3 big ways the tax code helps natural disaster victim

When natural disasters occur, many people are often left with damaged or destroyed homes and businesses. Some lose everything they own. If you are affected by a disaster that is declared by the president to qualify for federal assistance, there are several provisions in the tax law that may provide relief:

1. Extended tax deadline and interest abatement. The IRS is authorized to postpone the deadlines for filing returns and paying taxes for up to 120 days in a federally declared disaster area. Also, the IRS will not charge interest that would otherwise accrue for the extension period.
2. Faster refund. Taxpayers suffering losses in a federal disaster area have a choice of which tax year to deduct the casualty loss. You may deduct it on the return for the year the loss occurs, or it can be claimed on your prior year’s tax return. Amending your prior year’s return may give you a refund of much-needed cash sooner than waiting to deduct the loss on your current year’s tax return.
3. Tax-free gain. If the insurance payments you receive exceed the tax basis of your property, you will end up with a casualty gain. Casualty gains in federally declared disaster areas receive special tax treatment. Read more...
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Seasonal spender or credit card addict? | Bookkeeping services NJ

It’s not a big surprise if you found yourself reaching for your credit card more often around the holidays. The National Retail Federation projected that consumers would spend an average of $1,007 on gifts, decorations,and candy this season.

However, if you’ve noticed your plastic habits don’t fluctuate throughout the year, it could mean you’re living beyond your means … and you may be heading for financial disaster.Here are some ways to tell that you need to get your spending habits under control:

• Your credit card balances keep growing. If you’re only tackling minimum payments, you’re not going to see your credit card balance go down. To start digging yourself out of a financial hole, try paying double the minimum payment amount. Then keep doubling it. Your goal should be to pay the total balance on your credit card each month.
• You’ve got a lot of rotating plastic. Have you taken out a cash advance on one credit card to pay off another, then applied for another card when the first comes due?Stop. Instead, make a list of your credit cards and balances and start working backwards. If you opened two new cards last year, work to eliminate the balances of those two card cards in 2019. Then move on to the next two, and so on.

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How to Use a Minimize Rent and Storage Costs

For some small businesses, office lease and inventory storage costs are seen as settled. In any case, are such costs really inflexible? In many cases, no.

Since lease and capacity costs regularly establish a critical bit of a business' aggregate cost spending plan, inventive proprietors who discover approaches to limit those expenses may receive significant benefits. Consider the accompanying inquiries when attempting to shave some cash off your lease and capacity costs:

1. Lease — Is it negotiable? On the off chance that your business is situated in a region with empty places of business, you may appreciate a solid haggling position. Open up arrangements, particularly in case you're nearing the finish of a rent term.

In the event that your organization is battling, consider giving your landowner a chance to peruse your company's budget summaries, clarifying that a decrease in lease would empower your business to endure and thrive. A renegotiated rent assention may likewise accommodate an impermanent lease decrease in return for expanded installments when deals begin climbing.

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Minimize Your Tax Bill by Volunteering for Charity

In the event that you do humanitarian effort for a magnanimous association and have not monitored your out-of-stash costs, you may leave behind a phenomenal chance to bring down your expense bill.

Step by step instructions to get a tax cut

To qualify, your unreimbursed costs must relate straightforwardly to the philanthropy, and you should organize your findings on your assessment form. Here is a concise once-over of what to remember:

Philanthropy related out-of-stash costs might be deductible. Volunteers may deduct the expense of postage stamps, supplies and other out-of-take costs brought about in their charitable effort. For volunteers who are required to wear a uniform, the expense of purchasing outfits is deductible on the off chance that they are unsatisfactory for regular wear.

Time volunteered in not deductible. The expense of your time, regardless of how important it might be, isn't deductible. That is genuine regardless of whether you would regularly be paid for the sort of administration you contribute. For example, Bookkeeping services who perform free counseling for philanthropies can't deduct what they would regularly charge for their administrations.

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Estate Planning for Young Children

While numerous individuals discover estate planning essential, those with little youngsters may discover it particularly basic. A estate plan can be a useful arranging device to guarantee your kids are secured if something transpires.

