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Why Be an S Corp?

Posted on February 10th, 2018

Being an S Corp can save you quite a bit of money on Self Employment Tax.  However, there’s an extra cost involved in creating and running an S Corp that is not required to run a Sole Proprietor or Single Member LLC.  Watch the 7 minute video to learn what’s involved and what are the potential savings in running an S Corp.  You might find it very profitable 😉


Child Tax Credit 2018

Posted on February 2nd, 2018

The Child Tax Credit was increased from $1,000.00 per child in 2017 to $2,000.00 per child in 2018!

Sounds good, right?!

Well, yes, but don’t go thinking you’ve got another $1,0000.00 coming back from the IRS in your 2018 return.  There’s more to the calculation than meets the eye.  You need to take a few more factors into consideration – some good and some not so good.

On the good side, you have the doubling of the Standard Deduction coupled with the lower tax rates to increase that benefit even further.  Oh, and there’s more.  For those of you who couldn’t take the Child Tax Credit before due to your high income, there’s a very good chance you now qualify for it!

On the not so good news, we’ve lost the $4,050.00 personal exemptions.

Does the positive outweigh the negative?  Well for most yes, for some maybe not.

Watch the 4 minute video for more details.


Small Business Tax Cuts – 2018

Posted on January 19th, 2018

If you’re a Small Business Owner operating as a Sole Proprietor, S Corporation or Partnership chances are you’re looking at a very nice tax cut in 2018.  The new tax law states that pass through entities like the ones I just mentioned will not have to pay Income Tax on 20% of their net income.

There are some limitations.

Click on video for more details.

Let us know how we can help. Please contact our Longmont, CO office.


2018 Tax Law Changes – Home Equity Line of Credit (HELOC)

Posted on January 13th, 2018

The Tax Cuts and Jobs Act of 2017 made the interest on your Home Equity Line of Credit Non-Deductible. But, it might not even affect you. And if you used the funds for Home Improvements or for Business Purposes, you might still be able to get a deduction.

Why would it not affect you? Well, due to the doubling of the Standard Deduction, you might be one of the many individuals who will not be itemizing next year. So, even though you didn’t get the deduction, you didn’t need it!

And what about if you spent the money for Business Purposes? Well there’s an exception called a 10-T which might apply to you and you would be able to deduct the interest expense on your business.

Then there’s Home Improvements. Those are deductible for purposes of Interest Expense but not through your HELOC. An refinancing might get you that deduction back.

Let us know how we can help. Please contact our Longmont, CO office.


Tax Cuts and Jobs Act – Small Business Summary

Posted on January 8th, 2018

Are you getting a Tax Cut in 2018? Short answer, Yes! How big? Well, that depends – on a lot of factors! This video is a brief summary of our review of the new Tax Cut and Jobs Act of 2017. More detailed videos on each part as it affect you, the Small Business Owner and Individual Taxpayer, are coming soon. Stay Tuned!

If you would like to contact us to find out more about how we can help, please contact our Longmont, CO office.


Find the Right Person to Prepare Your Taxes

Posted on March 17th, 2017

by Julie Morris
juliemorris.org

The arrival of tax season each year is a given, but the person responsible for preparing your taxes isn’t. Maybe you already have a tax preparer that you have been going to year after year, but if you don’t, now is a good time to find one. However, choosing a tax preparer involves more than just picking the first person you see. It is important that you understand the qualifications and requirements of a seasoned tax preparer to ensure that you are getting the most out of your taxes.

Know the Basic Types

Other than the fact that all tax preparers prepare taxes, they are vastly different in their credentials and qualifications. According to Fox Business, the types of tax preparers can be summed up as follows:

  • Tax attorney – These are the ultimate tax preparers and their service is often enlisted in complicated situations such as audits or tax fraud. It is unlikely that you will require this level of representation, but they are there if needed.
  • Certified Public Accountants (CPA) – A CPA is certified at the state level, with their primary purpose being accounting. However, many specialize in tax preparation and would be a good choice if you have a complex tax return.
  • Enrolled Agent (EA) – An EA holds the highest credentials awarded by the IRS and must pass a rigorous exam and background check to be given the EA designation. EA’s are trained to handle tax returns of any complexity, and can represent you should you find yourself in the unfortunate situation of being audited.
  • Annual Filing Season Program Participants (AFSP) – The IRS’ AFSP program requires all participants to meet certain continuing-education requirements, and participants must register and test each year.

