How to Fix Taxes That Were Filed Wrong

If you have received a notice from the IRS, there’s a chance that your taxes may have been filed wrong. This is very common and can be easily fixed.

A CPA can help to translate what the IRS is trying to communicate. Once they have figured that out, they will review the documents needed to file taxes and they will file a 1040-X to amend the faulty taxes and correct them.

Help put your mind at ease by contacting your local CPA.

If you are in the OC or LA area, give us a call at 714-533-2600 to schedule a free consultation today!

WARNING! FAKE IRS Calls!

WARNING! Tax time also means FAKE IRS calls. Don’t be fooled by these crooks!

The safest way to check if it is the REAL IRS is hang up and go to www.IRS.gov and call the number on that website. The IRS goes through a very formal process of gathering information and would not ask for payment information over the phone or through e-mail. If you get threatened by the callers, the IRS does not do that either. 

 

Again, the safest thing to do is hang up and if you have real concern then call the IRS from the number on their website.

State Personal Property Taxes

State Personal Property Taxes

Do you own a car? A boat? State personal property taxes on cars, boats and other personal property are deductible on Schedule A. The IRS warns that the taxes must be based on value alone and imposed on a yearly basis. For example, most car owners pay a yearly fee for car registration. If part of the fee was based on the car’s value and part was based on its weight, you can deduct the value-based portion of the registration fee.

If you want to know if you qualify for these deductions, give us a call at (714)-533-2600 to schedule a FREE consultation to make sure you are maximizing your deductions. 

Business Taxes March 15th Deadline

Businesses, remember that March 15th is the deadline for 1120, 1120-s, and 1065 tax forms to be filed with the IRS.

This means if you haven’t already started finding someone to help, do that ASAP!

A CPA can either help you make sure you have all you need to file your taxes or file an extension to give you some more time to collect all of your records.

You don’t want to rush and miss any deductions that your business qualifies for. Give us a call at (714) 533-2600 to schedule an appointment to get help with your taxes today!

Tax Tips 2017: Energy Efficient Credit

Energy Efficient Credit

This is your last chance to claim this credit for applying energy efficient equipment to your residential property for 2016. Some examples are solar hot water heaters, solar electric equipment, wind turbines or fuel cells.

What the credit gives you is 30% of the cost for the equipment installed. The amount credited does not have a limit for most types of property.

So if you installed some alternative energy equipment to your property, and want to know if you qualify for this credit, give us a call at (714)-533-2600 to schedule a FREE consultation to make sure you are maximizing your deductions.

Tax Tips 2017: Education Tax Incentives

Education Tax Incentives

College can be stressful. But it can lead to some major tax benefits when it comes to tax season. There are misconceptions of what is deductible when it comes to school expenses. There are three categories to look at for you tax situation.

     1.       American Opportunity Tax Credit

• This credit gives you $2,500 to deduct from your taxes owed. If it brings the amount you owe down to $0, then you are able to get a refund of 40% of the remainder up to $1,000.

    2.       The Lifetime Learning Credit

• This credit is similar where you are able to deduct tuition and related expenses up to $2,000 per tax return. Unfortunately, this credit cannot lead to a refund like the previous credit.

    3.       Deduction for Tuition and Fees

• If for some reason you do not qualify for the credits above, you are always able to deduct up to $4,000 of related expenses each year.

 

In addition, there are income and other eligibility requirements. Compare your three options

using this chart provided by the IRS https://www.eitc.irs.gov/Other-Refundable-Credits/educompchart

 

If you want to know if you qualify for these credits, give us a call at (714)-533-2600 to schedule a FREE consultation to make sure you are maximizing your deductions. 

Business Tax Help 2017: Preparing for Expiration of Certain Deductions

Preparing for Expiration of Certain Deductions

Certain tax deductions are allowed for a certain amount of time to help induce an action. Whether it is spending more in one industry or stimulating the economy.

Unfortunately, these temporary deductions, if not renewed, expire and are no longer available for businesses to use.

For the 2016 tax year, the following business deductions will expire if they are not renewed:

• Film and TV production expense provisions
• Energy efficient commercial building deductions
• Mine safety equipment expense election
• Additional depreciation for bio fuel plant property

So if your business uses any of the stated deductions, it is best to prepare differently for 2017 if it does indeed expire. There may be new deductions that may benefit your company and right now is the best time to look into that matter.

To check what would be best for your business, give us a call at (714) 533-2600 to schedule a FREE consultation to make sure you are getting every deduction you deserve.

Tax Tips 2017: Student Loan Debt

Student Loan Debt

School loans can total up to be a large sum of money. In addition to that there is interest that must be paid as well. Luckily, you are able to write of the amount of interest you paid that year on your taxes up to $2,500.

This deduction can be taken not only if you make the payments, but if someone else makes the payments for you as well. The IRS sees it as you are receiving money from them and then in turn making the payments for the loan.

If you want to know if you qualify for these deductions, give us a call at (714)-533-2600 to schedule a FREE consultation to make sure you are maximizing your deductions. 

Business Tax Help 2017: Vehicles for Business Use

Business Use of Vehicles

When it comes to using a vehicle for business, there are two things you should keep track of: mileage and depreciation.

