Posts by Lesley Mast, CPA, Director of Tax Services:
- W-2s for you and your spouse.
- Investment income: This type of income will be listed on various 1099 forms including –INT, -DIV, -B, etc). You may also have K-1s and stock option information to provide to your tax preparer.
- Income received from state and local income tax refunds and/or unemployment. This income can be found on the Form 1099-G.
- Gather information about any alimony you may have received.
- If you are a business owner or farmer, don’t forget to provide a profit/loss statement and capital equipment information. And if you use your home for business, your tax preparer will need to know the size of your house, the size of your office and what you have paid to maintain your home and office.
- You will need to provide your IRA/pension distributions as well. This information will be provided to you on Forms 1099-R or 8606.
- If you rent a home or other type of property, be sure to gather that information that proves the profit or losses you realized as a result of the rental.
- Be sure to claim any Social Security benefits you may have received. This information is found on Form SSA-1099.
- If you sold your house in 2014, you must provide your tax provider with Form 1099-C, which will include the income you received from the sale of the property. Your preparer will also take the home’s original cost and cost of improvements, the escrow closing statement and cancelled debt information into consideration.
- Some other information you will need to pass along to your tax preparer includes items such as jury duty, gambling winnings, scholarships, etc.
- IRA contributions
- Student loan interest
- Medical Savings Account contributions
- Moving expenses
- Self-employed health insurance payments
- Pension plans such as SEP and SIMPLE
- Alimony you paid
- Educator expenses
- Child care costs – child care provider’s name, address, tax ID number and amount paid
- Education costs – these can be found on Form 1098-T
- Adoption costs – the SSN of the child as well as legal, medical and transportation costs associated with the adoption
- Home mortgage interest and points you paid, which can be found on Form 1098
- Investment interest expense
- Charitable donations that were made to not-for-profit organizations. Make sure you have the amounts and value of the donated property, and any out-of-pocket expenses you may have accrued in your effort to make the donation, including transportation costs. Include receipts for any contribution over $250
- Medical and dental expenses
- Energy credits
- Other deductions include items such as union dues, unreimbursed employee expenses, such as unreimbursed employee expenses
- Was everyone claimed on your tax return covered by health insurance?
- Did you or anyone on your return obtain health insurance coverage through Healthcare.gov or through a state run exchange in 2014?
- The new 39.6 tax rate. This rate will affect those who are single with income that exceeds $413,200, which is up from $406,750. Those who are married filing jointly will be affected if their income exceeds $464,850 – up from $457, 600. You can check out a great break down of the other tax rate increases here.
- A slight standard deduction increase. Those who are single, or married filing separately, can expect their standard deduction to be $6,300 – up from $6,200. Married couples filing jointly will see standard deductions increase to $12,600 – up from $12,400.
- Increasing elective contribution limits. In 2015, taxpayers will be allowed to defer $18,000 to your 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan. The deferral limit in 2014 was $17,500. The catch-up contribution limit for employees who are 50 and older will increase to $6,000 – up from the 2014 rate of $5,500.
- Does your current software do what you want it to? If so, does your staff know how to use it effectively?
- Does your current software do what you need it to? Have you had to put many workarounds into your systems to make the software work?
- Are your users complaining?
- Is your IT department complaining?
- Are you paying a lot for the service you are receiving?
- Are you getting the IT support you need from the software company?
It’s that time of year again – time to gather your information and prepare to file your tax return. If you want the process to go smoothly, make sure to gather and organize your information before sitting down with your tax preparer. You may be surprised how fast the entire filing process goes if you spend a little time preparing!
Here’s a list of some items to compile before you get started.
Hopefully you know YOUR social security number and date of birth by heart. But do you know your spouse’s SSN? Your kids? Make sure you remember to bring the social security numbers and birth dates of everybody who will be claimed on your tax return.
While your W-2 is important, there are many other pieces of information you will need to collect before you will be able to get started. Gather the following pieces of relevant information:
Adjustments To Your Income
Now that you have collected all the information you can to adequately identify your income in 2014, some adjustments may need to be made. Making the following adjustments to your income may help increase your tax refund or lower the amount you owe to the government. If you have documentation of any of the following information, be sure to bring them to your appointment.
Itemized tax deductions and credits
This is another way to increase your refund or reduce what you owe. The following deductions and credits help lower the tax burden on individuals. Be sure to collect this information before filing your return.
o Losses you realized as a result of casualty and loss (the cost of the damage and insurance reimbursements
New for 2014 returns
For the first time, you will need to provide information about your health insurance coverage to your tax preparer. Be prepared to answer questions such as these:
o If not, why?
o If yes, did any of those individuals receive a premium tax subsidy, cost reduction, or premium tax credit? If yes, provide Form 1095-A.
