Monday, April 28, 2014

IRS Expecting Millions of Edited Returns This Year

By Michael Cohn, Accounting Today
The Internal Revenue Service anticipates that nearly 5 million taxpayers will amend their returns by filing Form 1040X this year. If you're considering doing the same thing, contact Neikirk, Mahoney & Smith CPAs at (502) 896-2999.
Nearly 46 million returns were electronically filed from home computers as of April 18, more than the total from home computers for all of 2013. The IRS said Friday that it has received more than 131 million tax returns, of which 88 percent were e-filed.
Taxpayers who need to amend their returns should file this form only after filing the original return, the IRS noted. Generally, for a tax credit or refund, taxpayers must file Form 1040X within three years, including extensions, after the date they filed their original return or within two years after the date they paid the tax, whichever is later. For most people, this means that returns for tax-year 2011 or later can still be amended. 

Friday, April 25, 2014

Time to Re-evaluate Your Accounting Resources

Now that tax season is over for most of us, now would be a good time to re-evaluate your resources to make sure you're getting the most bang for your accounting buck.

How do you feel about the way your 2013 taxes were done? Did your accounting firm keep you informed of changes in the tax code that could impact your business?

Did your accounting firm take the time to really understand how your business operates? Did they provide you with suggestions and ideas that would positively impact your bottom line? Were they proactive or reactive? And at the end of the day, do you feel like you were getting what you expected at the cost your expected?

If the answer to any of the questions above is anything but a resounding "yes", contact Neikirk, Mahoney & Smith today. We'll spend some time together, discussing and learning what really matters to you, not to us.

In a world of fast talkers and false guarantees, Neikirk, Mahoney & Smith stands out from the white noise. That's because we really do care about you and your business.

Here's a great article for your reference from And after you've read it, give us a call today.


Every dollar counts for business owners, so if you don't know where you stand on a monthly basis, you may not be around at the end of the year. And while using do-it-yourself accounting software can help monitor costs, the benefits of hiring good accountants extend far beyond crunching numbers. Potentially, they can be your company's financial partner for life, with intimate knowledge of not only how you're going to finance your next forklift, for instance, but also how you're going to finance your daughter's college education.
Before you hire one though, make sure you understand the four basic areas of expertise in a general accounting practice:
  1. Business advisory services. Since an accountant should be knowledgeable about your business environment, your tax situation and your financial statements, it makes sense to ask them to pull all the pieces together and help you come up with a business plan and personal financial plan. Accountants can offer advice on everything from insurance (do you really need business interruption insurance or is it cheaper to lease a second site?) to expansion (how will additional capacity affect operating costs?). Accountants can bring a new level of insight, simply by virtue of their perspective.
  2. Accounting and record-keeping. These are perhaps the most basic of accounting disciplines. While it makes sense for many business owners to manage their day-to-day records, an accountant can help set up bookkeeping and accounting systems and show you how to use them. A good system allows you to evaluate profitability and modify prices. It also lets you monitor expenses, track a budget, spot trends and reduce accounting fees required to produce financial statements and tax returns.
  3. Tax advice. Accountants that provide assistance with tax-related issues usually can do so in two areas: tax compliance and tax planning. Planning refers to reducing your overall tax burden. Compliance refers to obeying the tax laws.
  4. Auditing. These services are most commonly required by banks as a condition of a loan. There are many levels of auditing, ranging from simply preparing financial statements to an actual audit, where the accountant or other third party provides assurance that a company's financial information is accurate.
Choosing an Accountant
The best way to find a good accountant is to get a referral from your attorney, your banker or a business colleague. You can also check in with the Society of Certified Public Accountants in your state, which can make a referral.
While accountants usually work for large companies, CPAs (certified public accountants) work for a variety of large and small businesses. Don't underestimate the importance of a CPA. This title is only awarded to people who have passed a rigorous a two-day, nationally standardized test. Most states require CPAs to have at least a college degree or its equivalent. Several states also require post-graduate work.
Once you have come up with some good candidates, it is important to determine how much of the work your company will do and how much will be done by the accountant.
Accounting services can be divided into three broad categories: recording transactions, assembling them, and generating returns and financial statements. Although the first two categories require a lower skill level than the latter, many firms charge the same hourly rate for all three. This is why it's important to determine exactly what work you want an accountant to handle.
The next step is to interview your referrals. For each, plan on two meetings before making your decision. One meeting should be at your site. The other should be at theirs. During the interviews, your principal goal is to find out about three things: services, personality and fees. Here's what to ask in each area.
  1. Services: Most accounting firms offer tax and auditing services. But what about bookkeeping? Management consulting? Estate planning? Will the accountant help you design and implement financial information systems? A CPA may offer services that include analyzing transactions for loans and financing; preparing, auditing, reviewing and compiling financial statements; managing investments; and representing you before tax authorities.

