Archive for June, 2011

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Client Spotlight: Eberl Iron Works

Monday, June 13th, 2011

Eberl Iron Works, Inc. started as a small welding shop that fabricated wrought iron railings, exterior fire escapes and miscellaneous iron in 1923.  Now it is a thriving company with 5 different and distinct divisions:

Metal Fabrication Services
Unistrut Buffalo Supports
Systems Installation & Design
Rooftop Support Systems
Traffic Safety Products

They credit their growth to their ability to diversify their products, the markets they serve and their customers. (more…)

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Protecting Your QuickBooks Data Against Hackers

Sunday, June 12th, 2011

Chris Blach, QuickBooks ProAdvisor
Every month, we provide information on how to better use QuickBooks. By implementing the best methods for managing your accounting data, you can actually improve your financial bottom line.

But all of your careful work is for naught if a malicious hacker gets in to your computers, or if you experience identity theft by an employee. Social Security and credit card numbers, home phone numbers and addresses, an excruciatingly detailed profile of your company – all can be lost in the time it takes to realize that it’s gone. (more…)

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The Best Financial Tool for Business Owners

Saturday, June 11th, 2011
If there were a tool that helped you create crystal-clear plans . . . that provided you with continual feedback on how well your plan was working . . . that told you exactly what’s working and what isn’t, allowing you to consistently make smart business decisions to keep your business on track for success – wouldn’t you want to take advantage of it?

Well, there is such a tool. It’s called the Budget vs. Actual report. (more…)

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Are Your Social Security Benefits Taxable?

Friday, June 10th, 2011
How much, if any, of your Social Security benefits are taxable? It depends on your total income and marital status. Generally, if Social Security benefits are your only income, your benefits are not taxable and you probably do not need to file a federal income tax return.

If you receive income from other sources in addition to Social Security and your modified adjusted gross income is not more than the base amount for your filing status, then your benefits will also not be taxed. (See below for more on base amounts.)

This quick computation will help you determine whether some of your benefits are taxable:

  • First, add one-half of the total Social Security you receive to all your other income, including any tax-exempt interest and other exclusions from income.
  • Then, compare this total to the base amount for your filing status.

The 2011 base amounts are:

  • $32,000 for married couples filing jointly
  • $25,000 for single, head of household, qualifying widow/widower with a dependent child or married individuals filing separately who did not live with their spouses at any time during the year
  • $0 for married persons filing separately who lived together during the year

According to the Social Security Administration, less than one-third of all current beneficiaries pay taxes on their benefits.

Call us for additional information on the taxability of Social Security benefits.

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Sell Your Home But Keep the Profits

Friday, June 10th, 2011
With the real estate market looking up in many areas, money is out there to be made. Sellers, it’s time to take a close look at the exclusion rules and cost basis of your home to reduce or eliminate your taxable gain.The IRS home sale exclusion rule now allows an exclusion of a gain up to $250,000 for a single taxpayer or $500,000 for a married couple filing jointly. This exclusion can be used over and over during your lifetime, unlike the previous one-time exemption, as long as you meet the following Ownership and Use tests. (more…)

Posted in Estate Planning, Tax | 2 Comments »

Tips on Tips

Saturday, June 4th, 2011
Do you work at a hair salon, barber shop, casino, golf course, hotel, or restaurant, or do you drive a taxicab? The tip income you receive as an employee from those services is taxable income.

Here are some tips about tips:

  • Tips are taxable. Tips are subject to federal income and Social Security and Medicare taxes, and they may be subject to state income tax as well. The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to federal income tax.
  • Include tips on your tax return. In your gross income, you must include all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip-splitting arrangement with fellow employees.
  • Report tips to your employer. If you receive $20 or more in tips in any one month, you should report all your tips to your employer. Your employer is required to withhold federal income, Social Security, and Medicare taxes.
  • Keep a running daily log of your tip income. Be sure to keep track of your tip income throughout the year. If you’d like a copy of the IRS form that helps you record it, let us know.

Tips can be tricky. Don’t hesitate to contact us if you have questions.

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Six Tips for Paying Estimated Taxes

Friday, June 3rd, 2011
Estimated tax is a method used to pay tax on income that is not subject to withholding. Depending on what you do for a living and what type of income you receive, you may need to pay estimated taxes during the year.

