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Tax season is come

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IRS SYSTEM DOWN

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips February 4, 2016 - IRS E-File System Outage (updated as of 7:30am) As of 7:30am, the IRS is still experiencing a computer outage. Remember that during this period you should continue filing returns with your tax software company. Your software company will hold the returns and submit them to the IRS as soon as IRS systems become operational. The IRS issued the following statement the evening of the February 3: The IRS experienced a hardware failure this afternoon affecting a number of tax processing systems, which are currently unavailable. A number of our systems are not currently operating, including our modernized e-file system and a number of other related systems. The IRS is currently in the process of making repairs and working to restore normal operations as soon as possible. Some of the systems will remain unavailable until tomorrow. The IRS remains in close contact with e-file software transmitters and the tax community during this period. A number of taxpayer and tax practitioner tools will be unavailable during this period. IRS.gov remains available, although a number of the services on the site are not, including Where’s My Refund. Taxpayers can continue to prepare and file their tax returns as they normally would. Taxpayers can continue to send their tax returns to their e-file provider; these companies will hold the tax returns until the IRS resumes accepting electronic tax returns. Taxpayers who have already filed their tax returns do not need to take any additional action. The IRS is still assessing the scope of the outage. At this time, the IRS does not anticipate major refund disruptions; we continue to expect that 9 out of 10 taxpayers will receive their refunds within 21 days. Please call us if you have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Capitalization of Assets Policy

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Is your capitalization policy up to date? It's January — time to update your capitalization policy! A recent IRS notice increased the safe harbor amount for deducting tangible property expenses currently, starting January 1. That means you'll need to review the written policy you use to set a threshold for which qualifying costs you'll record as assets and which you'll charge to expense. As you may remember, the "repair regulations" became effective in January 2014. This guidance from the IRS on the capitalization and repair of assets applies to all businesses, including sole proprietorships, rentals, and farms. The guidance explains the federal income tax treatment of expenditures you make for materials and supplies, repairs and maintenance, and business property you buy, produce, or improve. In general, you're required to capitalize these items. However, the regulations provide a de minimis safe harbor for expensing certain costs. The amount of the safe harbor depends on the type of financial statement you have prepared. For instance, if you have an applicable financial statement, the safe harbor is $5,000. (An example of an applicable financial statement is a certified audited statement with a report by an independent CPA that you use for credit or reporting purposes.) If your business does not have an applicable financial statement, the de minimis safe harbor was originally set at $500. Beginning January 1, 2016, the safe harbor is $2,500 per invoice or item with a supporting invoice. Please give us a call to discuss how this change to the capitalization and repair regulations will affect your business and what you need to do to update your accounting policy. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Ten forty plus bookkeeping houston

Tax Refunds Delays 2016

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips For each of the past few days, the IRS has released a small daily batch of refunds. Through yesterday, the IRS has released a portion (less than 1%) of returns filed on or prior to Jan 22. Today, the IRS released a portion (less than 1%) of returns filed on Jan 23 and Jan 24. On Monday, the IRS is scheduled to release a portion (less than 1%) of returns filed on Jan 25 and Jan 26. All other filers continue to wait. The IRS does not release information on how long the average taxpayer can expect to wait for their refunds. Instead, each year, the IRS comments on refund speed only by saying that it releases "9 out of 10 refunds in less than 21 days." In past years, however, in actuality the IRS has typically released the vast majority of all refunds within 14 days or less. This year, taxpayers who filed and had their return accepted by the IRS on January 11 (the first day the IRS allowed returns to be filed and returned acknowledgments back), will have waited 21 days as of Monday morning. It is clear that the IRS is not releasing refunds as quickly this year as it did in the past years. Some have speculated that this is due to additional fraud prevention measures which may have triggered delays in refunds in comparison to prior years. Others have speculated that the delay is the result of the blizzard that closed government offices in Washington DC last week. Over the past twenty years, there have been other IRS delays of funding at the beginning of the season. In prior delays, what generally happens is that there is an extra week delay for taxpayers filing at the start of the season, and after that point the IRS will finally begin paying refunds and things then return to their normal pattern. In 2012, for example, new anti-fraud measures implemented at the IRS were widely blamed for delaying refunds by an extra week in 2012. Regardless of the reason this year, the result is the same. The result is that there is currently a nationwide delay in IRS refunds, which impacts all tax preparers, as well as taxpayers all across the nation. We know that this is a difficult time for many of your customers, as they wait for their refund, and as you wait for your fees. As always, we are committed to providing you the most current information, and we stand by ready to help. Please call us if you have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