It’s likely that you have already started receiving tax forms in the mail from various places. It’s easy to misplace these documents if you’re not careful. If you haven’t already, set aside a place for these items until you have collected them all. Once you have everything you need, you can set an appointment to file your taxes with your financial advisor or tax preparer. For additional tax information, or to speak with a tax expert, email Rea & Associates.
By Lesley Mast, CPA (Wooster office)
Every mile you drive for business will be worth a little more next year, according to a recent IRS announcement. Beginning Jan. 1, 2015, the optional standard mileage rate for those calculating the deductible costs of driving for business will be 57.5 cents, which is up from 56 cents.
Based on a study of the fixed and variable costs associated with operating an automobile, the standard mileage rates take into consideration vehicle depreciation, insurance, repairs, maintenance, gas, etc. However, if you don’t intend on tracking your mileage, you also have the option of claiming deductions based on the actual costs of using your own vehicle rather than the standard mileage rates. Just be aware that you will not be allowed to claim both.
For example, if you have plans of claiming an accelerated depreciation on your vehicle, then you will not be able to claim the business standard mileage rate as well. If you are a business owner, you should also note that the standard rate is not available to fleet owners, or those who use more than four vehicles simultaneously. Additional details and rules can be found in Revenue Procedure 2010-51.
While the standard mileage rate for the business miles you drive will increase in 2015, those who use their vehicles for medical or moving purposes will see a reduction of half a cent in their mileage rates. Starting Jan. 1, the miles you drive for medical or moving purposes will be calculated at 23 cents per mile driven. And those driving their vehicles as a service to charitable organizations may calculate their deductions at 14 cents per mile driven.
Also in its announcement, the IRS noted an adjustment to the standard automobile cost allowable under the fixed and variable rate (FAVR) plan, which considers the costs taxpayers incur by driving their own vehicles for work-related purposes. In 2015, standard automobile costs may not exceed $28,200 or $30,800 for trucks and vans.
Do you use your vehicle for business? Make sure you track of your mileage. Every mile you travel is an opportunity to realize real tax savings. Our expert financial advisors can help professionals like you find opportunities you never even knew existed. Email Rea & Associates today and start the New Year out right.
By Lesley Mast, CPA (Wooster office)
The calendar may still say 2014, but the IRS is already looking ahead to 2016 – when you will file your 2015 tax returns. In doing so, it recently announced slight adjustments to more than 40 tax provisions to account for inflation. So, what can you expect? The adjustments are outlined fully in Revenue Procedure 2014-61, but a few points that may be of special interest include:
You can read the full IRS article here. Navigating tax rate and IRS procedure changes can be difficult – not to mention time consuming. To get more information on how you may be impacted by these adjustments, email Rea & Associates.
By Lesley Mast, CPA (Wooster office)
Your business probably uses a variety of software systems, whether it’s for an accounting function, a manufacturing process or a scheduling process. It has been said that technology doubles in advancement nearly every 12-18 months. New updates, new releases, and new products are brought to market constantly. Yet, when was the last time you or your team evaluated your current software or compared it to other existing options?
Most people dread the idea of switching software or converting to a newer version, but if you and your team do the homework, the transition doesn’t have to be so painful or costly.
Considerations For Your Current Software
Consider the following points when evaluating your existing software:
Five Tips For Easing Your Software Evaluation Process
When you decide to evaluate your software, here are some tips to ease the process:
- Assign a project manager. This person will be responsible for making sure team members are completing assignments and for keeping the group moving forward.
- Put together a team of users. Consider who uses the software and include members who vary in experience, IT savviness and tenure. Include a member of your IT team.
- Do your research. Call on companies who are in your industry to see what they use and ask them about their experiences. Are they satisfied with their software? How do they effectively use it? Also call on companies who use your existing software also to see what their experiences have been.
- Calculate a cost/benefit analysis. With any conversion, there are hard costs and soft costs involved. Calculate the amount of time and resources a change could involve, as well as its impact on your team’s morale. If there is a large conversion cost to incur, how quickly will you earn that back with the efficiencies to be gained from making the change?
- Keep the end goal in mind. What are you trying to accomplish by going through this process? For example, are you trying to find something that will help you gain efficiencies? Be sure the testing and research is focused around those kinds of end goals.
Best Practices For Selecting Business Software
Change for the sake of change is never a good thing. You want to be able to show that you adequately vetted out possible solutions and that the conclusion has been reached by the team. Perhaps you will find out that your current system is adequate, but that your team needs additional training on how to use it to its fullest potential. It would be more cost effective to schedule additional training rather than to go through an unnecessary and costly software conversion. Your team, and your budget, will thank you in the end.
If you would like to learn about more best practices, contact Rea & Associates. Our accounting professionals and business advisors can help you determine what steps you should take during your business software selection process.
Author: Lesley Mast, CPA, Macc-Taxation (Wooster office)
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