Category Archives: Prescott Accounting

Using IRA Distributions for Charitable Deductions – It’s Not Too Late Yet!

Have you considered using the funds in your individual retirement account (IRA) to make a charitable contribution?  If so, it’s a good idea to follow up on your plans sooner rather than later.  Under the American Taxpayer Relief Act of 2012, individuals who are age 70 1/2 or older can make a qualified charitable distribution from an IRA directly to a charity.  You can exclude donations up to $100,000 of an otherwise taxable distribution from your gross income and count them toward the current tax year’s  required minimum IRA distributions.

 

The rules only apply to distributions made in 2012 and 2013, so you need to act now.  Contact us with any questions you may have on this type of charitable distribution.


2014 Mileage Rates

Mileage rates for 2014 were recently released by the IRS.  Deductible expenses for business use vehicles can be calculated using the mileage rates provided by the IRS.  Rates for 2014 have decreased by 1/2 cent.

 

Business mileage – $.56 per mile

 

Medical or moving mileage – $.235 per mile

 

Charitable organization mileage – $.14 per mile

 

If you have questions related to any of the above, please contact us.


Reasons to Stay in Touch With Your Tax Prepare Throughout the Year

You got married.  You got a job, had a baby, lost a job, bought a house or moved.  Your life shifted in ways that once you couldn’t have imagined.  The last thing on your mind is taxes.

Most taxpayers look up a professional tax preparer once a year, as deadline day looms.  But during a year, a lot of taxpayers also experience circumstances when they should contact their preparer; marriage or divorce, birth of a child, retirement, career change or a notice from the Internal Revenue Service (IRS) or other tax authority.  Next March or April may be too late to fix nasty tax situations.

If any of the below changes or event occur in your life, contacting us is a good idea:

 

Marital:  If you’re going through a divorce, find a tax preparer to discuss ramifications of dependents, alimony, childcare, or division of property.  Divorce decrees also sometimes contain landmine wording that produces a different, often unpleasant, tax result.

If you changed your name as a result of a recent marriage or divorce, make sure the name on your tax return matches the name registered with the Social Security Administration (SSA).  If you took your spouse’s last name, or if both spouses decide to hyphenate their last names, you may run into complications with the IRS if you don’t notify the SSA.  Informing the SSA of a name change requires filing a Form SS-5, Application for a Social Security Card, at the nearest SSA office.

Family Size:  The birth or adoption of a child can affect tax returns, and as children get older their parents may lose certain credits.  In most cases, a child can be claimed as a dependent in the year in which he or she was born.  The child must have a Taxpayer Identification Number (TIN); for children born in the U.S., the TIN is generally a Social Security Number (SSN).  Parents may be eligible for a tax credit for qualifying expenses paid to adopt a child, and credits may increase if the expenses involve adoption of a child with special needs.

Career:  Not all tax changes due to career result from a raise and a bump to a higher tax bracket.  You must also consider whether your employment is full time, part time, or contract.  Pension opportunities or excludable benefits, such as cafeteria plans and dependent care benefits, also mean you should contact a tax professional, as do any changes in work-related deductions.

Unemployment compensations generally includes state unemployment insurance benefits and benefits paid to you by the Federal Unemployment Trust Fund.  If you received unemployment compensation during the year, next spring you should receive a Form 1099-G showing the amount you were paid.  Unemployment compensation must be included in your taxable income.

Retirement:  Kicking off the golden years, whether it was your decisions or that of your former employer, may trigger penalties for early withdrawal from retirement funds or ignite taxes on Social Security benefits.  Did your company present you with an early retirement proposal or are you considering early retirement?  You may be eligible for a tax credit if you contribute to an employer-sponsored retirement plan or to an individual retirement arrangement.  Discuss options with a preparer before you sign anything.

