New Twist to IRS Tax Appeal Process

Earlier this week, the IRS announced that its Office of Appeals would begin to pilot a new video conference option for resolving an IRS tax appeal. With over 100,000 taxpayers filing tax appeals each year, the agency is hoping that this new program will reduce response time as well as help to lighten the work load of IRS employees who are operating with reduced resources. Prior to the initiation of this new web-based alternative, a taxpayer or their representative would have to travel to an IRS office in order to have a face-to-face meeting with an IRS appeals representative. The only other option was to discuss the matter by phone which often did not result in a satisfactory resolution of the matter at hand.

An IRS tax appeal is most often initiated when a business or individual taxpayer disagrees with a determination made by the IRS as the result of an IRS tax audit. At the end of the audit process, the IRS sends the audited entity a copy of the auditor’s ruling together with a formal written letter outlining the specific steps necessary to appeal the results. The letter states that, in order to be considered, a written appeal must be submitted within 30 days of the date shown on the communication from the IRS. It must include a specific lists of the items for which there is disagreement, the reason for the disagreement and any facts or laws that support the taxpayer’s position. Once this statement is submitted together with a signed perjury statement, the IRS may take up to 90 days to respond.

If the written request for appeal is accepted, an appeal hearing is scheduled. To prepare, the business or individual being audited should submit a Federal Freedom of Information Act letter requesting the full auditor’s report and follow this up by collecting and organizing documentation to support each item being questioned. Prior to the recent IRS video conferencing initiative, these appeal hearings were conducted in one of two ways - over the phone with supporting documentation submitted by mail or face-to-face at an IRS office. Both of these previous alternatives are accompanied by logistical shortcomings which will hopefully be resolved with the new web-based solution.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702) 514-4048 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

IRS Warns of New Tax Scams

Although telephone tax scams have been around for years, there are some new angles being implemented. One involves demanding payment of a tax that doesn’t even exist, while another directs taxpayers to pay tax liabilities using iTunes Gift Cards or other types of prepaid debit cards. In response to the rise of such threats, IRS Commissioner John Koskinen recently issued a statement warning taxpayers to “remain vigilant and not fall prey to … aggressive calls demanding immediate payment of a tax supposedly owed.”

Some of the telephone tax scams that have popped up fairly recently are highlighted below:

  • “Federal Student Tax” Scam

This scam, which targets students, involves phone calls demanding payment of a fake tax called the “Federal Student Tax.” Although the tax doesn’t even exist, the scammers sound believable because they usually have obtained some legitimate piece of information such as the name of the school the taxpayer attends. The caller typically demands that the tax be paid using some untraceable method such as a MoneyGram and threatens legal action if the money is not received.

  • iTunes Gift Card Tax Scam

This scam, which has cost targeted taxpayers over $1.4 million, involves a scammer impersonating an IRS employee demanding the payment of back taxes using an Apple iTunes Gift Card. Other similar scams insist that tax payments be made using any one of a variety of other types of prepaid cards such as Reloadit, MoneyPak or Green Dot.

  • IRS Impersonation Tax Scam

This scam consists of callers presenting themselves as IRS representatives threatening targeted taxpayers with arrest if they don’t pay outstanding tax balances though the use of a prepaid debit card. The scammers claim that certified letters have been previously sent and that the debit card purchase is somehow linked to the Electronic Federal Tax Payment System which, of course, it is not. Part of the scam includes a warning that the taxpayer should not contact the IRS or their tax preparer until after the tax is paid.

To avoid falling prey to these and other tax scams, taxpayers should be aware that the IRS never demands payment of taxes over the phone or asks for personal information for the purpose of verifying a person’s identity. They will also never ask for debit or credit card numbers or threaten arrest if taxes are not paid. The IRS urges anyone who receives such a call to just hang up and not call back. If a tax collection message comes in the form of an email, the recipient is warned not to click on any links or supply any personal information. Taxpayers beware! Although tax season is officially over, tax scammers are as active as ever!

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)514-4048 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

The Implications of Trump’s Tax Plan

At the end last month the Trump team released a somewhat sketchy version of their proposed tax plan. Although it was only a single page summary and contained few specific details, the major bullet points of the proposal were quite clear. Outlined below are some of the major tax code changes contained in Trump’s tax plan:

1) Reduce the corporate income tax rate from 35% to 15%. This 15 % rate would also be made available to pass though entities such as partnerships and limited liability companies.

2) Reduce the top individual income tax rate form 39.6% to 35%.

3) Simplify the tax code for individual filers by reducing the number of individual income tax brackets from seven to three – 10%, 25% and 35%.

4) Eliminate the 3.8% Net Investment Income Tax that is imposed on certain types of passive income such as interest, dividends and capital gains for those taxpayers with adjusted gross incomes above certain threshold amounts.

5) Eliminate the Estate Tax which is currently levied on individual estates in excess of $5.5 million dollars.

6) Eliminate the Alternative Minimum Tax.

7) Eliminate the federal income tax deduction for state and local income taxes.

8) Eliminate the ability of employers to exclude employer paid health insurance premiums from their taxable income.

9) Institute a territorial system of business taxation where companies would only pay taxes on profits earned in the continental United States.

10) Establish a tax holiday for the purpose of allowing companies to repatriate foreign cash reserves at a reduced tax rate.

11) Double the amount of the standard deduction

12) Eliminate most itemized deductions with the exception of the deductions for charitable contributions and home mortgage interest.

Although proponents of Trump’s tax plan say that it will more than pay for itself by encouraging business activity and expanding the economy, critics maintain that this is not the case. In fact, a group of analysts at the Tax policy Center recently released a statement claiming that the proposed plan would reduce federal tax revenues by more than six trillion dollars over the next decade. Secretary of the Treasury, Steven Mnuchin, countered this opinion with the assertion that the Trump tax proposal will have the overall effect of lowering the ratio of debt to gross domestic product by stimulating the growth of the economy. Only time will tell which portions of this tax proposal are actually put into action and what effect they will have.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702) 514-4048 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Don’t Waste Tax Dollars!