1040+ Quality Tax Preparation Testimonial - Michelle

1040+ Quality Tax Preparation Testimonial - Michelle

529 account withdrawls

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Plan your 529 account withdrawals January is the start of a new college semester, and parents and grandparents may want a refresher course on 529 college savings plan withdrawals. Here are two things to consider. • Qualified withdrawals are tax-free. "Qualified" withdrawals are those you use to pay for college education expenses such as tuition, fees, books, supplies, and equipment. Be aware that some withdrawals may be taxable, such as when the account beneficiary receives a scholarship or other tax-free assistance. In addition, you must coordinate 529 withdrawals with Hope and lifetime learning credits, as well as distributions from Coverdell education savings accounts. These rules prevent the use of the same expenses to obtain multiple tax benefits. • Non-tax implications may affect timing of withdrawals. Financial aid may play a role in when you take money from your 529 account. For example, when grandparents own a 529 plan, withdrawals to pay for a student-grandchild's college costs may affect the amount of income the grandchild must report on a federal financial aid form. Planning for this generally means waiting to use grandparent-owned 529 funds in the student's last year or two, or transferring ownership of the account to the student's parents. A recent change to financial aid rules may also help. Starting with the 2017-2018 school year, the federal financial aid form will use income data from an earlier tax year than is used under the present rules. This change means some financial gifts — such as distributions from grandparent-owned 529 plans — may be made earlier. If you have questions or need help calculating 529 plan withdrawals, please give us a call. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Hobby Loss Rules 2016

Tax Tips Hobby or Business When you are a W-2 Wage earning opening a business could help you develop additional deductions while building a business that is 100% your own. However, you have to be careful about about Hobby / Loss Rules. If an individual, partnership, estate, trust, or an S corporation engages in an activity that is not conducted as a for-profit business, deductions are limited to the amount of income from the activity. This rule does not apply to corporations, other than S corporations. If an activity is considered a for-profit business, deductions can exceed income, allowing the resulting loss to offset other income. Determination In determining whether an activity is a hobby or a business, all facts and circumstances are taken into account. No one factor can make the determination. The following list is not intended to be all inclusive. 1) Manner in which the taxpayer carries on the activity. Factors that may indicate a business include maintaining complete and accurate books and records, carrying on the activity substantially similar to other profitable activities of the same nature, and changing operating methods and techniques to improve profitability. 2) The expertise of the taxpayer or his or her advisers. Factors that may indicate a business include knowledge of the taxpayer, or consultation with those who are knowledgeable about a particular industry, then using that knowledge to try and make a profit. 3) The time and effort expended by the taxpayer in carrying on the activity. Factors that may indicate a business include spending a lot of time and effort in the activity, particularly if the activity does not have substantial personal or recreational aspects. Taking time away from another occupation may also indicate a profit motive. Spending little time will not be counted against the taxpayer if qualified employees are hired to carry on the activity. 4) Expectation that assets used in the activity may appreciate in value. Even if no profit is made from operations, if the value of land or other assets in the activity appreciate so that an overall profit is made from a sale, the activity may be considered a business. 5) The success of the taxpayer in carrying on other similar or dissimilar activities. If the taxpayer was successful in the past turning an unprofitable venture into a profitable venture, the current activity may be a business even if it has not yet made a profit. 6) The taxpayer’s history of income or losses with respect to the activity. Early losses during start-up will not count against the taxpayer, but continued losses after the customary start-up stage that are not explainable may indicate a hobby. Losses sustained due to unforeseen circumstances, such as casualty or thefts beyond the taxpayer’s control, will not count against the taxpayer. Any series of profitable years are strong evidence the activity is a business. 7) The amount of occasional profits, if any, which are earned. The amount of profits in relation to the amount of losses, and in relation to the taxpayer’s investment in the activity, may indicate intent. An occasional small profit one year, mixed with large losses in other years or large taxpayer investments, may indicate the activity is a hobby. Substantial occasional profits mixed with frequent small losses or investment may indicate a business. An opportunity to earn substantial ultimate profits in a highly speculative venture also indicates a profit motive. 8) The financial status of the taxpayer. If the taxpayer does not have substantial income or capital from other sources, the taxpayer may have a profit motive. If the taxpayer has substantial income from other sources, and losses from the activity in question generate substantial tax benefits, the taxpayer may not have a profit motive. 9) Elements of personal pleasure or recreation. Where there are recreational or personal elements involved with the activity, a lack of profits may indicate a hobby. On the other hand, a lack of any appeal in the activity other than possible profits indicates a profit motive. It is not necessary that the sole purpose for engaging in an activity is to make a profit. The availability of other investments that might produce a higher rate of return will not count against the taxpayer. The fact that a taxpayer derives personal pleasure in the activity is not sufficient in itself to classify the activity as a hobby if other factors indicate the activity is a business. Presumption of Profit IRS rules state that if an activity is profitable in three of the last five tax years, including the current year, the presumption is it is carried on for profit, and the hobby loss limitations do not apply. If the activity consists primarily of breeding, training, showing, or racing horses, the IRS will presume it is carried on for profit if a profit is produced in at least two of the last seven tax years, including the current year. Reporting Hobby Income and Expenses Occasional profits from hobby activities are not subject to self-employment tax, and losses from hobby activities cannot be used to offset other income. Hobby Income Gross income for the purposes of the hobby loss rules equals gross receipts minus the cost of goods sold deduction. Hobby income may include capital gain, rent, and other income. Hobby Expenses Expenses related to hobby income are reported as itemized deductions on Schedule A. Activities Not Engaged in for Profit IRS examiners consider the following in their analysis to determine whether or not an activity is engaged in for profit. • Are there activities with large expenses and little or no income? • Are losses offsetting other income on the tax return? • Does the activity result in a large tax benefit to the taxpayer? • Does the history of the activity show that it is generating any profit in any years? Examples of possible hobby activities include: – Airplane Charter – Games – Artists – Gardening – Auto Racing – Horse Breeding – Boating – Horse Racing – Bowling – Jewelry Making – Collecting – Knitting – Cooking – Motocross Racing Please call us if you have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

