It’s tax season again, which means Americans all over the country are dealing with the same questions they had to ask themselves—and figure out how to answer—last year and the year before, and which they’ll undoubtedly have to ponder again 12 months from now. Even if your situation hasn’t changed very much since last year, filing taxes can be burdensome and frustrating. That’s why it pays to do some advance tax prep in Elkhorn, WI to ensure you aren’t dashing off to the post office or feverishly trying to complete your taxes online come April 15.
Filing taxes is complicated anyway, but for those who have significant business expenses related to owning a small business or being self-employed, things can get even trickier. The seemingly basic question, “What can I deduct?” turns out to be not so simple after all. Fortunately, this is where a tax professional can come into the picture. Here are some basic facts regarding deductible business expenses from the team at A Plus Accounting LLC Traveling Bean Counters:
What is deductible? In determining whether business expenses are tax-deductible, there are two keys attributes that the expenses under consideration must possess. First, they have to be ordinary expenses. This means that the expenses must be typical for someone in your particular line of work. Second, the expenses have to be necessary. This means that the expenses should be appropriate to your line of work, and beneficial to your accomplishing the tasks of your job. What you can actually deduct, in the end, depends a great deal on what kind of work you do.
Personal vs. business expenses: Especially for the self-employed, the line between what constitutes a business expense and a personal expense can be unclear. (This is another great reason to seek the help of a tax professional.) Of particular importance for many people are two major expenses: your home and your vehicle. For these, and for other expenses that are split between your personal life and your work life, it’s customary to deduct only the percentage of the expense that is actually used for business. For example, you can deduct the cost of home office space, or car expenses based on actual mileage.
Expenses you can deduct as a small business owner: Small business owners are also able to deduct a number of different expenses directly related to the cost of owning and operating their business. Some of these, such as employee pay, are relatively obvious. Others, however, such as rent for business property that you don’t own, insurance expenses necessary for your profession, and even interest on money you borrowed for your business can all be deducted.
This is just some of the most basic information about business deductions. For questions unanswered here, or to get more information and guidance to help you with your taxes, seek assistance with tax prep in Elkhorn, WI from the pros at A Plus Accounting LLC Traveling Bean Counters. We look forward to helping make your taxes as easy as possible—and getting you the largest return!
The Affordable Care Act remains a source of confusion, frustration and puzzlement for many people, and with tax season in full swing, its impact on many Americans’ tax returns is only one of the ways the ACA is in the news these days. For those who are wondering about how the ACA might affect their tax returns, here’s some useful information from your accountant in Elkhorn, WI.
The biggest change is that, this year, for the first time ever, health care coverage is something you’ll need to report on your tax return. Your options for doing so will be to check a box that says you were covered for the full year or, in the event that you are claiming or have already received premium tax credit payments in advance, fill out a new form indicating as much.
The premium tax credit is available to those who purchased coverage through the Health Insurance Marketplace. This particular tax credit is designed to make it easier for people with moderate income levels to purchase health insurance during the Marketplace’s open enrollment period. Here are some particulars about the premium tax credit:
It is only available to those who purchased insurance through the Marketplace.
Credit recipients cannot be eligible for employer-based or government-based coverage.
It is dependent upon income.
Married persons who file separate tax returns are ineligible, although certain exceptions are made in cases involving abuse or abandonment.
Another person cannot claim you as a dependent.
When enrolling for health coverage through the Marketplace, you have the option of receiving the premium tax credit right away via payment to your insurance carrier. This will aid in reducing your monthly premium payments. You also have the option of receiving the full amount of the premium tax credit when you file your tax return.
Regardless of how you opted to take the premium tax credit, you’ll still have to fill out the appropriate paperwork when filing your taxes. You’ll fill out Form 8962 if your insurer took your advance payments or if you’re unsure whether you might qualify for the tax credit. If you enrolled in coverage through the Marketplace, you should receive Form 1095-A, which contains information you’ll need to have on hand when filling out Form 8962.
