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Tax

Miami Income Tax Mortgage Debt Forgiveness: 10 Key Points

Miami Income Tax Mortgage Debt Forgiveness: 10 Key Points

VieraCPA a Miami Income Tax firm points out that canceled debt is normally taxable to you, but there are exceptions. One of those exceptions is available to homeowners whose mortgage debt is partly or entirely forgiven during tax years 2007 through 2012.

Miami Income Tax

Miami Income Tax CPA Firms would like you to know these 10 facts about Mortgage Debt Forgiveness:

1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence, according to VieraCPA a Miami Income Tax Firm.
2. Miami Income Tax Firms point out the limit is $1 million for a married person filing a separate return.
3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
4. Miami Income Tax Firms remind you that to qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion, according to VieraCPA a Miami CPA Firms.
6. Miami Income Tax Firms point out that proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.
7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.
8. Miami Income Tax CPA Gustavo Viera points out that debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.
9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
10. Miami Income Tax CPA Firms advises to examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.
For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit www.irs.gov. IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments, is also an excellent resource.
You can also use the Interactive Tax Assistant available on the IRS website to determine if your cancelled debt is taxable. The ITA takes you through a series of questions and provides you with responses to tax law questions.

Finally, you may obtain copies of IRS publications and forms either by downloading them from www.irs.gov or by Miami Income Tax CPA Firms.

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Tax

Sweep Nets Hundreds of Tax Services Miami Violating Laws

Sweep Nets Hundreds of Tax Services Miami Violating Laws

Miami Department of Consumer Affairs conducted a two-week-long enforcement sweep of Tax services Miami, specifically corporate tax preparation, across the city and issued violations to one out of every three Tax Services Miami it inspected, mainly for violating laws governing refund anticipation loans and disclosure of their true qualifications and fees.

The department conducted close to 850 inspections citywide and issued over 1,000 violations to Tax services Miami, specifically corporate tax preparation, who misrepresented their qualifications, violated consumer rights, or illegally advertised refund anticipation loans as “instant” or “rapid” refunds. Total fines from the enforcement sweep could reach close to $1 million. The agency is encouraging taxpayers to instead take advantage of Tax Services Miami professional CPA Firms for preparing their taxes and claiming the Earned Income Tax Credit.

Tax Services Miami

“There are substantial tax refund dollars waiting, who have, since 2002, claimed almost $10 billion in Earned Income Tax Credits alone,” said Tax Services Miami Gustavo Viera CPA. “That’s why we’re making it as easy as possible for people to file their taxes and claim those refunds.  And since the IRS issues these refunds in such a short amount of time, there’s no reason for such expensive, often deceptively sold loans getting in between you and every dollar of your refund.” Similar issues also apply to corporate tax preparation.

Tax Services Miami have been charged with previous violations in 2011 and 2010, along with other Tax services Miami who are located in neighborhoods with large populations of immigrants and high usage of refund anticipation loans.

Tax Services Miami Firms found that 65 percent of businesses that received a violation last year and were inspected this year, were complying with the law. In Miami, Tax services Miami must post their qualifications, fees and charges, and whether or not they will represent consumers at a government audit. Tax Services Miami must sign every tax return, and provide their customers with a copy of their tax return and a receipt for their services.

Taxpayers with children who earn less than $50,000 or $18,000 for those who do not have children can visit a Volunteer Income Tax Assistance sites in the Tri-County where a certified volunteer will prepare their taxes for free, the agency noted. Those earning less than $57,000 can also file their taxes online for free at irs.gov/taxprep. The city is also partnering with Intuit and One Economy Corporation to offer access to free online tax preparation software. Miami tax payers can also have their tax returns prepared at a participating H&R Block office for free for very simple tax returns. To qualify for the H&R Block discount, residents must earn less than $41,000 with children or $31,000 if they have no children.

 

 

 

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Tax

The IRS is very aggressive on delinquent payroll tax liability

The IRS is Very Aggressive on Delinquent Payroll Tax Liability

The IRS is very aggressive in their collection attempts for past due payroll tax liability. The penalties assessed on delinquent payroll tax liability or filings can dramatically increase the total amount owed in a matter of months. We believe that it is critical to have a CPA, Attorney, or Enrolled Agent represent taxpayers in how to reduce your payroll tax liability in these types of situations. How you answer the first five questions asked by the IRS may determine whether you stay in business or are liquidated by the IRS. You should avoid meeting with any IRS representatives regarding past due payroll tax liability or any tax until you have met with an accountant to discuss your options.

IRS Payroll Tax Liability Liens

The IRS can make your life miserable by filing federal tax liens so you need a CPA who knows how to reduce your payroll tax liability. Past due payroll taxes often trigger Federal Tax Liens which are public record that indicate you have a payroll tax liability. They are filed with the County Clerk in the county from which you or your business operates. Because they are public records they will show up on your credit report. This often makes it difficult for a taxpayer to obtain any financing on an automobile or a home. Federal Tax Liens also can tie up your personal property and real estate. Once a Federal Tax Lien is filed against your property you cannot sell or transfer the property without a clear title. Often taxpayers find themselves in a Catch-22 where they have property that they would like to borrow against, but because of the Federal Tax Lien, they cannot get a loan. Consult a CPA on how to reduce tax liability and remove the tax liens.