RETIREMENT PLAN CONTRIBTUION

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Review your retirement plan contributions for the new year You may have already heard the news: Many tax numbers that are adjusted annually for inflation did not change for 2016. For example, the 401(k) contribution limit remains at $18,000 this year, plus another $6,000 if you're celebrating your 50th birthday during 2016. SIMPLE plan contributions remain the same for 2016 also. You can save up to $12,500 in your SIMPLE account this year, plus another $3,000 if you're age 50 or over. Though the limits haven't increased, taking full advantage of allowable contributions and any amounts your employer matches is still a good idea. Contributions you make to employer-sponsored retirement plans reduce your taxable income because your employer deducts the amount you specify from your paycheck before taxes. You might also be able to benefit from a savers credit of up to $2,000. If you're already contributing the maximum, you may want to consider opening an individual retirement account this year. You can have both types of retirement plans, and a Roth or traditional IRA will help you diversify your retirement holdings and save additional tax-deferred or tax-free money. Just remember that your traditional IRA contribution may not be tax-deductible if you're eligible to participate in your employer's plan. The maximum amount you can contribute to an IRA during 2016 is $5,500 (plus $1,000 when you're age 50 or older). Give us a call for information about these and other tax-sheltered accounts that can offer significant breaks for 2016. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Great Tax Deduction

