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THURSDAY TAX TIDBITS

Tax Tip: Start Planning Ahead!

It is never too early to start thinking about the upcoming tax season. Don't procrastinate and be prepared for the tax reform changes that have been implemented this year. Under the Trump Administration, there have been several tax changes that may impact you or your business. Here are some changes that may impact you:


Tax Reform: Business Impact
There are many business considerations, including the corporate tax rate, limitations on net interest expense, full expensing of business assets, changes to net operating loss deductions, limitation of like-kind exchanges, limitation on deductibility of FDIC premiums, corporate alternative minimum tax, rules for recognition of income, changes to business tax credit, the modified limit on excessive compensation, and the modified deduction for meals and elimination of entertainment expenses. Not being able to claim the same expenses as before may lead to higher taxes! Tax Reform: Individual Impact
Individuals will …

THURSDAY TAX TIDBITS

What is the Dark Web?

As a tax accountant, I see and witness many clients falling victim to identity theft. Because of this, I make it my responsibility to bring awareness to the issue as much as I can. Recently, I came across an AARP article discussing what the Dark Web is. I found the article to be interesting and believe it is something of value to my blog readers. The intelligence and skill behind hacking are so advanced with today's technology; it is scary and difficult to know how to protect yourself from it. I encourage you to read AARP's article and share with friends and family. For more questions, our accountants at Cunningham Tax Help have the resources that can help you and your situation. We are open Monday through Friday from 9 AM to 5 PM; contact us by email or phone at: thetaxlady4u@gmail.com or 253.581.1461

AARP Article: https://www.aarp.org/money/scams-fraud/info-2018/what-is-the-dark-web.html

Follow me! Twitter: @thetaxlady4u And ask me about PolkaDotPowerhouse!

THURSDAY TAX TIDBITS

IRS Announces Major Changes to Form W-4!

Earlier this week the IRS and Treasury Department announced that the major changes for Form W-4 are to be delayed until the tax year 2020. These changes were planned to be made in 2019, however, after sharing the drafted version, the IRS and Treasury Department listened to feedback and decided to postpone the changes. Minor changes will be made to the 2019 W-4, but it will remain largely consistent with the present draft. 

In the meantime, it is important for individuals to learn how these changes may impact their personal finances. The IRS encourages taxpayers to use the paycheck checkup at https://www.irs.gov/payments/tax-withholding and review their withholding situation. By doing so, you can ensure withholding is not under-withheld or over-withheld. If under-withheld, there is a chance of having to pay taxes at the end of the year or receiving a smaller refund.

Don't ignore this issue until it is tax season. For more questions on how this …

THURSDAY TAX TIDBITS

PSA: Sales Tax Warning

Have you received one of these notices with your online order?


Confused about what this is? Let us help you! Last year, Washington state imposed a new bill to increase sales tax revenues. Out-of-state sellers are required to inform Washington State consumers of sales tax that is due on any purchases. They are required to attach this disclosure to applicable purchases if not, they are susceptible to hefty penalties. However, this only applies if the out-of-state seller has retail sales to Washington customers of more than $10,000. The notice sellers must provide need to inform Washington purchasers that:
Sales or use tax is due on certain purchasesWashington requires the purchaser to file a use tax returnThe notice is required under RCW 82.13.020(2)(a)(i)This bill was signed in July 7, 2017, and started to be enforced on January 1, 2018. Many Washington purchasers are uninformed and unaware about these notices or change in the bill. For more questions on how this …

THURSDAY TAX TIDBITS

6 Steps to Starting Your Business!

Do you have a great idea that you know will be a successful business? Or do you have the dream to open a small business, but don't know how to start? I get it, it's scary and overwhelming to think about everything you need to do to get started! Here is a list of the 6 steps you need to take to make your idea and dream into a reality:


Conduct Market ResearchMarket research will tell you if there’s an opportunity to turn your idea into a successful business. Gather information about potential customers and businesses already operating in your area. If you are unsure about your innovative ideas, we will provide honest feedback and help you dream of an idea you are passionate about!

Create a Business Plan

Your business plan is the foundation of your business. Cunningham Accountants will help you create a roadmap for how to structure, run, and grow your new business. We want to help you start your business, but your company's growth is important t…

THURSDAY TAX TIDBITS

Why You Should Turn Your Business Into An S Corp!

Are you thinking about starting your business or do you think your business couldn't be running any better? Whatever your business ownership position is, start thinking about turning your business into a corporation. An S Corp is a: "is a closely held corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code." Being an S Corp protects your personal liabilities from any business losses. There are more benefits to becoming an S Corp, such as tax and deductibility benefits. Here are some reasons why you should consider becoming an S Corp:


❖Save money on self-employment tax
❖W2 at year end
❖Deductibility of wages & payroll tax, employer portion
❖Rent expense paid to the shareholder 
❖Liability protection
❖Perpetual existence
❖Costs

To understand how this applies, the table below demonstrates the accounting differences between a Sole Proprietorship and an S Corp:


Start growing …

THURSDAY TAX TIDBITS

Five Facts the IRS doesn't want you to know!



