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tax preparation

Tax Season 2021: Get Your Tax Returns Done on Time!

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The good news is that Congress moved the date your tax returns are due to May 17, 2021! ***

The bad news is that you are still sorting out your tax return documents and haven’t filed yet or even sent the documents to your accountant! 

2020 was a year. You may be wondering, are there any special documents and information that I need to provide to my accountant to prepare my taxes? Here are a few reminders of documents and information you need to gather for your accountant:

  1. Home office deduction: Did you change jobs during the pandemic? Are you now a self-employed or an independent contractor working from home? If so, while gathering your tax preparation documents, include your expenses for your business use of home as well as any improvements made to your home.
  2. Estimated Payments:. If your income did not include federal and state withholding, you may have scheduled monthly or quarterly estimated tax payments. When submitting documents to your accountant, make sure to include the jurisdiction, amount, and date the estimated payment was made.
  3. Interest Income: 2019 tax filers who had a refund on their tax returns may have also received interest income from the IRS. (Due to delaying Tax Day from April 15 to July 15 due to the COVID-19 pandemic.) Interest payments are taxable and interest must be reported on the 2020 federal income tax return. (Minimum $10.)
  4. Charitable donation deduction:. The CARES Act allows taxpayers who file using the standard deduction to claim a limited deduction for cash contributions to qualifying organizations. The deduction cannot exceed $300. (Donated property cannot be deducted.)
  5. Economic impact payment(s): Include the amount of economic impact payment (EIP) provided by the COVID-related tax relief act of 2020 in your tax preparation documents. 
  6. Paycheck Protection Program loans (PPPL): Make sure to let your accountant know if you received a first and if applicable second round PPPL.

2020 was an extraordinary, and confusing, year for American taxpayers. We recommend that individuals and business owners consult an accountant for their tax preparation so they get all they deserve for the year most of us want to forget.

A.K. Burton, PC, can do all your individual and business tax preparation. We have experienced accountants who can prepare and file your tax return and represent you before the IRS.   Call us at (301) 365-1974 for a consultation. Our office is open. At this time we are not providing in-person services because of the pandemic. We serve the Bethesda, Rockville, and Montgomery County, MD area.    

*** See the IRS website for updates on the new tax return due date for 2021.

Small Business Accounting, tax preparation

Small Business Tax Preparation: The Five Biggest Mistakes People Make

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We have finally reached the fourth quarter of 2020.

2020 has been a year like no other, especially for small businesses. Tax deadline changes, COVID restrictions, added tax laws…it’s hard to keep up with it all.

AK Burton, PC specializes in helping our small business clients keep up with their taxes. Is October the time to think about taxes? Yes. Now is the time to get in touch with your CPA if you have had an abnormal business year and plan how to close out 2020.

As you and your accountant begin the tax taking a look at your small business taxes, keep in mind these five biggest mistakes people make in small business tax preparation:

  1. Misclassifying employees and independent contractors: Misidentifying a person as a contractor and not as an employee will lead to penalties and interest for non-payment of the employer share of employment taxes. The business must give every employee a W-2, and every contractor that was paid more than $600 gets a Form 1099-Misc.  
  1. Failure to pay “reasonable wages” to shareholders of an S-Corporation: The IRS states that for the 1120S income tax return that “Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation.” The shareholder plays an active, day-to-day role in the business, so, they are an employee and have to be paid a market-based salary for that position.
  1. Missing valid deductions or overstating business expenses: If your business expenses exceed its income, you may get the unwanted attention of the IRS. All of your business expenses need to be considered. IRS rules are quite strict on home office expenses as whatever is used for business should not be used for any other purposes than business. The IRS is “generous” when it comes to some Schedule C expenses. Be sure to use the depreciation schedule that the IRS has for deducting business equipment, business vehicles, and buildings. ***
  1. Improperly mixing business and personal expenses: This is one of the most common business tax filing mistakes of all. Many business clients co-mingle their personal and business banking accounts. “Co-mingling” your personal and business checking accounts makes it hard to distinguish which expenses are tax-deductible. Please keep personal income and expenses out of business bank accounts.
  1. Failure to plan: Tax laws can be complex. Most business owners are too busy running their company to understand all of the tax law nuances. A CPA or tax attorney is experienced in these matters and can help the business properly manage their accounting and business processes. Tax advice can help businesses take advantage of their resources and avoid unwanted consequences that may unknowingly occur due to the complexity of the tax laws. If you are about to incur an unusual financial transaction such as a large asset purchase or sale that is not an ordinary part of your business activity, contact your CPA to discuss the tax implications of the transaction. There may be unforeseen and unexpected tax consequences.  