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Triple Tax Advantages: Reimburse Your Employee ­Spouse for Health Insurance If you are self ­employed or a single member LLC taxed as a proprietorship and you have your spouse as your only eligible employee, you can gain significant tax savings by reimbursing your employee spouse for an individual health insurance policy purchased through a public health insurance exchange (including family coverage that covers both spouses and dependents). Structuring the reimbursement correctly creates a business expense deduction, saves on employment and income taxes for the business and the spouse, and helps the owner and spouse avoid tax penalties under health care reform. With health care reform’s individual mandate now in full force, every U.S. citizen must carry health insurance coverage (called “minimum essential coverage”) or risk paying a tax penalty. Individuals may obtain that coverage through employer plans (called group plans), government­ sponsored programs (like Medicare, Medicaid, or military insurance), or through newly formed state health insurance exchanges. Big Picture Health care reform has created significant obligations—and a ton of confusion—for everyone. Not only has it added the obligation that all individuals obtain health coverage, but it has created restrictions and requirements for insurers and employers that provide coverage. For the self­ employed and single­ ember limited liability companies taxed as proprietorships that have their spouses as their only eligible employees, the business reimbursement of the employee­ spouse’s health insurance coverage obtained on a public health insurance exchange means up to four tax benefits (three for sure). 1. The employee­ spouse does not recognize income on the reimbursement itself. 2. The owner avoids the super large ($100­a­day) penalty for reimbursing an employee for individually purchased health insurance. 3. The owner takes a tax­favored business deduction for the reimbursement payment. 4. The spouse might qualify for a premium tax credit, and potentially purchase a subsidized exchange plan that covers the spouse and the owner (and other dependents). Advantage 1: Tax­Free to Employee­ Spouse The tax code allows employers to reimburse or otherwise pay medical­ related expenses of an employee, the employee’s spouse, and the employee’s dependents without including those amounts in the employee’s gross income.6 This is big. The family medical reimbursement is not W­2 income to the employee spouse. Accordingly, the employee­ spouse does not pay any federal employment taxes on the reimbursement. And you, the employer, also do not pay any federal employment taxes (FICA, Medicare, or federal unemployment). Advantage 2: Escape the $100­ a ­Day Penalty Health care reform generally prohibits the practice of reimbursing employees for individual policies.7 But that prohibition does not apply to a plan that covers fewer than two eligible employees.8 So the proprietorship can reimburse the employee­spouse without including the reimbursement in the spouse’s gross income, while also saving on employment taxes and avoiding penalties that apply to businesses with two or more eligible employees. Advantage 3: Business Deduction In addition to the exclusion from federal payroll taxes, the owner takes a Schedule C business deduction for the medical reimbursement payment.9 The business deduction does two things: · First, it reduces the owner’s self ­employment taxes. · Second, it reduces the owner’s income taxes. And remember, the spouse received the medical reimbursement as a tax ­free fringe benefit. The bottom line is that the medical reimbursement is deductible by the proprietor and not taxable to the employee spouse. Advantage 4: Government Subsidy The fourth advantage relates to the spouse’s ability to still qualify for premium subsidies in the exchange. As mentioned above, generally speaking, if an individual is eligible for an employer sponsored group health plan, the individual is not eligible for a premium tax credit. In this instance, however, because the plan covers only one employee, the arrangement falls outside the definition of an employer ­sponsored plan.10 Therefore, the reimbursement, by itself, does not cause the owner or spouse to lose eligibility for the premium tax credit. If the spouse qualifies for the premium tax credit, you as a Schedule C business owner can reimburse the spouse for the net cost of the health insurance. In effect, this gives you and your spouse both the tax ­deductible reimbursement from the business and the subsidized premium tax credit from the federal government via the exchange. Of course, you may well have income that exceeds 400 percent of the federal poverty line (the actual dollar amount depends on the location of the individual and the number of dependents). With income too high, there is no government subsidy, but the tax­deductible business reimbursement remains. Putting the Plan in Place Your first step is to put your medical reimbursement plan in writing. You need to do this to comply with IRS Regulation 1.105­11(b), which defines a self­insured medical reimbursement plan as a separate written plan for the benefit of employees that provides for reimbursement of employee medical expenses referred to in section 105(b).11 To help you put your plan in place, here’s a sample Section 105 medical reimbursement plan document (click here). This document is for 2015, and it works for 2016, as no new legislation has changed the rules. Four things to keep in mind about the plan: 1. Make the plan cover the employee­ spouse. 2. Make the plan a family plan. 3. Require the employee­ spouse to submit medical expenses on a monthly basis. 4. Reimburse the employee spouse for every medical expense on a monthly basis (monthly makes the plan business­like). Also, to help you get your arms around this great benefit, take a moment to read the following articles: · Does Your Section 105 Plan (HRA) Work for You after Obamacare? · Shellitos Win Their Section 105 Medical Reimbursement Plan Deductions · Is a W­2 Wage Needed to Create an Employee­ Spouse 105 Plan? Takeaways When you implement the employee­ spouse health reimbursement strategy: 1. Your proprietorship deducts the reimbursement as a business expense. 2. Your employee­ spouse does not report the reimbursement as income. 3. Your business saves on employment taxes. 4. Your spouse saves on employment taxes. 5. You avoid the significant penalties that apply to reimbursing individually purchased health insurance. 6. You and your spouse avoid tax penalties under health care reform’s individual mandate. 7. You and your spouse potentially save money through premium tax credits in the exchange. If you can employ your spouse in your Schedule C business and you have no other employees, start saving money now. Employ your spouse and get all the tax advantages, obtain the health insurance coverage you need, and avoid health care reform penalties. Please call us if you have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Money Basics are important to your business