For 2016 the standard mileage rate is 54 cents per mile. This means you should keep track of your business miles to be able to write them off for your taxes. Some examples of business miles are traveling from one office to the other or driving to a client site from the office.

Depreciation should also be tracked because the value of a car drops significantly just after leaving the dealership. Luckily, this drop in value can be deducted without having to spend additional money in order to get a deduction. The IRS has separate deduction caps for different types of care. Here are two popular types:

Passenger Automobiles

• First Tax Year- $3,160 (or $11,160 if bonus depreciation is claimed)
• Second Tax Year- $5,100
• Third Tax Year- $3,050
• Each Succeeding year- $1,875

Trucks and Vans

• First Tax Year- $3,560 (or $11,560 if bonus depreciation is claimed)
• Second Tax Year- $5,700
• Third Tax Year- $3,350
• Each Succeeding year- $2,075

To see how your vehicle use can qualify, give us a call at (714) 533-2600 to schedule a FREE consultation to make sure you are getting every deduction you deserve.

Tax Tips 2017: Child and Dependent Care Credit

Child and Dependent Care Credit

Looking for someone to watch your children can be difficult while you are working or looking for work. That is why the IRS has a tax credit that may help cut your tax bill quicker than a simple deduction. This credit applies also for those who live with an elderly parent or disabled spouse whose care must be paid for while you work.

If you entered your child into a summer day-camp in order for you to be able to work, then the costs can be claimed for the credit. The credit limit for one qualifying individual is $3,000 and for two or more qualifying individuals it is $6,000.

If you want to know if you qualify for these deductions, give us a call at (714)-533-2600 to schedule a FREE consultation to make sure you are maximizing your deductions. 

Business Tax Help 2017: Business Property and Depreciation

Business Tax Help 2017

The goal for doing taxes for your business is simple; maximize your tax benefits to minimize the amount of taxes you have to pay. But with tax laws always changing, how can you ensure that your tax plan is still the best option?

That is why we here at Sonny and Company CPA will be keeping you up to date with some new tax tips and strategies that may help your business save money on taxes.

Business Property and Depreciation

Whether it is a new computer or a new forklift, business property helps you business operate but can also help you save on your business taxes

The introduction of bonus depreciation has helped many business owners deduct a larger percentage of the depreciation expense of their business property. Businesses are allowed to buy new property and in that first year of putting it into use are given a 50% bonus depreciation. This type of deduction is very helpful because it is an extra expense that is allowed to be taken without having to spend any money.

However, some companies prefer or can only afford to buy second hand property. For these cases, they are not allowed to take the bonus depreciation offer because it only applies to brand new, first time use property.

Luckily, these types of businesses can choose to elect Code Sec. 179 expensing. This tax code allows the taxpayer to deduct costs related to property and be expensed instead of marking it as an asset with depreciation. This code applies not only brand new property, but secondhand property as well. These deductions are allowed up to $500,00, which is double the amount from last year.

To check which one would be best for your business, give us a call at (714) 533-2600 to schedule a FREE consultation to make sure you are getting every deduction you deserve.

Tax Tips 2017: Moving Expenses

Moving Expenses

Moving into a new home to take a new job that requires you to change cities or states can be a lot to handle. There are many things that you have to take and it can be hard to keep track of it all. Something you should not forget is that all the expenses for moving into your new home can be deducted without having to itemize your return.

In order to see if you qualify, the IRS has some tests:

• Distance: The new place of work must be at least 50 miles farther than your former home was from the main workplace of your old job. If it is your first job, or if you have been unemployed and are return to work, the new workplace must be at least 50 miles from your home.
• Time Test: As an employee, you must work full-time for at least 39 weeks during the first 12 months after you arrive at your new job. As a self-employed worker, you must work 39 weeks during the first 12 months and 78 weeks during the first 24 months after you arrive.

After you pass these tests, then you are allowed to deduct 19 cents per mile if you use your own vehicle to move. You can also deduct the costs of moving your belongings as well as any lodging expenses on your way to your new home.

If you want to know if you qualify for these deductions, give us a call at (714)-533-2600 to schedule a free consultation to make sure you are maximizing your deductions. 

Tax Tips 2017: Job Hunting Expenses

Job Hunting Expenses

Finding a job can be tough, but what you might forget is that hunting for a job has expenses. If you are looking for a job in your field and have expenses while on the hunt, then those expenses can be deducted in Schedule A under job expenses and certain miscellaneous deductions on your 1040 taxes. This applies regardless if you gained employment or not.

Some examples of what the IRS allows as job hunting expenses are:

• Resumes
• Placement agency fee
• Travel to look for a new job

If you want to know if you qualify for these deductions, give us a call at (714)-533-2600 to schedule a free consultation to make sure you are maximizing your deductions. 

Employers Beware! IRS warns of W-2 Scam

Business owners beware! Every year there are people that claim to be part of the IRS to scare you into giving them information. This year, there is a payroll scam where they are sending out e-mails where they are asking for W-2 information. 

Remember, on these W-2’s there is a lot of sensitive information that could hurt your employees and your company. 