At A.K. Burton, PC, our specialty is assisting small business clients with their taxes. We are familiar with the tax laws and can advise our clients on being proactive in their tax planning for now and the future. Call us at (301) 365-1974 for a consultation. Our office is open! We serve Bethesda, Rockville, and Montgomery County. MD area.

*** You can find the IRS Depreciation Form 4562 here.

Tax Advice

Tax Preparation Alert: Individual Taxes Are Due July 15, 2020

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As you read this blog, the day is getting closer. Which day?

That day is July 15, 2020, and it is the extended filing deadline for all individual tax returns this year.

The federal government changed it to July 15 because, of course, the Coronavirus pandemic put millions out of work and set back deadlines. Now, States are reopening, and as people are returning to their job (if it is still available); it’s important not to forget this tax return filing date.

The later filing date has been a relief to many people who were laid off when the pandemic closings began. Millions were thrown out of work and have been unemployed or finding work where they can. This spring will be one for the books as it has stressed us all. Your individual Federal tax return is due July 15th. Check with your tax preparer for when your state tax return is due. Here, at A.K. Burton, PC we have been monitoring the everchanging Federal & State guidance striving to give our clients the best service possible during a period of such unprecedented legislative turbulence.  

While the three-month extension to file Federal individual taxes has given taxpayers 3 extra months to pay any tax due on the deadline, it has also given people a chance to procrastinate. Before we know it, July 15 will arrive and many taxpayers will not be ready. Let’s fix that. First, you need to send all of your tax documents to your tax preparer.

Don’t remember what documents to provide your tax preparer? Here are some tips on what to bring them:

1.    Wages and salary income (W2)

2.    State tax refunds and unemployment compensation  (1099-G)

3.    Dividend & Interest statements

4.    Stocks, bonds and other investments

5.    Rental income & Expenses

6.    Forms K-1 from Partnerships and S Corp

7. Forms 1099 (MISC) 

8. Schedule C- Business Income & expenses

9. Forms 1099-R for Pensions & IRAs

10.Property tax bills

11. Medical Expenses

12. Mortgage interest (form 1098)

13. Charitable donations

14. Moving expenses

15. Child care expenses

16. Tuition Paid (Form 1098-T)

17. Student Loan Interest Paid (Form 1098-E)   

Organize these documents. That will help your accountant or tax preparer get your tax returns completed more efficiently. Then, upload the documents to a secure link your tax preparer sent you or bring them to your accountants’ office ASAP as time is running out.

Late filings beyond July 15, 2020, may incur interest and penalties, so you may have to file an extension. Any tax you owe is due by the filing deadline. This is done by filing Form 4868. If you don’t have all your tax documents gathered, give your tax preparer all the documents you have and ask for an extension to be filed.

The main thing to remember if you have not filed your 2019 income tax returns is: See your tax preparer now! You don’t want to get any late fees or correspondence letters from the IRS.

A.K. Burton, PC, is open for business and we can prepare and file your taxes for you and your business. We are working extended hours to prepare our client’s returns.  Call us at (301) 365-1974 for a phone consultation. We serve the Bethesda, Rockville, and Montgomery County. MD area.        

*** For more information on the forms and other IRS documents, click here.  

Tax Advice

March 16 is Coming: Taxes for S Corps and Partnerships

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By the time you read this blog, Monday, March 16, 2020, will be even closer! No, this is isn’t “Mr. Obvious” talking here. It’s your business tax advisor sending you a notice to get on it to avoid IRS fees and penalties. 

Why is this date so important? If you own an S Corp or a Partnership, your taxes are due at that time. (Normally it is March 15 but that is a Sunday so it was moved to Monday.)  

Here are the business tax returns and their due dates: 

  1. S corporation returns must be filed on Form 1120S with Schedule K-1 for each member: March 16, 2020. 
  2. Partnership returns file a partnership tax return on Form 1065 with Schedule K-1 for each partner: March 16, 2020.
  3. Multiple-member LLC returns filing as partnerships file on Form 1065 for the partnership and give Schedule K-1 to each member: March 16, 2020.