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Business Tips Pay attention to money management basics Launching a small company can be exhilarating, like entering an extreme sports competition with huge risks and prodigious rewards. But keeping a business profitable year after year may not always generate such exuberance, especially if you're the one responsible for balancing priorities and covering day-to-day expenses. Like it or not, monitoring such mundane matters as cash flow, inventory, collections, and taxes often distinguishes winners from losers in the business arena. Conscientious owners who keep a close eye on their financial resources may still be in the fight five years after opening their doors. Entrepreneurs who neglect their accounts may find themselves posting "going out of business" placards after a year or two of frustration and dashed dreams. Unfortunately, some owners never discover what went wrong. Even if you've hired a top-notch accountant or bookkeeper, it's wise to acquire at least a basic understanding of the following business fundamentals: • Cash flow. Liquidity is the lifeblood of your business. Like a doctor assessing the health of a patient, gaining insight into cash — how much money is in the bank, how much is coming in, how much is going out, where the cash is being spent — can help you reach a proper diagnosis. Even if the firm seems healthy, knowing where your cash is flowing can inform crucial decisions, prompting adjustments that may stave off disaster before it strikes. • Assets and liabilities. The listing of balance sheet accounts lets you know how much is tied up in inventory, how much you owe and how much is owed to you, how much equity you've contributed to the business, and other factors that may affect your company's health. For example, a balance sheet that's heavy in accounts receivable may indicate a problem with too-lenient credit policies. A large cash balance may signal missed investment opportunities or sluggish payment of outstanding loans. • Business versus personal accounts. Of course, if the line between the company's books and your personal finances becomes blurred, your diagnosis may become distorted. Keeping personal and business budgets separate makes it easier to manage taxes and track financial transactions. Setting up discrete bank accounts — including a separate payroll account for employee social security, income taxes, and Medicare — is also crucial. If you'd like additional suggestions about managing your company's resources, give us a call. Please call us if you have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