Although the e-mails seem legitimate, do not send any information. Some examples of these scam e-mails are:

• Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.
• Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary).
• I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, i need them in PDF file format, you can send it as an attachment. Kindly prepare the lists and email them to me asap.

The IRS goes through a very formal process and does not request documents with such short notice. If you are still unsure if it is a scam or not, give them a call directly to verify if it was actually them.

Visit the site below to see what the IRS stated about this scam and for more information.

https://www.irs.gov/uac/newsroom/irs-states-and-tax-industry-renew-alert-about-form-w2-scam-targeting-payroll-human-resource-departments

Tax Tips 2017: Job Expenses

Job Expenses

Everyone wants to deduct job related business expenses, but what qualifies? There are some common beliefs of what can be and can’t be deducted. For example, you cannot write off your daily lunches or commute to work. You can however write any travel miles that you drive for business at 54 cents per mile.

Some job expenses that the IRS will allow you to deduct if they are unreimbursed by your employer are:

• Uniforms
• Professional Dues
• Protective Gear
• Safety Equipment
• Small Tools
• Professional Journal Subscriptions
• Travel Between Offices

Of these expenses, only the amount that exceeds 2% of your adjusted gross income will be counted in your Schedule A itemized deductions.

If you want to know if you qualify for these deductions, give us a call at (714)-533-2600 to schedule a free consultation to make sure you are maximizing your deductions. 

Tax Tips 2017: Charitable Donations

Charitable Donations

One easy way to reduce your tax liability and give back to your community is by making donations of money, goods and time. Keeping track of the cash and goods you have given to charity is easy to remember, but those are not the only things you should keep track of.

If you volunteer your time at your local soup kitchen or food bank, you are not able to deduct any amount for the time you spent there. However, you deduct the cost of getting there and back. For your kind acts to help others, the IRS will allow you to deduct 14 cents per mile as well as any parking or toll fees.

Making food for a charitable cause also qualifies as a deduction. Similarly to the previous example, the time is deductible but the cost of the ingredients are. Keeping receipts is important to be able to write off the cost. If the costs are over $250, then there needs to be verification from the charity of the contribution.

Overall, the IRS allows the following travel expenses,

• Air, rail and bus fares
• Out of Pocket expenses for a car
• Taxi fares
• Lodging
• Meals

The IRS will only allow these deductions if you are on duty in a genuine and substantial sense throughout the trip.

If you want to know if you qualify for these deductions, give us a call at (714)-533-2600 to schedule a free consultation to make sure you are maximizing your deductions. 

Tax Tips 2017: Deductible Medical Expenses

Medical Expenses

The doctor’s office may be a scary place, but when you can get a tax deduction for the visit, maybe it’s not so bad.

For 2016, the IRS will allow you to itemize the miles you drove for medical reason at 19 cents per mile.

That is additional to the amount of medical and dental expenses that are than 10% of your adjusted gross income that are deducted in Schedule A.

If you stuck in the hospital and had to pay for meals or lodging, the IRS will also allow you deduct these expenses from a hospital or similar institution if the principal reason was to receive medical care.

If you want to know if you qualify for these deductions, give us a call at (714)-533-2600 to schedule a FREE consultation to make sure you are maximizing your deductions. 

Tax Tips 2017: Itemized Deductions vs Standard Deduction

Tax season is upon us. There are many generally known tax deductions and strategies, but there may be something that you are missing.

We here at Sonny & Company CPA will be putting out some tax tips to help you either reduce your tax liability or maximize your refund.

Itemize or Not?

Itemizing your deductions is best whenever your deductions are greater than the standard deduction. For example, many homeowners choose to itemize because mortgage-interest payments along with local property taxes and uninsured medical expenses often add to be more than the standard deduction.

The IRS has said the standard deductions for the tax year of 2016 is as follows:

• $9,300 for heads of household
• $6,300 for singles and married persons filing separate
• $12,600 for married filing jointly

So, if you believe that you qualify for deductions that are greater than the standard deduction you will receive, then make sure you itemize everything you can to lower your tax bill.

If you do not believe you have enough deductions to surpass the standard deduction, then do not file a tax return to itemize deductions. It is more expensive to itemize deductions and you will save more by doing a simple return.

For those who do itemize, beware that deductions are limited are even phased out if your adjusted gross income for 2016 exceeds the following:

• Single: $259,400
• Married filing jointly or qualifying surviving spouse: $311,300
• Married filing separate: $155,650
• Head of household: $285,350

If you are still unsure if you should itemize or not, stay tuned for more tips or give us a call at (714)-533-2600 to schedule a free consultation to ensure you are making the right decision. 

Attention Employers: New W-2 and 1099 Filing Deadline

Employers, beware! If you have a business that has employees or independent contractors, be aware of the new deadline enforced by the IRS.

Usually employers had until the end of February to submit their W-2 copies to the IRS, but in an effort to detect and prevent refund fraud, the deadline has now been moved to January 31^st.

For businesses that give 1099-MISC forms, the same deadline applies for these non-employee compensation forms such as payments to independent contractors.