With 2017 tax rates ranging from 10% for those in the lowest tax bracket to a high of 39.6% for the highest wage earners, income taxes amount to a huge “expense” for most American taxpayers. A wage earner with a $50000 income, which is somewhere in the middle of the 25% tax bracket, can expect to pay over $12000 in federal income taxes alone! This being the case, it is important for individuals to be aware of the many ways available to save tax dollars and, on the flip side, to carefully avoid the pitfalls that can result in paying taxes in excess of what would otherwise be owed.

One of the easiest ways to save tax dollars is to take advantage of tax credits and tax deductions offered by the IRS and various state tax agencies. A tax credit offers a dollar for dollar reduction in the tax amount owed while a tax deduction reduces taxes by a certain percentage, normally determined by the marginal tax rate for that particular taxpayer. Available tax credits, which vary from year to year, are available for such things as child care costs, education expenses, caring for elderly or disabled family members and various energy saving improvements, among other things. Deductions include the standard deduction as well as numerous others including charitable contributions, medical expenses, tax preparer and financial adviser fees and unreimbursed employee expenses, to name only a few. Although they operate differently, both tax credits and tax deductions are valuable tax breaks that can provide taxpayers who know how to use them effectively with significant tax savings.

A second major tax saving opportunity is to make use of effective tax planning strategies. Many components of the tax system are time sensitive, thus making it possible to save tax dollars simply by adjusting the timing of certain tax related decisions. Some of the many tax considerations that are particularly affected by timing are the sale of investment properties and other investment assets, Roth conversions, gifting and 401(k) and IRA distributions. Timing can also be used to shield capital gains from taxation by pairing them with capital losses or using any one of a number of advanced tax planning strategies such as a 1031 Exchange or a zero cash investment transaction. Tax planning is also important for businesses and includes such considerations as buy-sell agreements, family succession transfers, captive insurance plans and defined benefit and contribution plans, among many others.

A third and final way to save valuable tax dollars is to meet tax filing and tax payment deadlines in order to avoid the penalties and interest associated with the late filing of a tax return and the late payment of taxes due. Failure to File and Failure to Pay Penalties are charged for each month or partial month that a return is late or that a back tax balance is owed. The penalty rate for Failure to File is 5% of the outstanding tax liability up to a maximum of 25% of the tax amount owed. Failure to Pay Penalties are assessed at a rate of 0.5% of the back tax balance with no ceiling on the amount that can be charged. Together with the interest that is assessed on any overdue tax balance, these penalties compound over time and can add a significant additional tax burden that is easily avoided by following the IRS guidelines.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702) 514-4048 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Private Agencies to Begin Collecting Tax Debt

Earlier this month, Congress gave the IRS the go ahead to begin using private collection agencies to collect back taxes. Although proponents of privatizing tax debt collection say that it will help to generate extra tax revenue, opponents are quick to point out its shortcomings. National Taxpayer Advocate, Nina Olsen, highlights the fact that over three fourths of delinquent tax accounts that could potentially be turned over to private collection agencies belong to taxpayers that are below the poverty line. For this reason, she believes the program will not accomplish its intended objective of increasing tax revenue. According to Olsen, the previous attempt to generate tax revenue through the use of private collection agencies which took place under the administration of George W. Bush “undermined effective tax administration, jeopardized taxpayer rights protections,” and actually ended up losing money.

Listed below are some of the specifics of this new policy:

Which taxpayers will be assigned to private collection agencies?

Only those taxpayers who have several years’ worth of unpaid tax debt and who have been subjected to numerous collection attempts by the IRS will be assigned to an outside debt collection agency.  

How will taxpayers be notified IRS?

Taxpayers will receive an official IRS Letter notifying them that their federal tax accounts are being turned over to a private collection agency and identifying the agency that will be handling their account. The letter will also include a copy of the IRS publication, What to Expect When the IRS Assigns Your Account to a Private Collection Agency.

How will the debt collection agencies communicate with the taxpayers?

Following the official IRS Letter, the debt collection agency will send its own written communication to the taxpayer. Once they have sent the letter, they will then be able to contact the delinquent taxpayer by phone.

How will the private collection process be regulated?

The private collection agencies will be regulated by the Fair Debt Collection Practices Act and must follow the all of the requirements set forth in this piece of legislation. These provisions include, among other things, being courteous, respecting the taxpayer’s rights, and not making contact at times and places “known or which should be known to be inconvenient to the consumer.”

What debt collection agencies are being used?

The following are the only debt collection agencies being used by the IRS: CBE Group (Cedar Falls, Iowa), Conserve (Fairport, New York), Performant (Livermore, California) and Pioneer (Horseheads, New York).

How many taxpayers will be assigned to private collection agencies?

For the first four weeks, each tax debt collection agency will be assigned 100 taxpayers per week. Following the initial break-in period, each private agency will service the accounts of 1000 taxpayers per week.

It is important to know that, although private collection agencies will be helping with collection of back taxes, they will not be given the power to initiate any type of enforced collection activity to achieve their goal. Only the IRS will have the power to place a tax lien, issue a tax levy or set up a wage garnishment. In addition, all back tax payments will be made directly to the IRS and not to the private collection agency handling the account. Any tax debt payments that are made using a credit or debit card should only be made using the payment options on the IRS website.  

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)514-4048 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Paying Your Income Tax Bill

With the close of Tax Season 2017 less than a month away, it is likely that many taxpayers will end up being faced with a tax bill in excess of what they are able to pay. When this situation occurs and your tax bill exceeds your available financial resources, the best approach is to face the situation head on. To ignore the problem and hope that it will go away will only make matters worse. Not only will this approach result in an increased back tax balance due to the continued accumulation of penalties and interest, but it could ultimately result in the initiation of a tax lien or some other type of enforced collection activity by the IRS.

One of the easiest options for paying a tax bill when the necessary funds are not immediately available is to request short term administrative extension. This agreement postpones the payment of the tax amount due for 120 days, at which time the balance must be paid in full. However, although payment of the tax balance is postponed, a failure-to-pay penalty of one-half of one percent of the tax amount due will be charged each month during the grace period. Other no hassle payment options include charging the tax debt to a credit card, withdrawing the necessary funds from a retirement account or taking out a bank loan to cover the tax amount owed. When considering any of the aforementioned choices, the cost of borrowing should be weighed against any interest or penalties that will be assessed by the IRS or state tax agency.