New Law allows Small businesses to expense rather then depreciate certain assets

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Beginning in 2016 and retroactive to 2015 in select circumstances, the IRS created a new audit­proof option that you can use to improve your tax deductions. The new option allows you to avoid depreciating certain assets and instead simply write them off. For example, say you buy two $2,000 computers for your office. Under the old rules, you likely had to treat the computers as capital assets and either: 1. depreciate them using the five­year depreciation table, or 2. elect Section 179 to expense them immediately. (Note that if you used Section 179, you had to hold the computers for five years to avoid recapture of some expensed amounts.) And then, whether you depreciated the assets or expensed them, you had to carry them in your books of account and track them for your tax return. This was a pain. But now, because of some new rules, you can avoid the capitalization and recapture rules. And this new rule allows you to remove those expensed assets from your books of account and tax returns. And it’s easy. You simply need to · follow a few simple rules, · likely insert some magic language that we will give you for your expense policy, and · do this today (this is the “act fast” part). Silver Lining In 2013, the IRS issued its final tangible­property regulations.1 This is a tome containing more than 250 pages of detailed regulations that most tax pros, business owners, and rental property experts dreaded, particularly at first glance. The property regulations, also commonly referred to as the “repair regs,” explain new tax rules that generally require you to capitalize amounts paid to buy, produce, or improve tangible property but that also allow you to deduct certain amounts as business expenses. The silver lining in the new regulations that we discuss in this article is the “de minimis” safe harbor that, when implemented, requires you to immediately deduct as business expenses assets with a certain dollar amount that you select (within limits), and gives you a regulatory advance agreement from the IRS that it will not, in an audit, challenge your election to expense. Safe Harbors: One of Two Dollar Limits The new rules contain two safe harbors; one of the two applies to you. You either have or don’t have an “applicable financial statement” for your business. If you have a CPA audit or something similar done to your financial statements, you have an applicable financial statement (AFS). The difference between having an AFS and not having one is this: With an AFS, you can create tax­deductible $5,000 expensing per invoice or invoice item. Without an AFS, you can create tax­deductible $2,500 expensing per invoice or invoice item. How to Take Advantage of the Safe Harbor To benefit from the safe harbor, you need to take four steps. Step 1: Have—and Stick to—an Expense policy For safe harbor protection, you must have in place an accounting policy—at the beginning of the tax year—that requires expensing of amounts paid per invoice item of property costing $2,500 or less (less than $5,000 with an AFS), and amounts paid for items with economic useful lives of 12 months or less. And you must comply with this expense policy in your books and records. If you establish a policy to expense amounts paid for items costing $2,500 or less, for example, you must expense every such item in your books. You can’t expense some of those items and capitalize others. Greedy? You can set your expense policy threshold above the safe harbor threshold, but the safe harbor applies only to amounts that don’t exceed the $2,500 threshold. Suppose, for example, you require the expensing of amounts paid for items below $3,100. The safe harbor will apply only to invoices or items that don’t exceed $2,500. So why wouldn’t you always set your expense policy threshold to the maximum safe harbor? Because the threshold applies not only to your tax return but also to your financial statements, and you may have reason to look better to your shareholders than you look to the IRS. Step 2: Put the Expense Policy in Writing If you have an AFS, the IRS requires that you have your expense policy in writing.9 As a proprietorship or small corporation, you likely don’t have an AFS, and you likely don’t have your expense policy in writing. And it’s likely that your historical expensing amount will not prove a history of $2,500 as your expense policy. This is a problem. It’s compounded by the fact that the IRS does not require you, as a non­AFS taxpayer, to have your expense policy in writing. Why? Because, as the IRS says in the preamble to its expensing regulations, “the de minimis safe harbor is intended to provide recordkeeping simplicity to taxpayers by allowing them to follow an established financial accounting policy for federal tax purposes, and allowing retroactive application is inconsistent with such purpose.” Your prior established expense policy is likely far below $2,500. To increase your expensing to $2,500, you need your expense policy in place now. Don’t waste a minute. Here’s some language you can use: Company Name Effective: January 1, 2016 For both book and tax purposes, the company (a) expenses assets costing $2,500 or less on a per invoice or per invoice­listed item basis, and (b) expenses assets with an estimated economic useful life of 12 months or less. For added proof that this policy is real and in place, sign the policy as an owner, date it, add a witness’s signature, and consider having the statement notarized. Tax year before January 1, 2016? In Notice 2015­82, the IRS grants safe harbor to years before 2016, but only if you had established expensing policies in those years. This means you had either a written policy or a consistent application of your expensing dollar amount. Step 3: Save Your Invoices The safe harbor applies only to items documented by invoices.12 That’s good. Remember, the invoice proves the purchase, and the canceled check or credit card charge proves that you paid the money. You want both proof of purchase and proof of payment in your tax file. Itemized versus lump­sum invoices. To apply the safe harbor on a per­item basis, you want the invoice to identify the separate items. Say you buy 20 computers that cost $2,000 each. If the invoice lists each computer separately—or at least notes the number of computers and the per­unit cost—the safe harbor lets you deduct the entire $40,000. Step 4: Make the Election on Your Tax Return You must make the election in your tax return every year you want to use the safe harbor.13 To make the election, you attach a statement to your federal tax return and file it by the due date (including extensions).14 The statement must be titled “Section 1.263(a)­1(f) De Minimis Safe Harbor Election” and include your name, address, and Social Security number, plus a statement that you are making the de minimis safe harbor election under Reg. Section 1.263(a)­1(f). Here’s some language for the safe harbor election: Taxpayer Name Taxpayer Address Taxpayer Social Security Number Taxpayer hereby elects under Reg. Section 1.263(a)­1(f) de minimis safe harbor expensing of up to $2,500. Two things here. First, the election is an annual event. Second, you can change your accounting policy on expensing any year. But if you make a change, make sure you have that change noted in a new or amended beginning­of­the­year written expense policy. Takeaways Because you save tax dollars, you want to use the new expensing safe harbor when you can. Here’s why: 1. Safe harbor expensing is superior to Section 179 expensing because you don’t have the recapture period that can complicate your taxes. 2. Safe harbor expensing takes depreciation out of the equation. 3. Safe harbor expensing simplifies your tax and business records because you don’t have the assets cluttering your books. In summary to put safe harbor expensing in place: 1. Have an expense policy in place at the beginning of the year. 2. Put the expense policy in writing, and comply with it. 3. Keep the invoices. 4. Make the annual election to expense on your federal income tax return. Please call us if you have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Unifled Taxes?