IRS Payroll Tax Liability Levy

An IRS levy is the actual action taken by the IRS to past due payroll taxes. For example, the IRS can issue a bank levy to obtain your cash in savings and checking accounts. Or the IRS can levy your wages or accounts receivable to satisfy the payroll tax liability. The person, company, or institution that is served the levy must comply or face their own IRS problems. The additional paperwork this person, company or institution is faced with to comply with the levy, usually causes the taxpayer’s relationship to suffer with the person being levied. Levies should be avoided at all costs and are usually the result of poor or no communication with the IRS or a CPA on how to reduce payroll tax liability.

When the IRS levies a bank account, the levy is only for the particular day the levy is received by the bank. The bank is required to remove whatever amount is available in your account that day (up to the amount of the past due payroll taxes) and send it to the IRS in 21 days unless notified otherwise by the IRS. This type of levy does not affect any future deposits made into your bank account unless the IRS issues another Bank Account Levy for the payroll tax liability.

An IRS Wage Levy is different. Wage levies are filed with your employer and remain in effect until the IRS notifies the employer that the wage levy has been released. Most wage levies take so much money from the taxpayer’s paycheck that the taxpayer doesn’t have enough money to live on.

IRS  Payroll Tax Liability Audit

The IRS can audit you by mail, in their offices, or in your office or home. The location of your audit is a good indication of the severity of the audit. Typically, correspondence audits are for missing documents in your tax return that IRS computers have attempted to find. These usually include W-2’s and 1099 income items or interest expense items. This type of audit can be handled through the mail with the correct documentation. The IRS office audit is usually with a Tax Examiner who will request numerous documents and explanations of various deductions. This type of audit may also require you to produce all bank records for a period of time so that the IRS can check for unreported income. The IRS audit schedule for your home or office should be taken more seriously due to the fact that the IRS Auditor is a Revenue Agent. Revenue Agents receive more training and auditing techniques than a typical Tax Examiner. All IRS audits should be taken seriously because they often lead to other tax years and other tax deductions not originally stated in the audit letter. Consult an Accountant immediately on how to reduce tax liability in case of an audit.

IRS Payroll Tax Liability Seizures

The IRS has extension powers when it comes to Seizure of Assets to pay past due payroll taxes. These powers allow them to seize personal and business assets to pay off outstanding payroll tax liability. This occurs when taxpayers have been avoiding the IRS. The IRS attempts to collect amounts owed with a seizure as the ultimate act of their collection efforts. Consult an Accountant immediately on how to reduce tax liability and avoid any asset seizures.

Unfiled Payroll Tax Returns

Many taxpayers fail to file required returns and find themselves with past due payroll taxes for many reasons. The taxpayer must be aware that failure to file tax returns may be construed as a criminal act by the IRS. This type of criminal act is punishable by one year in jail for each year not filed. Needless to say, it’s one thing to have a payroll tax liability but another thing to potentially lose your freedom for failure to file past due payroll taxes. The IRS may file “SFR” (Substitute For Return) Tax Returns for you. This is the IRS’s version of an unfiled tax return. Because SFR returns are filed in the best interest of the government, the only deductions you’ll see are standard deductions and one personal exemption. You will not get credit for deductions which you may be entitled to such as exemptions for spouses, children, interest and taxes on your home, cost of any stock or real estate sales, and business expenses, etc. Regardless of what you have heard, you have the right to file your original tax return, no matter how late it’s filed.

IRS Penalties

The IRS penalizes millions of taxpayers each year. They have so many penalties that it’s hard to understand which penalty they are hitting you with.

The most common penalties are: Failure to File and Failure to Pay. Both of these penalties can substantially increase the amount you owe the IRS in a very short period of time. To make matters worse the IRS charges you interest on penalties.

Many taxpayers often find out about IRS problems many years after they have occurred. This causes the amount owed to the IRS to be substantially greater due to penalties and interest.

Some IRS penalties can be as high as 75%-100% of the original taxes owed. Often taxpayers can afford to pay the taxes owed, however the extra penalties make it impossible to pay off the entire balance.

Consult a CPA immediately on how to reduce tax liability and avoid all these serious issues.

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Tax

Miami Tax Seven Tips to Avoid Phony Refund Schemes

Miami Tax Seven Tips to Avoid Phony Refund Schemes

Miami Tax offers the following seven tips to help taxpayers avoid during their 1040 tax preparation Miami and an emerging scheme tempting senior citizens and other taxpayers to file tax returns claiming fraudulent refunds.

Miami Tax firm Gustavo A Viera CPA state these schemes promise refunds to people who have little or no income and normally don’t have a requirement to do a 1040 tax preparation Miami.