In the absence of a borrowing alternative, a taxpayer who is short on financial resources can request setting up an IRS Installment Agreement. Such an agreement provides a means of paying off a back tax balance by making regular monthly installment payments. Although a small origination fee is charged, approval for this tax settlement option is almost automatic as long as the requesting taxpayer owes less than $10,000 and is in otherwise good standing with the IRS. The taxpayer is normally allowed to set the amount of the monthly installment payment as long as it will result in the full balance of the tax debt being paid off within five years form the date the agreement is initiated.  

Tax resolution options which involve settling a tax debt for less than full amount owed are harder to obtain but may be a viable alternative for taxpayers who meet certain specific qualifying criteria set by the IRS. Such partial payment tax settlement options include the IRS Offer in Compromise and the IRS Partial Payment Installment Agreement, among others. In general, the IRS only grants these tax settlement options when they determine that the taxpayer in question is very unlikely to be able to pay the full balance of the tax debt they have accumulated within a reasonable period of time.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today

How to Handle an Income Tax Penalty

The IRS imposes tax penalties for a variety of reasons including failure to meet a filing deadline, failure to pay a tax balance due, failure to make required estimated tax payments and submission of an inaccurate tax return. Since all of these penalties were created for the purpose of enforcing tax compliance, they are normally waived only when a taxpayer can document certain extenuating circumstances that have resulted in a deviation from the tax code. Listed below are some of the common tax penalties handed down by the IRS together with some suggested procedures for obtaining a penalty waiver.

Failure to File Penalty

·        Tax Consequences: Any taxpayer who does not file a completed tax return or a request for a tax extension by the IRS filing deadline will be assessed a Failure to File Penalty equal to 5% of the tax balance owed for each month or partial month that the return is late. This penalty can accrue up to a maximum of 25% of the unpaid tax balance. In addition, any person who fails to submit a tax return within 60 days of the IRS filing deadline will be assessed a minimum penalty of $135 or 100% of the tax balance owed, whichever is less.

·        Penalty Abatement Procedures: The IRS will normally negate the Failure to File Penalty for any taxpayer who has had a clean filing and paying history for the previous three years. A penalty waiver may also be granted when the taxpayer can document certain specific conditions that may have resulted in the tax return not being submitted by the filing deadline. Such conditions, which are collectively labeled as Reasonable Cause Relief, include such events and circumstances as death, a serious illness, a natural disaster, the inability to secure necessary tax information or faulty advice from the IRS or a tax professional.

Failure to Pay Penalty

·        Tax Consequences: A taxpayer who submits a tax return but does not pay the full balance of the taxes owed will be assessed a Failure to Pay Penalty of 0.5% of the tax amount due for each month or partial month that the taxes remain unpaid. This penalty can accrue up to a maximum of 25% of original back tax balance. In any given month, if both the Failure to File and Failure to Pay penalties apply, the combined tax penalty assessment cannot exceed 5% of the tax amount owed.

·        Penalty Abatement Procedures: A Failure to Pay penalty waiver may be granted for the same reasons as those described above under Failure to File. However, it important to note that, although a Failure to Pay or a Failure to File penalty abatement may be granted, the interest on any taxes owed will continue to accrue until the back tax balance is paid in full.

Penalty for the Underpayment of Estimated Tax

·        Tax Consequences: Taxpayers who earn or receive income that is not subject to withholding tax must make quarterly estimated tax payments to cover the tax amounts due for this income. When these payments are not made or are not sufficient to cover the taxes owed, the IRS assesses a Penalty for the Underpayment of Estimated Tax. This is generally equal to 5% of the tax amount owed for each month or partial month that the tax balance is overdue.

·        Penalty Abatement Procedures: The IRS normally waives the Penalty for Underpayment of Estimated Tax if the total amount of the unpaid tax balance is less than $1000 or if at least 90% of the tax balance shown on the current year’s tax return or 100% of that shown on the previous year’s return has been paid. Outside of these conditions, the IRS may abate the Penalty for the Underpayment of Estimated Tax when the taxpayer can prove that it has been calculated incorrectly or that calculating it by a different method would either reduce or eliminate it. This penalty will also generally be waived when the underpayment of estimated taxes is due to extenuating circumstances rather than willful neglect.

Inaccurate Tax Return Penalty

·        Tax Consequences: The IRS may assess a tax penalty when various inaccuracies such as negligence or the understatement of taxes result in an underreporting of the tax amount due. Generally, this penalty is only imposed when the amount shown on a tax return is more than 10% or $5000 less than amount of taxable income that should be shown.

·        Penalty Abatement Procedures: The Inaccurate Tax Return Penalty can sometimes be abated when a taxpayer is able to provide sufficient documentation to show that an error was made despite reasonable efforts to exercise ordinary care and prudence in preparing the return.

Take heart! Although it is best to avoid tax penalties altogether, receiving one is not the end of the world! Consult a certified tax professional to investigate the options available for obtaining a penalty waiver.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

The Future of the Federal Estate Tax

The federal estate tax is a tax assessed by the federal government on assets that are passed on to a person’s heirs at the time of their death. While numerous proposals to abolish this tax have been introduced by legislators over the years, a repeal seems more likely now that Donald Trump has been elected President. As recently as this last week, Trump reemphasized, to those in attendance at the Conservative Political Action Conference, his desire reduce taxes on the middle class. Although the particulars about how he will accomplish this remain unclear, it is fairly certain that the elimination of the federal estate tax will be part of any tax plan he introduces. 

·        The Recent History of the Federal Estate Tax

The modern estate tax was established by the Revenue Act of 1916 which created a tax on wealth transferred from an estate to its beneficiaries. Although there have been many changes to this tax since that time, the trends since 1997 when Congress passed the Taxpayer Relief Act have been fairly steady. Over that 20 year period, the estate tax exemption amount has steadily increased from $600,000 in 1997 to $5,490,000 in 2017. During that same time period, the top estate tax rate has decreased from a high of 55% in 1997 to 40% in the current year. An exception to this decline was a blip in the years 2010 to 2012 when the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act reduced it to 35%. It then went back up to 40% in 2013 when the American Taxpayer Relief Act failed to make the reduction permanent.

