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Archive for Accounting
Tax Extension
Personal Tax Prep Checklist
LAE Business Services, Inc.
P: 631-664-1390 F: 631-382-8334
www.laebusiness.com Email: info@laebusiness.com
Click to print Checklist- What Documents Do I Need to File My Taxes
What you need to file your taxes varies depending on your situation. For example, a tax prep checklist for a self-employed college student may include a 1099 and 1098-T. However, if you weren’t in college and only received a W-2, you could skip those items on your tax documents checklist.
Whether you see a tax professional or prepare your taxes on your own, we’re here to help you determine what forms and information you need to file your taxes.
Use the tax checklist below to find the documents and forms you’ll need to get started.
Personal Information
Tax Identification Numbers are mandatory items on your tax prep checklist. All taxpayers will need the following information.
- Your social security number or tax ID number
- Your spouse’s full name and social security number or tax ID number
Dependent(s) Information
Parents and caregivers should gather this information as they review what they need to file their taxes.
- Dates of birth and social security numbers or tax ID numbers
- Childcare records (including the provider’s tax ID number) if applicable
- Income of other adults in your home
- Form 8332 showing that the child’s custodial parent is releasing their right to claim a child to you, the noncustodial parent (if applicable)
Sources of Income
Many of these forms won’t apply every year. For example, you will only receive the investment forms you may need to file your taxes if you had distributions or other activity.
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Employed
- Forms W-2
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Unemployed
- Unemployment, state tax refund (1099-G)
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Self-Employed
- Forms 1099, Schedules K-1, income records to verify amounts not reported on 1099s
- Records of all expenses — check registers or credit card statements, and receipts
- Business-use asset information (cost, date placed in service, etc.) for depreciation
- Office in home information, if applicable
- Record of estimated tax payments made (Form 1040–ES)
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Rental Income
- Records of income and expenses
- Rental asset information (cost, date placed in service, etc.) for depreciation
- Record of estimated tax payments made (Form 1040–ES)
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Retirement Income
- Pension/IRA/annuity income (1099-R)
- Traditional IRA basis (i.e., amounts you contributed to the IRA that were already taxed)
- Social security/RRB income (1099-SSA, RRB-1099)
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Savings & Investments or Dividends
- Interest, dividend income (1099-INT, 1099-OID, 1099-DIV)
- Income from sales of stock or other property (1099-B, 1099-S)
- Dates of acquisition and records of your cost or other basis in property you sold (if basis is not reported on 1099-B)
- Health Savings Account and long-term care reimbursements (1099-SA or 1099-LTC)
- Expenses related to your investments
- Record of estimated tax payments made (Form 1040–ES)
- Transactions involving cryptocurrency (Virtual currency)
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Other Income & Losses
- Gambling income (W-2G or records showing income, as well as expense records)
- Jury duty records
- Hobby income and expenses
- Prizes and awards
- Trusts
- Royalty Income 1099–Misc.
- Any other 1099s received
- Record of alimony paid/received with ex-spouse’s name and SSN
Types of Deductions
The types of deductions you can take depend a lot on your life situation. It’s likely you won’t need all of the records listed below for your tax documents checklist.
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Home Ownership
- Forms 1098 or other mortgage interest statements
- Real estate and personal property tax records
- Receipts for energy-saving home improvements (e.g., solar panels, solar water heater)
- All other 1098 series forms
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Charitable Donations
- Cash amounts donated to houses of worship, schools, other charitable organizations
- Records of non-cash charitable donations
- Amounts of miles driven for charitable or medical purposes
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Medical Expenses
- Amounts paid for healthcare insurance and to doctors, dentists, hospitals
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Health Insurance
- Form 1095-A if you enrolled in an insurance plan through the Marketplace (Exchange)
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Childcare Expenses
- Fees paid to a licensed day care center or family day care for care of an infant or preschooler
- Wages paid to a baby-sitter
Don’t include expenses paid through a flexible spending account at work
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Educational Expenses
- Forms 1098-T from educational institutions
- Receipts that itemize qualified educational expenses
- Records of any scholarships or fellowships you received
- Form 1098-E if you paid student loan interest
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K-12 Educator Expenses
- Receipts for classroom expenses (for educators in grades K-12)
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State & Local Taxes
- Amount of state/local income tax paid (other than wage withholding), or amount of state and local sales tax paid
- Invoice showing amount of vehicle sales tax paid
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Retirement & Other Savings
- Form 5498-SA showing HSA contributions
- Form 5498 showing IRA contributions
- All other 5498 series forms (5498-QA, 5498-ESA)
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Federally Declared Disaster
- City/county you lived/worked/had property in
- Records to support property losses (appraisal, clean up costs, etc.)
- Records of rebuilding/repair costs
- Insurance reimbursements/claims to be paid
- FEMA assistance information
- Check FEMA site to see if my county has been declared a federal disaster area
IRS Announced 2016 Standard Mileage Rates and They’re DOWN from 2015!!