Needless to say, as is the case with so many tax-related situations, the specifics of your situation will matter a great deal when determining whether you can benefit from the premium tax credit. The paperwork involved can seem overwhelming, and while filing online is probably easier, it still poses unique challenges, and in either case, you’ll benefit a great deal from understanding what’s in front of you prior to April 15.
Tax season is stressful for many people, and for many different reasons. With help available, there’s no need to let questions about the Affordable Care Act and your taxes get you down. Contact an accountant in Elkhorn, WI for answers to all your questions about how the ACA might factor into your taxes.
The Affordable Care Act’s main aim is to provide affordable health insurance for a wider breadth of people. But in the couple years since the ACA took effect, it can often seem like it’s been most productive in confusing individuals and small business owners, especially during tax season. If you own a small business and are not sure how the Affordable Care Act affects your tax preparation in Elkhorn, WI, read on to gain some insight about the rules, regulations and resources at your disposal.
Size matters
Your taxes are going to depend a lot on how big your business is. First, you need to determine how many full time employees you had last year. Count how many employees you had working 30 hours a week or more each month and then add each month’s totals together. Finally, divide that number by 12.
If that number equals out to 25 employees or fewer, that means your business is exempt from penalties, and you may even qualify for a tax credit under the ACA. This is true for employers with fewer than 50 employees as well, though if you’re anywhere close to 50, you’ll want to make sure you’re doing your math right. Trusting a professional with your tax preparation in Elkhorn, WI may make this easier.
Finally, businesses with 50 or more full time employees that do not offer health coverage are subject to an Employer Shared Responsibility Payment, or a “Play or Pay” penalty. Figuring out the size of your business will go a long way toward helping you correctly prepare and file your taxes.
Credits and deductions
The Affordable Care Act doesn’t just mean businesses have to spend more. In fact, when it comes to tax season, many small businesses may be eligible for credits and deductions.
The Small Business Health Care Tax Credit is designed especially for small businesses and small tax-exempt organizations that employ low-income and moderate-income workers. This credit can pay up to half of the cost of providing health insurance for employees, and is meant as an incentive for small businesses to provide first time coverage or continue providing health coverage for their employees. Ask your local accountant if your small business qualifies.
A special deduction also exists specifically for businesses that consist of only one or two employees. If you own a small business by yourself or with your spouse, and you or the both of you are the only employees, you may qualify for this deduction. Whether you purchase health coverage for you and your family through the individual marketplace or through the small group market, you likely qualify for this tax deduction this year. Again, it is best to ask the advice of a qualified accountant if you are unsure about whether you qualify.
Hopefully this has provided some helpful guidelines about how the Affordable Care Act affects your taxes. If you’re left with any questions or concerns, please don’t hesitate to contact A Plus Accounting LLC Traveling Bean Counters. We’ll work with you to make your taxes as simple and painless as possible.
Filing personal taxes is complicated and stressful enough without having to provide 1099 forms as a small business owner. But once you understand a few rules and procedural guidelines, it can be easy to figure out whom to send them to and how to go about it. Here’s a rundown of what 1099s are, when to send them, what the penalties and exceptions are, and much more. As your local tax accountant in Elkhorn, WI, we hope this information is helpful this tax season.
What are 1099 forms? 1099 forms, or 1099-MISC, are exactly what they sound like: tax forms for miscellaneous income. Often, these are sent out by businesses that paid for contract work, but the 1099-MISC can also cover income from rent, prize money and more.
To whom should I send 1099 forms? As a businesses owner, you should send 1099 forms to any individual, partnership, estate, LLC or limited partnership to whom you paid at least $600 last year for rent, prize money, services or labor. 1099 forms are only used by business owners, so there’s no need to send 1099s to individuals and organizations you paid personally.