·        The Current Status of the Federal Estate Tax

The estate tax exemption amount for 2017 is $5,490,000, up from $5,450,000 in 2016. Estates above this amount are subject to an estate tax of 18% to 40%, depending on the amount of the overage. However, because the federal estate tax is structured as a unified tax credit instead of allowing the exemption to reduce the amount of the taxable estate, all estates are essentially taxed at the top rate of 40%. This being the case, the 11 lower estate tax brackets are rendered somewhat useless except for calculating the amount of the credit.

·        The Use of Gifting to Reduce the Federal Estate Tax

In addition to the annual lifetime exclusion amount there is an annual gift tax exclusion of $14,000 per person per year. This gift exclusion allows each individual to make tax free gifts of $14,000 per year to any number of recipients. Couples can make gifts of $28,000 per year. Over time, such nontaxable gifts can can be used to significantly reduce the amount of a person’s estate while they are still alive.  Gifts above these limits are added to the value of a person’s estate at the time of death.

·        Replacing the Revenue Generated by the Federal Estate Tax

As might be expected, only a very small percentage of the population is actually affected by the federal estate tax. For example, in 2015, estate tax returns were filed on behalf of less than 0.5 % of all decedents and, of that number, only half had estates valued at more than the exemption limit. However, in spite of the small percentage of estates that actually owe federal estate taxes, abolishing this tax would necessarily result in a loss of federal tax revenue. Because of this, some favor coupling the repeal of the estate tax with some modification to the step-basis that is granted to estates. This pairing would replace some or all of the lost estate tax revenue with capital gains taxes paid by the recipients of estate assets.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

The IRS Roll Back of Obamacare

On January 20, 2017, his very first day in office, President Donald Trump signed an executive order giving the Department of Health and Human Services as well as other federal departments and agencies including the IRS the authority to roll back the enforcement of certain Affordable Care Act requirements. IRS Commissioner John Koskinen responded to this directive almost immediately by announcing that, although the agency was being allowed to use its discretion as far as enforcing the income tax reporting requirements associated with Obamacare, he did not think that the collection of individual responsibility payments would be significantly affected for the 2017 tax season. Recently, however, Koskinen has issued a more specific statement, announcing that the at IRS will, in fact, accept and process 2016 tax returns that do not indicate the status of the taxpayer’s healthcare coverage. Only time will tell how this increased leniency will affect the collection of penalty payments for the current year.

Although one of the central campaign promises of Trump’s candidacy was that he would take immediate steps to repeal the Patient Protection and Affordable Care Act, this is an action must be approved by both houses of Congress and could take a significant amount of time. In addition, the process is very likely to come up against numerous stumbling blocks. For example, the Congressional Budget Office recently issued a report saying that retaining the insurance reforms implemented with Obamacare while repealing the associated subsidies and penalties with would increase both insurance premiums as well as the number of uninsured taxpayers. According to the data collected in this study, premiums would nearly double over the next ten years and the number of people without health insurance coverage would increase to over 30 million. In addition to negative findings such as this, many legislators have indicated that they do not feel comfortable with moving toward a repeal of Obamacare until a suitable alternative is in place.

Faced with time constraints and obstacles such as those described above, Trump signed an executive order giving various federal agencies leniency and discretion in enforcing the existing healthcare directive. The order specifically directs the heads of these organizations to “delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax penalty or regulatory burden” on healthcare providers, health insurers or recipients of health care services. As an agency targeted by the executive order, this language allows the IRS a certain amount of latitude in terms enforcing the income tax reporting requirements specified by the Affordable Care Act. In response, IRS Commissioner John Koskinen has announced that the agency will process 2016 tax returns even when the line item indicating healthcare coverage is left blank, an omission that would previously have resulted in a kickback of the return.

Although taxpayers whose tax returns are processed without indicating healthcare coverage will avoid payment of the individual responsibility payment, it is projected that the change will have little effect on tax revenue collected during the 2017 tax season. While the 2016 shared responsibility penalty can be as much as $2085 or 2.5% of a taxpayer’s adjusted gross income, whichever is greater, it is expected that the overall effect of not collecting the penalty from those who would have owed it under the previous guidelines will be small. This is due to the fact that approximately 90% of taxpayers would not have been assessed the penalty in the first place due to the fact that they have either valid healthcare coverage or a qualifying exemption.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702) 945-2757 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

The Jock Income Tax and the 2017 Superbowl

When visitors earn money in a city or state they are visiting, they may be required to pay local and state income taxes on any money they earn in that jurisdiction. This income tax is often called the “jock tax” because it originated in 1991 when the State of California assessed the earnings of Chicago Bulls players who were visiting Los Angeles to play the Lakers in the NBA finals. Following this, Illinois instituted its own “jock tax” but only imposed it on out-of-state players who originated from states that imposed a state income tax on athletes from Illinois. At the present time, most states levy an income tax on visiting athletes. The exceptions are the District of Columbia, which is prohibited by law from taxing nonresidents who work there, and Florida, Texas and Washington, the three states that have no personal income tax.

Fast forward to the Super Bowl 2017 game that was played in Houston, Texas. The fact that Texas does not have a state income tax means that none of the visiting players will be required to pay the “jock tax” on their play-off winnings. This amounts to a very significant tax savings for players of the New England Patriots who earned $107,000 each for their winning Super Bowl performance. Had Super Bowl 51 been played at Levi Stadium in Santa Clara, California, the location of Super Bowl 50, each of these players would have had to pay $14,231 of their winnings in state income tax. Atlanta Falcons players, who earned $53,000 each for their Super Bowl participation, will realize a tax savings of over $7000 compared to what they would have earned if the game had been played in California as it was in 2016.

Although all itinerant workers could technically be charged a state income tax for income earned outside of their state of residence, it is virtually impossible to track all of the thousands of visiting workers who earn income in any given state. Thus, the “jock tax” targets only high profile, high income earners, most of whom are professional athletes. It is this inequitable enforcement that critics point to as one of the major flaws of this particular state income tax assessment. Another major criticism is the difficult burden the “jock tax” places on the athletes who must pay it. For example, professional NFL players play 16 games in a season and receive 16 different checks. Although federal and state income taxes are withheld from each payment, there is much room for an overpayment or underpayment error. Also, since the each player must file a “jock tax” return with most states where they play as a visitor as well as a state income tax return with their state of residence, the tax filing process has the potential to become quite complex.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Nevada Residency Case Study

Nevada Tax Residency Case Study

When operating Las Vegas Bookkeeping in the state of Nevada we often work with business owners relocating to the state of Nevada to take advantage of the numerous tax benefits offered in the state of Nevada. The following is a modified real-world example of a taxpayer seeking the tax benefits of a no-tax state.