So, be proactive and take action now. Here are six things you need to send to your tax advisor so they can file it on time for you:

  1. Year-end bank/credit card statements: Compile all of your bank and credit card statements. These should show all of your purchases and monthly statements.  
  2. Payroll tax reports: IRS Form 941 is used to report the federal income tax, Medicare and Social Security amounts you withheld from your employees’ paychecks. Also, report your portion of Medicare and Social Security on this form. Employers are responsible for making federal unemployment tax contributions. You will pay taxes on the first $7,000 earned by each employee. Employees are not allowed to contribute to your unemployment tax liability, so you cannot deduct the tax from their wages. It is filed on Form 940. 
  3. QuickBooks (or other copy of your books) copy if you have one: A copy of all your business bookkeeping. If it is Quickbooks, you send a copy of the bookkeeping records to your small business accountant.  
  4. Last year’s business return (new preparer only): If you have a new accountant, you need to include a copy of last year’s tax return. This will save, and your bookkeeper, a lot of time. You may be spared phone calls and emails from them as they can use it as a template for this year’s return.  
  5. Vehicle mileage (total & business): Submit all of your vehicle business mileage. Include business mileage and total mileage. (You may want to use an app to record all of your business mileage.)***   
  6. Details on large business purchases: Did you purchase a vehicle for your business? (truck, car, motorcycle, etc.) You may have purchased smartphones, copiers, printers, computers, cameras, etc. Any large business purchases need to be reported.   

You have enough time to get these records to your tax advisor for them to complete the forms and file them with the IRS. Please don’t delay. It will save you time, money and a phone call from the IRS, which nobody wants. 

A.K. Burton, PC, has experienced tax advisors who can advise, complete and file all of your business tax returns by March 16. Call us at (301) 365-1974 for a consultation. We serve the Bethesda, Rockville and Montgomery County. MD area.

***A list of business mileage apps can be found here. 

Tax Advice

Tax Preparation Time: Getting Ready to File Your 2019 Tax Returns

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We are only a few weeks into 2020. You haven’t even had time to pack away the Christmas tree, yet. 

January seems too early to be thinking about anything other than just trying to get into the routine of work again. 

However, now is the time to get ready to file your 2019 tax returns. As those tax documents start showing up, pop them into your 2019 tax return file to send to your preparer. You haven’t seen anything yet, and still thinking it’s too soon? Well, the IRS has announced that they are going to open filing for individual 2019 tax returns on January 27, 2020!***  

Here are some ways you can prepare to file your 2019 tax returns now:

  1. Electric Organizers: Instead of filling out your organizer by hand, your tax preparer has probably sent you an electronic organizer. Do your best to fill it in. The organizer will give you a good idea of what documents you need to send to your tax preparer. Still not sure what to do? Use the notes space in the organizer to alert your tax preparer to any questions or concerns you have. If there’s not enough space, send a quick email or call your preparer to get your questions answered. 
  2. EDocuments: Remember the old days of bringing all your tax documents to your accountant in a thick Manila folder? Those went out with floppy discs and ripped-knee jeans. Now, you can scan all your documents then upload them using a secure link that your accountant has sent you. Make sure to keep a copy of your scanned documents for your file. It will save you time and make filing easier. Not sure which documents to send? Send your W2,1099, and 1098 forms to start. 
  3. Remember to send form 1095 – showing 2019 health insurance coverage: This tax form declares the type of health insurance coverage that you have, the period covered and the number of dependents that are covered. (If it is a health plan paid by your employer, it would have the company name and name of the employee.)
  4. Mileage expenses: If you used your vehicle for business and have recorded the miles used for work, submit the total mileage and your business mileage for the year. 
  5. Business use of the home: If you have a home office, with square footage exclusively used for your business, disclose the total amount of square feet in your home and the square footage of your home office. Be sure to disclose to your preparer expenses used to run your home such as utilities, insurance, security, and/or repairs and maintenance items. 
  6. Charitable contributions: Include an itemized schedule of all your donations to deductible charitable organizations. Any donation of $250+ must have a receipt from the receiving charity to be deductible. 
  7. Your 2018 Tax Return: If this is the first time you have worked with this tax preparer, bring or electronically send last year’s tax return. Your tax preparer will use it when completing this year’s tax return. 

Now is the time to prepare for your 2019 taxes. As you receive your tax documents, put them aside. Fill in your electronic organizer. When you’re ready, send your completed organizer and scanned documents to your tax preparer. Please remember to keep copies of your 2019 documents for your records.