To find a tax preparer that best meets your needs, requirements, and expectations, use the IRS Tax Preparer tool to find a preparer of that level near you. Keep in mind that should you use a storefront tax service, each tax preparer might have a varying degree of experience so be sure to ask questions before you have them prepare your taxes.

Know What You Should Be Charged

If you decide to have a professional prepare your taxes, you will be required to pay a fee. According to the National Association of Accountants, in 2014 the average cost to the taxpayer for preparing their tax return was $159 for a basic tax return (form 1040) and $273 for a return with itemized deductions. Keep in mind that each tax preparer or tax preparation service is different, and prices are subject to them as well as the complexity of your tax return. Some tax preparers charge a flat fee, while others may charge hourly. CBS News warns against using a tax preparer that charges based on the percentage of your tax return, as this may give them an incentive to increase your return illegally, leading to an unwelcome visit from the IRS.

No matter what the fee is, the IRS states that it is important that every tax preparer has a Preparer Tax Identification Number (PTIN). Regulations require that all paid tax preparers have a PTIN. In addition to having a PTIN, they must sign the return and include their PTIN. Be sure to review your return as well. Although the tax preparer signs your return, you are held responsible for the accuracy of your tax return.

Some people choose to do their taxes online with TurboTax software, for example. It is more convenient for some people to do it this way.  Since there are different types of tax preparers and fees, you should consider doing a little research before tax season approaches as to have a plan for who will prepare your taxes. Preparation is key in tax preparation.

 


Handling Your IRS Bill

Posted on March 1st, 2016

With April right around the corner, it’ll be time to file taxes before we know it and many of us will owe the IRS money. Until recently, most people who owed taxes mailed a check or money order with their return. You can still pay that way, but now the IRS is encouraging taxpayers to make these payments electronically. Take a look below for convenient ways to pay your Federal income tax online:

IRS Direct Pay

IRS Direct Pay is a free, secure system you can use to pay your taxes electronically and you don’t need to register to use it. Your payment will be deducted directly from your bank account on the date you choose and you’ll get an immediate payment confirmation for your records. 

Electronic Funds Withdrawal

If you use software like TurboTax to prepare and E-File your return, you can also pay when you file using Electronic Funds Withdrawal. Your payment is withdrawn from your bank account on the date you specify at no additional charge. Some software programs also offer the option to pay with a debit or credit card, however processing fees may apply.

IRS Mobile App

Using the IRS mobile app IRS2Go, you can make debit or credit card payments from your mobile device using the IRS Direct Pay system. The app is free to download from Amazon, Google Play, or the Apple App Store.

Electronic Federal Tax Payment System

This system can be used to pay your taxes by phone or online. It’s free and secure, but you’ll need to enroll online at EFTPS.gov. You can also enroll or get more information by calling 1-888-555-4477. 

Third Party Payment Processor

Third party payment processors will take payments from your debit or credit card by phone or using your mobile device, but will charge fees for processing the transactions. If you pay a fee, it’s often tax deductible, but no part of any fee ever goes to the IRS.

The IRS also offers help for tax payers who can’t pay their taxes in full by the filing deadline.  There’s an online tool to help you set up an agreement to pay over time, as well as a Pre-Qualifier tool to help you determine if you qualify for an Offer in Compromise if you owe more than you can afford. Log on to IRS.gov.to take advantage of these and other helpful tools.

How can we help you?

The tax experts at Hawkins & Martinez, EA’s, LLC  are always available to help you with tax prep, planning, or any IRS payment resolution. Give us a call at (303) 772-1577 for a free consultation to see how we can help you.


