July 2016 Newsletter

Feature Articles

Tax Tips

QuickBooks Tips


Selling your Business

There are many reasons to sell a business. Maybe you’re in ill health or ready to retire. Or you’re tired of working all the time and now that the business is profitable you’re ready to cash in. Whatever the reason, selling a small to medium sized business is a complex venture and many business owners are not aware of the tax consequences.

If you’re thinking about selling your business the first step is to consult a competent tax professional. You will need to make sure your financials in order, obtain an accurate business valuation to determine how much your business is worth (and what the listing price might be), and develop a tax planning strategy to minimizes capital gains and other taxes in order to maximize your profits from the sale.

Accurate Financial Statements

The importance of preparing your business financials before listing your business for sale cannot be overstated. Whether you use a business broker or word of mouth, rest assured that potential buyers will scrutinize every aspect of your business. Not being able to quickly produce financial statements, current and prior years’ balance sheets, profit and loss statements, tax returns, equipment lists, product inventories, and property appraisals and lease agreements may lead to loss of the sale.

Business Valuation

Many business owners have no idea what their business is worth; some may underestimate whereas others overestimate–sometimes significantly. Obtaining a third party business valuation allows business owners to set a price that is realistic for potential buyers, while achieving maximum value.

Tax Consequences of Selling

As a business owner you probably think of your business as a single entity sold as a lump sum. The IRS however, views a business as a collection of assets. Profit from the sale of these assets (i.e. your business) may be subject to short and long-term capital gains tax, depreciation recapture of Section 1245 and Section 1250 real property, and federal and state income taxes.

For IRS purposes each asset sold must be classified as capital assets, depreciable property used in the business, real property used in the business, goodwill, or property held for sale to customers, such as inventory or stock in trade. Assets are considered tangible (real estate, machinery, and inventory) or intangible (goodwill or trade name).

The gain (or loss) on each asset sold is figured separately. For instance, the sale of capital assets results in capital gain or loss whereas the sale of inventory results in ordinary income or loss, with each taxed accordingly.

Depreciable property

Section 1231 gains and losses are the taxable gains and losses from Section 1231 transactions such as sales or exchanges of real property or depreciable personal property held longer than one year. Their treatment as ordinary or capital depends on whether you have a net gain or a net loss from all your Section 1231 transactions.

When you dispose of depreciable property (Section 1245 property or Section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. Any remaining gain is a Section 1231 gain.

Business structure

Your business structure (i.e. business entity) also affects the way your business is taxed when it is sold. Sole proprietorships, partnerships, and LLCs (Limited Liability Companies) are considered “pass-through” entities and each asset is sold separately. As such there is more flexibility when structuring a sale to benefit both the buyer and seller in terms of tax consequences.

C-corporations and S-corporations have different entity structures and sale of assets and stock are subject to more complex regulations.

For example, when assets of a C-corporation are sold, the seller is taxed twice. The corporation pays tax on any gains realized when the assets are sold, and shareholders pay capital gains tax when the corporation is dissolved. However, when a C-corporation sells stock the seller only pays capital gains tax on the profit from the sale, which is generally at the long-term capital gains tax rate. S-corporations are taxed similarly to partnerships in that there is no double taxation when assets are sold. Income (or loss) flows through shareholders, who report it on their individual tax returns.

Need help?

As you can see, selling a business involves complicated federal and state tax rules and regulations. If you’re thinking of selling your business in the near future don’t hesitate to call the office and schedule a consultation with a tax and accounting professional.

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Tax Compliance Issues for Nonprofit Organizations

Whether you’ve just started a nonprofit, recently submitted your organization’s first Form 990, or are the executive director, it’s important not to lose sight of your obligations under federal and state tax laws. From annual filing and reporting requirements to taxes on business income and payroll compliance, here’s a quick look at what nonprofits need to know about tax compliance.