Extensions are still available but with new rules. Only one 30-day extension can be requested and it not automatic. If an extension is needed, then a Form 8809 Application for Extension of Time to File Information Returns must be completed before January 31^st.

This new deadline will help the IRS verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. As a benefit, refunds will be to released more quickly in many instances.

However, refunds for taxpayers who are claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), must wait until at least February 15^th to receive their refund. 

Gambling: How to Report Winnings for Taxes

While hitting the jackpot in a slot machine or getting a flush in poker, taxpayers must remember that even winnings from gambling are taxed. Gamblers will receive a W-2G to know the total of their winnings for the year. Although this process for taxes seems straightforward, there is more to consider when doing taxes for gambling activities.

1. Can losses be deducted from the winnings?
2. Are there different rules for different states?
3. Is there a difference if the gambler is a professional?

First off, a taxpayer’s gross income includes all earnings. This means that whether the gambling winnings are $5 or $500,00, the winnings are taxable.

But there is a good news. Losses from gambling can be deducted to the extent of the gains. For amateur gamblers this deduction is made on Schedule A for Itemized Deductions. However, nonresidents are not allowed to deduct the losses from gambling unless they are directly connected to a trade or business.

For residents of Connecticut, Illinois, Indiana, Kansas, Massachusetts, Michigan, North Carolina, Ohio, Rhode Island, West Virginia, and Wisconsin, beware. These states do not allow amateur gamblers to deduct their losses from their winnings. For example, if an amateur gambler in Ohio wins $50,000 and loses $50,000, they may not deduct their losses even though they technically broke even.

This is not the case if the taxpayer is a professional gambler such as a professional poker player. They may deduct gambling losses from their state income taxes but they are aggressively challenged for their status as professional.

So remember to consider the tax implications for gambling winnings and losses and plan accordingly based on your gambling status and the state you live in.

How to Find a “Soulmate” er… Good Business Partner

If you have read our older blogs, we made a post about how working with your spouse as a business partner can be very effective if you treaded carefully. Now, in case you do not have a spouse, we will talk about how to find a business partner with the right qualities.

If you believe that you as a business person can work better alone, we have an example that may change your mind. Written from lesseverything.com, they had an example of a man named Allan who had been running his own consultant business just fine alone. He had a father who was a successful entrepreneur for decades that told him not get a business partner. Eventually, Allan met Steve during the Summer 2006. Steve could take Allan’s ideas and instantly be able to tell him why it was bad and how to make it better. Allan quickly realized that having Steve around would make him better at what he does. Additionally, he also realized that Steve could also plan and execute business better than Allan could. Allan was ideally the idea factory while Steve improved upon those ideas. Now today, they together have made an even more successful business.

Keep in mind that a business partnership is like a marriage without the sexual part. Every business decision that Allan makes will affect Steve, and every business decision that Steve makes will affect Allan. If Steve needs to spend more for the business, this will put a strain on Allan, which will affect the business entirely. In a way, it is like having your spouse spend tons of money on products that are unnecessary; you would have to keep track of their spending in order to use that budget for other important things.

How do you make a business partnership work out? Well, it’s basically the same thing as a marriage:

Have mutual respect for each other: You must always have respect for the things that both parties do, and they must collaborate and work together without any criticizing or fighting. It is a partnership and marriage, not a war between two partners.

When you have a partnership, you treat each other as if you are equals. There is no such thing as the dominator in the relationship or the captain. When you make decisions, make it together with a compromise if one party does not agree with certain factors. This would be another way to show respect for one another.

Another thing that is considered to be rare, but if you have it, do not lose it. This would be having a partner who has skills that are complementary to your skills. In lesseverything.com’s case, Allan is a designer and Steve is a developer. When you have a person who designs and another who develops those designs while improving them through the process, you can say that it works like “peas and carrots.”

There are times when you and your business partner are best friends, and sometimes you both are not, but one thing for sure us that they are always aware of how the other party is doing, and they are usually willing to help that person out. In many cases, they are trying to understand each other’s stresses and the workload.

Here are two qualities that your partner should have:

–          A real friend, spouse, or partners are willing to point out your flaws and tell you some of things that you are lacking. They are saying this because they want you to grow, they are not looking disrespect you or criticize you. And you are willing to take that in because you value their opinion.

–          They do not judge you. When you need help with a broken car, moving, or if some kind of emergency happens, who would you call? If it is 2:00am and you are unable to drive back home, who is going to drive 50 miles to help you out? If that person is willing to do that for you, consider that person a true friend. This is how your business partner should be.

Inspiring quote: “Allan says…

“I’ve always had plenty of friends, but there’s only a small circle of those that I would call ‘close friends.’ My Grandfather would tell me that before the Great Depression, he had money, a bunch of friends and a Model-T car. When the hard times struck, his family lost everything–including the friends. They only wanted to be around him when he had possessions.”

 

***ARTICLE BASED ON LESSEVERYTHING.COM***

 

How to Avoid Tax Fraud, Advice from Scammers Themselves

As a company who follows the three basic principles of Honesty, Integrity, and Innovation, we do not condone Tax Fraud, and we certainly will never perform such acts for anyone who requests such atrocity. So what is Tax Fraud? According to tax whistleblower, it is a general term, which can trigger many different laws found in Title 26 and Title 18 of the United States Code. It is basically a taxpayer’s intent to defraud the government by not paying taxes that they know are lawfully due.