Are there any exceptions? Yes, quite a few. You don’t need to send 1099s to real estate agents, or for merchandise, storage or other material goods. When in doubt about whether or not to send a 1099, it’s best to consult your accountant in Elkhorn, WI.
What happens if I don’t send out 1099s? If the IRS finds out you were supposed to send out 1099s and failed to do so, you can find yourself paying a penalty of anywhere from $30 to $100 per 1099 form. The longer you take to file after the deadline, the higher that penalty may be. If you intentionally try to avoid doing this, the penalty can be even higher, starting at $250. Sending out 1099s can be a pain, but it’s usually better than the alternative.
How can I make sending 1099s easier? If you like to plan ahead, one way to make tax season easier is to request W-9 forms from any individual or business whom you plan to pay $600 or more. The tax information required on W-9s will make determining whether you need to send a 1099, and filling out your portion of them, much easier.
Where can I find the forms? The IRS sends out preprinted 1099 forms in batches of three, and they are available at the post office or can be ordered. Act quickly in procuring your 1099s so you can be sure to get them out well before the deadline.
What deadlines should I know about? There are two deadlines you need to know about when it comes to 1099s. First, January 31is the date when all 1099s need to be sent out to their recipients. Second, you need to submit copies of all the 1099 forms you send out, along with a 1096 form, to the IRS. You can do that part electronically, and you must do it by March 31.
1099-MISC forms don’t have to be especially stressful or complicated for business owners to prepare and send out, but a little advance planning can go a long way. Contact your local tax accountant in Elkhorn, WI for more information.
For many people, the concept of accounting can take on numerous meanings. Some people like to picture accountants with old school calculators, visors and cash-counting machines, toiling away to make sure that all of the dollars and cents add up just right; others picture accountants as ledger-keepers in suits, who spend their days penciling in every business transaction while they literally balance the books.
The fact of the matter is that in today’s day and age, accountants in Elkhorn, WI have outgrown both of these stereotypes to becomes something much more than just money managers. In fact, today your accountant can help with a variety of things, including payroll and business planning, and these professionals are truly the keepers of knowledge when it comes to business cash flow and operations.
To this end, we’ve compiled five of the most common questions that people ask in regards to accountants in Elkhorn, WI—the answers might surprise you!
What exactly are the duties of an accountant?
Accountants can be hired for a myriad of reasons pertaining to your small business, but most of the time, it comes down to a few core services: bookkeeping, payroll services, tax prep and filing, and business planning. These things all encompass a business’ cash flow and taxes, which are the prime areas of focus for an accountant.
Why should I hire an account if I can balance my own books?
This is a big question that often gets asked by small businesses seeking to cut out the middle man and save money. Basically, when it comes right down to it, an accountant in Elkhorn, WI is going to handle your finances better than you can—unless of course you’ve gone through years of schooling to be an accountant, passed numerous accounting examinations and are certified for things like bookkeeping and tax preparation! Hiring an accountant will keep your books balanced, your mind free to focus on other things and will ensure that this critical aspect of your business is being handled to its fullest potential.
How do I hire an accountant on my terms?
Again, many people want to take advantage of accounting services, but only on their own terms, as a way to save money. The good news is that many accountants can be hired on an hourly basis or even via a retainer fee. If you only need accounting services part-time or sparingly, these options allow you to take full advantage of a professional’s time and expertise!
When should I hire an accountant?
The answer is as soon as possible! If your business is just starting out, an accountant is going to give you the very best insight into how to proceed sustainably; if you’re already up and running, an accountant is going to give you valuable insight into what your financial picture looks like.
What’s the difference between an accountant and a CPA?
The answer is: not much! Both professions are considered to be accounting professions, however CPAs can do a bit more on the management side of things when it comes to your business. For example, if you need to produce a business audit, a CPA will be required for this process. As a business grows larger, there’s more of an emphasis on CPAs, however in early stages of business, a regular accountant will be able to provide essential services for an affordable cost.
