Category Archives: IRS Tax Tips

Schutte & Hilgendorf Business Year End Letter

2018 Business Year End Letter

 

 

With the end of the year fast approaching Schutte and Hilgendorf would like to remind you about tax matters and changes from the new tax law that you may want to consider in anticipation of tax season. Please click the title above in order to view the year end business tax letter. Happy Holidays from everyone here at Schutte & Hilgendorf!

 

 

 

 

 

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona. With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting. We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors). Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.


Tax Tuesday with Inek Contreras


NEW IRS PROPOSED REGULATIONS DISALLOW FEDERAL DEDUCTION FOR ARIZONA TAX CREDIT DONATIONS

 

 

NEW IRS PROPOSED REGULATIONS DISALLOW FEDERAL DEDUCTION

FOR ARIZONA TAX CREDIT DONATIONS

 

The IRS issued proposed regulations (REG-112176-18) on August 23rd that will no longer allow a charitable deduction on the Federal tax return for the Arizona state tax credit donations made after August 27, 2018. This will apply to the Qualifying Charitable Organization, Qualifying Foster Care Organization, Public School, Private School Tuition Organization, Military Family Relief Fund and other tax credits in Arizona.

 

If you do not expect to itemize deductions under the new tax law, this will not have any tax effect on the contributions you would make. Thresholds for itemized deductions for 2018 are $24,000 for married couples filing jointly, $18,000 for head of house hold filers and $12,000 for single filers.

 

If you expect to itemize under the new tax law, the proposed regulations will reduce the deductions you are allowed to claim. We recommend making your Arizona tax credit donation payment before August 28, 2018 to be able to claim the charitable deduction on your 2018 Federal tax return. If you make donations in excess of your 2018 taxes, you are able to carryover the credits on your Arizona tax return for up to 5 years. Depending on your tax situation, it could be beneficial to make donations before August 28th in excess of your expected 2018 tax liability and carryover the remaining credit to future years, to be able to claim the maximum deduction for those donations on your 2018 Federal tax return.

 

In light of this new regulation, the tax credits can still be a great opportunity to redirect your tax dollars and possibly receive a dollar for dollar offset for your contributions. But you will no longer receive the double benefit of the Arizona tax credit and the Federal tax deduction after August 27, 2018.

 

If you have questions, please talk to your tax advisor, or Schutte & Hilgendorf, CPAs.

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona, call us at 928-778-0079 or check out our website at www.prescottaccountants.com.

 

 

 


IRS New Withholding Calculator

The IRS encourages everyone to use the Withholding Calculator to perform a quick “paycheck checkup.” This is even more important this year because of recent changes to the tax law for 2018.
The Calculator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work.
There are several reasons to check your withholding:
• Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year.
• At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks.
If you are an employee, the Withholding Calculator helps you determine whether you need to give your employer a new Form W-4, Employee’s Withholding Allowance Certificate. You can use your results from the Calculator to help fill out the form and adjust your income tax withholding.
Plan Ahead: Tips For Using This Program
The Calculator will ask you to estimate values of your 2018 income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your 2018 taxes. This process will take a few minutes.
• Gather your most recent pay stubs.
• Have your most recent income tax return handy; a copy of your completed Form 1040 will help you estimate your 2018 income and other characteristics and speed the process.
• Keep in mind that the Calculator’s results will only be as accurate as the information you provide. If your circumstances change during the year, come back to this Calculator to make sure that your withholding is still correct.
• The Withholding Calculator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address or bank account numbers. The IRS does not save or record the information you enter on the Calculator.
IMPORTANT NOTE: This Withholding Calculator works for most taxpayers. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes taxpayers who owe self-employment tax, alternative minimum tax, the tax on unearned income of dependents or certain other taxes, and people with long-term capital gains or qualified dividends.

Ready to start? Make sure Javascript is enabled.

 

IRS Withholding Calculator

To Change Your Withholding:

  • Use your results from this Calculator to help you complete a new Form W-4, Employee’s Withholding Allowance Certificate, and
  • Submit the completed Form to your employer as soon as possible. Withholding takes place throughout the year, so it’s better to take this step as soon as possible.