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips We all know the annual ritual: once January rolls around, you gather your tax documents to file your tax returns by the deadline. Sometimes (or maybe all the time!) you need an extension. And maybe you don’t meet the extended deadline, and now your return is late and unfiled. Then the next tax season rolls around, and you still haven’t filed last year’s return—so you don’t want to do the current one either, out of fear of the IRS or because you need last year’s data. Now your problem is snowballing—and if you let fear grip you, it can continue for years . . . before the IRS decides to do you in. Don’t let this problem get ahead of you. Let us give you a road map for achieving peace of mind by getting right with the IRS. If you have late, unfiled tax returns, you have an urgent problem that you should start to fix ASAP. The possible consequences include: You are at risk of the IRS preparing your returns for you giving you no dependents and no deductions and there is a possibility of criminal prosecution. The best way to avoid criminal prosecution is to come forward and voluntarily file any delinquent returns. The IRS has a time­honored policy that, in general, it will not criminally prosecute for failure­to­file those taxpayers who come forward and file their past­due tax returns. Don’t forget you may have had a refund all those years. Sad to say you can’t get anything beyond three years back from April 15th the current year (i.e you can still get a refund for 2012, 2013, and 2014, but not 2011 going back). If you owe, you always owe. If you have a long­standing problem, in most cases the IRS usually shows you some mercy. In general, the IRS requires you to file the most recent six years of tax returns to be in current compliance with your tax return filings. However, if they filed your seven year and older returns for you, they may not have given you all your dependents and deductions and you owe for the old ones. In that case you may want to file all your returns. Once you file a tax return, the general three­year statute of limitations on assessment of tax starts to run.7 If you never file a tax return, you give the IRS open season with no time limits to assess tax for that unfiled tax year. If your business has unfiled payroll tax returns but made all of its required tax deposits, and the returns show no tax owed, go ahead and file those delinquent returns. But if you made only some or none of the required tax deposits, and your payroll tax returns show that you owe the IRS money, you need to take special care before you file them. If you run your business as a limited liability company or corporation, you are not personally liable for the payroll tax balances; only your entity is. However, the IRS can potentially transfer liability for the “trust fund” portion of payroll taxes to you as the person responsible for allowing the business entity to fail to pay the IRS. What are “trust fund” taxes? They are the taxes that you collect on behalf of your employees and send to the IRS—namely, the employees’ federal income tax withholdings and their half of FICA taxes. If you have unpaid trust fund taxes, it is in your best interest to pay off the trust fund portions first. To do this, you send a designated payment to cover the trust fund taxes. The IRS honors such designations.12 If you don’t designate the payment, the IRS applies the payment to the non­trust fund taxes first! If you have not filed older tax returns whether one or ten, we are here to help. Just give us a call, the consultation is free. Please call us if you have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Health Insurance Penalties 2016 | Joseph Becker