A.K. Burton, PC, has experienced tax preparers who prepare and file personal and business tax returns. Our friendly and efficient tax preparation staff can file your taxes and represent you to the IRS, District or state. Call (301) 365-1974 for an appointment. ***See the IRS 2019 Tax Filing information here.

Accounting and Bookkeeping, Tax Advice

Tax Preparation 2020: No Time Like Now to Make next Year’s Returns Easier

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Tax Season 2019 is over.

Yay!! Taxes are filed! Time to party and enjoy life until next April, right?

Wrong.

Well, yes, you could procrastinate doing your tax preparation like millions of other Americans. Out of sight, out of mind. That works for some folks, but not for others. Often, that means delaying the inevitable. You hope that the mistakes you made on your returns will not be repeated next year.

tax returns AK Burton

There is a better way. Here at A.K. Burton, PC, we specialize in helping our clients tax plan. Even if it seems overwhelming and you don’t know where to start, we are here to help you. We can help prepare now, this year, to get your tax plan in order and get ahead of the game. Here are several ways you can prepare for next year’s tax return now:

  1. Plan your tax write-offs: You have old equipment (mowers, tractors, espresso-makers, computers, cars, etc.) that needs to be replaced. Now is the time to plan on purchasing that equipment to use in your business. However, before you purchase the new equipment that is high-dollar, check with your financial adviser on the tax benefits of the items.
  2. Set up estimated tax payments: When you filed your 2018 taxes this year, your accountant may have advised you to begin paying your estimated tax bill for 2019, now. Depending on your 2019 projected income and withholdings, your accountant may give you estimates for federal, state, and local taxes. Pay attention to your payment options.  For a federal estimated payment, you can register and pay online at www.EFTPS.gov or you may have the option of sending payments by direct mail. You may be advised to pay monthly or quarterly. Paying ahead and lessening your burden (or erasing it altogether) by April 15, 2020, is a guaranteed way to get ahead. If you need to generate estimated payments for 2019, AK Burton PC provides this service.
  3. Make changes to your withholding: If you had a child, got married, got divorced, adopted a child, purchased a home, or made other life changes, you may need to adjust your withholdings from your pay. If so, file a new W-4 with your employer. Many of our clients seek our advice on this topic. Choosing the wrong number of allowances can lead to an unwanted surprise when filing your taxes.
  4. Give more to your 401k: You may not be working all your life. You may have plans to retire one day. If so, then put more money into your company or private 401k account. You can contribute up to $19,000 each year now, excluding catch-up contributions. If you’re interested in maximizing your retirement and minimizing your tax liability, A.K. Burton, PC is here to help you.
  5. Re-examine your business structure: “Business as usual” is not always a smart strategy. Becoming an LLC, S or C Corporation may be an upgrade that you need. Check with your tax adviser for the designations which may benefit your tax strategy. At AK Burton, PC we take the time to understand our small business clients and maximize tax strategies such as restructuring.
  6. Stop procrastinating! Whether your business has just begun or has been around for several years, there are evolving tax strategies to consider. Stop procrastinating and make the changes now. It takes time, and you may have to make some adjustments. But in the long term, it will be worth it for you, your business, your clients, and your family.

Here at A.K. Burton, PC we specialize in tax planning and strategies. We provide the services that our clients need in an ever-evolving work and regulatory environment. It is our mission to use our expertise to help our clients achieve the best results possible for their unique circumstances.  Today is the day to begin that strategy. Contact one of our tax advisers at (301) 365-1974 or email us at info@cpa-maryland.com. We serve the Bethesda, MD and the Washington, D.C. area.

Tax Advice

How Smart Tax Preparation Can Help You Get A Better Refund in 2018

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Everyone is wondering: Now that the new tax laws have passed, will I be paying the IRS more or less in 2018?

My answer to that question is this: I have no Idea. It’s impossible to know or to even contemplate. Even with the new tax laws, everyone’s tax return situation is different. You may get more money back this year or you may pay even more money this year.

Yes, it’s complicated.

This year is done. But you can prepare for next year.

