QuickBooks, created by intuit, is an accounting software that many businesses use to track their financial information including invoices, bills, paychecks, and inventory. To become a certified QuickBooks ProAdvisor, one must complete a series of comprehensive tests to show their knowledge and skills with the QuickBooks software. Here at MKR CPA’s we have three certified QuickBooks ProAdvisors: Jean Miller, Amanda O’Brien, and Tiffany Evans.
Jean Miller has been a certified QuickBooks ProAdvisor since 2006. She is the manager of the accountants in the office and she has worked in the accounting industry for 34 years. She is certified on QuickBooks Desktop and QuickBooks Online. In our office she is our inventory and payroll specialist, and works on time consuming corrections, data reviews, and consultations. She just recently acquired her Advanced Desktop Certification.
Amanda O’Brien has been a certified QuickBooks ProAdvisor since 2011. She is a staff accountant and has worked in the accounting industry for 8 years. She is certified on QuickBooks Desktop and advance certified on QuickBooks Online. In our office she specializes in QuickBooks Online and QuickBooks for Mac. She works with, but not limited to, veterinary companies, nonprofits, and service-based companies. She also just recently acquired her Advanced Desktop Certification.
Tiffany Evans has been a certified QuickBooks ProAdvisor since 2012. She is a staff accountant and has worked in the accounting industry for 5 years. She is certified on QuickBooks Desktop and QuickBooks Enterprise. In our office she specializes in bookkeeping services and QuickBooks Enterprise. She works with, but not limited to, hardware companies, real estate investors, and product and inventory driven companies. She just recently acquired her Advanced Desktop Certification as well.
Beginning in 2018, the new tax laws are officially implemented, which could spell a shift in take home pay for many workers. And, if your employer has begun using the new withholding tables, you could see a change in pay this month. The Congressional Budget Office has approximated that employers could withhold around $10-15 billion less from employees each month by utilizing the new withholding tables.
Many taxpayers may be wondering if they will actually see any of that $10-$15 billion on their regular paychecks? An increase in take-home pay will be based on the number of allowances you take, how often you are paid and if you file jointly or are a single filer. So, for the average single filer who makes between $46,000-$162,000 and is paid bi-weekly, your paycheck will likely increase between $40 and $190. For married filers who make between $61,000-$167,000, you could see a bi-weekly pay increase between $30 and $172.
However, there are other factors in play that could offset any pay increases taxpayers might see. While the federal tax cuts might increase take-home pay for the average workers, other changes in deductions might counteract a boost in pay. Although the federal tax rates changed, some state or local taxes may have increased for some workers. Many companies make health benefits or other benefit changes at the start of a new year as well, which would ultimately influence a worker’s final take-home amount.
Whether you see a pay increase or not, all employees should consider re-evaluating their withholding allowances. Why? Withholding tables are intended to provide a ballpark figure of how much tax should be taken from your pay, but this year’s estimation could be a bit looser than previous years.
The new tax laws change elements that affect how many allowances workers claim. For example, some personal exemptions have been eliminated, itemized deductions have been reduced and tax credits have been altered. The new withholding tables do incorporate the tax code changes, but taxpayers were not required to fill out a new W-4 form. Therefore, the number of allowances selected when your last W-4 was filed could be rather inaccurate now.
How do you know if your allowances need to be modified? Taxpayers can speak with a tax adviser to decide the correct withholding amounts. Another option is to use the new withholding calculator the IRS plans to release at the end of February, which is designed to help employees calculate if they are claiming too little or too much in light of the tax changes. If you do decide to change withholding amounts, you will need to submit new instructions to your employer.
In the midst of identity scams and credit card hacking, the IRS has warned against another scam, this time targeted at businesses and employers. There is a growing W-2 email scam threatening sensitive tax information and the IRS wants to alert payroll and human resources officials so they can be on their guard.
A simple email beginning with a casual greeting has quickly become one of the most dangerous phishing attacks. Hundreds of employers fell victim to the scheme last year, which left thousands of employees vulnerable to tax-related identity theft.
Since there have been significant improvements made in curbing stolen identity refund fraud, criminals are now seeking more advanced personal information in order to fraudulently file a return. W-2’s contain a wealth of detailed taxpayer income and withholding information, which is exactly what frauds are searching for and why they are targeting employers to acquire such information.
The scam has only grown larger in recent years, attacking a variety of businesses, from public universities and hospitals to charities and small businesses. The IRS wants to educate employees and employers, particularly payroll and HR associates who are often targeted first, to hopefully limit the number of successful attacks.
The scammer will likely spoof the email of someone high up in the organization or business, sending an email to someone with W-2 access using a subject line similar to “review” or “request.” The “request” will likely be a list of all the employees and their W-2 forms, potentially even specifying the file format. Since the employee believes they are corresponding with an executive of some sort, they may send the information without question, meaning weeks could go by before it is even evident they have been scammed. This gives frauds plenty of time to file numerous fake returns.
