“Get an IP PIN” tool has returned to IRS.gov

The Internal Revenue Service announced that the “Get an IP PIN” tool has returned to IRS.gov with a stronger authentication process to help protect taxpayers.
The Identity Protection Personal Identification Number (IP PIN) is given to taxpayers who are confirmed identity theft victims and to certain taxpayers who opt into the program. The six-digit IP PIN adds an additional layer of protection for the Social Security number.
The re-launched tool uses a multi-factor authentication process that will help prevent automated attacks.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Five bookkeeping tips for entrepreneurs

Entrepreneurs keep a lot of the financial details of their business in their heads.
But when you don't have a system and some processes in place, unpleasant surprises can pop up, goals can be easily missed and important paperwork forgotten. Getting a better handle on your money can help you to make and keep long-term goals, smooth out the seasonal ups and downs of your cash flow and maybe improve your profits.

1. Plan for major expenses.
You're less likely to miss business opportunities or have to scramble for a loan when the expenses become unavoidable.
2. Track expenses.
You otherwise might some miss tax write-offs and may lose out on others.
3. Record deposits correctly.
You may be less likely to pay taxes on money that isn't income.
4. Set aside money for paying taxes.
The IRS can levy penalties and interest for not filing quarterly tax returns on time.
5. Keep a close eye on your invoices.
Late and unpaid bills hurt your cash flow. Assign someone in your organizations to track your billing.

Courtesy of Entrepreneur

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Accounting tips for Small Business

When running a small business, you have to make sure you stay focused on accounting. If you don’t manage debt, receivables, and marketing expenses accurately, your company will sink before it grows.

You can save your company by implementing simple bookkeeping strategies.

Weigh the options of bookkeeper vs. DIY accounting.
Though entrepreneurs might feel ready to act as head of accounting, sales, and marketing at the same time to cut costs, it may help to hire a bookkeeper. It can help you to know someone with experience and deeper understanding is working on your books.

Keep accounts receivable payments separate from borrowed funds.
Small business owners need financial backing and/or loans for startup capital, marketing campaigns, and other initial things in the early days. To make sure the loans don’t appear in the receivables, use software that separates income from borrowed funds. Don’t lose sight of what is yours and what needs paying back.

Don’t allow clients to get away with not paying balances.
Seeing a large amount in the receivables column is a good thing, but the money doesn’t really count until it is in your bank account. Don’t let clients avoid regular payments.

Detail daily expenses so you can budget for the coming weeks.
It’s a good idea for business owners to keep records of everyday expenses they incur in the company. Instead of calculating expenses every two weeks for payroll purposes, focus on every day or every week.

Calculate a minimum monthly profit.
When planning how much it takes to keep a small business running, the numbers can get complicated. Devise an accurate system of expenses and regular obligations so you know exactly the minimum income you need every month.

Courtesy of BusinessBee

For more information contact Neikirk, Mahoney and Smith at 502-896-299

Tips to Get Your Small Business Accounting in Order

Bookkeeping is a necessary chore of all businesses, helping you manage your operations and prevent an audit by giving the IRS what they need. To keep moving toward your long-term goals and improve profits, get your small business accounting in order with these essential tips:

Separate Business and Personal Expenses – Having a dedicated business bank account, including checking and a credit card, saves you precious man-hours when it’s time to tally up deductible expenses.
Track Every Expense – Label and categorize each expense, and track your cash flow.
Accurately Record Deposits – Loans, revenue from sales and other cash infusions are easy to lose track of, and that can lead to paying unnecessary income taxes.
Understand When It Pays to Pay – Hiring a professional bookkeeper or accountant, even for just a few hours a week or month, can make a big difference.
Dedicate Time to Update Your Books – Block out weekly time in your calendar to get necessary paperwork in order and avoid letting receipts and invoiced receivables pile up.
Keep Tabs on Labor Costs – Paying employees, including yourself, may be your largest expense. Take note of overtime, perks and other benefits you offer to prevent over- or under-paying.
Expect Major Expenses – Computer upgrades, equipment replacement and tax deadlines shouldn’t come as a surprise.
Maintain Inventory Records – Avoid misplacing merchandise – or theft – by noting dates purchased, stock numbers, purchase prices, dates sold and sale prices.
Follow Up on Invoices and Receivables – Avoid overpaying on taxes and hours spent sifting through your revenue account and receivables listing by circling back with vendors who owe you money.