The IRS announced on December 17, 2015 the new 2016 tax-deduction rates for using your vehicle for business, charity, medical and moving…
These rates tend to change from year to year, usually going up. This will not be the case for 2016! Vehicle-Use tax-deduction rates will decrease in 2016:
• Business: 54¢ per mile (57.5¢ in 2015, decrease of 3.5¢)
• Charity: 14¢ per mile ( 14¢ 2015, No change)
• Medical: 19¢ per mile (23¢ in 2015, decrease of 4¢)
• Moving: 19¢ per mile (23¢ in 2015, decrease of 4¢)
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Stay up to date with the latest tax news and information at LAE Business Services on LinkedIn.
4 Tips for Successfully Managing Accounts Payable
4 Tips for Successfully Managing Accounts Payable
Laura A. Ehle | February 18, 2015| LAE Business Services, Inc.
No what matter what size your business is, paying bills will always be part of it. Whether it’s the monthly operating expenses, an occasional order to pay or a fully staffed accounts payable department managing hundreds or thousands of invoices. By implementing best business practices you can streamline your accounts payable process and be prepared for future growth.
Below are 4 tips to help you successfully manage your accounts payable:
1. Simplify Your Accounts Payable Process
- Reduce the number of check runs to every other week.
- When the accounting staff prepares check runs, they should have the invoice, any backup (packing slips, pod’s, etc.) ready and invoices approved by the appropriate department heads before coming to you for signatures.
- Make Accounts Payable aware of any cash disbursement ceilings for each check run so they can then select the most important invoices to pay if cash is tight during that payment cycle.
- Empower your staff with decisions that will make your life easier and are not dangerous for them to make. The decision to make partial payments on larger balances, or delaying payments to vendors who have a higher tolerance on due dates are a couple of examples.
2. Use Technology
- Analyze and reduce errors such as paying incorrect amounts, incorrectly entering check numbers used to pay vendors, and paying too early or too late.
- Make sure your accounts payable module is set up correctly so that transactions flow properly. You may need to use a consultant to make sure your accounting software and accounts payable module are correctly configured, or you could cause more problems than you solve.
- Have Accounts Payable staff enter terms for each vendor in which the system can default to, such as Net 30, Net 60, etc. Terms are often provided by the vendor, and are usually printed on the face of their invoice.
- If they don’t send them already, require your vendors to send monthly statements to ensure you’re not missing any invoices.
- Run aging reports so you know what is in the pipeline. You may have a small check run this period, but could have a large one coming up that you didn’t know about until looking at these reports.
- Use laser printed checks, which will update the system automatically, marking which invoices have been paid and with what check numbers.
3. Vendor Terms May Be Negotiable
- Usually invoices will come with set terms-Net 30, Net 60, 2%10 Net 30, etc.
- Give you vendors a schedule of when your check runs are so they know when to expect payments.
- Regardless of the terms given, you can call your vendors and negotiate terms for your own company.
- Vendors will often give discounts or special terms to customers that purchase large volumes and on a regular basis.
- Even if the normal terms can’t be changed, if you run into an issue and must pay late, it’s best to call and discuss it with your vendor rather than avoiding them. Follow the phone call up with an email with what was discussed to there is no miscommunication.
4. Reduce CFO Impact to Verification & Signature
- Typically the CFO signs checks or in the case of small companies, an owner will often sign the checks, but should not be assembling the check run.
- Accounts Payable should run the aging, choose which invoices to pay, assemble the invoices, print the checks, and verify that all invoices are approved before bringing them to the appropriate party for signature.
Regardless of the size of your company, start managing your accounts payable process more efficiently to save time and money.
Understanding the Affordable Care Act (ACA)
Starting January 2014, The Individual Shared Responsibility provision of the Affordable Care Act takes effect. This means that each and every taxpayer (and family member) is now required to maintain basic health insurance, also known as “minimal essential coverage.” You must either have health insurance coverage throughout the year, qualify for an exemption from coverage, or make a payment when you file your 2014 federal income tax return in 2015. Many people already have qualifying health insurance coverage and do not need to do anything more than maintain that coverage. Plans that meet the minimal essential coverage requirement may be obtained through employer-sponsored coverage, government programs, or the Health Insurance Marketplace. Visit the IRS website for a chart of coverage types that qualify.
Health Coverage Exemptions
There are a limited number of exemptions from the individual shared responsibility provision. Types of exemptions include: members of certain religious sects, members of Federally-recognized Native American tribes, certain non-citizens, households with income below the return filing threshold, people for whom coverage is considered unaffordable, incarceration exemptions, and certain hardship exemptions.
Exemptions must be obtained through either the Marketplace or the IRS. Exemptions are reported on your income tax return, but you are automatically exempt if you aren’t required to file a return because of insufficient income.