Because this scam poses such a major tax threat at both the local and state level, the IRS has set up a specific reporting process to alert the proper individuals, which is outlined briefly below:
Email dataloss@irs.gov to notify the IRS of a W-2 data loss and provide contact information. Type “W2 Data Loss” into the subject line so that the email can be routed properly and do not attach any employee personally identifiable information.
Email the Federation of Tax Administrators at StateAlert@taxadmin.org to get state specific information on reporting victim information.
Businesses or payroll service providers should file a complaint with the FBI’s Internet Crime Complaint Center (IC3.gov). They may be asked to file a report with local law enforcement as well.
Notify employees so they are able to take protective steps against identity theft. The Federal Trade Commission website, www.identitytheft.gov, provides guidance on steps employees should take.
Beyond just educating employees, payroll officials and HR associates about the scam, employers are encouraged to set up policies or practices to avoid being hacked. Suggested policies include requiring verbal communication before sending sensitive information digitally, or requiring two or more individuals to receive and review any sensitive W-2 information before it can be sent out. The IRS is fighting diligently to protect taxpayers and lower the number of tax-related scams, so employers are encouraged to be on the defense as well and safeguard their own tax paying employees.
The latter part of 2017 has been filled with discussions and votes regarding new tax legislation. But, with nothing official in the books yet, taxpayers would be wise to focus their year-end tax planning around the current laws, since the proposed legislation may not become law or may undergo significant changes before being passed. Below are seven key tax strategies that could improve your finances and reduce your tax bill regardless of what Congress decides.
Max out contributions to tax-sheltered savings Whether it’s a 401(k), health savings account (HSA), IRA or Roth IRA, make sure you are contributing the max amount. In 2017, HSA contributions for a single person are limited to $3,400, and $6,750 for families; IRA’s cap out at $5,500 in annual contributions ($6,500 for those 50 or older).You can contribute up to $18,000 in 401(k)’s annually, but only 10% reached that max in 2016 according to data. For all of these accounts, if you’re contributing pre-tax funds, it may feel like less money in your wallet now, but it will mean a lower tax bill come April.
Review your withholding Examining the amounts that are withheld from your paycheck could help you avoid a larger tax bill in the spring. There are several categories of individuals who often find they are not withholding enough: those with a second job, those who owe estimated taxes (and potentially missed a payment), those who started Social Security or pension payments, and those who sold large assets with gains.
The IRS website includes a withholding calculator to assist taxpayers in determining if their withholding amount is correct. If it is incorrect, you still have time to adjust by updating your form W-4 with your employer.
Meet your medical deduction threshold Only around 6% of filers claim the deduction for medical expenses, which may be why it is under threat of repeal if the new tax legislation is passed. Current law allows medical expenses in excess of 10% of your adjusted gross income to be deducted.
Because this saving can be a vital tax benefit, if you’re close to meeting the threshold, find ways to accelerate your medical spending before the year ends. This could include purchasing vital medical equipment or scheduling procedures and appointments before December 31.
Take advantage of taxable losses and gains If your investments took a hit this year, you are able to deduct the losses up to the amount of capital gains, plus $3,000. You are even able to roll over an excess of losses to claims for future years if your losses exceeded the annual limit.
For those currently in the two lowest income tax brackets (10% and 15%), you might be eligible for a zero tax rate on investments with long-term capital gains. One way to achieve this zero-tax capital gain is by selling a low-cost-basis long-term investment. You could then purchase it back at a higher cost basis and potentially lower your future taxes as long as that acquisition does not push you into a higher tax bracket.
Give to charity Increasing your charitable contributions is always a smart, and generous, way to lower your spring tax bill. Rather than simply donating money though, you can also donate highly appreciated stock by simply transferring ownership of your stock to the charity. If you’re eligible for a deduction, it will be based on the market price of the donated stock and you will not owe capital taxes on its appreciation.
Another viable option is placing money or investments in a donor-advised fund, which allows you to spread out donations to charities in future years and allows you to take an itemized deduction for the amount transferred into the account this year. If you’re 70 ½ or older, you may also donate to a charity through your IRA, which would reduce the taxes on your required withdrawals.
Take any required distributions As mentioned, once you reach 70 ½, most qualified accounts (401(k)’s, IRA’s, etc.) have required minimum withdrawals (RMD) and that money is taxed as ordinary income. Although there is a grace period until April 1st of the following year for those taking their first RMD, every other year’s RMD must be taken by December 31st of that year.
If you don’t take the RMD in time, you will still owe the required taxes you would have paid plus a cost penalty, which is half of the amount you were supposed to withdraw. Many financial institutions have RMD calculators to help you determine the amount you should be withdrawing.
Take tax planning deductions One highly beneficial tax deduction is for investment advice and tax planning. This deduction may be modified under the new proposals, but the current law still allows taxpayers to make deductions for items such as the cost of tax software like TurboTax or fees paid to financial planners or accountants, so make sure to take advantage whether you do your own taxes or generally seek help.