1. Calling the IRS for help won't work.

Calling the IRS usually requires you to stay on hold. Last year, 35.6% of phone calls went unanswered by representatives; that's a lot! Additionally, this year the IRS projects that they will only serve 43 percent of callers after they wait for 30 minutes. Crazy, I know!
2. The IRS can't handle all the paperwork either.
About 50 percent of letters the IRS receives have not been handled in a timely manner. The IRS deals with over a million pieces of correspondence; it takes an average of 45 days to respond.
3. The IRS is worried about ObamaCare collection.
If you received a subsidy based on your projected income, and you made more than that estimate, you may have to pay back part of the subsidy. If you did not have a health care plan, you may be able to file for an exemption or you could owe a small penalty. The Trump administration ended this policy, however, it is not effective until …

THURSDAY TAX TIDBITS

Tax Reform Tip With the changes made in the tax policies late last year, there may be an impact to taxpayers with children and/or other dependents. Understanding the personal impact of this change may influence your withholding on your paychecks. This is a brief overview of how the tax law changes may affect the withholding of parents and caretakers:
Child tax credit The maximum child tax credit increased from $1,000 to $2,000 per qualifying child.Taxpayers whose income was too high to benefit from the Child Tax Credit in prior years may now find they qualify.The credit now phases out at $400,000 for couples and $200,000 for singles, compared with 2017 amounts of $110,000 for couples and $75,000 for singles.Additional child tax credit The maximum additional child tax credit increased from $1,000 to $1,400.The ACTC is a refundable credit for taxpayers who owe little or no federal income tax. Credit for other dependents There’s a new $500 credit that can benefit taxpayers who support other…

THURSDAY TAX TIDBITS

How to: Avoid an audit from the IRS Being audited by the IRS is a common worry among business owners. To help, here is a list of 8 tips to avoid an audit from the IRS Too many round numbers on a tax returnAvoid too high or unusual deductionsAssure income matches what is reported to the StateAvoid claiming any flaky deductionsAccount for everything the first timePay any bill from the IRS in a timely mannerReport actual numbers that are reasonableHave a professional do your tax return
Dealing with the IRS can be stressful! We understand that at my office, so let us offer you some cunning Cunningham tax help! Not only do we want to provide the best tax services, but we also care about the growth of your business. If your business is still audited despite our audit proof tips, we will continue to stand by your side and defend you throughout the audit process. For any questions, do not hesitate to reach out to my office! We are open Monday to Friday from 9 AM to 5 PM; contact us by email o…

THURSDAY TAX TIDBITS

More Tax Law Changes The Republican tax bill was signed into law at the end of December. The seven tax bracket ranges have been adjusted, personal exemptions have been removed, and standard deductions have increased.
The seven federal tax brackets have slightly lowered rates and new ranges.





In 2017, the standard deduction for a single taxpayer was $6,350, plus one personal exemption of $4,050.
The new law combines those into one larger standard deduction for 2018: $12,000 for single filers and $24,000 for joint filers.
To answer more personal questions on how this may impact your personal or business taxes, please reach out to my office! We are open Monday to Friday from 9 AM to 5 PM; contact us by email or phone at: thetaxlady4u@gmail.com or 253.581.1461 
Follow me! Twitter: @thetaxlady4u
And ask me about PolkaDotPowerhouse!

THURSDAY TAX TIDBITS

How does Trump's new tax law affect you?
Under the Trump Administration, there have been many changes made. Read through this brief article on how it may impact you; if you come across any confusion or questions, do not hesitate to reach out! The Act eliminates most itemized deductionsThat includes moving expenses, except for members of the military. Those paying alimony can no longer deduct it, while those receiving it can. This change begins in 2019 for divorces signed in 2018. It keeps deductions for charitable contributions, retirement savings, and student loan interest. The Act limits the deduction on mortgage interest to the first $750,000 of the loan. Interest on home equity lines of credit can no longer be deducted. Current mortgage holders aren't affected.  Taxpayers can deduct up to $10,000 in state and local taxes. They must choose between property taxes and income or sales taxes. This will harm taxpayers in high-tax states like New York and California. The Act expand…

Bonus tip!