Reconciling PayPal

Posted on February 4th, 2016

If you do a lot of shopping with internet retailers like Amazon, Etsy or eBay you’re most likely familiar with PayPal, a widely-used online payment processing service. Privately founded 1998, it took off in popularity when it became a wholly owned subsidiary of eBay in 2002. These days, it’s not just for shopping online. You can use it at a growing list of well-known brick and mortar stores like Home Depot, Best Buy, Walmart and Macy’s when you buy on their websites and it’s often as a payment option when you check out in the stores. It’s a convenient service with many advantages and an easy-to-use selling tool.

Accounting Confusion with PayPal

But, as with any good thing, there are drawbacks –for small retailers in particular. PayPal charges fees for use of the service which is to be expected, but one of the disadvantages that sellers complain most about is the way those fees are charged.  Rather than billing fees as a lump sum on a monthly basis, PayPal imposes a per-transaction fee which is assessed as each transaction is completed such as when a payment is received, a seller issues a refund or their PayPal account is used to pay for supplies or services. Since many small retailers can often process several hundred transactions – or more – in a month, it increases opportunity for accounting problems.

When it’s time to reconcile their books in preparation for taxes each quarter, sellers are finding that the PayPal business reporting function and other popular software programs fall short when it comes to matching all those sales and other transactions with the corresponding fees. It ends up to be an extremely tedious, time-consuming and not-always-accurate exercise for the typical business person.

Reconciling your PayPal Accounts

That’s where we can help. The accountants and tax experts at Hawkins & Martinez understand the issues involved with reconciling your PayPal and other business transactions.  We make it a priority to stay current with all the state and federal tax laws and will work with you to incorporate our proven solutions for structuring your business accounts to keep them up-to-date and organized. We save you valuable time and headaches when you need to file your taxes. Give us a call for a free consultation and find out how we can help you and your small business with all your tax and business accounting needs.


Why Use an Enrolled Agent?

Posted on January 27th, 2016

We all know that there isn’t much that’s simple about preparing income taxes.  If you have a straightforward return, it’s a little less daunting to do it yourself, but if it’s a business return or a personal return that involves itemizing or investments, many of us hire a tax professional which makes sense in light of the complicated and constantly changing tax laws.

Chances are, when you think about a tax professional what comes to mind are accountants, CPAs, or one of the well-known tax prep companies like H & R Block.  But while all of these resources have merits, there’s another highly trained source for tax preparation that warrants some serious consideration:  Enrolled Agents.  Also known as “America’s Tax Experts,” Enrolled Agents (also known as EAs) are the only tax professionals licensed to practice by the federal government.

Enrolled Agent status is the highest credential awarded by the IRS and those who obtain this status have gained the highest possible level of knowledge about federal taxes.  To earn this status, a prospective EA must pass a stringent application process, undergo rigorous training, and pass a series of tests, and once licensed, must maintain their credentials with continuing education every 3 years.

While highly trained attorneys and CPAs are also authorized to represent taxpayers in all matters before the IRS, they’re licensed by state, but not by the federal government.  EAs on the other hand are designated federal “agents” and based on that are given unlimited rights in all 50 states to advise tax payers and to represent them in resolution of any tax problem by appearing in the taxpayer’s place before IRS.

The Enrolled Agents at Hawkins & Martinez specialize in IRS-compliant tax preparation and are ready to help you with all your IRS and tax preparation needs.  We’ll prepare tax returns for individuals, estates and trusts as well as businesses of all types including partnerships, corporations, nonprofits or any business with specific tax reporting requirements.

If you’ve received an audit notice, owe back taxes, have unfiled returns or have heard from the IRS for any other reason, don’t try to deal with it alone.  Our initial consultations are free, so give us a call to find out how the Enrolled Agents at Hawkins & Martinez can help you with all your taxation needs.


Now is the Best Time to Catch Up on Late Taxes

Posted on December 10th, 2015

File your late tax returns now while your tax accountant has the time. Our video explains why now is the best time to become compliant with the IRS.

If you would like to contact us to find out more about how we can help, please contact our Longmont, CO office.