Krebsonsecurity.com has talked about one of the successful scammers who explained how he was able to file a tax fraud by using prepaid debit cards. This kind of method has been used for several years because it has been a indispensible tool of tax fraudsters. The scammer named Peleus reported that he was able to bypass the IRS Fraud Filters, and was able to find great success at the state level. The important thing was, according to Peleus was having a bogus refund sent to a unique prepaid debit card account for each filing. In March 12, 2015, Utah State Tax Commission Chairman John Valentine has reported to the U.S Senate Finance Committee that suspicions returns has been about the direct deposit information changed from the previous year’s ban account to prepaid debit cards.

The problem with transferring funds to prepaid debit cards is that they cannot be traced or recovered, which is a perfect way to commit tax fraud. It seems that prepaid debit cards are most preferable to fraudsters because the identity thief doesn’t have to interact with banks, credit unions or checking cashing stores that may become suspicious when one person starts bringing in multiple tax refund checks to be cashed or deposited.

HOW TO AVOID THIS

–          Try to file your taxes as early as possible. However, if the state taxes have been “filed” already, then immediately report this issue with the state revenue agency.

–          Have a CPA or Accountant do it for you. Accountants are born to study all of the complications of the tax law, and they have to make sure their clients are safe. This is a good opportunity as there are many fraudsters out there who want to file a fake tax return. Accountants usually charge a fair price for their services, especially in Orange County.

–          Consider placing a fraud alert freeze on your file at the major credit companies. If fraudsters have enough personal information to file a fraudulent tax return under your name, then they can use that data to commit other crimes. Placing a fraud alert on your credit file every 90 days is the cheapest way since it is free.

Be sure to make sure your personal information is safe from crooks, and also use this information as a way to help you understand how fraudsters operate so you can use this information to help your sound more legitimate when you report a tax fraud claim.

 

***ARTICLE BASED ON TAX FRAUD ADVICE, STRAIGHT FROM THE SCAMMERS from krebsonsecurity.com ***

 

Overview of Trump’s Upcoming Tax Plan (In Case You Don’t Already Know)

As January 20^th comes closer to President Elect Trump taking over office, America must prepare for the new changes that he will make in the country. The changes we would like to discuss is the US Federal income tax system that he will implement. In this case, Trump has promised that he will make the tax system easy to understand for individuals.

According to Jane Beule, owner of Griffin Black Financial Services, there is going to be a simplified tax bracket for Personal Income Taxes. Here is what we can expect to see:

“First, expect a simplification of the tax rate structure along with an elimination of the highest personal income tax brackets along the following lines:”

Current (Marred Filing Jointly)

10% bracket: $0 to $18,550
15% bracket: $18,550 to $75,300
25% bracket: $75,300 to $151,900
28% bracket: $151,900 to $231,450
33% bracket: $231,450 to $413,350
35% bracket: $413,350 to $466,950
39.6% bracket: $466,950 or more

Proposed (Married Filing Jointly)

12% bracket: $0 to $75,000
25% bracket: $75,001 to $224,999
33% bracket: $225,000 or more

The 3.8% Obamacare tax on the lesser of net investment income or the amount by which your AGI exceeds $200,000 would also be eliminated under both the Trump and the House plans.

In addition, current tax proposals seek to simplify the calculation of net taxable income by:

• Substantially increasing the standard deduction (from $12,600 to $30,000 for joint filers; $6,300 to $15,000 for singles);
• Eliminating the personal exemption;
• Eliminating all itemized deductions other than for mortgage interest and charitable deductions;
• Capping itemized deductions at $200,000 (joint) or $100,000 (single); and
• Scrapping the alternative minimum tax altogether.

 

What does this all mean?

With these new proposals in mind, low-income taxpayers earning less than $18,500 would move from a 10% Bracket to a 12% tax bracket and couples earning between $225,000 to $231,450 will pay higher tax because they would be placed in the 33% tax bracket. However, if there is a larger deduction for a “large percentage of these taxpayers would mean a larger proportion of their income would be excluded altogether from taxation than is currently the case, thus maintaining or even reducing their overall effective tax rate”

“Most higher-income taxpayers would see their federal taxes reduced, particularly those who earn more than $466,950, who would see their marginal bracket fall from 39.6% to 33%. Eliminating the 3.8% tax would provide tax relief for all taxpayers earning more than $200,000.

All taxpayers would benefit from not having to deal with the complexities of the Alternative Minimum Tax.”

** Article Based on “How to Prepare for Trump’s Tax Plan Now” written by Jane Beule of Griffin Black **

Professional New Year’s Resolution Ideas

It’s that time of the year again. We are sure 2016 wasn’t that great, or maybe it wasn’t too bad for you, but the most important thing to remember now is to learn from everything you have experienced in 2016 and cherish those moments when you were most happy. One thing to keep in mind however, is that sometimes New Year’s Resolutions are somewhat not going as planned. According to Amanda Zantal-Wiener 45% of Americans make New Year’s Resolutions, however, only 8% are successful in achieving them. Interestingly, University of Scranton’s Journal of Clinical Psychology stated that the top 10 resolutions of 2015 included losing weight and falling in love. Although those goals are great, the question you should ask yourself is, are they really going to make you better at what you do every day?

