Tips for Filing an Amended Return

IRS Tax Tip 2015-64, April 20, 2015

Have you found that you made an error on your federal tax return? If so, you may need to file an amended return. Here are ten tips that can help you file.

1. Tax form to amend your return.  Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct your tax return. You must file a paper Form 1040X; it can’t be e-filed. You can get the form on IRS.gov/forms at any time. See the Form 1040X instructions for the address where you should mail your form.
   
2. Amend to correct errors.  You should file an amended tax return to correct errors or make changes to your original tax return. For example, you should amend to change your filing status, or to correct your income, deductions or credits.
   
3. Don’t amend for math errors, missing forms.  You normally don’t need to file an amended return to correct math errors. The IRS will automatically correct those for you. Also, do not file an amended return if you forgot to attach tax forms, such as a Form W-2 or a schedule. The IRS will mail you a request for them in most cases.
   
4. Most taxpayers don’t need to amend to correct Form 1095-A, Health Insurance Marketplace Statement, errors.  Eligible taxpayers who filed a 2014 tax return and claimed a premium tax credit using incorrect information from either the federally-facilitated or a state-based Health Insurance Marketplace, generally do not have to file an amended return regardless of the nature of the error, even if additional taxes would be owed. The IRS may contact you to ask for a copy of your corrected Form 1095-A to verify the information.
   
5. Time limit to claim a refund.  You usually have three years from the date you filed your original tax return to file Form 1040X to claim a refund. You can file it within two years from the date you paid the tax, if that date is later. That means the last day for most people to file a 2011 claim for a refund is April 15, 2015. See the Form 1040X instructions for special rules that apply to some claims.
   
6. Separate forms for each year.  If you are amending more than one tax return, prepare a 1040X for each year. You should mail each year in separate envelopes. Note the tax year of the return you are amending at the top of Form 1040X. Check the form’s instructions for where to mail your return.
   
7. Attach other forms with changes.  If you use other IRS forms or schedules to make changes, make sure to attach them to your Form 1040X.
   
8. When to file for second refund.  If you are due a refund from your original return, wait to get that refund before filing Form 1040X to claim an additional refund. Amended returns take up to 16 weeks to process. You may spend your original refund while you wait for any additional refund.
   
9. Pay added tax as soon as you can.  If you owe more tax, file your Form 1040X and pay the tax as soon as you can. This will stop added interest and penalties. Use IRS Direct Pay to pay your tax directly from your checking or savings account.
   
10. Track your amended return.  You can track the status of your amended tax return three weeks after you file with ‘Where’s My Amended Return?’ This tool is on IRS.gov or by phone at 866-464-2050. It is available in English and in Spanish. The tool can track the status of an amended return for the current year and up to three years back. To use ‘Where’s My Amended Return?’enter your taxpayer identification number, which is usually your Social Security number. You will also enter your date of birth and zip code. If you have filed amended returns for multiple years, you can check each year one at a time.
    
    If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tipsor any of our e-news subscriptions.

How to Retain Good Employees

We always realize how much we depend on our fantastic employees during tax season!  We've blogged about rewarding employees and Marcus Erb from The Great Place to Work Institute offers his tip on how to retain great employees including building trust with employees by conducting stay interviews.

3 Tips for Filing a Tax Extension

It is less than 2 weeks until April 15^th.  If you are running behind this tax season, you aren’t alone. According to the IRS, more than 80 million returns had been processed as of March 20, leaving millions of taxpayers who still haven’t filed.  In fact, each year approximately 7% of taxpayers and businesses need to file an extension.

If you decide to file an extension, below are 3 things to consider:

1. File an extension as soon as possible, if you can't make the deadline

If you can’t file your taxes by the April 15 deadline, then you need to file an extension.  It’s not hard.  Just contact your CPA (set an appointment first) and fill out the appropriate tax forms. The extension will automatically extend your filing deadline by 6 months to Oct. 15, 2015.

The extension gives you more time to file and allows you to avoid a late-filing penalty, however, it does not give you more time to pay. If you owe, you will still need to pay the balance on April 15. 

2. If necessary, request a payment installment plan

If you can’t pay what you owe by April 15, you can request a payment plan. The IRS has a program to let taxpayers make monthly payments on their tax bill. But there is a catch. There is a setup fee of $52 and there will be interest that’s adjusted quarterly and a monthly 0.25 percent late fee. 

If you want a payment plan, you still need to request an extension by April 15.  If you don’t, the IRS will charge a 5 percent monthly failure-to-pay penalty, up to 25% of the balance. If it goes more than 60 days overdue, the minimum penalty is $100 or 100 percent of the tax due, whichever is less.