    Although smaller accounting firms are generally a better bet for entrepreneurs, they may not offer all these services. Make sure the firm has what you need. If it can't offer specialized services, it may have relationships with other firms to which it can refer you to handle these matters. In addition to services, make sure the firm has experience with small business and your specific industry.
  2. Personality: Is the accountant's style compatible with yours? Be sure the people you are meeting are the same ones who will be handling your business. At many accounting firms, some partners handle sales and new business, then pass the actual account work on to others.

    When evaluating competency and compatibility, ask candidates how they would handle situations relevant to you. For example: How would you handle an IRS office audit seeking verification of automobile expenses? Listen to the answers and decide if that's how you would like your affairs to be handled.

    Realize, too, that having an accountant who takes a different approach can be a good thing. Just be sure that the accountant doesn't pressure you into doing things you aren't comfortable with.
  3. Fees: Ask about this upfront. Most accounting firms charge by the hour with fees ranging from $100 to $275. However, others work on a monthly retainer. Get a range of quotes from different accountants. Also try to get an estimate of the total annual charges based on the services you have discussed.

    Don't base your decision solely on cost, however, as an accountant who charges higher hourly rate is likely to be more experienced and able to work faster than a novice who charges less.

    Also be sure to ask for references -- particularly from clients in your industry. Call them to find out how satisfied they were with the accountant's services, fees and availability.
Make the Most of the Relationship
After you make a choice, spell out the terms of the agreement in an engagement letter. The document should detail the returns and statements to be prepared and the fees to be charged. This ensures that you and your accountant have the same expectations.
Also, hold up your end of the agreement. Don't hand your accountant a shoebox full of receipts. Write down details of all the checks in your check register, whether they are for utilities, supplies and so on. Likewise, identify sources of income on your bank deposit slips. The better you maintain your records, the less time your accountant has to spend and the lower your fees will be.
It's a good idea to meet or at least speak with your accountant every month. Review financial statements and go over problems so you know where your money is going. Your accountant should go beyond number-crunching to suggest alternative ways of cutting costs and act as a sounding board for any ideas or questions you have.
Start Your Own BusinessExcerpted from Start Your Own Business, Fifth Edition by the staff ofEntrepreneur.

Tuesday, April 15, 2014

Social Security to Stop Seizing Tax Refunds

A pair of senators have called on the Social Security Administration to end the policy of seizing taxpayers’ refunds to hold them accountable for decades-old errors made by the agency that led to the overpayment of benefits, and the agency has agreed to do so.
Senators Barbara Boxer, D-Calif., and Barbara Mikulski, D-Md., highlighted a story on the front page of the Washington Post last Friday morning that detailed the case of Mary Grice, whose tax refund was seized by the U.S. government to repay an overpayment of benefits made to an unknown member of her family in 1977. 
“While this policy of seizing tax refunds to repay decades-old Social Security overpayments might be allowed under the law, it is entirely unjust,” the senators wrote in a letter Friday to the Acting Commissioner of the Social Security Administration, Carolyn Colvin. “Grice and other families like hers are unfairly being held responsible for decades-old errors at the Social Security Administration – even though many of these taxpayers were children at the time the error was made. Too many of these families are now finding themselves trapped in a mess of paperwork and red tape that is both costly and time-consuming.” 
To learn more about how this measure might affect you, contact Neikirk, Mahoney & Smith PLLC
Read more at Accounting Today