Individual Shared Responsibility Payment
The 2014 tax return (IRS Form 1040) will ask whether you have health insurance coverage or if you qualify for an exemption. If you (or any member of your household) do not have the minimal essential coverage and do not meet the exemption criteria, you will need to make an Individual Shared Responsibility payment. For 2014, the individual shared responsibility payment is the greater of:
- 1% of your household income above your tax filing threshold
- The flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285
Health Care Tax Tips
Here are some general tax tips for the Affordable Care Act:
- Certain employers are required to report the cost of coverage under an employer-sponsored group health plan. Consequently, your employer may report the value of the health insurance provided to you on your Form W-2 (in Box 12 with Code DD) — however, it is not taxable income. This amount is only provided for informational purposes and should not be reported as taxable earnings.
- If you are self-employed, you can deduct the cost of health insurance premiums (within limits) on your Federal income tax return, as well as on your state tax return in many cases.
- Individuals and families with low or moderate income, who purchased health insurance through the Health Insurance Marketplace (the “Exchange”), may be eligible for a Premium Tax Credit designed to help them afford insurance coverage. You can elect to have the tax credit paid in advance to your insurance company to lower your monthly premiums, or you can claim all of the credit when you file your Federal tax return for the year. If you choose to have the credit paid in advance, you will need to reconcile the amount paid in advance with the actual credit you calculate (based upon family size and income) when you file your tax return.
- As part of the Affordable Care Act, an Additional Medicare Tax went into effect in 2013. This affects taxpayers at higher income levels (as measured by wages, compensation, and self-employment income). The rate of the Additional Medicare Tax is 0.9%. To find out if you are subject to this tax, you can view the income threshold chart on the IRS website.
Tax-Favored Health Plans
Some employers offer additional types of tax-favored health plans, including the following:
- A health flexible spending arrangement (FSA) enables you to reduce your taxable income by the amount of money you contribute.
- A health savings account (HSA) allows your employer to put money aside for you, which is not taxable to you within certain limits. Money that you put into an HSA generally qualifies for a tax deduction and can reduce your income tax liability. Money that you withdraw from an HSA to use for qualified medical expenses is not considered taxable income. However, withdrawals for other (nonqualified) purposes are taxable and may even trigger an additional tax.
- Money you receive from a health reimbursement arrangement (HRA) is usually not taxable.
Information for Employers
An employer’s tax responsibilities are based on how many employees they have and what type of health coverage they offer. The general rules are as follows:
- Employers with less than 25 full-time employees may qualify for the Small Business Health Care Tax Credit, which helps cover the cost of providing insurance coverage.
- Employers with 50 employees or less are generally eligible to purchase coverage through the Small Business Health Options Program (SHOP).
- Employers with 50 or more employees must file an annual information return and report what type of health insurance they provide (if any). These employers are also subject to the Employer Shared Responsibility Provisions under the Affordable Care Act.
For more information about how the health care law may affect you, please visit the IRS website: Affordable Care Act (ACA) Tax Provisions.
Still have questions? Consult with your local tax professional. You can email us at: info@laebusiness.com
Accountant vs Bookkeeper
Accountant vs Bookkeeper
What is the difference between a bookkeeper and an accountant? A bookkeeper handles the day-in day-out financial record keeping and reporting. An accountant specializes in the preparation and filing of taxes. Having a good bookkeeper is just as important to the growing business as having a good accountant.
Cost is another significant difference between an accountant and a bookkeeper. For this reason it is very important that you allocate your resources accordingly. You do not want to be paying your accountant to perform bookkeeping functions, this will eat up most of your financial services budget.
Accountants do not have the time to handle day-in day-out financial record keeping and reporting, that’s why they hire bookkeepers.
Bookkeepers perform a critical function for the firms and organizations they serve. Regularly challenged to maintain precise and accurate records, bookkeepers produce the vital reports that keep management up to date on the financial condition of their company.
Bookkeepers are responsible for maintaining the business checkbook. They record routine money transactions like customer payments into a cash receipts journal and checks to vendors into a cash disbursement journal. They also process payroll. At month end they transfer or post the journal totals to the general ledger in preparation for financial statements prepared by the accountant. They prepare monthly quarterly and year end financial statements.
Accountants are responsible for the design and management of the financial systems that bookkeepers use. They prepare tax returns at year end. Accountants may also prepare budgets for management and loan proposals for bankers; they may perform cost analysis for the company’s products or services.
Hiring a bookkeeping service may often be a good solution for the small business owner. A good service will communicate well with your accountant so when tax time rolls around, the accountant will need to spend as little time as possible on your tax return keeping your accountant’s fee to a minimum. Make sure you understand the reports you get back from your service. You want to make the most of the information to make productive decisions for your business.
Both bookkeepers and accountants are important to your business. Knowing the difference between them will not only assure you of receiving the best information on which to base your financial decisions, but will also save you hundreds of dollars per year in fees.