Of course, it all starts with your documentation and preparation. Here are Smart Ways Your Tax Preparation Can Improve Your Refund in 2018:

  1. Reconsider how you file: Do you always file jointly if you’re married? That is always the best way, right? Actually, no it isn’t. Don’t do the “auto-reply” on your filing. Married-filing-jointly is not always the best way. If you do married-filing-separately instead, you may get a larger return. AGI or Adjusted Gross Income determines if some deductions can be used for medical and certain other expenses. Filing separately may gives each spouse a lower AGI. So, don’t automatically file jointly. Do both jointly and separately if there are a fair number of medical expenses and COBRA payments.
  2. IRA Contributions: You can still take out an IRA contribution up until April 15thfor the previous You can then claim it on your return by filing early and then claiming the credit on your return. You can file early and use your tax refund to open the traditional IRA account. Just remember that it will reduce your income and you must be at least 50 years old. (Check the IRS guidelines on IRAs for detailed rules.)
  3. It’s all in the timing: There is an old saying from the famous golfer, Arnold Palmer that “Timing is everything, in life and golf.” It’s everything in tax filing with the IRS, too. If you pay your mortgage payment by December 31, you improve your chances of getting a larger refund. Also, schedule medical appointments by the end of the year and pay those bills before January 1, too. Keep in mind that your mortgage payments and medical expenses are still deductible expenses. They will certainly increase your refund.

These are just three basic but crucial ways to increase your refund in 2018 and beyond. However, it all starts now. Our best thought on this topic: See your licensed accountant or tax adviser. They can give you the best advice based on experience and knowledge of tax laws.

A.K. Burton, PC, which serves the Washington,D.C. and Bethesda, Md area, has experienced and licensed individual tax advisers who can help you with any questions you have on the new tax laws and how you should file. Contact us at (301) 365-1974 for more information or email us at info@cpa-maryland.com.

 

Tax Advice

Ten Tax Preparation Things Your Small Business Can Do Now

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This year is almost over.

In fact, by the time you read this blog, 2018 may have already arrived. Christmas has passed, the New Year’s parties have ended, school has reopened and regular life has returned.

Ho hum…

Well, I hope you had a safe and enjoyable holiday.

But, now that the New Year has arrived, I am going to bring up a topic you need to consider and now: Taxes. Yes, taxes. Tax season has just begun for small businesses and you can do something you may have never done before as a small business owner or an employee who works the accounting department: you can get ahead of the game.

Helping you and your small business be smart and successful in your bookkeeping and accounting is one of my own accounting firm goals. So, here are Ten Tax Preparation Things Your Small Business Can Do Now:

  1. Create a checklist of what you need: This checklist can be shared, such as on Google Documents, among you and your employees. It is a good way to keep updated on each item. (An excellent tax preparation checklist can be found at H. R. Block.)
  2. Find last year’s tax return: This will help you with deductions and other facts. Some businesses have the same deductions each year. It is also a legal document that may help you stay accurate for this year’s return.
  3. Balance Sheet: Your IRS tax return is based on income and expenses. It is that simple. So, you will need a balance sheet showing gross receipts, expenses and assets. It is an excellent one-glance document summarizing your past year.
  4. Asset purchases: Your business equipment can be included in your return. Some assets may written off using depreciation deductions for a number of years. For instance, if your company purchased new laptops, printers and cell phones for employees, they can be added on your tax return. Use receipts for each purchase and have them available for your accountant.
  5. Payroll Records: Payroll is, for most businesses, the largest tax deduction of all. All full-time, part-time employees, temporary employees and subcontractors’ pay should be included.
  6. Asset Dispositions: If your small business sold any depreciable assets, you will need to calculate gainsor losses on the sales. You will need a description of the asset, sale date, asset price, sale expenses and accumulated depreciation.
  7. Business vehicle(s): This may be a crucial deduction as most small businesses have fleet and/or service vehicles. You will need to get the total miles driven for business and commuting miles. (Personal mileage is not allowed to be deducted.)
  8. Credit card statements: Many small business owners use a company credit card to purchase gas, lodging, office supplies, business meals and other pertinent business purchases. The entire statement of the year’s credit card purchases need to be submitted. (Make sure that if any personal purchases were made with that card that they are marked as “personal” and not included in the business tax return.

This is a great start! In fact, if you get these all compiled and sent to your accountant, you may be able to file your federal tax return early and know how much you owe. (You may have to pay in installments, but at least you will know how much you owe and can budget it.)

It seems too early, to many small business owners, to be tackling their tax records and preparation in January. Yet, most owners will tell you that getting their tax preparation done now is a relief. Then, they can get on with running their business.

A.K. Burton, PC, which serves the Washington,D.C. and Bethesda, Md area, has experienced and licensed small business tax advisers on staff. If you need more advice on business and individual tax planning, contact us at (301) 365-1974 for more information or email us at info@cpa-maryland.com.