With today's fast-paced life, we often find ourselves facing obstacle after obstacle, and task after task. All of our challenges make it easy to focus on the negativity and complain. So to look at the bright side of things, here's a list of five things to do instead of complaining: Practice Gratitude - If you focus on the positive, you can’t be negativePraise Others - Think about what others are doing right and encourage their personal growthFocus on Success - Before going to bed, reflect on one great thing about your day. Be proud of what you did and motivate yourself to do more tomorrowLet Go! - Focus on the things you can change and have control overPray and Meditate - This daily practice helps reduce stress and boost positive energy.

Challenge yourself and try to implement one of these tips in the next week!

THURSDAY TAX TIDBITS

How to: Notice red flags and avoid scams!
Summertime tends to be a period when thieves increase their scam attempts. They try to obtain peoples’ Social Security numbers, account information and passwords. To avoid these scams, remember these signs!
The IRS and authorized private collection agencies will never: Call to demand immediate payment using a specific method such as a prepaid debit card, gift card or wire transfer. Normally, the IRS mails a bill and the payments are made payable to the U.S Treasury. Never make checks to other partiesThreaten to immediately bring in the local police or other law-enforcement groups to have the taxpayer arrested for not payingDemand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owedAsk for credit/debit card numbers over the phoneUse email, text messages, or social media to discuss personal tax issues, such as those involving bills or refunds

If you believe you may owe taxes, then you can: View tax …

THURSDAY TAX TIDBITS

Tax Law News: Four States Sue the IRS

The IRS is being sued? How and why? The states: Connecticut, Maryland, New Jersey, and New York have filed a federal court lawsuit to eliminate the cap on state and local taxes (SALT) deductions under the new tax law. In the past, there wasn’t any specified limit to the quantity of taxes one could claim, however now, married taxpayers cannot claim more than $10,000. This can mean a higher federal tax liability for some taxpayers. Not only us this inconvenient for individuals, but it will also cause major social issues. In fourteen states, the SALT cap will drop home values, which leads to a huge loss in societal home equity value. For additional information, check out Forbes article with more details: https://www.forbes.com/sites/kellyphillipserb/2018/07/17/states-sue-irs-treasury-to-strike-down-salt-cap-under-new-tax-law/#54061fa55303

THURSDAY TAX TIDBITS

Tax Law Changes: Auto Deductions
The biggest change in deducting automobiles is an increased deduction for car depreciation for cars used for business. This change may make business owners consider buying cars versus leasing. With Trump’s tax plan, you can take an $18,000 deduction for a new car the first year you own it.
Bigger depreciation allowances for passenger vehicles For both new and used passenger vehicles that are acquired and placed in service after 12/31/17 and used over 50% for business, the Tax Cuts and Jobs Act dramatically and permanently increases the auto depreciation allowances. For vehicles placed in service (put to business use) in 2018, the maximum allowances are:
* $10,000 for Year 1 or $18,000 if you claim first-year bonus depreciation (see below). * $16,000 for Year 2 * $9,600 for Year 3 * $5,760 for Year 4 and thereafter until the vehicle is fully depreciated
If you don’t use the vehicle 100% for business, these allowances are cut back proportionately. These …

THURSDAY TAX TIDBITS

How to: Make taxes easier! Download and use the new IRS app!
Anyone with tax questions can just grab their phone for answers. The IRS has a mobile app, IRS2Go, is available for free to use on Android and iOS devices. Taxpayers use the app to:
 Check the status of their refund. Taxpayers can check on their refund status within 24 hours after the IRS receives their e-filed return, or about four weeks after mailing a paper return.
 Make a payment. The app offers easy access to mobile-friendly payment options like IRS Direct Pay. This offersthe taxpayer a free, secure way to pay directly from their bank account. Users can also make acredit or debit card payment through an approved payment processor.
 Get Helpful Tips and Information. Taxpayers can use the app to link to IRS accounts on social media. Users can do things such aswatch helpful videos and access IRS tweets. Taxpayers can also use the app to sign up toreceive IRS Tax Tips by email.
 Stay Secure. Users can use IRS2Go to create …

THURSDAY TAX TIDBITS

Tax Law Changes: Meals and Entertainment
Under the Trump Administration, the new tax Act creates stricter limits on the deductibility of business meals and entertainment expenses. As a business owner, you can still deduct your meals, but no longer entertainment. For example, if you take your team to a baseball game, you can write-off the hot dog, but not the game. Entertainment expenses incurred or paid after December 31, 2017 are nondeductible unless they fall under the specific exceptions in Code Section 274(e). One of those exceptions is for “expenses for recreation, social, or similar activities primarily for the benefit of the taxpayer’s employees, other than highly compensated employees”. (i.e. office holiday parties are still deductible). Business meals provided for the convenience of the employer are now only 50% deductible whereas before the Act they were fully deductible. After 2025, those meals will be nondeductible.

These new rules should be kept in mind as businesses pla…