3. Do not wing it!

If you are hustling to get your taxes done by the April 15 deadline, you may want to slow down.  Several people will just guesstimate some of their tax information when they feel like they don’t have time to get the correct information.  This is not good!   You could miss some important deductions, have administrative errors, and trigger an audit later.


Contact Hardee Accounting if you are interested in filing an extension.  

Everything You Need to Know About Office Email Etiquette

Okay, so we violate a few of these rules from time-to-time, but they are still good reminders.  And funny!

 

Are You Self Employed? Check Out These IRS Tax Tips

IRS Tax Tip 2015-34, March 9, 2015

Many people who carry on a trade or business are self-employed. Sole proprietors and independent contractors are two examples of self-employment. If this applies to you, there are a few basic things you should know about how your income affects your federal tax return. Here are six important tips about income from self-employment:

• SE Income.  Self-employment can include income you received for part-time work. This is in addition to income from your regular job.
  
• Schedule C or C-EZ.  There are two forms to report self-employment income. You must file aSchedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with your Form 1040. You may use Schedule C-EZ if you had expenses less than $5,000 and meet other conditions. See the form instructions to find out if you can use the form.
  
• SE Tax.  You may have to pay self-employment tax as well as income tax if you made a profit. Self-employment tax includes Social Security and Medicare taxes. Use Schedule SE, Self-Employment Tax, to figure the tax. If you owe this tax, make sure you file the schedule with your federal tax return.
  
• Estimated Tax.  You may need to make estimated tax payments. People typically make these payments on income that is not subject to withholding. You usually pay this tax in four installments for each year. If you do not pay enough tax throughout the year, you may owe apenalty.
  
• Allowable Deductions.  You can deduct expenses you paid to run your business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business.
  
• When to Deduct.  In most cases, you can deduct expenses in the same year you paid for them, or incurred them. However, you must ‘capitalize’ some costs. This means you can deduct part of the cost over a number of years.

Visit the Small Business and Self-Employed Tax Center on IRS.gov for all your federal tax needs. You can also get IRS tax forms on IRS.gov/forms anytime.

If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.

Additional IRS Resources:

• Form 1040-ES, Estimated Tax for Individuals
• Publication 505, Tax Withholding and Estimated Tax
• Publication 334, Tax Guide for Small Business
• Publication 535, Business Expenses

3 Tax Deductions You May Have Missed

Well, it’s that time of year again.  No, not saying farewell to Downton Abbey and hello to binge watching House of Cards.  Although…

It’s tax season!  For many of you, that is already a thing of the past, since you have met with your amazing CPA.  For the rest, well, let’s look at some possible tax deductions you may be missing.

1.       Taxes

So you can write taxes off your taxes?  That’s not crazy talk; that’s true!  For example, the property taxes you pay for the building you own and operate your business in (businesses operated out of your home count, too) are tax deductible.  Keep in mind, these taxes are only eligible to be deducted in the year they’re paid.

In general, the four types of deductible non-businesses taxes are:

1. State, local, and foreign income taxes.
2. State, local, and foreign real estate taxes.
3. State and local personal property taxes.
4. State and local general sales taxes.

For a more in-depth look at deductible taxes and how to claim them, check out Topic 503 on the IRS website.

2.       Advertising

This includes pay-per-click ads, print ads, event sponsorships, and even business cards can be deducted, as long as there is a clear association between the expense and your business.  Quick note: if you sponsor an event , make sure that the event’s materials mention your business as the sponsor, not an individual participant.

3.       Bad Debts

Did you know that not everyone pays their debt back?  Yeah, of course you did.  Instead of complaining about it on Facebook , you can spend that energy deducting this bad debt from your taxes.

Examples of deductible bad debts include:

• Credit sales to customers (#1 offender)
• Loans to clients and suppliers
• Business loan guarantees

Review IRS Tax Topic 453 for more information on how to deduct bad debts.

*Disclaimer: To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

If you have any questions at all, contact Hardee Accounting!

No Health Coverage? What That Means for Your Taxes

So here's a fun topic.  Fun, like standing in line at the DMV fun.  But may be worse.

Here is important information about the fees and exemptions related to not having health insurance coverage. If you don’t have qualifying health coverage, you may need to pay a fee with your federal tax return or get a health coverage exemption.