You may utilize your bequest intend to select gatekeepers for your minor youngsters, and additionally accommodate their monetary prosperity. This may incorporate assigning recipients for retirement accounts.

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Succession Planning for Small Businesses

Progression arranging is critical for entrepreneurs, particularly those with a family-claimed business. Before you take a seat with your assessment and lawful consultants to draw up a progression plan, you should thoroughly consider three critical issues:

Who: The subject of who will succeed you in the business can be the hardest of all. Most proprietors need to pass the business on to the family. Be that as it may, are your youngsters willing to go up against the business, and assuming this is the case, would they say they are equipped for running it? Settling these sorts of issues may take a considerable measure of open discourse.

In the event that there isn't an undeniable family successor, different choices incorporate pitching the business to a pariah, elevating a current worker to head the business while you hold possession, or notwithstanding pitching the business to the representatives.

When: When you make the change relies upon various variables, for example, your age, wellbeing, retirement objectives and the status of a successor. Consider whether you need to keep up some inclusion with the business or make a total separation. Keep in mind, however, you ought to dependably have a possibility progression plan if there should arise an occurrence of sudden demise or handicap.

How: How you structure the progress depends halfway on the responses to the prior inquiries and mostly on money related contemplations. Thoroughly consider issues, for example, regardless of whether you require retirement pay from the business or whether you principally need to limit bequest charges.

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Smart strategie for required distributions RMDs

After all the exhortation you've gotten about putting something aside for retirement, removing cash from your conventional IRAs and other qualified retirement designs may feel odd. However once you achieve 70½, the required least conveyance (RMD) rules say you need to do only that.

Under these principles, you should pull back no less than a base sum from your retirement designs every year. Since the withdrawals are viewed as conventional wage, arranging ahead of time can enable you to get ready for the effect on your assessment form. Here some arranging tips:

• Make a rundown of your records. The guidelines require a RMD computation for each arrangement. With customary IRAs, including SEP and SIMPLE designs, you can take the aggregate dissemination from at least one records, in any sum you pick. You can likewise take more than the base. 

Be that as it may, withdrawals from various kinds of retirement designs can't be consolidated. Say for example, you have one 401(k) and one IRA. You need to figure the RMD for each and take isolate conveyances.

For what reason is that imperative? Neglecting to take disseminations, or taking not exactly is required, could result in a punishment of 50 percent of the setback.

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Steer clear of these 5 retirement plan mistakes

Participating in a 401(k) or similar retirement plan is a tax-advantaged way to save for retirement. If you have the option of participating in a 401(k) plan, avoid these five common mistakes:

• Not taking full advantage. Too many employees opt out of the plan or don’t contribute as much as they can afford. At a minimum, try to set aside enough to receive the full employer-matching contribution.
• Investing too much in company stock. Try not to put all your eggs into one basket when it comes to company stock. Even if the company is doing well now, things can change. If you lose your job, you don’t want to lose your retirement savings, too.

If your employer uses company stock for the matching contribution, you may have no choice. But at least you can select other investments for your own contributions.

• Borrowing from your plan. Take a loan from the plan only as a last resort. Remember, these savings are for your retirement, not to fund everyday needs. When you borrow from the plan, you’re losing the tax-deferred growth on those funds.
• Withdrawing your savings if you change jobs. It’s tempting to cash out your savings if you change jobs. But if you do, you’ll owe taxes and probably a penalty. More importantly, you’ll lose the future tax-favored growth that you might need in retirement. Instead, talk to your financial advisor about a rollover into an IRA or your new employer’s plan.

Not sure if the retirement planning you’ve done so far will be enough? Schedule a time to talk with us at www.bas-pc.com/schedule and we’d be more than happy to discuss your specific situation and give advice on how to maximize your funds leading up to retirement.