Miami Tax firm Gustavo A Viera CPA warns that promoters claim they can obtain for their victims, often senior citizens, a tax refund on their 1040 tax preparation Miami or nonexistent stimulus payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college.

Miami Tax CPA warns con artists falsely claim that refunds are available even if the victim went to school decades ago. In many cases, scammers are targeting seniors, people with very low incomes and members of church congregations with bogus promises of free money.

A variation of this scheme also falsely claims the college credit is available to compensate people for paying taxes on groceries when preparing their 1040 tax preparation Miami.

These schemes can be quite costly for victims. Miami Tax and Small business tax services Miami warns promoters may charge exorbitant upfront fees to file their 1040 tax preparation Miami and claims and are often long gone when victims discover they’ve been scammed.

Miami Tax and Small business tax services Miami warns taxpayers should be careful of these scams because, regardless of who did the 1040 tax preparation Miami, the taxpayer is legally responsible for the accuracy of their tax return and must repay any refunds received in error, plus any penalties and interest. They may even face criminal prosecution.

Miami Tax

Miami Tax and Small business tax services Miami warns to avoid becoming ensnared in these schemes, the IRS says taxpayers should beware of any of the following:

Fictitious claims for refunds or rebates based on false statements of entitlement to tax credits.

  • Unfamiliar for-profit tax services selling refund and credit schemes to the membership of local churches.
  • Internet solicitations that direct individuals to toll-free numbers and then solicit social security numbers.
  • Homemade flyers and brochures implying credits or refunds are available without proof of eligibility.
  • Offers of free money with no documentation required.
  • Promises of refunds for “Low Income – No Documents Tax Returns.”
  • Claims for the expired Economic Recovery Credit Program or for economic stimulus payments.
  • Unsolicited offers to prepare a return and split the refund.
  • Unfamiliar return preparation firms soliciting business from cities outside of the normal business or commuting area.

In recent weeks, the IRS has identified and stopped an upsurge of these bogus refund claims coming in from across the United States. The IRS is actively investigating the sources of this scheme, and its promoters can be subject to criminal prosecution.

To get the facts on tax benefits related to education, go the Tax Benefits for Education Information Center on the IRS website.

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Tax

How to Reduce Tax Liability with New IRS Penalty Relief and Installment Agreements

How to Reduce Tax Liability with New IRS Penalty Relief and Installment Agreements

Reduce tax liability — The Internal Revenue Service today announced a major expansion of its “Fresh Start” initiative to help struggling taxpayers to reduce tax liability by taking steps to provide new penalty relief to the unemployed and making Installment Agreements available to more people.

Under the new Fresh Start provisions on how to reduce tax liability, part of a broader effort started at the IRS in 2008 which aided taxpayers to reduce tax liability, certain taxpayers who have been unemployed for 30 days or longer will be able to avoid failure-to-pay penalties. In addition, the IRS is doubling the dollar threshold for taxpayers eligible to reduce tax liability with Installment Agreements to help more people qualify for the program.

“We have an obligation to work with taxpayers who are struggling to make ends meet,” said IRS Commissioner Doug Shulman. ”This new approach makes sense for taxpayers and for the nation’s tax system, and it’s part of a wider effort we have underway to help struggling taxpayers to reduce tax liability.”

Reduce tax liability with Penalty Relief

The IRS announced plans for new penalty relief on how to reduce tax liability for the unemployed on failure-to-pay penalties, which are one of the biggest factors a financially distressed taxpayer faces on a tax bill.

To assist those most in need to reduce tax liability, a six-month grace period on failure-to-pay penalties will be made available to certain wage earners and self-employed individuals in order to reduce tax liability. The request for an extension of time to pay will result in relief from the failure to pay penalty for tax year 2011 only if the tax, interest and any other penalties are fully paid by Oct. 15, 2012.

How to reduce tax liability using the penalty relief will be available to two categories of taxpayers:

•             Wage earners who have been unemployed at least 30 consecutive days during 2011 or in 2012 up to the April 17 deadline for filing a federal tax return this year.

•             Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.

Reduce tax liability using penalty relief is subject to income limits. A taxpayer’s income must not exceed $200,000 if he or she files as married filing jointly or not exceed $100,000 if he or she files as single or head of household. Reduce tax liability penalty relief is also restricted to taxpayers whose calendar year 2011 balance due does not exceed $50,000.

Taxpayers meeting the eligibility criteria will need to complete a new Form 1127A to seek the 2011 How to reduce tax liability penalty relief. The new form is available on IRS.gov.

The failure-to-pay penalty is generally half of 1 percent per month with an upper limit of 25 percent. Under this new relief on reducing tax liability taxpayers can avoid that penalty until Oct. 15, 2012, which is six months beyond this year’s filing deadline. However, the IRS is still legally required to charge interest on unpaid back taxes and does not have the authority to waive this charge, which is currently 3 percent on an annual basis.

Even with the new penalty relief becoming available, the IRS strongly encourages taxpayers to file their returns on time by April 17 or file for an extension. Failure-to-file penalties applied to unpaid taxes remain in effect and are generally 5 percent per month, also with a 25 percent cap.