IRS Can Help if W-2s Are Missing

IRS Tax Tip 2015-15, February 9, 2015 

In most cases you get your W-2 forms by the end of January. Form W-2, Wage and Tax Statement, shows your income and the taxes withheld from your pay for the year. You need your W-2 form to file an accurate tax return. If you haven’t received your form by mid-February, here’s what you should do: 

• Contact your employer.  Ask your employer (or former employer) for a copy. Be sure that they have your correct address.
  
• After Feb. 23.  If you can’t get a copy from your employer, call the IRS at 800-829-1040 after Feb. 23. The IRS will send a letter to your employer on your behalf. You’ll need the following when you call:
  
  • Your name, address, Social Security number and phone number;
  • Your employer’s name, address and phone number;
  • The dates you worked for the employer; and
  • An estimate of your wages and federal income tax withheld in 2014. You can use your final pay stub for these amounts.
    
• File on time.  Your tax return is normally due on or before April 15, 2015. Use, Form 4852, Substitute for Form W-2, Wage and Tax Statement, if you don’t get your W-2 in time to file. Estimate your wages and taxes withheld as best as you can. The IRS may need more time to process your return while it verifies your information. If you can’t finish your tax return by the due date, you can ask for more time to file. Get an extra six months by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can also e-file a request for more time. You can do this for free with IRS Free File.
  
• Correct if necessary.  You may need to correct your tax return if you get your missing W-2 after you file. If the tax information on the W-2 is different from what you originally reported, you may need to file an amended tax return. Use Form 1040X, Amended U.S. Individual Income Tax Return to make the change.

Note: Important New Health Insurance Form. If you bought health insurance through the Health Insurance Marketplace, you should have received a Form 1095-A, Health Insurance Marketplace Statement, by early February. You will need the new form to help you complete an accurate federal tax return. You will use the information from the Form 1095-A to calculate the amount of your premium tax credit. The form is also used to reconcile advance payments of the premium tax credit made on your behalf with the amount of premium tax credit that you are eligible to claim.

If you did not receive your Form 1095-A, you should contact the Marketplace from which you received coverage to get a copy. You are not required to send in proof of health care coverage, including Form 1095-A, to the IRS when filing your tax return. However, it’s a good idea to keep these records on hand to verify coverage. Additional information about Form 1095-A is available onIRS.gov/aca and on HealthCare.gov/taxes.

You can visit IRS.gov/forms to view, download or print the tax forms you need right away. To get IRS forms by mail go to IRS.gov/orderforms and place an order.

If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.

Negotiation Do’s and Don’ts

We live in a world of negotiations.  We negotiate the price of our car, where to eat lunch, and we even negotiate with our kids to get them to eat their vegetables.

The same is true in your business.  You may feel like you are living in a flea market, since you are constantly:

·         Negotiating price breaks with your vendors

·         Negotiating salaries with your employees

·         Negotiating lease terms with your landlord

·         Negotiating contracts on just about anything

         Negotiating doesn’t have to be a painful experience.  You simply need some basic ground rules and the do’s and don’ts before beginning the process.

• DON’T – Just wing it!  Even though you feel pretty good about your people skills, you still need to have a clear idea of your objectives; otherwise, you won’t know what you are negotiating for.

• DO – Identify your goals before negotiating.  You need to know your bottom line, so you will have clear parameters and even know when to walk away.

• DON’T – Try to beat your opponent into submission.  Even if you have all of the leverage, you may ultimately turn the other party off.  Most people would rather walk away with their dignity, than a small sum they had to beg for.

• DO – Look for the win-win.  This will keep the process moving forward and give you the opportunity for working with this person again in the future. 

• DON’T - Negotiate against yourself. If you make an offer, wait for the response. Be careful in using the phrase, “Why don’t you throw out a number?” Usually, the first amount mentioned by a seller is the amount that’s ultimately agreed upon.

• DO – Ask for what you want.  This means being specific about what you want and don’t want.

• DON’T – Take things personally, even if the other person gets personal.  Stay calm during the process and avoid losing your temper if negotiations don’t go your way.

• DO - Present your side with clear and concise facts.  Act with confidence, even if you have to “fake it, till you make it.” 

• DON’T – Assume that there will be zero tax consequences from a sale or purchase. 

• DO – Meet with your CPA (we hear Hardee Accounting is pretty good) to determine what, if any, tax implications there are to making this deal.

Ellen Discusses the Stages of Losing Your Phone

Oh, so true!!! 

Listen to Ellen talk through the many stages one goes through when they can't find their cell phone.

IRS Warns Of Delayed Refunds, Long Waits For Taxpayers & Possible Shutdown

With a week to go before tax season opens, taxpayers were already bracing for a potentially “miserable” filing season. It turns out that it could live up to the hype.

So.....there is good news and bad news.  