Again, Amanda Zantal-Wiener has stated some tips on some professional New Years Resolution Ideas incase you are short on what ideas. The challenge here is to see if you can come up and stick to professional New Year Resolutions. These tips will drive you to become more “creative, productive, and generally more content at work.” Here they are:

–          Assign times throughout the day to make an electronics- free zone.

• Our bodies are trained to respond to light and dark signals. According to National Sleep Foundation, these signals send us important signals, like the time of the day. Once you add phones and electronic screens to your day, our brains recognize the brightness from phones, and other electronic devices. Ever wonder why people usually never get enough sleep? Its because many of us have a hard time to fall asleep when we’re exposed to too much screen time at night.

 

• HOW CAN WE ACHIEVE THIS? : Everyone can relate to this issue, and it is in fact a very hard resolution to achieve. If you like to watch movies, tv shows, or play video games before going to bed, try to lower the amount you do each night. For example, if you watch tv for about 2 hours before you sleep, reduce that amount to 1 hour and 30 minutes and keep going until you finally can finally sleep without it. Replace the lost time of tv by reading a book, journal. Perhaps read an accounting book, learn how to become a cpa, or better yet, read books on how to save money!

 

–          Write about anything everyday! Perhaps a diary

• According to Amanda Zantal-Wiener, the quality of writing in the U.S has been going around the news and headlines for awhile now. Many viewers and consumers are looking for better writers, however, the trouble is that they are having trouble investing the time to do so. According to Neil Patel, he said writing for 30 minutes a day (of course skipping the weekends) will greatly improve your writing skills. Practice makes perfect!

 

• HOW CAN WE ACHIEVE THIS? : Pick a question everyday and write about it. You can get topics by asking friends, a customer, or a topic that has always been floating around your head for awhile. It really helps you bring out your diction levels while increasing your conversation skills. You can even write something that makes no sense, the point is to improve your writing.

 

–          Always ask for help.

• You’re probably wondering, doesn’t that make me feel needy and less important? Not at all! Zantal-Wiener states that Care.com took a survey of working mothers and the findings was about the concept of asking for help. Around 30% of respondents felt guilty of doing things without asking. Also, about 79% also felt like they were falling behind at work, and 75% saw an overall reduction in stress when they did ask for help. Obviously, these numbers goes beyond working mothers, but as Zantal-Wiener states, “there’s an epidemic of fear when it comes to asking for help at work.”  So if you need help with anything, for example, taxes or accounting, you can contact a cpa firm and ask any questions when you have any financial problems!

 

• HOW CAN WE ACHIEVE THIS? : This was a very good quote that Zantel-Wiener posted : “The most successful people ask for help when they need it!” Always remember this, this will lead you to success. Don’t ever assume that your questions are dumb, if people say that it is, just get the answer and don’t ask them again, those people are not good people, unless they are joking.

 

–          Read more.

• Remember, the most successful people never stop learning. 70% of adults in the professional or managerial roles continue their education. It is one of the best ways to constantly update yourself with industry trends, learning from experts, and expand the spectrum of creativity. Some of the best ways to learn is to read outside of a classroom setting. Reading accounting blogs, reddit blogs, or some other blogs that are notable really provide useful information that may help you in the future.

 

• HOW CAN WE ACHIEVE THIS? : There is a ton of content out there, however, some content that would be worth reading. If you need some useful information on how to save money or cut tax spending, perhaps reading our older blogs at sonnycpa.com would be helpful. There are many others you can Google, there is so much content out there. If you have any questions about something, simply ask it, or check out our older blog posts.

 

Well that’s all the tips we have for you, we hope you guys have a Happy New Year! Look forward to 2017 and enjoy what we have now! 

Spend More Time With Your Family & Friends while saving money for the Holidays

It’s that time of the year again where many of us celebrate the holidays with cheer, parties, gifts, and many other goods to enjoy before they hit reality again. But guess what, you know what else comes after those parties, gifts, and goods? That’s right! A hefty bill in the New Year!

You’re probably thinking, “Oh thanks a lot Sonny, I definitely needed that reassurance…” Well hold on there, we’re not here to deliver bad news to you! We have some great money saving tips that will help you save money so it’ll at least soften up that bill in January.

According to moneyadviceservice.org, the average Christmas spent per household is around $615, which includes food, presents, travel, and decorations. Based on moneyadviceservice.org, they have compiled a list of steps on how you can save money for the Holidays:

Step 1 – Set a Budget – Making a list of family and friends you will be buying for will help you organize how much you will spend on each person. We recommend using a Microsoft Excel spreadsheet so you can calculate how much you have to spend, and include tax rates as well. Additionally, if you are hosting dinner then think about how many people will be coming over and how much you will be spending on what you will be offering in the party to your guests.