Courtesy of Fundera

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Miscellaneous Deductions Can Trim Taxes

Miscellaneous deductions may reduce your tax bill. These may include certain expenses you paid for in your work if you are an employee. You must itemize deductions when you file to claim these costs. Many taxpayers claim the standard deduction, but you might pay less tax if you itemize. Here are some IRS tax tips you should know about these deductions:

The Two Percent Limit. You can deduct most miscellaneous costs only if their sum is more than two percent of your adjusted gross income. These include expenses such as:

Unreimbursed employee expenses.
Job search costs for a new job in the same line of work.
Tools for your job.
Union dues.
Work-related travel and transportation.
The cost you paid to prepare your tax return. These fees include the cost you paid for tax preparation software. They also include any fee you paid for e-filing of your return.
Deductions Not Subject to the Limit. Some deductions are not subject to the two percent limit. They include:

Certain casualty and theft losses. In most cases, this rule is for damaged or stolen property you held for investment. This may include property such as stocks, bonds and works of art.
Gambling losses up to the total of your gambling winnings.
Losses from Ponzi-type investment schemes.
You can’t deduct some expenses. For example, you can’t deduct personal living or family expenses.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Miscellaneous Deductions Can Trim Taxes

Miscellaneous deductions may reduce your tax bill. These may include certain expenses you paid for in your work if you are an employee. You must itemize deductions when you file to claim these costs. Many taxpayers claim the standard deduction, but you might pay less tax if you itemize. Here are some IRS tax tips you should know about these deductions:

The Two Percent Limit. You can deduct most miscellaneous costs only if their sum is more than two percent of your adjusted gross income. These include expenses such as:

Unreimbursed employee expenses.
Job search costs for a new job in the same line of work.
Tools for your job.
Union dues.
Work-related travel and transportation.
The cost you paid to prepare your tax return. These fees include the cost you paid for tax preparation software. They also include any fee you paid for e-filing of your return.
Deductions Not Subject to the Limit. Some deductions are not subject to the two percent limit. They include:

Certain casualty and theft losses. In most cases, this rule is for damaged or stolen property you held for investment. This may include property such as stocks, bonds and works of art.
Gambling losses up to the total of your gambling winnings.
Losses from Ponzi-type investment schemes.
You can’t deduct some expenses. For example, you can’t deduct personal living or family expenses.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Fake IRS scammers are getting more convincing

Thieves who call pretending to be IRS agents seem to know a lot more about the people they’re trying to scam and create a deep fear, making it seem like the victims are really in trouble with the IRS.
Scammers are targeting middle class families.
Beware of scammers making unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email.

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

The IRS Will Never:

Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.

Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.

Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

Require you to use a specific payment method for your taxes, such as a prepaid debit card.

Ask for credit or debit card numbers over the phone.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

How Seasonal Workers Affect Your Workforce Size

For purposes of the Affordable Care Act, an employer’s size is determined by the number of its employees. Employer benefits, opportunities and requirements are dependent upon the employer’s size and the applicable rules. If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year.  However, there is an exception for seasonal workers.

Here’s the exception: If your workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 during that period were seasonal workers, your organization is not considered an ALE. For this purpose, a seasonal worker is an employee who performs labor or services on a seasonal basis.

The terms seasonal worker and seasonal employee are both used in the employer shared responsibility provisions, but in two different contexts. Only the term seasonal worker is relevant for determining whether an employer is an applicable large employer subject to the employer shared responsibility provisions.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

How a Summer Wedding Can Affect Your Taxes

With all the planning and preparation that goes into a wedding, taxes may not be high on your summer wedding checklist. However, you should be aware of the tax issues that come along with marriage. Here are some basic tips to help with your planning:

Name change. The names and Social Security numbers on your tax return must match your Social Security Administration records

Change tax withholding. A change in your marital status means you must give your employer a new Form W-4, Employee's Withholding Allowance Certificate.