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6 ways to avoid credit card catastrophes

Credit cards should be a convenient short-term way to pay, not a source of regular spending. Unfortunately, some people have a hard time staying true to this concept. Instead of paying off the entire balance due on the card each month, they let it grow and pay only the minimum amounts.
If this sounds all too familiar, it’s time to stop what you’re doing and start following these rules:

• Pay the entire balance due each month.

• If a balance remains unpaid at month’s end, do not use the card again.

• Do not use more than one credit card.

• Do not accept credit cards from specific retail stores.

• Do not pay off one credit card with another.

• Do not purchase gifts for people with your credit card. It’s often too easy to let your generosity exceed your ability to pay.

Spending habit monitoring tip: Take your credit card charges and your canceled checks for the past year and sort each charge and canceled check into two piles. One pile is for the “must” payments such as utilities, taxes, medication, rent or mortgage payments. The other pile is for the optional spending, such as meals at restaurants, gifts for people, recreational events or equipment.

Want more cash flow ideas?

Give us a call today and we will be more than happy to discuss specific strategies that are geared to your situation.

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How to get your marriage off to a good financial start

Wedding season is upon us!

Did you know couples often enter into marriage without ever having had a discussion about financial issues? As a result, they find themselves frequently arguing about money. If you are planning a wedding, here are some steps you can take to get your marriage off to a good financial start:

• Determine your financial compatibility. Take some time to discuss your finances before you tie the knot. Talk about your assets, debts, credit ratings and your financial attitudes, including your spending and saving habits. Do you share the same goals? Talk it out and see where you two align and where you differ.

• Make a plan for how to handle finances after you say “I do.” This means figuring out day-to-day stuff, like who will pay the bills and whether or not you’ll maintain joint or separate checking accounts.

• Involve your financial advisors. Every couple needs to work out their own style for handling money. Call us to assist you in setting up a budget, controlling your taxes and mapping out a financial plan for your future.

• Discuss any related legal matters. If you have substantial assets, talk about the merits of a prenuptual agreement with your attorney. And ask your attorney how you can protect yourself from your partner’s credits if they have substantial debt. Perhaps you plan on buying a house together or combining financial accounts. Your attorney can advise you on the best way to hold title to your assets.

Discussing your finances before you wed may increase your chances for living happily ever after. Give us a call if you would like assistance in this area.

We love accounting (and happy couples)  =)

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Answers to Common Questions After You File Your Tax Return

Many taxpayers have questions after they file their tax returns. The IRS provides answers to many of them. These are a few of the most common.

* How can I check the status of my refund?

You can go online to check on your refund if it has been 24 hours since the IRS would have received your e-filed tax return or four weeks after you mailed your paper return. Go to www.irs.gov and click on “Where’s My Refund?” You will need your Social Security number, your filing status, and the amount of your tax refund.

* What records should I keep?

Keep receipts, canceled checks, or other substantiation for any deductions or credits you claimed. Also keep records that verify other items on your tax return (W-2s, 1099s, etc.). Keep a copy of the tax return, along with the supporting records, for seven years.

* What if I discover that I made a mistake on my return?

If you discover that you failed to report some income or claim a deduction or tax credit to which you are entitled, you can correct the error by filing an amended tax return using Form 1040X, Amended U.S. Individual Income Tax Return.

* What if my address changes after I file?

If you move or have an address change after filing your return, send Form 8822, Change of Address, to the IRS. You should also notify the Postal Service of your new address so that you’ll receive any refund you’re due or any notices sent by the IRS.

For answers to other tax questions you may have, give us a call.

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How to Build Your Business Credit

Whether your firm has been operating for years, or you decided over last night’s coffee to start a new venture, you’re sure to face the need for business credit. Entrepreneurs often ask friends and family to invest in their start-up businesses, and many draw on personal funds to launch new firms. But to address ongoing business needs – such as requirements for inventory, equipment, and real estate – most firms seek additional help from credit card companies and banks.

Unfortunately, today financial institutions are more wary than they used to be about extending credit to small companies. And with many business revenues faltering because of market pressures, even well-established companies have found it difficult to obtain loans.