General: The taxpayer is expecting a significant capital gain in tax year in the upcoming income tax year. The gain would be resulting from privately owned, original issue stock from the taxpayers’ current employer. The taxpayer currently lives in southern California but works for an employer located in the state of Nevada. Currently the primary taxpayer has the flexibility to relocate to and be employed in Las Vegas where current earnings and capital gains income will not be taxed.

Authoritative Guidance:  Generally speaking the state of California taxes all residents on their world-wide income. 

A "resident" is defined as:

       every individual who is in the state for other than a temporary or transitory purpose; and

       every individual who is domiciled in California who is outside the state for a temporary or transitory purpose.

( Sec. 17014, Rev. & Tax. Code )

Domicile is defined as the place where the taxpayer has his or her permanent home, and to which he or she intends to return whenever he or she is absent. ( Reg. 17014(c), 18 CCR )

"Residency" is not the same as "domicile." ( Whittell v. Franchise Tax Board (1964) 231 CA2d 278, 41 CRptr 673, ¶202-709) One may be a resident although not domiciled in the state, and conversely, may be domiciled in the state without being a resident. ( Reg. 17014(a), 18 CCR )

The state of California provides a partial list of factors to be considered for determining whether the taxpayer is a California resident.

 

Residency Factors include:

                   the amount of time spent in and out of California;

       the location(s) of the taxpayer's spouse and children;

       the location of the taxpayer's principal residence;

       where the taxpayer was issued a driver's license;

       where the taxpayer's vehicles are registered;

       where the taxpayer maintains professional licenses;

       where the taxpayer is registered to vote;

       the locations of banks where the taxpayer maintains accounts;

       the locations of the taxpayer's doctors, dentists, accountants, and attorneys;

       the locations of the church, temple, or mosque, professional associations, and social and country clubs of which the taxpayer is a member;

       the locations of the taxpayer's real property and investments;

       the permanence of the taxpayer's work assignments in California; and

       the location of the taxpayer's social ties.

 

In review of guidance and court cases related to the determination of residence and California income tax filing requirements there are several key factors that are the primary considerations for determining residency.

Once a California resident, there is the presumption on continued residency until the establishment of a new domicile is proved.

Board of Equalization Appeal Andra Sachs – March 2010

 “Respondent argues that its residency determinations are clothed with a presumption of correctness, that appellant was California domiciliary in 1999, and that this California domicile remains with her until she bears the burden of proving her establishment of a new domicile at a specific physical address outside California in the 2000 tax year at issue on a date that predates her receipt of the Flashcom stock sale proceeds. Respondent argues that appellant's subjective intent is insufficient to overcome this presumption, and that appellant has failed to demonstrate the required objective facts showing that she established through physical residence a non-California domicile and residence before she received the Flashcom stock sale proceeds.”

In some cases, a person may not be domiciled in California but may still be a resident for California tax reporting purposes.  In some cases, the intention of the taxpayer is emphasized in determining California residency.

 California Tax Reporter

“Some cases emphasize the taxpayer's intentions when the taxpayer left the state. In Appeal of Rand, SBE, 76-SBE-042, April 5, 1976, ¶205-430, a California domiciliary who was employed in Libya under a contract that required a commitment of at least 18 months, but that had no definite termination date, was outside the state for other than a temporary purpose. Despite his business contacts with California, including bank accounts and rental property, he did not intend to return to California upon completion of the minimum employment commitment. In Appeal of Hardman, SBE, 75-SBE-052, August 19, 1975, ¶205-294, a professional writer domiciled in California went to England to write a screenplay. His one-way ticket to England, use of professional services in the country, and enrollment of his daughter in an English school, indicated that he intended to remain in England indefinitely and he lost his California residency for income tax purposes”

California Tax Reporting:

A California resident filed a California Income Tax Return to report all world-wide income in any given tax year.  A taxpayer that has a State filing requirement in multiple states generally files a State tax return in California in any other state in which the taxpayer has reportable income. In most cases the state of California provides a tax credit for taxes paid to the other state and receives a copy of the income tax return filed with the other state.   In a year that the taxpayer changes state residency the taxpayer files in both states and reports income in the respective states. In both scenarios, the taxpayer must provide the state of California with a copy of the other state tax return for that year.  In past experience, if the state of California is aware of a large taxable transaction and a change of residency in the same taxable year the state will generally examine the transaction and the change of residency.

Summary and Analysis:

In recent years, the state of California has made significant efforts to identify taxpayers that are improperly escaping tax reporting and payment in the state of California.  This is primarily due to the high- income tax rates in the state of California and the significant tax benefit received from reporting income in either low or no-tax states.  The state of California employs a variety of methods to identify potential under-reporting taxpayers.  These include but are not limited to identification of taxpayers with mortgages and financial accounts in CA, comparisons of property tax and DMV records, searches of California professional licenses, and a variety of other methods. In our experience, the most common action by the state is to send a letter indicating that the state believes that a state tax return should have been filed for a given year and ask for a response from the taxpayer.  At that point the taxpayer must provide the reason for non-filing.

In all cases, residency is a subjective determination made on a case by case basis.

The following are items that should be considered if the taxpayer chooses to change his State of California residency status.