Reduce tax liability with Installment Agreements

The Fresh Start provisions also mean that more taxpayers will have the ability to use streamlined installment agreements to catch up on back taxes.

The IRS announced today that, effective immediately, the threshold for using an installment agreement without having to supply the IRS with a financial statement has been raised from $25,000 to $50,000. This is a significant reduction in taxpayer burden.

Taxpayers who owe up to $50,000 in back taxes will now be able to enter into a streamlined agreement with the IRS that stretches the payment out over a series of months or years. The maximum term for streamlined installment agreements has also been raised to 72 months from the current 60-month maximum.

Taxpayers seeking installment agreements exceeding $50,000 will still need to supply the IRS with a Collection Information Statement (Form 433-A or Form 433-F). Taxpayers may also pay down their balance due to $50,000 or less to take advantage of this payment option.

An installment agreement is an option for those who cannot pay their entire tax bills by the due date. Penalties are reduced, although interest continues to accrue on the outstanding balance. In order to qualify for the new expanded streamlined installment agreement, a taxpayer must agree to monthly direct debit payments.

Taxpayers can set up an installment agreement with the IRS by going to the On-line Payment Agreement (OPA) page on IRS.gov and following the instructions.

These changes supplement a number of efforts to help struggling taxpayers, including the “Fresh Start” program announced last year. The initiative includes a variety of changes to help individuals and businesses pay back taxes more easily and with less burden, including the issuance of fewer tax liens.

“Our goal is to help people meet their obligations and get back on their feet financially,” Shulman said.

Input from the Internal Revenue Service Advisory Council and the IRS National Taxpayer Advocate’s office contributed to the formulation of Fresh Start.

Offers in Compromise

Under the first round of Fresh Start, the IRS expanded a new streamlined Offer in Compromise (OIC) program to cover a larger group of struggling taxpayers. An offer-in-compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed.

The IRS recognizes that many taxpayers are still struggling to pay their bills so the agency has been working to put in place more common-sense changes to the OIC program to more closely reflect real-world situations.

For example, the IRS has more flexibility with financial analysis for determining reasonable collection potential for distressed taxpayers.

Generally, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.

Details on IRS Collection and Other Information

A series of eight short videos are available to familiarize taxpayers and practitioners with the IRS collection process. The series “Owe Taxes? Understanding IRS Collection Efforts”, is available on the IRS website, www.irs.gov.

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Tax

Tax Services Miami Threatened over Tax Refund Delays

Tax Services Threatened over Tax Refund Delays

Anxious taxpayers awaiting their delayed tax refunds are in some isolated cases taking out their frustrations on their Tax Services.

“Severe taxpayer frustration is generated due to the impact of their 1040 tax preparation delayed refunds and a lack of information on status,” said Bernie McKay, chairman of the Council for Electronic Revenue Communication Enhancement, in testimony on February 28 at a hearing of the IRS Oversight Board. His organization, CERCA, serves as a liaison between the Internal Revenue Service and the electronic filing industry.

“Such intense early season taxpayer frustration at Tax Services is directly related to the fact that significant numbers of early season return filers have the most urgent financial need for receipt of their tax refund to meet pressing household, personal or family bills,” McKay added. “For many of these taxpayers, the receipt of their annual tax refund is a major financial event which they and their families depend upon. Tax Services knows when refunds are delayed and status information is not available or reliable, private sector Tax Services Miami staff suffer widespread verbal abuse from deeply frustrated taxpayers after 1040 tax preparation, while Tax Services have been physically threatened or even sustained personal property damage (e.g., rocks through car windshield).”

“We did not go into detail about specific incidents, but if you talk to any Tax Services Miami, they will say that there were challenges that they had during and after 1040 tax preparation,” said CERCA spokesman Mike Cavanagh.

The IRS informed Tax Services early this tax season that it was experiencing tax refund delays as a result of new anti-fraud filtering software it had put in place to protect taxpayers against identity theft. The “Where’s My Refund” tool Tax Services Miami refer taxpayers to on the IRS Web site was also producing error messages and telling taxpayers different dates for when they could expect their refunds.

In the most recent update on the status of the tax refund delays, the IRS indicated that it was catching up, although it was still about 2 million tax returns behind where it was last tax season.

“The Where’s My Refund online tool needs to be continuously functioning, timely and accurate,” said McKay. “A lack of information, or the repeated unavailability or non-functionality of the tool itself after 1040 tax preparation, adds to the growing frustration of the taxpayer and directly drives growing call volumes for both the public and private sectors alike.”

At one point, when the Where’s My Refund tool was malfunctioning, the IRS asked taxpayers not to keep calling and Tax Services got the calls.