As a result, establishing good business credit has become more important than ever. To convince a lender that your company represents a good risk, you should first prepare a well-written business plan. It need not be as long as a Tolstoy novel, but should lay out in some detail your products, pricing, estimates, competition, and basis for cash flow projections. A clearly defined business plan will convince potential lenders that you’ve addressed the greatest obstacles to your firm’s success. Before approaching lenders, consider your business structure as well. For example, a limited liability company or corporation may be seen as less risky than a sole proprietorship. The goal is to present a professional image to convince the lender that your company will prosper in good times and bad.

To establish good business credit, you’ll also want to make sure all required licenses are current and your firm is registered with the major business credit reporting bureaus such as Experian and Equifax. Work with vendors who report to these bureaus so that your on-time payments are tracked.

Of course, the key to building good business credit is making all your payments on time. As with personal credit, your business credit score will climb as managers prove their skill at monitoring the firm’s cash flow and their commitment to honoring the firm’s obligations.

Also consider having our office review your financial statements before you send them to the bank. If you need assistance with this or other business concerns, give us a call.

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Building Customer Loyalty – A Few Basics

Studies have shown that businesses often spend five to six times more to attract a new customer than to keep an existing one. Over the long term, those dollars add up. In fact, a company’s ability to care for its customers often determines its survivability in the marketplace. Make customers happy and they’ll stick with you; disappoint them and they’ll tell their friends.
Building customer loyalty is a matter of focusing on the basics. Does your company need to refocus on any of them?

Hire friendly people. You have probably visited a business where you encountered a grumpy salesperson or a bashful receptionist. Unlikeable staff will not generate repeat business. The staff you employ should enjoy interacting with people. If your employees regularly hide out in the back room instead of greeting clients, it’s time to take a hard look at your hiring practices.

Request customer feedback. This can be as simple as spending a few minutes with a customer to inquire about his or her experience with your company. Be specific. Instead of asking “How was our customer service today?”, ask a more specific question like, “Did our salesperson answer all your questions about XYZ product?” You might also establish a focus group of customers to solicit ideas for improving your products and services.

Follow up. If customers spend valuable time providing their opinions via surveys, suggestion boxes, or focus groups, don’t ignore what they have to say. Let them know that you take their ideas seriously and are looking for ways to implement at least some of their suggestions.

Never stop training. Often employees treat customers rudely or disrespectfully because they simply lack training in proper etiquette. Show them the proper way to answer phone calls, how to make eye contact and smile, how to help without being pushy. With a little focused training, most people can learn good customer service skills. Take time upfront to develop these skills in your employees and you’ll reap dividends in customer loyalty.

Model proper behavior. Simply put, the boss should exemplify top-notch customer service. If your employees see you treating clients poorly, don’t be surprised if they assume that such behavior is acceptable.
Remember: it’s easier to keep an existing client than to beat the bushes for a new one. It’s cheaper, too.

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A Tax Refund for You or an Interest-Free Loan for the IRS?

 

Millions of taxpayers receive refunds each year. Will you be among them? Most of us will happily accept our tax refund checks, because we can usually use the money. However, it’s important to understand that refunds actually cost you money.

Here’s why:

* The government pays no interest on refunds. Kept in your hands, those dollars could have been productive. For example, you could have invested the money or used it to pay off your debt during the year. If the money had been added to a 401(k) plan, tax could have been deferred on both the investment and its earnings. Even better, your employer might have matched all or part of your investment, adding to your retirement savings.

* Refunded cash is not available for use until actually received. Even though most taxpayers get their refund checks promptly, circumstances or errors can delay (or stop) a refund.

To manage potential tax refunds, consider reducing your withholding or estimated tax payments. For most taxpayers, withholding must equal either the prior-year’s tax or 90% of the current year’s liability. If your annual income changes little, it’s relatively easy to avoid overwithholding. You should consider filing a revised Form W-4 withholding statement with your employer if you’re having too much withheld.

For taxpayers with fluctuating income or multiple sources of income, the problem is more complex. The IRS provides a worksheet with Form W-4, but many people find the form complicated. If you’d like assistance adjusting your withholding, contact our office.

