I heard of Send Out Cards a few years ago, and thought it was a cool concept but never looked into it. After talking with Donna Smallin Kuper, a Send Out Cards independent distributor, I learned the ease and efficiency of utilizing S.O.C.
Whether you use it occasionally for personal use, as a means of staying in touch with clients, or for large mailings such as holiday cards – you will find Send Out Cards to be a wonderful tool to do so.
1. IRS Announces 2010 Standard Mileage Rates
This has been a busy year on the tax front and much of the news has been good for taxpayers. The economic stimulus law enacted early in the year provides significant tax relief in various forms. And the IRS and the court have issued a number of rulings that have favored the taxpayer.
For example, homeowners with large mortgages may be entitled to a bigger deduction for their interest payments, thanks to a new ruling from the IRS. The tax law imposes a limit on the amount of interest that’s deductible on a mortgage used to buy a home and a second limit on deductions for interest paid on “home equity” loans. The IRS ruled that you can combine the two limits and treat first mortgages in excess of the first limit as “home equity” loans, thus entitling you to a bigger interest deduction.
Another winning combination came in the IRA area. While withdrawals from an IRA before age 59 ½ are generally subject to a penalty tax, there are exceptions. One exception applies to IRA owners who make periodic level withdrawals. Another exception applies to IRA owners who withdraw funds to pay a child’s college expenses. The Tax Court ruled that IRA owners can combine these two exceptions. Your regular periodic payments will still be considered “level” even though you withdraw additional amounts to pay college costs.
Another pro-taxpayer ruling from the IRS is good news for taxpayers who make tax payments via credit or debt cards. Reversing a prior position, the IRS says it will allow taxpayers to deduct the convenience fees that credit and debt cards charge for tax payments. The deduction is available if you itemize your deductions and have sufficient deductible “miscellaneous” expenses.
The IRS also provided much-needed tax relief to investors who lost money in the recent widely-publicized “Ponzi” schemes. While investment losses are generally treated a capital loss, of limited tax value, the IRS ruled that investors in the Ponzi schemes can write off their losses as thefts. This allows investors to claim a bigger deduction for their losses.
You know the drill. In the coming weeks, you will begin gathering the information we will need each year to prepare your individual tax return—W-2 forms from your employer, income and loss statements from your investments, receipts for charitable donations, and the like.
But what you may not know is that there are a number of new-for-2009 tax breaks and other changes on the 2009 Form 1040 that may require a little extra information gathering on your part. For example:
DID YOU KNOW that for 2009 you can claim a deduction for real estate taxes you paid on you main home even if you ordinarily claim the standard deduction? The deduction is up to $500 for singles or $1,000 for married couples filing jointly. To claim this valuable deduction you will need information from your state of local taxing authority showing the real estate taxes you paid in 2009.
DID YOU KNOW that if you bought a new car in 2009, you may be able to claim a deduction for the taxes you paid on the purchase? The maximum deduction is equal to the taxes paid on the first $49,500 of the purchase price of the car. What’s more, the deduction applies whether or not you itemize your deductions. To claim this deduction, you will need information on the purchase price of your new car and the taxes you paid.
DID YOU KNOW that is you paid college tuition or other expenses in 2009 you may be able to claim a new-and-improved credit against you tax bill for those costs? The credit is up to $2,500 for any of the first four years of a student’s post-secondary education. What’s more, a part of the credit may be refundable even if you don’t owe any taxes. The credit applies to the tuition and fees you paid to the educational institution (which should be reported to you on Form 1098-T). However, for 2009, the credit also applies to the costs of books and course materials, so you will need a break down of those expenses as well.
DID YOU KNOW that if you bought a new home before December 1, 2009, you may qualify for a special tax credit for first-time homebuyers? And don’t let the term “first-time” fool you. Even if you owned a home in the past, you may qualify if you did not own a home in the prior three years. The credit is up to $8,000 or 10% of the purchase price of the home. What’s more, the credit is refundable, so eligible homebuyers receive the credit in the form of a full or partial refund to the extent it exceeds their tax bill for the year. To claim the first-time homebuyer credit you will need information on the purchase price of your new home.
DID YOU KNOW that if you received unemployment benefits in 2009, the first $2,400 is tax free? You should receive a Form 1099-G showing the total unemployment compensation you received in 2009, but only the amount above $2,400 will have to be reported as income on your tax return.
DID YOU KNOW that you may be able to claim tax credits if you made energy-saving improvements to your home in 2009? The credit applies to qualified improvements such as windows and doors or energy-efficient property like solar water heaters and heat pumps. You will need information about the nature of you home improvement (including any certification of credit eligibility you received at the time of purchase) and its cost.