  • Employer documentation supporting the change in the place of employment would support the change in residency.
  • The taxpayer should carefully review the residency factors on page one and make as many of these changes as possible as quickly as possible.  Items that are easily verifiable should be given special attention.  (leases, DMV, professional licenses, etc.)
  • Any drivers and professional licenses should be cancelled in the state of California as soon as possible.
  • As referred to in the court case on page 2, California residency is assumed until there is proof that residency has been changed.  The most obvious indication of a change in residency is proof of residing in the other state through a lease and employment documentation and the replacement of various registrations and licenses.
  • As referred to in California tax reporter section, intent is often a factor in residency determination.  The move and change of residency should appear to be permanent with no immediate current intention to return to California.
  • Time spent in and out of California is a significant consideration in determining California residency. In review of court cases bank and credit card records indicating California purchase transactions are commonly used to determine time spent in the various state.  Careful consideration should be given to these types of transactions.
  • Any 2017 California source income that triggers a 2017 California income tax filing requirement would provide visibility into the Nevada reporting of the gain and increase potential scrutiny.  No 2017 wages or other California income would be ideal.
  • The location of the taxpayers’ spouse and children are one of many factors in determining residency.  The relocation of the family would be ideal but maybe not possible. Efforts to limit the ability to verify the family location would be helpful.  The relocation of the family after the school year would support the intention of the taxpayer to make a permanent change of residency.

As mentioned, a large taxable transaction happening soon after a change in residency may receive scrutiny by the state of California and the determination of residency is mostly subjective and done on a case by case basis.  The best defense is for the state of California not to be aware of the transaction.  If there is no 2017 taxable income in the state of California there would be no requirement that California receive a copy of a state income tax return. If a large portion of the changes listed in the document are made as soon as possible the change of residency would be a supportable position to take on future years tax returns.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Income Tax Changes Affecting 2016 Tax Returns

Although Benjamin Franklin’s famous statement that “nothing can be said to be certain, except death and taxes” may still be true, his remark definitely does not refer to any of the specifics involved with filing and paying income taxes. In fact, Barbara Weltman, an editor for J.K. Lasser’s Income Tax 2017, recently reminded taxpayers that they should not assume that “what (they) relied on last year is necessarily the same.” Although there are no major changes to the tax filing parameters for 2016 tax returns, there are certain changes to tax penalties, mileage rates, tax exemptions, tax credits and tax brackets that tax filers should be aware of.

The following are some of the changes that affect the filing of 2016 tax returns:

Change in Tax Filing Deadline

Tax Day for 2107 is Tuesday, April 18th. This delay is due to the fact that the normal April 15th filing deadline falls on a Saturday followed by Emancipation Day on Monday.

Increase in Health Insurance Penalty

The 2016 penalty for not having health insurance is $695 per adult and $349.50 per child, with a maximum household penalty of $2085. These tax penalties are up over 100% from those tax penalties imposed in 2015.

Millage Rate Decrease

Taxpayers are allowed to deduct expenses involved with the use of their personal vehicle for certain specific purposes that include medical, charitable causes, moving and business. This tax break can be calculated in one of two ways, either by using the actual costs involved with operating the vehicle to service these various proposes or by using the mileage rate specified by the IRS. The mileage rate for 2016 tax returns has decreased form 57.5 cents per mile to 54 cents per mile for business and from 23 cents per mile to 19 cents per mile for medical and moving related use. It remains unchanged at 14 cents per mile when the vehicle is used for charitable reasons.

Tax Bracket Changes

The income limit for single taxpayers subjected to the maximum tax rate of 39.6% has been raised from $413,200 to $425,050 and from $464,850 to $466,950 for married couples filing jointly. The income limits for all other tax brackets have also been increased slightly.

Higher Personal Exemption

The personal exemption has increased from $4000 to $4050 for single taxpayers with adjusted gross incomes below $259,400 ($311,300 for married couple filing jointly). The income level at which this exemption fades out completely has also been increased.

Possible Refund Delay

Tax refunds will be delayed for taxpayers who are claiming either the Additional Child Tax Credit or the Earned Income Tax Credit. According to the provisions of the Protecting Americans from Tax Hikes (PATH) Legislation that was passed in 2015, refunds associated with tax returns claiming either of these two tax breaks must be held until February 15th in order to give the IRS time to match tax return information with forms W-2 and 1099-MISC submitted by employers.

Passport Revocation for Owing Back Taxes

Beginning this year, the State Department will have the right to revoke the passport of any taxpayer who has a back tax balance in excess of $50,000. This law was passed as an add-on provision of the Fixing America’s Surface Transportation (FAST) Act of 2015.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Income Tax Refund Delays Likely

Tax refunds for some taxpayers will be delayed this year due to a provision of the Protecting Americans form Tax Hikes (PATH) Act of 2015. This law stipulates that tax refunds issued to taxpayers who claimed either the Earned Income Tax Credit or the Additional Child Tax Credit must be held until February 15, 2017. Since the same law now requires that employers submit forms W-2 and 1099-MISC to the Social Security Administration by the end of January, pushing the refund issue date out until the middle of February will give the IRS time to match the information submitted on taxpayer returns with the forms submitted by employers.

Prior the initiation of this new time schedule, employers could wait until the end February to report wage information to the government. If filing electronically, they could even wait until the end of March. With many tax refunds issued prior to this, there was no time allotted for the matching of employer and taxpayer information, a situation that is corrected by the new PATH legislation. The law specifically targets the Earned Income Tax Credit and the Additional Child Tax Credit because they are refundable tax credits, meaning that they allow a taxpayer to receive a refund that is greater than the full amount of their tax liability. It is this type of tax break which is most likely to trigger tax fraud and refund error, both of which the new refund issue date is designed to reduce.

The two tax credits affected by the February 15th refund issue date are described below:

·        Earned Income Tax Credit

The Earned Income Tax Credit is a refundable tax credit provided by the IRS for the benefit of low income taxpayers who meet certain specific requirements. Although a small credit is available to childless taxpayers, the main focus of the credit is to provide tax relief for individuals and families with dependent children. Specifically, the 2016 guidelines allow for a tax credit of $506 for tax returns showing no dependent children up to maximum benefit amount of $6,269 for tax returns claiming three or more children. The phase-out thresholds begin at annual income amounts of $8270 for single individuals with no dependents up to $23,740 for married couples filing jointly with three or more dependent children.

·        Additional Child Tax Credit

The Additional Child Tax Credit is a refundable tax credit created by the IRS for the purpose assisting taxpayers who are ineligible to receive the full benefit of the non-refundable Child Tax Credit. Taxpayers who would not receive the full amount of the Child Tax Credit due to the fact that the allowable benefit exceeds the total amount of their tax liability may apply for the Additional Child Tax Credit provided that they have an earned income of at least $3000 for 2016.