Special Note for 2019:  If you follow the recommendations at the end of this Calculator and change your withholding for 2018, the IRS reminds you to be sure to recheck your withholding at the start of 2019. This is especially important if you reduce your withholding sometime during 2018. A mid-year withholding change in 2018 may have a different full-year impact in 2019. So if you do not file a new Form W-4 for 2019, your withholding might be higher or lower than you intend. To help protect against having too little withheld in 2019, we encourage checking your withholding again early in 2019.

If you have additional questions about your withholding, consult your employer or Schutte & HIlgendorf, CPAs.

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona. With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting. We also provide tax planning and preparation, sales tax payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors). Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079


A Warning for Taxpayers: per IRS “Report Phishing and Online Scams” website

 


A Warning for Taxpayers:  per IRS “Report Phishing and Online Scams”  website


Internet and telephone scams are a growing issue in the U.S. and we at Schutte & Hilgendorf spend a great deal of time and expertise protecting our clients and their information from theft and hackers.  We continually upgrade and update our systems, software, hardware and procedures to keep you and your information safe from predators.

 

However, we cannot protect the information you have on your own computers or information you may be asked to give out over the phone.  So we would like to help you to avoid the latest in predatory behavior:  IRS contact is never initiated by robocall, email, text messages or social media channel per information distributed by the IRS. 

 

If you have received any sort of communication from the IRS other than by letter from the U.S. Postal service, please do not interact with the communication.  Go to this link: https://www.irs.gov/privacy-disclosure/report-phishing and follow the suggested actions as per this IRS official website posting.

 

If you are uncertain about any communication you have received, please contact us or the IRS before responding.


Tax Exempt Organization Search Tool

Verify the Status of a Charity before you Make a Donation:

 

If you have found the charity you feel deserves your hard-earned money, but you are uncertain of the legitimacy of its charitable status, it is best to do a little research.  Some donations made to “charities” are non-deductible due to the organization’s lack of “charitable organization” status with the IRS.  IRS now has a tool to help you determine if your donation will indeed be deductible.  Following is the latest press release for IRS’s new search tool:

New Tool Provides More Information About Exempt Organizations

 

The IRS launched a new tool on IRS.gov that gives taxpayers fast and easy access to information about exempt organizations. The new Tax Exempt Organization Search replaces the EO Select Check tool.

Here are some things taxpayers will find when they use the new TEOS tool:

  • Images of an organization’s forms 990, 990-EZ, 990-PF and 990-T filed with the IRS. Initially, only 990 series forms filed in January and February 2018 will be available. New filings will be added monthly.
  • More information about exempt organizations than was previously available using EO Select Check.
  • A simplified search process.
  • TEOS is mobile friendly, which provides access to the search tool using smartphones or tablets.
  • Users can access favorable determination letters. These are issued by the IRS when an organization applied for and met the requirements for tax-exempt status. At first, a limited number of determination letters will be available. Eventually, determination letters issued since January 2014 will also be available.

Taxpayers can also use TEOS to find information previously available on EO Select Check. This includes whether an organization:

  •  Is eligible to receive tax-deductible contributions.
  • Has had its tax-exempt status revoked because it failed to file required forms or notices for three consecutive years.
  • Filed a Form 990-N annual electronic notice with the IRS; this applies to small organizations only.

Publicly available data from electronically-filed 990 forms is still available through Amazon Web Services.


IRS Small Business Tip – Employee or Independent Contractor??