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How to Prevent Identity Theft From Affecting You

   
The IRS has made great strides in protecting taxpayers from identity thieves, but you must still be diligent to protect your information.
Identity thieves can steal a taxpayer’s personal information and use it to file a tax return claiming a refund under the taxpayer’s name. Then when the taxpayer actually files a return, the IRS won’t accept it and notifies the taxpayer that a return under his or her name and ID number has already been filed.
The IRS recommends that taxpayers should do the following in order to avoid becoming an identity theft victim:

• Guard your personal information. Identity thieves can get your information by stealing your wallet or purse, going through your trash, or posing as someone who needs your information for a legitimate reason.
• Watch out for IRS impersonators. Don’t fall for phone calls, faxes, e-mails, or other contacts made by people claiming to be from the IRS. Do not respond to the message, open any attachments in an e-mail or click on any links.
• The IRS recommends that you enter “phishing” in the search box at the top of its website (www.irs.gov) to get more information on avoiding tax scams. E-mail suspected scams to phishing@irs.gov.
• Protect information on your computer. Protect your tax information with a password, and once you’re finished with your tax data, take it off your hard drive.

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Why you should consider using HRAs to help employees with medical costs

A health reimbursement arrangement, or HRA, is a benefit plan you can offer to your employees to reimburse them for medical expenses that are not covered by an insurance plan. HRAs offer tax benefits, including the deductibility of contributions you make to your employees’ accounts. Since the Affordable Care Act (ACA) took effect, if you employed 50 or fewer workers, your ability to provide HRAs to your employees may have been limited. However, a law passed in December 2016 created a new type of HRA that you can offer if you do not provide group health insurance.

The 21st Century Cures Act allows “stand-alone” HRAs if the accounts meet funding and other requirements. These new HRAs allow you to help your employees pay for medical costs, such as the reimbursement of premiums for policies purchased on the healthcare exchange. In addition, the Act extends relief from the $100 per day penalty for prior arrangements that did not meet Affordable Care Act rules.

Please contact us for more information about this new employee benefit option. This discussion could be crucial given the uncertainty of future ACA rules.

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You don’t have to itemize to claim these deductions on your 2016 return

Can’t itemize? You can still claim some expenses on your 2016 federal income tax return. Here’s how you can benefit.

* IRA and HSA contributions

If you made a contribution to your traditional IRA for 2016, or if you plan to make a 2016 contribution by April 18, 2017, you may qualify to deduct up to the maximum contribution amount of $5,500 ($6,500 if you’re age 50 or older). Income limitations apply in some cases, and you can’t deduct contributions to Roth IRAs.

Health Savings Accounts (HSAs) are IRA-like accounts set up in conjunction with a high-deductible health insurance policy. The annual contributions you make to your HSA are deductible. Contributions are invested and grow on a tax-deferred basis, and you’re allowed to withdraw money in the account tax-free to pay for your unreimbursed medical expenses. For 2016, you can deduct up to the contribution limit of $3,350 if you’re filing single and $6,750 when you’re married filing jointly. You may also be able to deduct an additional $1,000 if you were age 55 or older and made a catch-up contribution to your HSA.

* Student loan interest and tuition fees
Deduct up to $2,500 of interest on student loans for yourself, your spouse, and your dependents on your 2016 return. For 2016 returns, you can also deduct up to $4,000 of tuition and fees for qualified higher education courses. Income limitations apply, and you must coordinate these deductions with other education tax breaks.

* Self-employment deductions

If you’re self-employed, you can generally deduct the cost of health insurance premiums, retirement plan contributions, and one-half of self-employment taxes.

* Other deductions

Alimony you pay, certain moving expenses, and early savings withdrawal penalties are also deductible on your 2016 return, even if you don’t itemize. Teachers can deduct up to $250 for classroom supplies purchased out-of-pocket in 2016.

Contact our office for more information on these and other costs you may be able to deduct on your 2016 tax return.