The bad news can be found in this Forbes article.

Essentially the IRS is telling us to expect the following:

• Identity theft could increase
• Refund delays
• Lags in correspondence
• Fewer resolutions
• Unanswered calls
• Shutdowns
• Fewer Audit Closures

The good news?   There will be fewer audits, since there are fewer auditors.  

And Downton Abbey is back!!!!  Oh how we missed the Dowager Countess of Grantham. 

So if you need help getting ready for the fun tax season, call Hardee Accounting.

Get. Stuff. Done!

It’s the time of year for everyone to implement their New Year’s Resolutions.  While we are not anti-New Year’s Resolutions, we do recognize that only 8% of people keep them.

However, we do like the idea of goals.  And yes, we understand they can be virtually the same as New Year’s resolutions.  But we can set goals any time. 

So why do we need goals?  Goals give you focus, energy, persistence, and they make you think. 

For example:

Dominican University conducted a study on how goal achievement in the workplace is influenced by writing goals, committing to goal-directed actions, and accountability for those actions. Participants ranged in age from 23 to 72 and represented a wide spectrum of backgrounds.

Participants in the study were randomly assigned to one of five groups.

• Group 1 was asked to simply think about their goals.  
• Group 2 was asked to write their goals.
• Group 3 was asked to write action commitments for each goal. 
• Group 4 had to both write goals and action commitments and also share these commitments with a friend. 
• Group 5 went the furthest by doing all of the above plus sending a weekly progress report to a friend.

So how did each group do?

• Group 1 – 43% accomplished their goals.
• Group 2 – 51% accomplished their goals.
• Group 3 – 61% accomplished their goals.
• Group 4 – 64% accomplished their goals.
• Group 5 – 76% accomplished their goals.

So skip the New Year’s Resolution and focus on a goal or two for 2015.  Common and effective goals for businesses are for revenue, profit margin, and/or number of new customers. 

Oh, and if you need any help with your goals, you can always contact your favorite accounting firm!

Top Four Year-End IRA Reminders

IRS Special Edition Tax Tip 2014-24, December 9, 2014

Individual Retirement Accounts are an important way to save for retirement. If you have an IRA or may open one soon, there are some key year-end rules that you should know. Here are the top four reminders on IRAs from the IRS:

1. Know the limits.  You can contribute up to a maximum of $5,500 ($6,500 if you are age 50 or older) to a traditional or Roth IRA. If you file a joint return, you and your spouse can each contribute to an IRA even if only one of you has taxable compensation. In some cases, you may need to reduce your deduction for traditional IRA contributions. This rule applies if you or your spouse has a retirement plan at work and your income is above a certain level. You have until April 15, 2015, to make an IRA contribution for 2014.
   
2. Avoid excess contributions.  If you contribute more than the IRA limits for 2014, you are subject to a six percent tax on the excess amount. The tax applies each year that the excess amounts remain in your account. You can avoid the tax if you withdraw the excess amounts from your account by the due date of your 2014 tax return (including extensions).
   
3. Take required distributions.  If you’re at least age 70½, you must take a required minimum distribution, or RMD, from your traditional IRA. You are not required to take a RMD from your Roth IRA. You normally must take your RMD by Dec. 31, 2014. That deadline is April 1, 2015, if you turned 70½ in 2014. If you have more than one traditional IRA, you figure the RMD separately for each IRA. However, you can withdraw the total amount from one or more of them. If you don’t take your RMD on time you face a 50 percent excise tax on the RMD amount you failed to take out.
   
4. Claim the saver’s credit.  The formal name of the saver’s credit is the retirement savings contributions credit. You may qualify for this credit if you contribute to an IRA or retirement plan. The saver’s credit can increase your refund or reduce the tax you owe. The maximum credit is $1,000, or $2,000 for married couples. The credit you receive is often much less, due in part because of the deductions and other credits you may claim.

Ellen Goes Holiday Shopping at Target (and hilarity ensues!)

So we have never seen Ellen at the Glenbrook Target, but we did see the Oak  Ridge Boys at Cafe Rakka once!

Year End Tax Planning

Lower that tax bill!

Oh the weather outside is frightful, and so is tax planning delightful……wait, that’s not how it goes.

Well, tax planning can be delightful if you are able to lower your tax bill.

So as you get close to the end of 2014, you may want to take a good long look at what you may owe in taxes.

Below are some ways to lower your tax bill for this year:

1. Defer income – No, that’s not crazy talk.  This can lower your taxable income, if you are able to pull this off.  

You can delay billing or simply ask a few clients to pay you in January.  Quick note: don’t do this this with chronic late payers.  They do not need any additional motivation to pay late.