But that put more pressure on Tax Services Miami to answer the question about taxpayer’s 1040 tax preparation for clients, CERCA noted. “The IRS posting of notices asking taxpayers to stop calling because it has no information does not help the problem, and does not produce the desired behavior within the impatient taxpayer population,” said McKay in his testimony. “If the taxpayer does indeed stop calling the IRS, they just start calling, emailing, texting, blogging or tweeting Tax Services. A lack of information or customer service does not result in the taxpayer patiently going away and waiting. It is not a behavior that a dissatisfied consumer of services is accustomed to in the modern 24×7 world of instantaneous communications and constant access to desired information and services. A fundamental customer service paradigm shift has taken place in the commercial world, and the government sector is not immune from its impact.”

Besides the anti-fraud identity theft filters, some of the problems may have also been due to the IRS’s new Modernized eFile system. The IRS told taxpayers that the refunds would be delivered within a 10-21-day window, but many tax refunds continue to be delayed, Tax Services Miami noted Friday.

CERCA had seen this coming. “Despite years of public predictions of significant acceleration in refund cycle times due to major public investments in IRS systems, this year the IRS official guidance, and actual experience, was of a significantly longer refund cycle time than in the past,” said McKay. “Going forward, strategy must either align performance and management objectives back to the long-time predictions and commitments made to the public, or begin a major public re-education program to change public expectations about the timeliness of 1040 tax preparation refund availability from the U.S. income tax system. The IRS Refund Cycle Chart has been out of synch this tax season with actual refund turnaround time, and out of synch as well with the IRS’s own projection posted in January that lengthened the predicted amount of time it might take refunds to be processed to be 10-21 days. The disconnects in these types of critical datapoints add to taxpayer confusion and anxiety, and an objective for future seasons must be a standard of simplicity and consistency and timeliness in information and messaging.”

Even after the system indicated that the refund had been issued, the money oftentimes has not been forthcoming. “Once the IRS does issue the refund, the agency can today provide no further support to the taxpayer when researching where the refund actually is, and what happened, for example, with regard to offsets,” said McKay. “Tax Preparation Miami and electronic service providers need access to [Financial Management Service] information to verify where disbursement is in the process, so that if there’s been a problem with the funds they can be traced. Lack of timely, accurate, accessible information drives negative taxpayer experiences, particularly with early return filers who have the most urgent need to receive their refunds.”

Tax Services Miami wants to work with the IRS to improve the situation for next tax season.

“What we simply wanted to do was suggest solutions,” said Cavanagh. “Next year let’s work harder. The issues this season have happened, but let’s work with the IRS to do better.” He acknowledged that the problems from earlier this tax season are now abating. An IRS spokesman confirmed that the problems are mostly resolved at this point.

Tax Services Miami want to make sure that the situation improves in future tax seasons or else it could upset the delicate balance involved with voluntary tax compliance.

“The role of tax refunds as an incentive for taxpayer voluntary compliance in the United States is foundational to the very high tax compliance rate the U.S. government has come to expect and enjoy over many decades,” said McKay in his testimony. “The role of tax credits as a lever of national economic policy has likewise become central to the role of the U.S. tax system in the American economy. If the timeliness of tax refunds is going to fundamentally change as the ‘new normal’ of American taxation, the taxpaying public must be informed and educated. Changing citizen expectations and behaviors took 10 years to produce a conversion from paper returns to electronic filing and achieving an 80 percent e-file rate. Changing citizen expectations about the timeliness of their access to their tax refund money would likely be a more difficult challenge that would encounter a more a challenging range of taxpayer behaviors and emotions, if this tax season is any indication.”

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1040 Tax Preparation How To Calculate and Make Estimated Tax Payments

1040 Tax Preparation How To Calculate and Make Estimated Tax Payments

As a 1040 Tax Preparation Tax Return Preparation CPA Firms will tell new business owners, understanding your tax obligations is critical and one of the first requirements you’ll need to understand are estimated tax payments prior to your 1040 tax preparation.

1040 tax preparation

What are estimated taxes? Who must pay them and how? Below are some facts from Tax Services Miami Guide to help new small business owners understand their estimated tax obligations.

What Are Estimated Taxes?

1040 Tax Preparation CPA Firms remind you that the IRS and your state’s treasury department require that individuals and businesses pay taxes almost as quickly as they earn income. If taxes aren’t withheld from wages or other payments, then you will likely need to pay estimated tax payments each quarter prior to your 1040 tax preparation.

Tax Services Miami would like you to think of estimated taxes as a “pay-as-you-go” tax. Four times a year (quarterly), you are required to send Uncle Sam enough of your revenues to cover your income tax and your self-employment tax (Social Security and Medicare) obligations prior to Tax Return Preparation time.

If you don’t pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax when you get to your 1040 tax preparation. However, Tax Services Miami knows that calculating earnings isn’t easy, so it offers a safe harbor rule – if you pay at least as much as your previous year’s liability or pay within 90 percent of your actual liability, there’s no penalty for underpayment.

1040 Tax Preparation Tax Return Preparation Who Pays Estimated Taxes?

If you are self-employed and expect to owe $1,000 or more when you do your 1040 Tax Preparation, then you must pay estimated taxes on income.  If it’s not through withholding, then it has to be done by quarterly estimated taxes. If your business is structured as a corporation, you’ll need to pay estimated taxes if you expect to owe $500 when you file.