Although only returns claiming the either the Earned Income Tax Credit or the Additional Child Tax Credit are affected by the refund delay, data suggests that returns claiming these two tax breaks are more likely to be submitted early. This being the case, the total tax refund dollars issued by the IRS prior to February 15, 2017 is likely to be less than in previous years.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Trump's Income Tax Reform Just Around the Corner

Trump’s Income Tax Reform Just around the Corner

Donald Trump has announced that he will begin a major overhaul of the United States tax system as soon as he takes office on January 20th. He maintains that the changes he is suggesting will simplify the tax code, provide tax relief to American taxpayers and benefit the economy by making condition’s more favorable for businesses. According to his plan, these changes will be revenue neutral. They will be paid for by certain other changes to the tax code which will actually increase tax revenue. In particular, his proposal recommends eliminating many of the deductions that are currently available to high income taxpayers as well as closing a number of corporate tax loopholes.

The following are some of the major changes proposed by Trump’s tax plan:

·         Simplifying the tax code for individuals

Trump’s tax plan outlines a simpler tax code by proposing that the number of tax brackets be reduced to four (0%, 10%, 20% and 25%) instead of seven. Individuals earning less than $25,000 and couples earning less than $50,000 would not pay any tax at all, with the net result that over 50% of the population would effectively be removed from all income tax obligations. Taxpayers paying the 10% income tax rate would keep almost all of their current deductions while those in the 20% and 25% brackets would lose some of theirs. In addition to simplifying tax brackets and eliminating deductions, Trump’s tax plan proposes terminating both the Alternative Minimum Tax and the marriage penalty.

·         Eliminating of the death tax

Under current estate tax laws, individual estates in excess of $5,490,000 are subject to taxation with a maximum estate tax rate of 40% when the amount of the taxable estate exceeds $1,000,000. Under Trump’s tax plan, the estate tax will be eliminated altogether.

·         Making the tax code more attractive for business

One of the main components of Trump’s tax plan is to make America more attractive to business by reducing the corporate income tax rate to 15%, a significant reduction from its current rate of over 35%. In addition, it proposes providing pass-through entities with a matching rate by intoducing a special business tax rate within the tax guidelines for personal tax returns. Owners of partnerships, LLCs and certain other business structures are currently taxed at their personal income tax rates which are often in excess of 15%.

·         Eliminating certain loopholes and deductions

A final important part of Trump’s tax plan involves generating income tax revenue by eliminating certain tax loopholes and deductions for wealthy taxpayers and special interests. Included in this list of suggested changes is decreasing the income threshold for the Pease Limitation on itemized deductions and the phase out of personal exemptions and phasing out the life insurance interest deduction for wealthy taxpayers. The proposal also recommends putting a cap on interest deductions for business expenses as well ending tax deferrals for corporate income earned on foreign soil.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. To learn more about the services we provide, visit us at www.lasvegasbookkeeping.com.  Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com  to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Outside Tax Resources

Your Guide to Outside Tax Resources

Although Las Vegas Bookkeeping serves clients from all over the Unites States, most of our clients are located in the State of Nevada. The links below provide direct access to useful resources for both the Internal Revenue Service and the Nevada Department of Taxation.

 

IRS Links:

·         Contact Information

https://www.irs.com/articles/contact-the-irs

·         Locate Your Local Tax Office – Nevada

http://www.taxoffices.org/nevada-tax-offices/

·         Check the Status of Your Refund

https://www.irs.gov/refunds

·         Forms and Publications

https://www.irs.gov/forms-pubs

 

Nevada Department of Taxation Links:

·         Contact Information

https://tax.nv.gov/Contact/Contact_Us/

·         Online Services

https://tax.nv.gov/OnLineServices/Online_Services/

·         Forms and Publications

https://tax.nv.gov/Forms/

·         Modified Business Tax Forms

https://tax.nv.gov/Forms/Modified_Business_Tax_Forms/

 

As always, the licensed professionals at Las Vegas Bookkeeping stand ready to assist you with all of your accounting and bookkeeping needs. To learn more about the services we provide, visit us at www.lasvegasbookkeeping.com.  Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com  to receive a free, no obligation consultation. Don't wait! Streamline your business operations today by contacting the professionals at Las Vegas Bookkeeping today.

2016 Tax Preparation Deadlines

Although most filing deadlines for 2016 individual and business tax returns to be filed during the 2017 calendar year remain the same, there are several important changes. One such change is the due date for individual tax returns which has been moved to Tuesday, April 18, 2017. The regular April 15th deadline falls on a Saturday and the following Monday is Emancipation Day, pushing the deadline to Tuesday. This change does not affect the due date for filing an amended return which is still April 15, 2020.  In addition to this change, there are several more permanent deadline changes for the filling of business tax returns. The due date for partnership (calendar year) returns has been moved back to March 15th while that for C corporations has been forward to April 15th.

The following is a summary of 2017 filing deadlines for both individual and business tax returns:

Filing Deadlines for 2016 Individual Tax Returns

·         April 18, 2017: Regular tax deadline for personal tax returns

·         October 16, 2017: Extension deadline for personal tax returns

Filing Deadlines for 2016 Business Tax Returns

Partnerships

·         March 15, 2017: Filing deadline for partnership tax returns (calendar year)

·         September 15, 2017: Extension deadline for partnership tax returns (calendar year)

** Fiscal year partnership tax returns are due on the 15th day of the third month following the end of the company’s fiscal year with extensions due six months from that date.

S Corporations

·         March 15, 2017: Filing deadline for S corporation tax returns (calendar year)

·         September 15, 2017: Extension deadline for S corporation tax returns (calendar year)

C Corporations

·         April 15, 2017: Filing deadline for C corporation tax returns (calendar year)

·         September 15, 2017: Extension deadline for C corporation tax returns (calendar year); filing deadline for C corporation tax returns (June 30th fiscal year)

·         April 15, 2018: Extension deadline for C corporation tax returns (June 30th fiscal year)

·         ** Tax returns for C corporations with a fiscal year ending on any date other than June 30th or December 31stare due on the 15th day of the fourth month following the end of the company’s fiscal year with extensions due six months from that date.