Problem: The Department of Homeland Security has issued regulations requiring employers that receive SSA no-match letter to prove that they did not have ‘constructive knowledge’ an employee was not authorized to work inthe US. These regulations require an employer unable to resolve a name/SSN mismatch to terminate the employee or face potential penalties up to $11,000 for employing an unauthorized worker.
Solution: Check employee SSNs on W-2s that do not match SSA records at www.ssa.gov/bso/services.htm to review and correct mismatches. For more info visit the SSA website
Online Press Release for Backstage Virtual Assistant here
Remember, tax planning and preparation is a year-round task. By accurately tracking income, expenses, deductions, etc. you will be better prepared to take advantage of available credits/deductions. You will also SAVE money by having all the needed documentation available for your tax preparer; if they need to contact you numerous times requesting information, billable time increases. Some tips for preparing your information:
Also, let your preparer know of any changes that affect your tax filing status. I recommend using a program – Quicken or QuickBooks to track expenses and income. With proper input of data, reports can be generated to make tax preparation easier.
This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.
By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.
QuickBooks provides a feature called Classes, that permits you to group items and transactions in a way that matches the kind of reporting you want to perform. Think of this feature as a way to “classify” business activities. To use classes, you must enable the feature, which is listed in the Accounting section of the Preferences window. Some of the reasons to configure classes include: · Reporting by location if you have more than one office. · Reporting by division or department. · Reporting by business type (perhaps you have both retail and wholesale businesses under your company umbrella). You should use classes for a single purpose; otherwise, the feature won’t work properly. For example, you can use classes to separate your business into locations or departments, but don’t try to do both. When you enable classes, QuickBooks adds a Class field to your transaction windows.
After you create your classes, you can assign one of them to that field. Adding a Class To create a class, choose Lists | Class List from the QuickBooks menu bar to display the Class List window. (Remember that you must enable Classes in Preferences to have access to the Class Lists menu item.) Press Ctrl-N to add a new class. Fill in the name of the class in the New Class window. Click Next to add another class, or click OK if you are finished.
TIP: It’s a good idea to create a class called Other. This gives you a way to sort transactions in a logical fashion when there’s no link to one of your real classes.
Using a Class in a Transaction When you’re entering transactions, each transaction window provides a field for entering the class. The invoice form adds a Class field at the top (next to the Customer:Job field) so you can assign the invoice to a class. However, it’s more useful to link a class to each line item of the invoice. To accomplish this, you must customize your invoice forms to add classes as a column.
TIP: When you add the Class column, add it to the screen form, but not the printed form. The customers don’t care (and it’s none of their business anyway).
Reporting by Class There are two types of reports you can run for classes:
· Individual class reports · Reports on all classes To report on a single class, follow these simple steps:
1. Open the Classes list and select the class you want to report on.
2. Press ctrl-q to open a QuickReport on the class.
3. When the Class QuickReport appears you can change the date range or customize the report as needed.
If you want to see one report in which all classes are used, open the Classes list and click the Reports button at the bottom of the list window. Choose Reports On All Classes and then select either Profit & Loss By Class, or Graphs. The Graphs menu item offers a choice of an Income & Expenses Graph, or a Budget vs Actual Graph. The Profit & Loss By Class report is the same as a standard Profit & Loss report, except that each class uses a separate column. The Totals column provides the usual P&L information for your company. Totals for items not assigned to a class appear in a column called Unclassified. This is likely to be a rather crowded column if you chose to enable class tracking after you’d already begun using QuickBooks. You can also display a graph for Income & Expenses sorted by class, or one that compares budget versus actual figures sorted by class. Customizing Other Reports for Class Reporting Many of the reports you run regularly can also be customized to report class information (for example, Aging reports). Use the Filters tab to add all, some, or one class to the report.
Using Classes to Track Partners One clever way to use classes is to track revenue and expenses by partner. This is frequently used in professional service businesses. In effect, each partner is tracked as a profit center. Each partner name is established as a class, and there are two additional classes: · Other, which is used to mean “this particular item is practice-wide.” · Split, which is used to mean “add this up at the end of the year and assign a percentage to each partner.” All revenue transactions are assigned to a partner class. Each line item on every vendor bill is assigned to a class, as follows: · Certain overhead items such as rent, utilities, and so on are assigned to Other. · Consumable and other specific overhead items are assigned to Split. At the end of the year, when the reports are run, the totals for the Split class are reapportioned with a journal entry. The percentage of income is used as a guideline for the percentage of the split, because the assumption is that a partner with a certain amount of revenue must have used a certain amount of consumable items in order to produce that revenue. While this system isn’t terribly exact, it is as ingenious and fair as a system could be. When the year is closed, a percentage of the retained earnings figure is posted to each partner’s equity account. The profit for each partner is the revenue, less the expenses incurred by each partner (including the Split class percentage). This system also provides a nifty way to figure end-of-year bonuses, since the partners can base the amount of the bonus on the amount of the current year retained earnings for each partner.