How Much Should You Pay in Estimated Taxes?

1040 tax preparation and calculating what you owe each quarter requires figuring out your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. Each business situation is different, especially if you are a new business owner, so it’s worth spending some time with a Tax Services Miami tax advisor to understand the best calculation method for your situation.

You have a number of options when it comes to calculating what you owe each quarter:

•Use Form 1040-ES – You can calculate your quarterly estimated tax payment using Form 1040-ES (the same form used to pay estimated taxes), which includes a worksheet that helps you estimate how much you owe for the current year. Corporations should use Form 1120-W to calculate estimated taxes.

•Refer to Last Year’s Return – If you have been in business for a while, you can refer to your previous year’s federal tax return. Include all the income and deductions you expect to take on your current year’s tax return and refer to the total tax you paid so that your estimated tax payments are in the same range as last year’s taxes (100-110 percent is the range to shoot for to avoid underpayment problems).

•Make a Quarterly Calculation – If you are a freelancer or independent contractor and face fluctuating or cyclical income, you might prefer to calculate your estimated taxes on a quarterly basis.

Tax Return Preparation CPA Firms offers more advice in its Estimated Taxes Guide on how to calculate your payment and adjust estimates if you think you are paying too much – or too little – as the year progresses.

When Are Payments Due?

For estimated tax purposes, the year is divided into four payment periods. Payments for each year are due on the 15th day of April, June, September and the following January. You should try to pay at least the minimum owed by the due date (with the remainder paid on April 15), or risk incurring penalties from the IRS or your state.

How To Pay Estimated Taxes

Paying your estimated taxes is an easy process. If you are filing as a self-employed individual, use Form 1040-ES, which includes quarterly payment vouchers to submit with your payment. Corporations can deposit the payments by using the Electronic Federal Tax Payment System for deposit coupons (Forms 8109). Once you are in the system, the IRS will send you payment vouchers at the end of each tax year so you won’t have to worry about downloading the latest forms.

Paying Estimate Taxes to Your State?

You need to pay your estimated state income taxes at the same time you pay your federal taxes. Find links to your state’s tax office for the appropriate forms here.

Talk to a 1040 Tax Preparation Specialist

Spend an hour with a Tax Return Preparation CPA Firms to help you understand what the best calculation methods are, how to appropriately track and deduct expenses, and how to maintain good records. Many will provide this initial consultation for free simply because they hope you will return and use them come filing season.

 

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Accounting Firms High Hopes Congress Slash Taxes

Accounting Firms High Hopes Congress Slash Taxes

Accounting Firms have been tracking House Republicans hoping they will slash personal income taxes to a 25 percent top rate and a 10 percent lower rate as part of their fiscal 2013 budget proposal to be released Tuesday.

Accounting Firms hope the election-year plan from House Budget Committee Chairman Paul Ryan (R-Wis.) would greatly simplify the tax code by collapsing the current system of six tax brackets for 1040 tax preparation for individuals into two marginal rates, Accounting Firms Gustavo A. Viera CPA said Monday.

It would also lower the top corporate tax rate to 25 percent, and scrap the Alternative Minimum Tax.

Accounting Firms Gustavo A. Viera CPA says the proposal represents an aggressive bid by House Republicans to seize an advantage on taxes ahead of a presidential election expected to center on economic issues and the future of the Bush-era tax rates, which are set to expire at the end of the year.

While the proposal is unlikely to become law this year, as most Accounting Firms agree, it dovetails with plans from GOP presidential candidates and sets the stage for a battle with Democrats and President Obama, who wants to raise tax rates on families with annual incomes above $250,000.

In its corporate tax reform framework, Accounting Firms called for lowering the top rate to 28 percent, and ensuring that U.S. manufacturers paid no more than 25 percent.

Accounting Firms called out that a number of details are left vague in the House GOP plan, including the income thresholds for the two proposed individual tax brackets.

Accounting Firms note the proposal does include more tax reform specifics than last year’s House GOP budget did, and it lays out a clearer vision of how Republicans on Capitol Hill want to overhaul the tax code — an idea that has been embraced by officials and political figures on both sides of the aisle.

The Ryan budget plan would set a $1.028 trillion discretionary spending cap below the $1.047 trillion cap set by last summer’s debt-ceiling deal, and instruct committees to find ways to avoid the automatic cuts also included in that agreement, according to lawmakers and Accounting Firms briefed on the plan.

Accounting Firms warn the plan also sets up a fight with Senate Democrats, who had warned Republicans against cuts deeper than those mandated by the debt-ceiling deal.

On the health side, the budget includes a plan to overhaul Medicare that Ryan hashed out an option with Sen. Ron Wyden (D-Ore.) that would require future seniors to use subsidies to buy into the current public program or a private plan.

Accounting Firms point out the new proposal is a shift from a proposal in the 2012 budget, which would have replaced traditional Medicare entirely with a privatized system in which seniors would buy private insurance with limited subsidies from the government.