Standard mileage rate for 2016 is less than 2015

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Standard Mileage rate for 2016 has decreased. The IRS recently announced the mileage rate for business driving in 2016 will be 54¢ a mile, a decrease from the 2015 rate of 57.5¢ per mile. You can use this rate for cars, vans, pickups, and panel trucks instead of tracking the actual costs of operating those vehicles for business purposes. An annual study of the fixed and variable costs of operating an automobile is used to determine what the standard mileage rate will be for a given year. In addition to the mileage rate, a separate deduction may be claimed for parking fees, tolls, interest relating to the purchase of the automobile, and state and local personal property taxes. The standard business mileage rate isn't applicable to automobiles used for hire, such as taxicabs, or for fleets of automobiles you use simultaneously. One other caution: You can't use the standard rate if the vehicle was previously depreciated by other than the straight-line method, including bonus depreciation or the Section 179 deduction. A depreciation component of 24¢ a mile is included in the 2016 business mileage rate (the same as 2015). This depreciation reduces your cost basis in the vehicle. You have a choice when using your vehicle for business. You can use actual expenses which include gas, repairs, maintenance, tolls, washing, parking, and depreciation. It is important to note that under the actual expense method you have to track your business and your personal mileage. The business expense deduction is based on a percentage of your business miles to total miles. Or you can use the standard mileage rate (business miles times $.54 per mile). Using the standard mileage rate you only track your business miles. In most cases the standard mileage rate provides a larger deduction. When you use the standard rate you can use commuting miles (to and from your business office or client (unless you work out of your home and have a home office)). You cannot deduct gas, oil, repairs, or car insurance. You can deduct parking, tolls, and car washes. Whether you are using actual expenses or using the standard mileage rate you must keep a log of your business mile usage. If you have a smart phone you can download an app that well help you track your mileage. Please call us if you have any questions. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Do you know how your business is doing as of right now?

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Business Tips Balance sheet analysis provides planning opportunities Learn to dissect your company's balance sheet to discover opportunities for growth, imminent shortfalls, financial disasters in the making, and trends both favorable and unfavorable. To jumpstart your analysis, focus on the following key indicators. Current ratio. The current ratio is calculated by dividing current assets by current liabilities. Current assets generally include cash, investments, short-term accounts receivable, inventory, and supplies. Current liabilities include payroll and other short-term payables, as well as current payments on long-term debts such as mortgages or bank loans. These accounts are classified as "current" because you generally expect to convert them to cash or pay them off within a year or during the current business cycle. For example, you might buy inventory on credit and plan to pay suppliers using proceeds from current sales. The rule of thumb: If your company's current ratio is greater than one, you have enough short-term assets to cover short-term obligations. If the number dips below one, your business may be headed for trouble. On the other hand, if the current ratio is three or above, you could be neglecting profitable investment opportunities. For instance, you might have too much money sitting in a low-interest bank account when the funds could be used to develop a new product line, liquidate long-term debt, or invest in a more lucrative venture. Working capital. Subtract current liabilities from current assets to arrive at this number. Like the current ratio, working capital indicates whether your company has enough cash (and short-term assets that can be converted to cash) to meet current obligations. Banks analyze this number because they're reluctant to loan money to a business that's barely covering existing commitments. The greater the amount of working capital, the more likely your company will make payments when due. Debt-to-equity ratio. You can calculate the debt-to-equity ratio by dividing total liabilities by total equity (assets minus liabilities). The debt-to-equity ratio indicates whether your company is relying excessively on debt to finance current operations. Like the spendthrift who finances an extravagant lifestyle with credit cards, a business that's heavily leveraged may find itself careening toward bankruptcy. Analyzing this ratio can help you make needed corrections before it's too late. Generally speaking, the lower the percentage, the stronger your company's financial health. Call us if you have any questions. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.

Congress renews expired tax breaks

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Congress renews expired tax breaks You're probably familiar with tax provisions that expire on an annual basis, also known as "extenders." In mid-December 2015, Congress renewed the extenders that expired last year. But this time, the extender renewal went further than making the breaks retroactive to the beginning of 2015. Some of the rules are now effective through December 31, 2016, some are effective through 2019, and some are effective permanently. Other provisions made changes to existing tax rules that were not part of the extenders. What does that mean for you? For one thing, it means you can benefit from tax breaks such as bonus depreciation, expanded Section 179 expensing, and residential and business energy improvement incentives on your 2015 federal income tax return. Here are three rules that are back in place for 2015 — and that were permanently extended, meaning they'll also be available in future years. • State and local sales tax deduction. If you itemize, you can choose to deduct sales taxes you paid during 2015 instead of state and local income taxes. You can claim your actual expenses or use optional IRS tables. • Educator expenses. If you're a teacher who spends your own money for classroom supplies, you can claim up to $250 of your expenses as an above-the-line deduction. You may be able to deduct additional out-of-pocket expenses if you itemize. • Charitable donations from your IRA. Are you age 70½ or older? You can make a tax-free distribution of up to $100,000 from your IRA when the money is paid directly to a qualified charity. Please contact us to discuss how this new law could affect you. Call us if you have any questions. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.