Issue Number: IRS Small Business Week Tax Tip 2017-02
Inside This Issue
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Employee or Independent Contractor? Know the Rules

The IRS encourages all businesses and business owners to know the rules when it comes to classifying a worker as an employee or an independent contractor.
An employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Employers normally do not have to withhold or pay any taxes on payments to independent contractors.
Here are two key points for small business owners to keep in mind when it comes to classifying workers:
1. Control. The relationship between a worker and a business is important. If the business controls what work is accomplished and directs how it is done, it exerts behavioral control. If the business directs or controls financial and certain relevant aspects of a worker’s job, it exercises financial control. This includes:
• The extent of the worker’s investment in the facilities or tools used in performing services
• The extent to which the worker makes his or her services available to the relevant market
• How the business pays the worker, and
• The extent to which the worker can realize a profit or incur a loss
2.  Relationship.  How the employer and worker perceive their relationship is also important for determining worker status. Key topics to think about include:
• Written contracts describing the relationship the parties intended to create
• Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation or sick pay
• The permanency of the relationship, and
• The extent to which services performed by the worker are a key aspect of the regular business of the company
• The extent to which the worker has unreimbursed business expenses
The IRS can help employers determine the status of their workers by using form Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. IRS Publication 15-A, Employer’s Supplemental Tax Guide, is also an excellent resource.
Share this tip on social media — Employee or Independent Contractor? Know the Rules. https://go.usa.gov/x58ra#IRS


IRS Alerts

Borrowed via Checkpoint Newsstand – Thomson Reuters post 2/7/17
The following are some recent phishing scams and myths that the IRS would like you to be aware of :
Federal Tax Highlights

Washington Alert — Part I

IRS, joined by state tax agencies and the tax industry, has issued an “urgent alert” to all employers regarding the Form W-2 (Wage and Tax Statement) email phishing scam. (IR 2017-20) According to the agency, the phishing scam “has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits”. The W-2 scammers have been coupling their attempts to steal employee W-2 information with a scheme regarding wire transfers. As described by IRS, cybercriminals use a variety of techniques to make an email appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments and requests a list of all employees and their Forms W-2. In a new twist, the perpetrators follow up with an “executive” email to the payroll department or comptroller and ask that a wire transfer be made to a specific account. In some cases, companies have responded to this request. Noting that there has been “an upswing of [scam] reports in recent days”, IRS urged employers to immediately share this information with their payroll, finance and human resource personnel. They also should have an internal policy on the distribution of employee W-2 information and conducting wire transfers. “This is one of the most dangerous email phishing scams we’ve seen in a long time”, said IRS Commissioner John Koskinen. “It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns.” Additional information is available at irs.gov/uac/dangerous-w-2-phishing-scam-evolving-targeting-schools-restaurants-hospitals-tribal-groups-and-others

IRS has issued tips to taxpayers that refute several “myths” pertaining to tax refunds currently circulating. (IR 2017-16) The myths included the following – all refunds are delayed; calling IRS or a tax professional will provide a better refund date; ordering a tax transcript is a “secret way” to obtain a refund date; the “Where’s My Refund” tool must be incorrect because there is no deposit date appearing; and delayed refunds for those claiming the earned income tax credit or the additional child tax credit will be delivered on Feb. 15. Complete details can be found at irs.gov/uac/newsroom/irs-answers-common-early-tax-season-refund-questions-and-addresses-surrounding-myths

IRS has commenced publishing entries to its annual list of “Dirty Dozen” tax scams for the 2017 filing season. (IR 2017-15) Phishing schemes now lead the newest Dirty Dozen list. As of Feb. 3, IRS published two additional entries on its list – telephone scams and identity theft. It is expected that the agency will be announcing daily additions to the list. Updated information will appear at irs.gov/uac/newsroom/dirty-dozen

 

If you receive any suspicious emails, phone calls, or mail, contact us at  Schutte & Hilgendorf CPAs .

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.

 

 


2017 Standard Mileage Rates

From the IRS website:

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.   The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

 

Go to the following link for more information:

 

2017 Standard Mileage Rates for Business, Medical and Moving Announced

 

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Volunteers for Charities – Tax Tips

If you volunteer for a charitable organization and you itemize your deductions, here are some tips to keep in mind:

  • Keep track of your mileage, date, and purpose of the trip.  The IRS allows you to deduct 14 cents per mile.
  • You can also deduct parking fees if applicable.
  • There are also deductions for other expenses incurred while volunteering such as the cost of stamps for a fund-raising mailing, or ingredients for making cookies for a bake sale fund raiser or for your religious organization.

 

If you have any questions about this or any other tax questions, please give us a call at 928-778-0079.

 

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.