Although the 2018 tax code is still uncertain at this point, there are changes you can make in the next few weeks to alter your spring tax bill. This time of year is undoubtedly busy with the holidays and gatherings, but you will be thankful come April of next year that you took the time now and made some beneficial tax moves for your future.
With their first plan shot down in Congress, the GOP has released another, broader tax framework as the Trump Administration attempts to shift the tax code. This new plan has many elements that Congress will need to hash out before anything is signed into law, but taxpayers of all income levels are wondering how this plan may affect them personally. Below are five major developments in the new plan that could affect you come tax season:
Rate Shift Our current code has seven different income tax brackets, but the new plan would drop that number down to three: 12, 25 and 35 percent. Although the plan does not specify which income levels would be taxed at each new rate, the wealthy would likely see the greatest benefit since the current top bracket at 39.6% would drop to 35%. The current lowest bracket (at 10%) would see an increase to join the 12% bracket, but the plan claims to aid families in that bracket through an increase in the standard deduction and a greater child tax credit.
Deduction Increase (for most) For many taxpayers, the new plan would almost double the current standard deduction. Filers who claim multiple children would not see as high of a increase, but could potentially see that offset by a steeper child tax credit. Presently, about 70% of taxpayers take the standard deduction as it is higher than itemizing. However, experts believe that number would increase significantly if the standard deduction is doubled. The GOP’s plan would remove other deductions to offset the increased standard deduction, but the charitable contribution and mortgage interest deductions would be kept.
Some Taxes and Deductions Eliminated Entirely The largest deduction that would meet its end with the new GOP plan is the local and state tax deduction. This deduction is often taken in states where taxes, and average income, is higher, states that are often Democratic. Other taxes that would be eliminated include the alternative minimum tax and the estate tax for those who inherit funds in excess of $5.49 million.
New Tax Rate for “Pass-Through” Businesses S corporations, sole proprietorships and partnerships could see a new tax rate at 25% under the new plan. Currently, those “pass-through” businesses pay at the individual rate of their owners, and those businesses make up about 95% of the nation’s business demographic. Although many business owners currently pay a rate lower than 25%, just under 2% of those business owners pay the top rate of 39.6%, which means they could see a significant drop in rate if they are permitted to incorporate as a “pass-through.”
Change in the Corporate Tax Code The current plan taxes corporations at 35%, but the new plan would drop that rate to 20%. To offset this steep drop in rate, the proposal submits to eliminate certain business deductions and credits. The plan suggests that the deduction for domestic production could be eliminated, while maintaining exceptions for low income housing and research and development, but leaves many of those choices up to Congress.
Congress must still comb through the GOP’s newest plan and make adjustments before a finalized plan is voted upon, so taxpayers should prepare for more adjustments to be made before anything is signed into law. As developments arise, MKR will continue to keep our clients up to date in future newsletters.
Although Equifax has yet to reveal specifics about the individuals who were affected by their data breach, as many as 143 million Americans may have been impacted. With that in mind, anyone with credit should consider taking measures to protect their identity and funds. Many experts are suggesting individuals freeze their credit, but this may not be the most effective method. While freezing your credit is not a bad decision, it only protects you from new accounts being opened in your name, a form of identity theft that is actually quite rare.
While many taxpayers are now deeply concerned about their lives being destroyed from identity theft, there are many other ways to guard your identity and your money that may be more beneficial than freezing your credit:
Use two-step verification and secure passwords Most identity theft occurs on existing accounts, so making it difficult for hackers to access your accounts with financial information is one step you can take to safeguard your personal data.
Choose ID-verification questions and answers cautiously Consider choosing questions whose answers cannot be easily found online. Questions such as “Where were you born?” or “What was your high school mascot?” could be easily discovered by checking your social media accounts, so be wise when creating those protective measures.
Monitor current accounts as often as possible Ideally, you should check your bank accounts daily to ensure all posted charges were made by you or whoever has access to the account. Since most financial institutions today have an app for accessing account information, monitoring your credit can be as simple as a quick log on from your phone. If you notice suspicious activity, you can then notify your bank immediately to avoid racking up more false charges.
Set up alerts for new credit activity Although you can set up a fraud alert or credit freeze, there are other free services that monitor your credit and any new account openings or activity.
Check credit reports regularly Every individual is allowed one free credit report annually from each of the three major credit bureaus through AnnualCreditReport.com, a site sponsored by the government. You can receive all three reports at once, or request one every 4 months to space out your monitoring tactics.
File taxes early One form of fraudulent behavior that is becoming more common is filing for taxes under someone else’s SSN. But, organizing your tax information quickly and filing as early as possible could lower the chances that someone will file in your name. Plus, if you are owed a refund, you will likely get it sooner than April if you file early.
While none of these methods are entirely foolproof, taking precautionary steps to protect your credit are always advised. If you do fall victim to identity theft, check out the Federal Trade Commission’s step-by-step recovery guide for helpful information.