Republicans took a political pounding over last year’s Medicare proposal, which was widely seen as contributing to the special election loss of a traditionally GOP House seat in New York.

With that in mind, Republicans have made the case that Wyden’s involvement with Ryan’s latest Medicare proposal makes the plan more bipartisan, though a wide range of Democrats have sharply criticized the idea.

Accounting Firms Gustavo A Viera CPA points out, like the House GOP’s 2012 budget, the new proposal does not include an outline for revamping Social Security.

The three appropriators on Ryan’s Budget Committee had been fighting to maintain the August debt-ceiling level of $1.047 trillion, and Rep. Mike Simpson (R-Idaho) hinted that appropriators would try to revert the figure to that level when the panel meets Wednesday to mark up the budget.

“We’ll see what happens at mark-up,” Accounting Firms VieraCPA said.

Members of the conservative Republican Study Committee (RSC), on the other hand, told The Hill that they would like to cut the budget more deeply.

Rep. Tim Huelskamp (R-Kan.) said leaders in both parties are at risk of “reneging” on the debt-ceiling deal known as the Budget Control Act (BCA).

“I guess I am learning that a majority of the House and Senate, and the president, apparently agree we’re not going to follow the BCA,” Accounting Firms VieraCPA said. “If the budget passes at $1.028 [trillion] or $1.047 [trillion] that is reneging on the Budget Control Act, which is the $950 [billion].”

Accountant Firms VieraCPA said he “presumes” the RSC will offer an alternative budget with a lower spending cap.

Even though top officials in both parties have said they would like to overhaul the tax code, few Accounting Firms think that process can be completed during the heat of a presidential election.

Both House Republicans and the administration want to prune out a wide range of credits and deductions in a tax overhaul. But Democrats have concentrated much of their fire on tax breaks for hedge fund managers and the oil-and-gas industry.

In guidance sent to the Budget Committee in March that helped Ryan produce his budget, Ways and Means Republicans criticized the president for not seeking to revamp the business and individual tax structures together, and for pushing to continue to tax corporations for profits made offshore, noted Accounting Firms VieraCPA.

The White House outline, the GOP lawmakers said, “falls woefully short: the rates are too high, the tax base is too narrow (and used as a tool to provide political favors); and the international reforms are anti-competitive.”

The Ryan budget would shift the United States to a so-called territorial system that would largely exempt a corporation’s foreign earnings from American taxation, and would not use loophole closures to increase net revenues for the government.

 

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Outsource Your Bookkeeping and Focus on Selling

Outsource Your Bookkeeping and Focus on Selling

Our Miami Bookkeeping Services handle all your daily accounting needs: invoices and statements, accounts payable, cash receipts and disbursements, payroll, bank reconciliations and recurring reports. Your bookkeeper will be in contact with you daily by Instant Messenger, email or phone with any questions or concerns. All under the supervision of our accountants in our Miami CPA Firm.

Accounts Receivable

Get your invoices out promptly and send monthly statements on the date of your choice.

We offer two options:

  • We prepare your sales invoice from information you email to our bookkeeper. We email you the final invoice for approval.
  • You generate invoices and statements through time and billing software. Your bookkeeper posts or imports the invoices into your accounting software.

Whether we prepare your invoices for you or you generate them yourself, we can print and mail or email customer invoices and statements on your behalf.

Accounts Receivable reports for collection and cash flow management are prepared and delivered to you on a schedule of your choice. Finance changes are assessed on overdue invoices based on your company’s payment terms and conditions, and statements can be initiated and transmitted on a schedule of your choice.

Accounts Payable

Invoices you receive from vendors will need to be scanned and emailed to us. We provide a scanner with PaperPort scanning software at no cost.

This process is as simple as 1-2-3:

1. Insert the invoice into the scanner then press the Scan button.

2. Name the file that appears on your screen (give it a unique name)

3. Click the email icon to create an email, attach the file and send.

That’s it! You’re done! Your vendor invoices for the day are on the way to us for recording into your accounting file.

Alternately, you can have vendor invoices mailed or emailed directly to us for processing.

On a schedule determined by you, we will email you a report of all open vendor invoices. Just indicate which invoices you want paid, then email the report back. We will set up the requested bill payment checks in your accounting file.

Once the checks are ready to print, we offer two options for printing:

  • You or a designated staff member can log into your accounting software and print checks directly to your local printer.
  • We can print the checks and mail or deliver them to you.

The printed checks are signed and mailed from your office. You maintain full control over your funds.

Cash Receipts

Prior to taking deposits to the bank, you will scan the deposit slip and each of the items to be deposited. Then create an email and upload the file at your convenience. We will post the customer payments against the appropriate customer invoices and record the bank deposit.

Payroll Services

We either processes payroll or makes the necessary entries to record payroll processed by a third-party provider. In either case, payroll entries will include complete recording of gross wages, employer taxes and other payroll expenses, and payroll liabilities, and quarterly and annual reconciliation of general ledger balances to payroll returns. If needed, we can also initiate transfers from your operating bank account to your payroll bank account to cover payroll if these accounts are held by the same bank.