Changes in circumstances. If you or your spouse purchased a Health Insurance Marketplace plan and receive advance payments of the premium tax credit in 2016, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace when they happen.

Address change. Let the IRS know if your address changes. To do that, send the IRS Form 8822, Change of Address. You should also notify the U.S. Postal Service.

Tax filing status. If you’re married as of Dec. 31, that’s your marital status for the whole year for tax purposes.

Select the right tax form. Choosing the right income tax form can help save money.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

IRS, Partners Warn Tax Preparers of Data Theft Risks

Leaders from the Internal Revenue Service, state tax agencies and tax preparation community today warned tax preparers that they increasingly are targets of cybercriminals and should take appropriate steps to protect clients from data theft.
IRS also posted new information to help tax professionals get started with safeguards to protect clients’ data. It’s the first in a series of fact sheets and tips on security, scams and identity theft prevention measures aimed at tax professionals. The Protect Your Clients; Protect Yourself campaign will run through the start of the 2017 filing season.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Summer Time Tax Tip : Paying owed taxes

The IRS offers many safe and easy ways to pay your taxes. These tips explain many of them:

• Mailed tax bills. The IRS sends bills in the U. S. mail. Try to pay soon and in full to avoid any extra charges.
• Use IRS Direct Pay. The best way to pay your taxes is with IRS Direct Pay. It’s the safe, easy and free way to pay from your checking or savings account.
• Get a short-term payment plan. If you owe more tax than you can pay, you may qualify for more time- up to 120 days- to pay in full.
• Apply for an installment agreement. Most people who need more time to pay can apply for an Online Payment Agreement on IRS.gov.
• Check out an offer in compromise. An offer in compromise or OIC may let you settle your tax debt for less than the full amount you owe. 
• Avoid tax surprises. If you are an employee, you can avoid a tax bill by having more taxes withheld from your pay. To do this, file a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Tax Breaks for the Military

If you are in the U. S. Armed Forces, there are special tax breaks for you. For example, some types of pay are not taxable. Certain rules apply to deductions or credits that you may be able to claim that can lower your tax. In some cases, you may get more time to file your tax return. You may also get more time to pay your income tax. Here are some tips to keep in mind:

Deadline Extensions.  Some members of the military, such as those who serve in a combat zone, can postpone some tax deadlines.
Combat Pay Exclusion.  If you serve in a combat zone, your combat pay is partially or fully tax-free.
Moving Expense Deduction.  You may be able to deduct some of your unreimbursed moving costs on Form 3903.
Earned Income Tax Credit or EITC.  If you get nontaxable combat pay, you may choose to include it in your taxable income. Including it may boost your EITC, meaning you may owe less tax and could get a larger refund.
Signing Joint Returns.  Both spouses normally must sign a joint income tax return. If your spouse is absent due to certain military duty or conditions, you may be able to sign for your spouse.
Reservists’ Travel Deduction.  Reservists whose reserve-related duties take them more than 100 miles away from home can deduct their unreimbursed travel expenses on Form 2106, even if they do not itemize their deductions.
Uniform Deduction.  You can deduct the costs of certain uniforms that you can’t wear while off duty.
ROTC Allowances.  Some amounts paid to ROTC students in advanced training are not taxable.
Civilian Life.  If you leave the military and look for work, you may be able to deduct some job search expenses.
Tax Help.  Most military bases offer free tax preparation and filing assistance during the tax filing season.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

IRS Takes Steps to Strengthen IVES Program

As part of a wider effort to protect taxpayer information and strengthen authentication standards, the Internal Revenue Service is putting in place new requirements for participants using the Income Verification Express Service (IVES), a service supporting the lending industry to verify loan applicant’s incomes.
The new requirements will help further ensure IVES participants verify and validate their clients using the system. The IVES service is used by pre-screened companies who, in turn, are hired by clients such as mortgage firms and loan companies who need to verify applicants’ income.
The IRS is working with the IVES participants to help ensure a smooth transition to the stronger validation rules. These new requirements are being shared this week with the participants. The IRS will only accept transcript requests from IVES participants who certify that they will submit requests only from clients who have been verified using the new requirements.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

