Is it Time to Go through Your Tax Records? Consider This…

Chances are you’re a little confused about what to keep and what to throw when it comes to tax and financial records. No worries. It’s time to sort through what you’ve got and keep only the important stuff. Here’s what to keep in mind:

• Keep records that directly support income and expense items on your tax return. For income, this includes W-2s, 1099s and K-1s. Also keep records of any other income you might have received from other sources. It’s also a good idea to save your bank statements and investment statements from brokers.
• The IRS can audit you within three years after you file your return. But in cases where income is underreported, they can audit for up to six years. To be safe, keep your tax records for seven years.
• Retain certain records even longer. These include records relating to your house purchase and any improvements you make. Also keep records of investment purchases, dividends reinvested and any major gifts you make or receive.
• Hold on to copies. Keep copies of all your tax returns and W-2s in case you ever need to prove your earnings for Social Security purposes.

Have other questions related to tax record retention? BAS can help! Give us a call today.

For More Info : Visit Here : https://www.bas-pc.com/

Sweeping Changes for Taxpayers & What They Mean for You

The Tax Cuts and Jobs Act was passed at the end of December 2017 with some of the most sweeping changes taxpayers have seen in 30 years. Here are a few big changes to come out of the new act — and what you can do about it.

1. The medical expense deduction threshold was lowered to 7.5 percent.

The tax reform bill retroactively lowers the threshold to deduct medical expenses in 2017 to 7.5 percent of adjusted gross income. The previous threshold was 10 percent. This new 7.5 percent threshold remains in place for 2018, but reverts back to 10 percent in the following years.

What this means: You may want to consider using the medical expense deduction this year. If there are any qualified medical expenses you can make (drug purchases, medical equipment, etc.) to push you over the new, lower threshold, consider doing so in 2018.

1. The healthcare individual mandate penalty stays in place until 2019.

The shared responsibility penalty (also known as the individual mandate) in the Affordable Care Act is effectively repealed by the tax reform legislation, but not right away. The penalty is set to zero in 2019, but remains in place for 2018.

What this means: You still need to retain your Forms 1095 this year in order to provide evidence of your healthcare coverage. Without proof of coverage, you may have to pay the higher of $695 or 2.5 percent of your income. Unless there are further changes coming, 2018 may be the last year you’ll need to worry about the individual mandate penalty.

More changes to consider for 2018 tax planning

We’re experiencing some of most significant tax law changes since the 1980s. There will be a lot of things to consider for tax planning this year. Here are some of the most significant:

• Reduced income tax rates
• Doubled standard deductions
• Suspension of personal exemptions
• New limits on itemized deductions, including:

1. Combined state and local income, property and sales tax deduction limited to $10,000
2. Casualty losses limited to federally declared disaster areas
3. Elimination of miscellaneous deductions subject to the 2 percent of adjusted gross income threshold

• Boosts to:

1. The child tax credit ($2,000 in 2018)
2. A new $500 family tax credit
3. 529 education savings plan expansion for K-12 private school education
4. The estate tax exemption​ (doubled)

Stay tuned

There will surely be more details on the tax reform changes and how they are implemented by the IRS in the weeks to come. In the meantime, contact us if you have urgent questions regarding your situation.

For More Info : Visit Here : https://www.bas-pc.com/

REVERSE MORTGAGE – Don’t say yes until you read this

There’s no doubt you’ve seen TV advertisements telling seniors that their lives could improve if they use reverse mortgages to harvest the equity in their homes. They go on to tell you that you can free up money to take an expensive trip, remodel your home or just have fun. It sounds appealing — but is it worth it?

 What is a reverse mortgage?

As the name implies, a reverse mortgage is the opposite of a traditional mortgage. With a traditional mortgage, you borrow a sum of money to purchase a home and then pay off the debt over time.

 With a reverse mortgage, you receive loan proceeds (as a lump-sum payout, an annuity, a line of credit or a combination of all three) but make no payments as long as you reside in the property. The loan, with any accrued interest, comes due when you move out or pass away. To qualify for a reverse mortgage you need to be 62 or older, own your residence and generally have significant equity in your home.

 Unfortunately, reports of abuse regarding aggressive and predatory sales practices are common. Here are a few items to analyze if you’re thinking about a reverse mortgage:

•  Determine if a reverse mortgage is logical for your situation. Evaluate alternatives. Conventional solutions such as a home-equity loan might be a better answer.

•  Consider the financial ramifications. Reverse mortgages can be expensive. Upfront fees are significant. If you stay in your home just a few years, the effective interest rate can be very high.

•  Be wary of bundled sales pitches. Commission-driven salesmen can push life insurance or various annuity products along with a reverse mortgage. You could end up with products you don’t need.

If you are considering a reverse mortgage, call us. We can help you determine potential tax issues, plus other alternatives. 

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Payroll Fraud – Is your business susceptible?

Unless a small business owner handles all aspects of computing and paying payroll, there is room for fraud. Even if your company has only a few employees — it does not guarantee your funds will be safe.

How payroll fraud happens

Perhaps one of the easiest payroll fraud techniques is the overpayment of withholding or payroll taxes. Your bookkeeper simply overpays the government. When the refund check arrives, the employee deposits it to his or her personal account.