We do recommend direct deposit of employee paychecks whenever possible.

Banking Activities

We will have access to view and download transaction history and bank statements, and, if desired, to transfer funds between business accounts at your bank. We will not have the authority to sign checks or to initiate electronic payments that have not been pre-approved by you or a designated staff member.

Bank account activity is updated daily in your accounting file, so that you always know your available cash balance. Transactions that appear in your bank account that we have no knowledge of will be posted, but we will inform you of these transactions and request supporting information by email. Bank account balance notifications and cash receipts and disbursement reports can be emailed to you daily, weekly, or monthly as desired.

Banking, credit card, and loan accounts are reconciled to the corresponding statements each month, and the reconciliation reports are emailed to you promptly. When emailing the reconciliation report, we will call your attention to old outstanding items that require resolution and will also provide a list of any missing check numbers for security and control purposes.

Bank Reconciliation

Reconciling your business checking account each month allows us to keep your bank account, accounting, and taxes up-to-date.

Having us reconcile your account each month allows you to…

  • Identify lost checks, lost deposits and unauthorized wire transactions.
  • Detect and prevent excess/unjustified bank charges and ensures transactions are posted correctly by your bank.
  • Detect and prevent embezzlement of funds from within your company.
  • Know how your business is doing. You can’t really know unless all accounts are reconciled and properly accounted for on your financial statement.
  • Manage your cash more effectively. Proper management of funds not only saves money, it makes money for you.
  • Protect yourself. By timely reconciling and promptly objecting to your bank about any unauthorized, fraudulent or forged checks presented to your bank and paid by that bank, you can relieve your agency of responsibility for the shortfall and transfer the risk to the bank. This reason to reconcile alone should be enough. Crime exists.
  • Sleep Better. You will sleep more peacefully at night knowing your bank accounts are reconciled, in balance and that all escrow funds, accounts, checks and disbursed funds are properly accounted for.

Compiled Financial Statements

You’ll get a complete set Compiled Financial Statements of on either a monthly or quarterly basis (you’re preference). The financials will consist of a Balance Sheet and Income Statement also known as a Profit & Loss. We will set up a Web Conference to review your financial results each quarter. This gives you and us a forum for Q&A and advisory type services.

 

 

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Warning Signs it’s Time to Change Your Accountant

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CPA

Warning Signs it’s Time to Change Your Accountant

Are you considering firing your current Accountant in favor of a new one? If so, you’re probably not sure if you’re overreacting or if you have just cause. The following warning signs will help you decide if it is time for you to change accountants: Your accountant does not return your phone calls in a timely manner, if at all.The bottom line here is you have hired your accountant to work for you. If he/she is not returning your telephone calls, or waits until you’ve left several messages before calling you back, take this seriously. A few incidents here and there are not something to worry about, as your accountant likely has many other clients and may not be in the office for days at a time. However, if not returning phone calls are the normal state of affairs, you will want to set up an appointment to discuss your concerns.

Your accountant is never in the office.

This could mean he or she is very busy and out with other clients the majority of the time. It could also mean they do not take their business, or your business, very seriously. Regardless, if you have a difficult time connecting with your accountant, it may be time to look for someone who has more time in their schedule to see to your needs.

Your accountant never delivers your financial statements or income taxes or other forms to you on time.

This is not a good scenario! You have hired your accountant to be on top of the financial aspects of your business. If they are not able to get your forms to you on time, you need to first ask yourself if it is your fault. If you are late getting them the material they need, then it probably has little to do with them, but if they have everything they require from you with ample time – and are still consistently late, you will probably want to consider changing accountants.

Your accountant does not take the time to discuss your financial reports with you.

This is your business. You have the right to understand your financial reports, and if your accountant is unwilling to schedule the time to go over them with you, this is a warning sign you shouldn’t ignore. Think of it this way if you don’t understand your reports, then you can’t feel confident that the IRS is getting correct information. It is essential to your peace of mind, and to your business, that you understand all of your financial reports.

The staff member accountant assigned to your account does not seem competent.

If staff is unable to answer your questions, or if you seem to know more about the accounting aspects of your business than they do, you should request a different person to handle your accounts. If this is unable to be done, you may want to consider switching accountants.

You begin to receive a lot of IRS notices in the mail.

This is a serious warning sign. If the IRS is sending you repeated notices, then your business’s financial affairs are not being taken care of correctly. Too many of these notices, and your business will be red-flagged by the IRS, which could lead to years of issues every time a form is filed. Speak with your accountant and demand to know what the problem is. If you are unsatisfied with the answers, it is time to search for a new accountant.

Trust your instincts.

Often overlooked, but it shouldn’t be. If your instincts are telling you something isn’t right, pay attention.

With any of the above warning signs, it is always best to speak with your accountant about the issues at hand first. Sometimes, you may gain a clearer understanding and then feel more comfortable, but if you don’t, you need to move on. Changing accountants isn’t easy, but if it is the right decision, then it is absolutely what you must do.