Tax Exempt Organizations

·         May 15, 2017: Filing deadline for tax exempt organization returns

·         November 15, 2017: Extension deadline for tax exempt organization returns

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. To learn more about the services we provide, visit us at www.lasvegasbookkeeping.com.  Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com  to receive a free, no obligation consultation. Don’t wait! Streamline your business operations by contacting the professionals at Las Vegas Bookkeeping today.

Know Your Bookkeeper

Many bookkeepers are professionally certified although this is not a necessary prerequisite for most bookkeeping positions. An official certificate will, however, ensure an employer that an individual who is in their employ has some basic qualifications. The two major types of bookkeeping certificates, Certified Bookkeeper (CB) and Certified Public Bookkeeper (CPB), both establish that the individual who holds them has passed a competency exam as well as fulfilled some type of educational or work requirement. In addition, both of these certificates have ethical and continuing education components.

Issued by the American Institute of Professional Bookkeepers, the Certified Bookkeeper (CB) certificate requires the verification of 3000 hours or two full years of accounting/bookkeeping experience. The applicant must also pass a two-part examination which covers the areas of payroll, depreciation, adjusting entries, bank reconciliation, inventory and internal controls. Part of this exam must be completed at a testing site while the other part can be completed on line. In addition, a candidate for this certification must sign the Code of Ethics established by the American Institute of Professional Bookkeepers and must complete a minimum of 20 hours of approved continuing education each year in order to keep it.

The second general bookkeeping certificate, the Certified Public Bookkeeper (CPB), is issued by the National Association of Certified Public Bookkeepers. In order to receive this designation, an applicant must have fulfilled an education or experience requirement in one of the following three ways: 1) receive an Associate’s Degree or a Bachelor’s Degree in accounting, 2) earn a Bookkeeper Certificate from the National Association of Certified Public Bookkeepers or 3) verify 4000 hours or two full years of accounting/bookkeeping experience. In addition, an individual applying for this certificate must pass a four-part competency exam which covers accounting fundamentals, accounting principles, payroll fundamentals and QuickBooks. The applicant must also sign the Certified Public Bookkeeper Code of Professional Conduct. In order maintain certification, the certificate holder must complete 24 hours of continuing education during each calendar year. 

In addition to these two general bookkeeping certificates, various specialty certificates are available. The National Association of Certified Public Bookkeepers, which offers the Certified Public Bookkeeper designation, also offers advanced certificates in payroll, tax, Microsoft Office Excel and QuickBooks. On top of this, several software companies offer specialty designations for proficient use of their specific programs.  The Certified QuickBooks User and the Microsoft Office Excel Certification are issued by Intuit and Microsoft, respectively.

Unlike the Certified Public Accountant designation, the various certificates issued by bookkeeping associations and software companies are not subjected to any state or federal regulations. They do, however, give employers information about a bookkeeper’s knowledge and experience. In addition, the Certified Public Bookkeeper and the Certified Bookkeeper designations ensure that the individuals that hold them are being held to high ethical standards as well as being required to complete continuing education requirements.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. To learn more about the services we provide, visit us at www.lasvegasbookkeeping.com.  Contact us by phone at (702)945-7257 or by email at tina@lasvegasbookeeping.comto receive a free, no obligation consultation. Don't wait! Streamline your business operations today by contacting the professionals at Las Vegas Bookkeeping today.

Las Vegas Bookkeeping - Closing Out The Year

The end of the year can be a busy time for bookkeepers and bookkeeping services providers. Although the majority pf bookkeeping tasks are performed all year long, there are a few additional responsibilities that must be fulfilled as the business year comes to a close. These extra bookkeeping duties, which include evaluating the status of accounts receivable, taking an accurate inventory, preparing annual financial statements and getting the books ready to generate 1099s and W-2s, are essential to transitioning a business into a new year. Without the data provided by these year-end bookkeeping chores, a business has no means of evaluating its financial health and planning effectively for the year to come.

The following are a few critical bookkeeping tasks that must be performed as the year comes to a close:

1)      Evaluate the status of past due accounts receivable.

Since accounts receivable contribute to the calculation of business profitability, they are an essential consideration in determining the year-end financial health of a business. One of the important tasks in closing out the books at the end of the year is identifying past due accounts receivable and evaluating the likelihood of collecting the balance due from the party responsible for incurring the charge. If it is determined that collection is unlikely, the outstanding balance can be written off as a business loss and used as such for tax purposes.

2)      Take an accurate physical inventory.

One very obvious task that must be completed by the bookkeeping arm of a business as the year comes to an end is taking an accurate physical inventory. Since inventory is an asset, it figures into calculations of profitability and loss and is an important element of business tax preparation. An overstated inventory automatically results in the payment of excess taxes, highlighting one of the important reasons why taking an accurate inventory at the end of the tax year is a necessary antecedent to the preparation of the business tax return.

3)      Produce required financial reports.

In addition to being necessary for the preparation of business tax returns, financial statements are an essential prerequisite for determining the overall financial health of a business. These formal reports, which include statements of equity, income and cash flow, provide business owners and with the information that is necessary for tax preparation, long range tax planning and making informed decisions about asset allocation and business operations. In addition, Equity Statements and Statements of Financial Position, are an important component of the decision-making process for potential lenders and investors.

4)      Prepare to generate tax forms.

Although 1099s and W-2s are not issued until after the first of the year, all of the income and tax data that is to be reported must be complied before the year comes to a close. Both W-2s, which must be mailed to employees before the end of January, and 1099s, which must be filed before the end of February, require accurate tax and income data from the previous year. This being the case, bringing company books up to date and compiling the financial information required by these forms is an important and necessary end-of-the-year bookkeeping task.

Although internal bookkeepers and bookkeeping services providers perform a key business function all year long, their work is especially important as the business year comes to an end.  During the month of December, bookkeepers everywhere are hard at work taking inventory, collecting data and generating year-end reports, all aimed at moving the businesses they serve seamlessly and efficiently into the coming year.

The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. To learn more about the services we provide, visit us at www.lasvegasbookkeeping.com.  Contact us by phone at (702)945-2757 or by email at tina@lasvegasbookkeeping.com  to receive a free, no obligation consultation. Don't wait! Streamline your business operations today by contacting the professionals at Las Vegas Bookkeeping today.