In some cases, the employee will have an account at a different bank but in the company name. Such an account could be used for the fraudulent deposit of other company receipts as well.

The greater the number of employees, the easier it is for someone to pull off a scam. Perhaps the payroll clerk has invented a fictitious employee or falsifies hours or commissions for a cooperating employee who shares the stolen funds. Or perhaps the employee holds the payroll deposit funds in his or her own interest-bearing account until it is time to make the payroll deposit to the government.

How to prevent payroll fraud

Small businesses can be exceptionally susceptible to payroll fraud because they often lack anti-fraud controls that larger organizations have in place. Here’s a few ways you can work toward preventing this type of fraud:

• Get outside help. A payroll review by an independent accountant may help prevent employee schemes.
• Divvy up duties. Even in small companies, it is possible to divide office tasks to make employee theft more difficult.
• Limit payroll access. Figure out who needs to have access to payroll data. That list will likely be very small. Make sure it stays that way.
• Offer direct deposit. No paper checks means less opportunities for employees to handle funds, meaning greater security all around.

 Want to make sure your business is protected? Call us today to discuss countermeasures, specific to your business, to prevent such fraud from occurring.

For More Info : Bookkeeping services NJ

Nanny Tax – Ignorance isn’t a good excuse

As you review your filing requirements for 2018, make sure you don’t overlook the nanny tax related to household employees. If you have a housekeeper or any other household employee, you could be liable to pay state and federal payroll taxes.

 How to know if you must pay the nanny tax

First, you’ll need to determine whether you have a household employee. Generally, this is someone you hire to work in or around your house. It could be a babysitter, nurse, gardener, etc. It doesn’t matter whether they work part-time or full-time, or whether you pay them hourly, weekly, or by the job.

But not everyone who works around your house is an employee. For example, if a lawn service sends someone to cut your grass each week, that person is not your employee.

As a general rule, workers who bring their own tools, do work for multiple customers and/or control when and how they do the work are not your household employees.

Your responsibilities

If you have a household employee, you’ll generally be responsible for 2017 payroll taxes if you paid that individual more than $2,000 last year. However, federal unemployment tax kicks in if you pay more than $1,000 to all domestic employees in any quarter.

It’s not always easy to tell whether you have a household employee, or whether exceptions apply. If in doubt, don’t hesitate to call our office. We’re here to help you in any way we can.

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Tax-Time Review

Now is the perfect time to review your financial affairs. You have to gather information to prepare your tax return at this time. Why not take one more step and do something positive for the wellbeing of your wallet?

The following suggestions will help you with your financial review:

• Talk to your family. You should factor in the financial decisions and goals of your spouse and children.

• Put your financial goals in writing. Figure out how much money you’ll need to meet each goal, when you’ll need it and how you’ll get it.

• Create a net worth statement. Create a list of your assets and debts, and compare it to last year’s statement. Are you gaining ground or losing it?

• Review investment performance. Weigh your investment performance minus the effects of inflation, and compare your progress with your goals. Determine what investments are worth it and what may need to change this year.

• Protect what you have. Consider the risks of your financial strategies. Your long-term goals may be unobtainable if you lose your present assets or your income potential.

• Determine if you need the insurance you have — or if you’re missing something. Don’t duplicate employer-provided coverage. Review your coverage annually; don’t just automatically renew policies.

• Review your will and your estate plan. Did your situation change during 2017? Make appropriate changes to your will and estate plan if it did. Stay informed about the 2018 tax reform changes that affect your plan.

Need help creating an effective 2018 tax strategy for your situation? BAS can help! Give us a call today.

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Is it time to update your beneficiary list?

It’s not uncommon to lose track of your beneficiaries, including which accounts have them, and who you designated. However, it is important to keep them current.

Make your beneficiary designations a priority

When you designate a beneficiary for an account, that person inherits the assets in the account, regardless of what your will says. That’s why updating your will periodically may not be enough.

Typically, you’ll have beneficiaries for each of your IRAs, your 401(k) or other retirement plans, annuities and insurance policies. Your designations could be out of date just because of life’s changes. Since you made your initial choices, you may have married, had children or divorced. Some of the beneficiaries you chose could have died, divorced or married. Their circumstances could have changed so you no longer want them to be the beneficiary.

Tax laws change frequently as well, and they can have an impact on your choices. Choosing the wrong beneficiary, or failing to name a contingent beneficiary, can affect the long-term value of your IRA assets after you die. That’s why it’s important to review your choices with tax consequences in mind.

How to update your designations

At a minimum, you should have copies of your beneficiary designations in one place. If you don’t, call the trustees of your retirement accounts and your insurance agent and request copies.

Then review the documents and decide what changes you’d like to make. Make an appointment to review your decisions with your tax- and estate-planning advisor. Discuss matters such as naming secondary beneficiaries and whether to name your estate as a beneficiary (which is sometimes not a good idea).

Finally, send your changes to the account trustee, ask for a confirmation, and keep copies in your records. If you have questions about tax consequences or other tax matters related to your estate, call our office.