Step 2 – Work out how much to save each month –   Make a commitment to save a portion of your income or cash flow every month. If you commit to saving a certain amount every month consistently, you will notice that you have a lot more money than you think without even realizing it. It really feels like you hit a jackpot in a slot machine game!

Step 3 – Start some new Christmas traditions – Perhaps starting some new Christmas traditions where the whole family or friends can join in with while saving along the way will help save money, since they are going to pitch in the expenses. A good tip on saving, instead of writing out gift cards to friends and family, you can send e-gift cards through email. We are living in the digital age, and most people are heavily reliant on digital devices and phones these days. Not only will you save money on buying gift cards, you will also save a lot of time, in which you can use to spend that extra time with those who matter to you most. If you are buying gifts for friends, you can set a limit on how much you spend, or even better, you can use the extra time you have (Assuming you use e-cards) to make a handmade present, nobody loves a handmade present more than a purchased gift.

Step 4 – Decide where to put your Christmas Savings – For those who want to save smaller amounts of money, you can simple place your savings in a coin jar. However, be sure to transfer it into a savings account once it gets full. Setting up a bank account that is used for instant savings would help as well.

Well, that’s it folks! Sonny & Company CPA wishes you Happy Holidays, and we hope you are all able to enjoy the end of the year with your loved ones! We hope these tips will help you.  Save, party, and enjoy like there’s no tomorrow! Happy New Year! 

Happy Holidays! Year-End Tax Saving Tips to Spend or Save for the Holidays

It looks like the end of the year is coming, and we are pretty sure many of you are still frantically shopping for gifts for your family and friends. Do you ever wish you had more money to spend for your friends and family, but just could not figure out how you can save more money?

Well have no fear! We are an Orange County CPA firm who will be here to provide tips on how you can cut tax spending to save or have more money to spend for you your loved ones.

Capital Gains and Dividends. The tax rate on qualified capital gains (net-long term gains) and dividends range from 0 – 20%, depending on the individuals income tax bracket.

STRATEGY:  Spikes in income, whether capital gain or other income, may push gains into either the 39.6 percent bracket for short-term gain or the 20% capital gains bracket. Spending the recognition of certain income between 2016 and 2017 may help minimize the total tax paid for the 2016 and 2017 tax years.

State and local sales tax deduction. The PATH Act made permanent the itemized deduction for state and local general sales taxes. That deduction may be taken in lieu of state and local income taxes when itemizing deductions.

STRATEGY: Generally IRS tables based upon federal income levels and a taxpayer’s number of departments are used for this optimal deduction. Taxpayers who wish to claim more than the table amounts must provide adequate substantiation.

Tuition and fees deduction. The PATH Act extended the above-the-line deduction for qualified tuition and related expenses for two years, for expenses paid before January 1, 2017. The maximum amount of the tuition and fees deduction is $4,000 for an individual whose AGI (Adjusted Gross Income) for the tax year does not exceed $65,000 ($130,000 in the case of a joint return), or $2000 for other individuals who’s AGI does not exceed $80,000 ($160,000 in the case of a joint return)

STRATEGY: Payments by year-end 2016 may be particularly critical to taking this deduction. There is some – but not unlimited – flexibility regarding the deductibility of tuition paid before a semester begins. As with the AOTC, the deduction is allowed for expenses paid during a tax year, in connection with an academic term beginning during the year or the first three months of the next year.

Nonbusiness energy property credit. The PATH Act extended the nonrefundable non business energy property credit allowed to individuals, making it available or qualified energy improvements and property placed in service before January 1, 2017.

STRATEGY: Several overall limitations apply. A credit amount for qualified energy efficiency improvements equals 10 percent of the amount paid or incurred during the tax year and 100% of the amount paid or incurred for qualified energy property during the tax year. The maximum credit amount for qualified energy property varies depending on the type of property, further all nonbusiness energy property carries a $500 maximum lifetime credit cap.

Individual Shared Responsibility Payments. For 2016, the individual shared responsibility payment is the greater of 2.5% of house-hold income that is above the tax return filing threshold for the individual’s filing status or the individual’s flat dollar amount, which is $695 per adult and 347.50 per child, limited to a family maximum of $2,085, but capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2016.

STRATEGY: Open enrollment for coverage through the Health Insurance Marketplace for 2016 has closed. However, some qualifying life events may make an individual eligible for non-filing season special enrollment.

Medical expense deduction. Taxpayers who itemized deductions (for regular tax purposes) may claim a deduction for qualified reimbursed medical expenses to the extent those expenses exceed 10% of adjusted gross income (AGI), unless the tax payer falls within an age-based exception. Taxpayers (or their spouses) who are aged 65 or older before the close of the tax year, may apply the old 7.5% threshold for tax years but only through 2016.

STRATEGY: Tax payers who are age 65 or older may consider accelerating medical costs into 2016 if they want to itemize deductions since the AGI floor for deductible expense rise from 7.5% to 10% in 2017. For deductions by cash-basis taxpayers in general, including for purposes of the medical expense deduction, a deduction is permitted only in the year in which payment for services rendered is actually made.