New requirement for organizations intending to operate under Section 501(c)(4)

New legislation enacted at the end of 2015 added section 506 to the Internal Revenue Code. Section 506 requires an organization to notify the IRS of its intent to operate as a section 501(c)(4) organization. The IRS has developed a new form – Form 8976 – that organizations should use to provide this notification. The Form 8976 may only be submitted electronically. The Form 8976 – Electronic Registration System allows organizations to complete the notification process, keeps account information current and enables organizations to receive secure, digital communications from the IRS. A user fee of $50 must be submitted to Pay.gov to complete your organization’s notification. You do not need special software to submit a notification.

Courtesy of IRS

For more information contact Neikrik. Mahoney and Smith at 502-896-2999

IRS Offers Tips on Filing an Amended Tax Return

You may discover you made a mistake on your tax return. You can file an amended return if you need to fix an error. You can also amend your tax return to claim a tax credit or deduction. Here are 10 tips from the IRS on amending your return:

When to amend. You should amend your tax return if you need to correct filing status, the number of dependents or total income. You should also amend your return to claim tax deductions or tax credits that you did not claim when you filed your original return.

When NOT to amend. In some cases, you don’t need to amend your tax return. The IRS will make corrections, such as math errors, for you. If you didn’t include a required form or schedule, for example, the IRS will mail you a notice about the missing item.

Form 1040X.  Use Form 1040X to amend a federal income tax return that you filed before. You must file it by paper; you cannot file it electronically. Make sure you check the box at the top of the form that shows which year you are amending.

More than one tax year.  If you file an amended return for more than one year, use a separate 1040X for each tax year. Mail them in separate envelopes to the IRS.

Other forms or schedules. If your changes have to do with other tax forms or schedules, make sure you attach them to Form 1040X when you file the form. If you don’t, this will cause a delay in processing.

Amending to claim an additional refund. If you are waiting for a refund from your original tax return, don’t file your amended return until after you receive the refund.

Amending to pay additional tax. If you’re filing an amended tax return because you owe more tax, you should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.

When to file. To claim a refund file Form 1040X no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax, if that date is later than the three-year rule.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

IRS Offers Tips on Filing an Amended Tax Return

You may discover you made a mistake on your tax return. You can file an amended return if you need to fix an error. You can also amend your tax return to claim a tax credit or deduction. Here are 10 tips from the IRS on amending your return:

When to amend. You should amend your tax return if you need to correct filing status, the number of dependents or total income. You should also amend your return to claim tax deductions or tax credits that you did not claim when you filed your original return.

When NOT to amend. In some cases, you don’t need to amend your tax return. The IRS will make corrections, such as math errors, for you. If you didn’t include a required form or schedule, for example, the IRS will mail you a notice about the missing item.

Form 1040X.  Use Form 1040X to amend a federal income tax return that you filed before. You must file it by paper; you cannot file it electronically. Make sure you check the box at the top of the form that shows which year you are amending.

More than one tax year.  If you file an amended return for more than one year, use a separate 1040X for each tax year. Mail them in separate envelopes to the IRS.

Other forms or schedules. If your changes have to do with other tax forms or schedules, make sure you attach them to Form 1040X when you file the form. If you don’t, this will cause a delay in processing.

Amending to claim an additional refund. If you are waiting for a refund from your original tax return, don’t file your amended return until after you receive the refund.

Amending to pay additional tax. If you’re filing an amended tax return because you owe more tax, you should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.