These six tips from the IRS will provide you with a quick look at estimated taxes and how to pay them…

  1. If you have income from sources such as self-employment, Partnership or S-Corp pass through income, interest, dividends,  alimony, rent, gains from the sale of assets, prizes, or awards, then you may have to pay estimated tax.
  2. As a general rule, you must pay estimated taxes in 2011 if both of these statements apply: 1) you expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and credits, and 2) you expect your withholding and credits to be less than the smaller of 90% of your 2011 taxes or 100% of the tax on your 2010 return. There are special rules for farmers, fishermen, certain household employers, and certain higher-income taxpayers.
  3. For sole proprietors, partners, and S Corporation shareholders, you generally have to make estimated tax payments if you expect to owe $1,000 or more in tax when you file your return.
  4. To figure your estimated tax, include your expected gross income, taxable income, taxes, deductions, and credits for the year. Use the worksheet in Form 1040ES, Estimated Tax for Individuals, which we can send you. You want to be as accurate as possible to avoid penalties. Also, consider changes in your situation and recent tax law changes.
  5. The year is divided into four payment periods, or due dates, for estimated tax purposes. Those dates generally are April 15, June 15, Sept. 15, and Jan. 15.
  6. Form 1040ES, Estimated Tax for Individuals, provides all you’ll need to pay estimated taxes. This includes instructions, worksheets, schedules, and payment vouchers. The easiest way to pay estimated taxes, however, is electronically through the Electronic Federal Tax Payment System or EFTPS. You can also pay estimated taxes by check or money order using the Estimated Tax Payment Voucher or by credit or debit card.

    7.  

Take our advice and don’t ignore your estimated tax payments. And please call us with any questions.

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Getting Withholdings Right This Tax Year

Friday, June 3rd, 2011
In most situations, the tax withheld from your pay will be close to the tax you figure on your return – if you follow these two rules. 

  • You accurately complete all the Form W-4 worksheets that apply to you.
  • You give your employer a new Form W-4 when changes occur.

But because the worksheets and withholding methods do not account for all possible situations, you may not be getting the right amount withheld. This is most likely to happen in the following situations:

  • You are married and both you and your spouse work.
  • You have more than one job at a time.
  • You have nonwage income, such as interest, dividends, alimony, unemployment compensation, partnership/ S Corporation pass through income,  or self-employment income.
  • You will owe additional amounts with your return, such as self-employment tax.
  • Your withholding is based on obsolete Form W-4 information for a substantial part of the year.
  • Your earnings are more than $130,000 if you are single or $180,000 if you are married.
  • You work only part of the year.
  • You change the number of your withholding allowances during the year.

If you need help downloading Form W-4 or have questions on how to fill it out properly, give us a call. We’re happy to help.

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How to Pay Less for Your Summer Vacation

Thursday, June 2nd, 2011
The summer travel season is almost upon us. While you look forward to lazing on the beach, visiting the theme parks, and enjoying ice cream cones, also consider ways to fit some business in to your trips. 

The idea is to take advantage of tax deductions for which you become eligible when you devote part of your trip to business. As long as most of your travel days are for business purposes, you can deduct the cost of travel (airplanes, trains, cars, etc.) and for hotels, parking, taxi service, meals, and so on.

As defined by the IRS, travel expenses are the Ordinary and Necessary expenses of traveling away from home for your business, profession, or job. An Ordinary expense is one that is common and accepted in your field of trade, business, or profession. A Necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary.

The key factor is that your trip must be primarily for business. Days of leisure can be added to a trip and still be considered primarily for business. The more days and time per day spent on business will help substantiate the trip. There are no set rules on how many days and how much time per day need to be spent on business for your trip to be considered business related. (more…)

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Financial Tips for June 2011

Wednesday, June 1st, 2011
Review Your Insurance Policies
You reviewed your “asset” policies in April. This month, review your life, health, and disability insurance policies. Check with your employee benefits office as to what programs are available. Make certain you have adequate coverage. Call us to determine the appropriate amounts for your age and income.

Lower Your Utility Costs
Review your utility costs for the year. Make certain you are getting the best possible deal where multiple providers are available. For example, obtain competitive quotes for long-distance phone service. For other utilities, review your usage to see if any savings are available. Consider the use of annual “budget” plans with the utilities to even out annual payments.

Analyze Budget vs Actuals
Compare May income and expenditures with your budget. Make adjustments as appropriate to your June expenditures. Make sure you have invested your planned savings amount for May.

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