Moving:  Consider everything from mileage rates for the moving vans to change-of-address forms to the IRS.  Generally, you can deduct moving expenses if your move is closely related to the start of work.  Your move meets the IRS distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was.  Qualifying taxpayers must also meet a time test, working full time for at least 39 weeks during the first 12 months after arriving in the general area of the new job location.  Different rules may apply to members of the Armed Forces or a retiree or survivor moving to the U.S.  Your best bet is to check with a tax professional.

IRS Notifications:  If the IRS mailed you a notice after last tax season and you tossed it in a drawer, realize that the notice never really disappeared.  If you’ve received a letter from the IRS, call your tax preparer immediately.  Putting off responding will only bring more IRS letters and, likely, larger penalties.

With the right help from a tax professional, you can easily navigate the proper tax process for filing after recent changes in your life.  For more information contact us at 928-778-0079.

 

 

 


Latest News from IRS Regarding Homeowner Associations

The IRS recently posted this information regarding the tax-exempt status of Homeowners’ Associations.  There is often confusion between Non-Profit Status in the eyes of the Arizona Corporation Commission and in the eyes of the IRS.  Most homeowners associations will not be granted tax-exemption by the IRS, and are expected to file an 1120 or 1120H.  Click on the link below for more information:

TAX EXEMPT STATUS OF HOMEOWNERS’ ASSOCIATIONS

 

Schutte & Hilgendorf CPAs has over 20 years experience invested in the complex accounting and tax treatment of Homeowners’ Associations. We provide audit, review and compilations to homeowners association to help them meet the annual Arizona statutory requirement.  In addition, we provide tax planning and preparation services to Associations all year around.  Call us today to schedule your free initial consultation 928-778-0079.


Health Care Act: Tools and Answers for Employers and Individuals

EMPLOYERS (FOR-PROFIT AND NON-PROFIT)!!:

We are receiving information daily regarding the new Patient Protection and Affordable Care Act (ACA) (Also called “ObamaCare”), which is scheduled to phase in starting in 2014. Here’s some important information that will effect both individuals and employers before then:

For Individuals: The Individual Insurance Exchanges will be open for enrollment in October 2013.

For Employers: The scheduled Employer side of it has been delayed until 2015. However, there is a requirement for ALL Employers to post a notice for all new and existing employees (both full and part time) by October 1, 2013

The attached templates can be used by Employers for posting and handouts (click on the link that applies):

Template A_withoutplans: For employers who DO NOT offer a health plan
Template B_withplans: For employers who offer a health plan to all or some of their employees

In addition, we’re excited to announce a new, streamlined health care tool , housed at Business USA, to help you find out exactly what you and your employees need to know about the Affordable Care Act. In a few quick steps, you’ll understand the essentials of new insurance options and other health care changes. We tried it and think it will help you work through all of the options. Click on the link below to access the tool (if the link doesn’t work, copy and paste the URL to your browser):

http://business.usa.gov/healthcare

Rest assured, we will pass on all final, relevant information, links and tools for both individuals and employers, as it becomes available. We at Schutte & Hilgendorf CPAs are trying to keep in front of the information to answer your questions as you begin to contemplate what this means for you individually and as a business owner or manager. Look for announcements and new developments either through direct mailings or email. All content will also be posted on our website, www.prescottaccountants.com.

To find more information directly, go to https://www.healthcare.gov/ , the official website for the ACA.

If you have questions, call us today!

Schutte & Hilgendorf CPAs is a full service public accounting firm, providing tax preparation, planning, audit, accounting, and QuickBooks set and consulting to Prescott and the great Yavapai and Northern Arizona region.  Call us for more information at 928-778-0079


Arizona Tax Credit for School Tuition Organizations

An individual may claim a credit for making a donation to a School Tuition Organization for scholarships to private schools. The maximum credit amount that may be taken for tax year 2012 is $503 for single, unmarried head of household and married filing separate filers and $1,006 for married filing joint filers. The maximum credit amount that may be taken for tax year 2013 is $517 for single, unmarried head of household and married filing separate filers and $1,034 for married filing joint filers. The tax credit for contributions to private school tuition organizations is claimed by the individual taxpayer on Form 323.