When to file. To claim a refund file Form 1040X no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax, if that date is later than the three-year rule.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Accounting 101 for your New Business

Business ownership is a constant flood of satisfying milestones coupled with expanding to-do lists. With your launch, you’ll need to get on top of the accounting tasks that come along with owning a store.
1. Open a Bank Account
After you’ve legally registered your business, you’ll need somewhere to stash your business income. Having a separate bank account keeps records distinct and will make life easier come tax time. Note that LLCs, partnerships, and corporations are legally required to have a separate bank account for business. Sole proprietors don’t legally need a separate account, but it’s definitely recommended.
2. Track Your Expenses
The foundation of solid business record keeping is learning to track your expenses effectively. It’s a crucial step that allows you to monitor the growth of your business, build financial statements, keep track of deductible expenses, prepare tax returns, and support what you report on your tax return.
3. Develop a Bookkeeping System
Bookkeeping is the day-to-day process of recording transactions, categorizing them, and reconciling bank statements.
4. Set up a Payroll System
As a new online store owner, you’ll likely be a one-person show. However, maybe you’ll hire a part-time employee to help you out, or a freelancer to design your logo. Right away, you need to establish whether that individual is an employee or an independent contractor. For employees, you’ll need to decide on a payroll schedule and ensure that you’re withholding the correct taxes; there are lots of services that can help with this. For independent contractors, be sure to track how much you’re paying each person.
5. Investigate Import Tax
Depending on your business model, you may be planning to purchase and import goods from other countries to sell in your store. When importing products, you’ll likely be subject to taxes and duties. These are fees that your country imposes on incoming goods.
6. Determine How You’ll Get Paid
If you want to accept credit card payments without using Shopify Payments, you’ll either need a merchant account or you can use a third party payment processor like PayPal. A merchant account is a type of bank account that allows your business to accept credit card payments from customers.
7. Establish Sales Tax Procedures
The world of eCommerce has shaken up sales tax regulations and they are admittedly a bit confusing due to location issues. When a customer walks into a brick and mortar retail shop, they pay the sales tax of whatever state or province they make the purchase in, no matter if they live in that city, or they’re visiting from across the world. However, when you sell online, you’re often selling to customers who live in different states/provinces, and even countries.
8. Determine Your Tax Obligations
Tax obligations vary depending on the legal structure of the business. If you’re self-employed (sole proprietorship, LLC, partnership), you’ll claim business income on your personal tax return. Corporations, on the other hand, are separate tax entities and are taxed independently from owners. Your income from the corporation is taxed as an employee.
9. Calculate Gross Margins
Improving your store’s gross margin is the first step towards earning more income overall. In order to calculate gross margin, you need to know the costs incurred to produce your product.
10. Constantly Re-evaluate Your Methods
As you keep growing, it’s good to continually reassess the amount of time you’re spending on your books, and how much that time is costing your business. The right bookkeeping solution means you can invest more time in the business with bookkeeping no longer on your plate, and potentially save the business money.

Courtesy of Shopify For more information contact Neikrik, Mahoney and Smith at 502-896-2999

Don't be fooled by Summertime Scams

Tax scammers work year-round; they don’t take the summer off. The IRS urges you to stay vigilant against calls from scammers impersonating the IRS. Here are several tips from the IRS to help you avoid being a victim:

Scams use scare tactics. These aggressive and sophisticated scammers try to scare people into making an immediate payment. They make threats, often threaten arrest or deportation, or they say they’ll take away your driver’s or professional license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls.” Emails will often contain a fake IRS document with a phone number or an email address for you to reply.

Scams spoof caller ID. Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.

Scams use phishing email and regular mail. Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. This makes the scheme look official.

Scams cost victims over $38 million. The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of more than one million contacts since October 2013. TIGTA is also aware of more than 6,700 victims who have collectively reported over $38 million in financial losses as a result of tax scams.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 5029-896-2999

Sign Up for IRS Summertime Tax Tips

The Internal Revenue Service today encouraged taxpayers interested in receiving helpful consumer tips this summer to get a jump-start on this year’s taxes by subscribing to the IRS Tax Tips email service.

Beginning July 1, the IRS will begin offering its Summertime Tax Tip series, which includes useful information in English and Spanish. Tax Tip subscribers will receive a new Tip via email three times a week during July and August. They will also get a Tax Tip each weekday during the tax filing season. The IRS also issues Special Edition Tax Tips on important tax topics throughout the year.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999