Keep in mind you will owe taxes on the money you push into the next tax year. 

2. Accelerate expenses – You can also hurry up expenses that can reduce the taxable amount. You can pay business expenses, such as professional membership dues, office supplies, and/or insurance or buy equipment, such as furniture, machinery, and/or computers to accomplish this.

Make sure these expenses meet IRS standards of being ordinary and necessary.  Granite countertops in your home, probably won’t count.

3. Stash cash for retirement – Unless you want to run this business forever, you need to think about retirement.  Entrepreneurs have several options when it comes to retirement plans.

There is IRA’s, SEP IRA’s, Simple IRA’s, Individual 401k’s, and a few other plans available.  Make sure to consult with your CPA and financial advisor, before selecting one.

*Disclaimer – Make sure you contact your CPA, before making any decisions on lowering your taxable income.  A good income projection will go a long way in determining which, if any of the previous methods are right for you.

Happy Holidays (yes, we include Festivus) from Hardee Accounting!

What Did and Did Not Work in 2014

As 2015 approaches, we often get caught up in the hustle and bustle (what is bustle anyways?) of the
holiday season and year end tax planning.  However, this is also a good time to take a step back from your business and assess what went well and not so well for this year.

Things to think about:

1. What was our best seller for 2014?  Did the customers like it and were we good at it?
2. What was the most profitable items and what were the least profitable items in 2014?
3. What are the cool kids in my industry planning for 2015?  Is there a trend that can affect my business and what technology is emerging?  For example, even though Kim Kardashian is still on Blackberry, it may not be the thing to stick with in your business. Or Aol.  Or that giant fax machine in the corner of your office.
4. What is your big goal for 2015?  Do you have a revenue goal, profit goal, or have a number of new customers that you would like to obtain?

It's cliche to say the definition of insanity is to do the same thing over and over and expect a different result, however, it is also correct.

Here's to a fantastic 2015!

One more reason to like Intuit (makers of QuickBooks)

Funding of cool commercials that are out to inspire the next generation of female engineers! Yes, we are accountants and this aired during the Super Bowl, but it is still cool.

Still Time to Act to Avoid Surprises at Tax-Time

IRS Special Edition Tax Tip 2014-21, October 23, 2014

Even though only a few months remain in 2014, you still have time to act so you aren’t surprised at tax-time next year. You should take steps now to avoid owing more taxes or getting a larger refund than you expect.  Here are some actions you can take to bring the taxes you pay in advance closer to what you’ll owe when you file your tax return:

• Adjust your withholding.  If you’re an employee and you think that your tax withholding will fall short of your total 2014 tax liability, you may be able to avoid an unexpected tax bill by increasing your withholding. If you are having too much tax withheld, you may get a larger refund than you expect. In either case, you can complete a new Form W-4, Employee's Withholding Allowance Certificate and give it to your employer. Enter the added amount you want withheld from each paycheck until the end of the year on Line 6 of the W-4 form. You usually can have less tax withheld by increasing your withholding allowances on line 5. Use the IRS Withholding Calculator tool on IRS.gov to help you fill out the form.
  
• Report changes in circumstances.  If you purchase health insurance coverage through the Health Insurance Marketplace, you may receive advance payments of the premium tax credit in 2014. It is important that you report changes in circumstances to your Marketplace so you get the proper type and amount of premium assistance. Some of the changes that you should report include changes in your income, employment, or family size. Advance credit payments help you pay for the insurance you buy through the Marketplace. Reporting changes will help you avoid getting too much or too little premium assistance in advance.
  
• Change taxes with life events.  You may need to change the taxes you pay when certain life events take place. A change in your marital status or the birth of a child can change the amount of taxes you owe. When they happen you can submit a new Form W–4 at work or change your estimated tax payment.
  
• Be accurate on your W-4.  When you start a new job you fill out a Form W-4. It’s important for you to accurately complete the form. For example, special rules apply if you work two jobs or you claim tax credits on your tax return. Your employer will use the form to figure the amount of federal income tax to withhold from your pay.
  
• Pay estimated tax if required.  If you get income that’s not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, or rent. If you expect to owe a thousand dollars or more in tax, and meet other conditions, you may need to pay this tax. You normally pay the tax four times a year. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax.

For more see Publication 505, Tax Withholding and Estimated Tax. You can get it and IRS forms on IRS.gov, or call 800-TAX-FORM (800-829-3676) to get them by mail.

If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media and subscribe to IRS Tax Tips or any of our e-news subscriptions.