 

A Smart Business Decision Maker = A Successful Entrepreneur

Many successful business leaders all share a common skill that most people do not posses. Although this skill comes in all forms and is dependent on the amount of opportunities given to them, they all still have to undergo a process whether it takes a long time to process or a very short amount of time. That skill, my fellow entrepreneurs is: Smart Business Decision-making. Every day people from all over the world make decisions. You may not realize it but you, the reader, just made the decision to read this article (Thanks by the way!). However, let’s take it to a business perspective; business leaders, (including yourself) “make dozen of decisions a day” that creates an impact to the success of their company while creating an influence factor to employees as well. “Developing such a skill requires a combination of education, experience, and intuition.”

Marci Martin, author of Business News Daily who wrote the article “How to Make Effective Business Decisions” has stated a great quote: “There are many things that influence how an individual makes decisions. They include emotions, perceived personal and professional risks and rewards, preparation through experience or education, deadlines, stress and a host of others. It is important to mitigate the irrational and embrace the rational.”

Many decisions always comes with a process, as mentioned above, there are many factors that come into play before coming up with a conclusion. Some of those decisions usually come from a “gut feeling” while others come from undergoing a long process of asking others, and a more common form would be the opportunity cost (Is it more beneficial to me than the cost?). As Martin mentioned, the “bottom line is that being an effective decision-maker requires practice.”

Gayle Abott, President of Strategic Alignment Partners, a human consulting firm, has implemented a four- point strategy to deploy whenever you must act:

–          Identify the problem.

–          Analyze the possible solutions

–          Evaluate the possibilities that are likely to bring you closer to your goal.

–          Make the decision.

However, as easy as this 4 point system sounds, this type of strategy does not come easily for any beginner. As Abott has said in Business News Daily, it takes years of practice to master this skill. Many people who have become masters did not simply start off as talented decision makers, they made many mistakes in the past, learned from them, and simply moved on. The most crucial part in any decision making in a business, is the ability to learn from them. It is not easy as you think it is because people still make the same mistake, whether it’d be motivated by an emotion, by influence, or by stubbornness. The reality is that, it will not be easy to become a smart business decision maker until you have made enough decisions to consider yourself a smart business decision maker. 

Tips on How Small Businesses Can Become a Firm of the Future

How can a business become a firm of the future?

 
Well let’s take a step back, what does it mean to become a firm of the future?

 
Let’s look at this example, a firm of the future has been “in business for decades, achieving success using a tried-and-true formula of providing high quality work and or providing great service and product.”

 
Every year as we all witness the everlasting change of businesses, markets, and demands, we; as business owners sometimes worry about our methodology and business practices in our company.We begin to question if our practices are obsolete now, or are they still working for our business? Then the next question arises, how would we grow the practice while maintaining the winning factors that made the firm what it is? And because of this, many business owners worry too much about these changes and will then take up too much time and money.

 

Thus, begs the question: How can do we become firms of the future? Well worry no more! As an Orange County CPA, it is our sole duty to provide fresh tips on how you can become a survivalist in the battlefield of business. We have tips here that will help you achieve that!

 
Do not ever assume that and changes in the market and business world do not apply to you. As George Forsythe states, “even successful and happy firms may not be working as effectively as possible.” Always have a strategic review and assess your plan to measure out the pros and cons to your strategy. If they are working, try to find something that will cause the plan to fail, always assume that there will be change in the future.

 
Figure out where you stand. Create a transitional step tool that a firm can take in its culture, talent, and clients. Use informal brainstorming to identify steps that can help you move your firm forward.

 
Set your own priorities. When you start reviewing your firm’s status, be sure to look out for employees who show a lot of promise in their work. Prepare them for the next generation of leaders, this will ensure the security of your company when you are training new leaders.

 
Do not reinvent the “wheel.” Do not try to create a completely new plan to face the changes your company is facing. Take some of your strategies and create a new way to make them better. Focus on the aspects of creating a simpler, more effective method of that strategy and execute it. Reinventing a new strategy not only makes your employees and partner learn a new method, which takes time, but also, the strategy may not work in this changing marketing and business world.

 

**ARTICLE BASED ON AICPA.ORG***

Business deduction for the entire cost of qualified property

Businesses should consider accelerating purchases into 2012 to take advantage of the still generous Code Sec. 179 expensing. Qualified property must be tangible personal property that a taxpayer actively uses in its business, and for which a depreciation deduction would be allowed. Qualified property must be newly-purchased new or used property, rather than property the taxpayer previously owned but recently converted to business use. Examples of types of property that would qualify for Code Sec. 179 expensing are office equipment or equipment used in the manufacturing process. Additionally, Code Sec. 179 expensing is allowed for off-the-shelf computer software placed in service in tax years beginning before 2013.

If a taxpayer’s equipment purchases for the year exceed the expensing dollar limit, the taxpayer can decide to split its expensing election among the new assets any way it chooses. If the taxpayer has a choice, it may be more valuable to expense assets with the longest depreciation periods. As long as the taxpayer starts using its newly-purchased business equipment before the end of the tax year, it may take the entire expensing deduction for that year. The amount that can be expensed depends upon the date the qualified property is placed in service, not when the qualified property is purchased or paid for.