Beginning with tax year 2012, an individual may claim an additional credit for making a donation to a School Tuition Organization if the amount contributed is greater than the maximum amount that can be claimed on form 323. The maximum credit amount that may be taken for tax year 2012 is $500 for single, unmarried head of household and married filing separate filers and $1,000 for married filing joint filers. The maximum credit amount that may be taken for tax year 2013 is $514 for single, unmarried head of household and married filing separate filers and $1,028 for married filing joint filers. The tax credit for contributions to certified school tuition organizations-individuals is claimed by the individual taxpayer on Form 348 ( New for Tax Year 2012).

For a list of School Tuition Organizations certified to receive donations for the individual income tax credit click here


Are my Social Security Benefits Taxable?

We get a lot of clients that ask us when their Social Security Benefits become taxable.  The following information is provided bythe Social Security Administration and clearly explains when your Social Security Benefits become taxable.  This is also available by

 

CLICKING HERE

 

Should you need assistance or have questions about your Social Security Benefits and their taxability, contact Schutte & Hilgendorf, CPAs, providing tax planning and preparation, auditing, accounting and QuickBooks consulting to the greater Yavapai County. Call us at 928-778-0079 or email at info@prescottaccountants.com

Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.

No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:

  • file a federal tax return as an “individual” and your combined income* is
    • between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
    • more than $34,000, up to 85 percent of your benefits may be taxable.
  • file a joint return, and you and your spouse have a combined income* that is
    • between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
    • more than $44,000, up to 85 percent of your benefits may be taxable.
  • are married and file a separate tax return, you probably will pay taxes on your benefits.

*Note:

Your adjusted gross income

+ Nontaxable interest

½ of your Social Security benefits
= Your “combined income

Each January you will receive a Social Security Benefit Statement (Form SSA-1099) showing the amount of benefits you received in the previous year. You can use this Benefit Statement when you complete your federal income tax return to find out if your benefits are subject to tax.

If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits.

For more information about taxation of benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits.


Questions and Answers for the Additional Medicare Tax – Effective January 1, 2013

The following link will take you to questions and answers that will  provide employers and payroll service providers information that will help them as they prepare to implement the Additional Medicare Tax which goes into effect in 2013. The Additional Medicare Tax applies to individuals’ wages, other compensation, and self-employment income over certain thresholds; employers are responsible for withholding the tax on wages and other compensation in certain circumstances. The IRS has prepared these questions and answers to assist employers and payroll service providers in adapting systems and processes that may be impacted.

Click on the link below to be taken to the IRS Q&A:

Questions and Answers for the Additional Medicare Tax – From the IRS

For further tax planning considerations and questions, contact Schutte & Hilgendorf, pllc – CPAs.  We offer free initial consultations.  Schutte & Hilgendorf, pllc – CPA’s, is a full service public accounting firm providing tax planning, preparation, audit, accounting, and QuickBooks consulting to individuals, small businesses, non-profits, and homeowners associations in the Prescott and greater Yavapai County area.  Call us at 928-778-0079 or visit www.prescottaccountants.com


IRS Net Investment Income Tax – Effective January 1, 2013 – FAQs

The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code (IRC). The NIIT applies at a rate of 3.8 percent to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts. The Net Investment Income Tax goes into effect on Jan. 1, 2013.

For more information directly from the IRS, click on the link below for a FAQ page.

3.8% NET INVESTMENT INCOME TAX – EFFECTIVE 2013 – FAQS

For further tax planning considerations and questions, contact Schutte & Hilgendorf, pllc – CPAs.  We offer free initial consultations.  Schutte & Hilgendorf, pllc – CPA’s, is a full service public accounting firm providing tax planning, preparation, audit, accounting, and QuickBooks consulting to individuals, small businesses, non-profits, and homeowners associations in the Prescott and greater Yavapai County area.  Call us at 928-778-0079 or visit www.prescottaccountants.com