. As the experts tackle your challenging accounting problems, your teams can focus on your core business operations and increase productivity. In addition, your work will become more efficient and effective when the software is fine-tuned, and your team knows how to use it for maximum benefit. Using QuickBooks at its highest potential, you can turn over work that would ordinarily involve multiple professionals. Professional TroubleshooterQuickBooks ProAdvisors have access to top-tier customer service and support, so they can help troubleshoot and fix any issue that could crop up. They have access to an online forum to talk to other ProAdvisors and find the correct solution to the problem. Also, QuickBooks ProAdvisors can pass along their special annual discounts to you. Train & Coach Your TeamQuickBooks ProAdvisors offer expert training on using the software effectively and taking advantage of all the impressive functionalities. Studies show that about 50% of software features don’t get used. As such, your business is most likely leaving some money and tools on the table when using QuickBooks. Hiring a ProAdvisor to train your in-house staff allows you to unlock more details and capabilities in using your bookkeeping software. Get the Most Out of QuickBooksConsulting an advanced Certified QuickBooks ProAdvisor can streamline your accounting and bookkeeping in many ways. Regardless of the size of your business, leveraging expert knowledge of QuickBooks will give you a significant return on investment and help grow your business by leaps and bounds. Fortunately, many CPAs and other financial professionals often have ProAdvisors on staff who can provide additional advice and insights on running a successful venture. The post What Are the Benefits of Using a QuickBooks ProAdvisor? first appeared on www.financialhotspot.com.![]() 9 Questions to Ask When Searching for a Business Accountant![]() A professional accountant plays an essential role in helping your startup achieve its strategic objectives. However, picking the right fit for your business isn’t always a straightforward affair. These questions will help you in the process of searching for a suitable business accountant: 1. What Are Your Credentials?Certified public accountants (CPAs) are among the most familiar professionals in this field. Specializations include management, forensic, investment, and project accounting. In addition to passing the Uniform CPA Exam, a licensed CPA must also be recognized by the State Board of Public Accountancy in their area of practice. 2. What Services Do You Offer?Accounting firms offer various essential services, including bookkeeping, business valuation, recording transactions, auditing, tax preparation and planning, and financial consulting. Before hiring an accountant, ensure they can provide tailored solutions to your business problems. 3. What Are Your Fees?This is an important question, especially to small businesses keen on minimizing expenses. Your prospective business accountant must have a clear billing structure for their services. Do they charge a flat rate for any accounting service or by the hour depending on complexity? Will you receive discounts for signing long-term agreements? 4. How Will Your Services Improve My Business?As a business owner, the main reason for seeking an accountant is to streamline your operations. Your new accountant should provide detailed financial insights to help you achieve these objectives. Their expertise should improve your cash flow, recommend suitable new hires, adjust the business structure, and ensure compliance with various business regulations. 5. What Are the Common Accounting Problems in My Industry?The most common accounting problems include payroll errors, revenue recognition, fraud, inadequate financial analysis, obsolete accounting software, negative cash flow, and weak internal control. An experienced accountant should understand the issues most likely to affect your industry and implement appropriate countermeasures. 6. How Can I Make My Business Tax Compliant?The ever-changing tax code means businesses of all sizes face occasional challenges. In addition to the IRS, your accountant should facilitate compliance with local and state tax authorities. They should also create a tax planning structure that maximizes long-term financial savings for your business. Additionally, business accountants help your company benefit from other tax specialists such as enrolled agents and tax attorneys. 7. Who Are Your Other Clients?Your prospective accountant’s past and present clients provide a glimpse into their skill and experience. Other than reading public reviews detailing their professional relationship, you can contact these clients for more information before signing a deal. 8. Do You Operate Virtually?If your business has a wide service area, has multiple locations, or operates virtually, you’ll want an accountant with the skills and flexibility to match. Ask whether they’re available for virtual meetings, if their services can be performed online, and what security measures they have in place for digital data transfers. 9. Are You Accessible Any Time I Need Help?Can you call or email your accountant any time you have a query during business hours, or must you book an appointment first? Will they charge you extra for these inquiries? It’s advisable to have clear answers to these questions to avoid frustrations when you urgently need guidance. Finding the Right Accountant MattersA competent accountant helps your business achieve growth, profitability, and long-term objectives while complying with industry regulations. These questions will help you determine the best candidate for the job and give you ample time to focus on more enjoyable aspects of running your company. The post 9 Questions to Ask When Searching for a Business Accountant first appeared on www.financialhotspot.com.![]() How Accurate Financial Statements Can Fuel Business Growth![]() Savvy business owners understand the importance of having a complete, up-to-date understanding of a business’ financial status. One of the most effective ways to accomplish this is through timely and accurate financial reports. When produced efficiently, financial reports provide a snapshot of financial data that not only reveals the health of your business but also helps drive strategic decision-making. Preparing Strategically Useful Financial ReportsIn order to reap the full benefits of financial reporting, you must ensure your reporting systems are providing timely and accurate information. Developing effective financial reporting systems requires both efficiency and attention to detail. In general, the process should involve the following steps:
The Benefit to Your BusinessWith your financial reporting system firmly in place, you can begin leveraging the information to make decisions, identify areas for improvement, and plan for your company’s future. The following are just a few ways that solid financial reporting can help drive business success: 1. Better Planning and ForecastingAn efficient and reliable financial reporting system can drive improved decision-making in your organization. Analyzing your financial reports should be a prerequisite for a variety of different decisions. For example, you might assess your company’s current asset values before deciding whether to purchase new equipment or open a new office. Let’s say you are seeking more funds to scale up your business. Your accountant will rely on the accuracy of the balance sheet to assess debts and examine your financing options. Also, when the season to pay dividends comes, the CFO will use the debts, profits, and reserves before determining the payout. 2. Improve Payment CyclesAccurate financial statements help improve accounts receivable and accounts payable cycles. These reports also allow you to manage payroll, inventory, credit payments, and shareholder dividends. With correct figures, making business calculations becomes easier. 3. Create TrustBusiness continuity heavily relies on company trust. Investors use your company’s financial statements to determine whether they should put their money into your business. Inaccurate financial reports can damage trust with investors and other stakeholders, in addition to placing your business in regulatory peril. 4. Catch Errors EarlyProper financial reporting allows you to mitigate wrongdoings and errors early on, preventing irreversible business moves. With careful reconciliation of every entry in your books, your team will catch accounting errors and verify that no one has tampered with the numbers. 5. Minimize Your Tax BurdenAs a business owner, growing your business means making profits. Unfortunately, as your company grows, so do the tax rates. Accurate financial statements allow you to assess your tax liability and ensure your taxes do not take you by surprise. With diligent tax planning aided by solid financial reporting, you will be in a better position to take advantage of tax credits and deductions. TakeawayFinancial statements can impact your business growth in multiple ways. They give you a snapshot of your company’s financial condition, create transparency with investors, inform decision-making, mitigate accounting errors, and promote business continuity. Therefore, it’s wise to to invest in top accounting talent and software to guarantee accuracy. The post How Accurate Financial Statements Can Fuel Business Growth first appeared on www.financialhotspot.com.![]() Copyright © 2023 All materials contained in this document are protected by U.S. and international copyright laws. All other trade names, trademarks, registered trademarks and service marks are the property of their respective owners. |