Annual Filing and Reporting Requirements: Form 990

Once you’ve applied for and received tax-exempt status under (Section 501(c)(3) and filed Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and received your exemption letter from the IRS, your organization is officially a nonprofit, and is exempt from federal income tax under section 501(c)(3). Tax exempt status refers to exemption from federal income tax on income related to the organization’s mission, as well as the ability to receive tax-deductible contributions from donors.

The next step is to comply with annual filing and reporting requirements, specifically, Form 990, Return of Organization Exempt from Income Tax.

Generally, tax-exempt organizations are required to file annual returns. If an organization does not file a required return or files late, the IRS may assess penalties. In addition, if an organization does not file as required for three consecutive years, it automatically loses its tax-exempt status.

Note: Certain organizations such as churches (including church-affiliated organizations and schools operated by a religious order) as well as organizations affiliated with a governmental unit are not required to file Form 990. Refer to your IRS exemption letter if you’re not sure.

There are four different Forms 990; which form an organization must file generally depends on its gross receipts. Forms 990-EZ or 990 are used for organizations with gross receipts of less than $200,000 and with total assets of less than $500,000. Form 990 is used for nonprofits with gross receipts greater than or equal to $200,000 or total assets greater than or equal to $500,000.

When gross receipts are less than or equal to $50,000, certain small organizations may file an annual electronic notice, the Form 990-N (e-Postcard); however, organizations eligible to file the e-Postcard may choose to file a full return. Private foundations file Form 990-PF regardless of financial status.

Form 990 is submitted to the IRS five and a half months after the end of an organization’s calendar year. For example, for nonprofits whose calendar year ends on December 31st, the initial return due date for Form 990 is May 15. If a due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day.

Extended due dates of three and six months are available for Forms 990; however, for Form 990-N the due date is the “initial return due date,” e.g. May 15 and extended due dates do not apply.

NOTE: Unlike individual tax returns filed with the IRS, which may be postmarked on April 15, Forms 990 must be received (not postmarked) by the IRS before the May 15 due date.

Unrelated Business Income Taxes (UBIT)

Unrelated business income is defined as income from a trade or business which is regularly carried on and is not substantially related to the charitable, educational, or other purpose that is the basis of the organization’s exemption.

While it may come as a surprise to some, nearly all tax-exempt organizations are required to pay taxes on unrelated business income, which might include proceeds from an annual holiday card sale or souvenirs related to an educational exhibit in support of the nonprofit’s mission.

If the IRS determines that a nonprofit is significantly underreporting income from unrelated business activities, it may lose its tax-exempt status.

Employment and Payroll Compliance

Similar to for-profit companies, nonprofit organizations must comply with both federal and state payroll reporting requirements. Federal tax withholding, social security taxes, and Medicare taxes must be deposited through the Electronic Federal Tax Payment System (“EFTPS”), and the organization must file Form 941 on a quarterly basis. Nonprofits are also required to report reimbursements to employees for out-of-pocket expenses; however, nonprofits that create an accountable reimbursement plan or ARP that meets IRS guidelines are able to avoid these reporting requirements.

State Tax Compliance

Most nonprofit organizations incorporate before applying to the IRS for tax exempt status. As such, they must comply with state laws such as annual or periodic registrations. Each state has different laws, but in general, nonprofit organizations must update basic contact information including mailing address, names of responsible parties, and registered agents. Some states require that charitable organizations apply for sales/use or property tax exemptions as well.

Further, charitable organizations that solicit donations in a particular state are subject to state solicitation laws that require the nonprofit to register with the state(s) and to report on the nonprofit’s fundraising activities. For nonprofits that solicit donations from residents in more than one state, compliance is often challenging. Organizations that fail to register are subject to hefty penalties.

Stay Informed

These are just a few of the tax-compliance issues facing nonprofit organizations. If you have any questions, would like more information, or need help setting up an accountable reimbursement plan that meets IRS requirements, please call.

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Paying off Debt the Smart Way

Between mortgages, car loans, credit cards, and student loans, most people are in debt. While being debt-free is a worthwhile goal, most people need to focus on managing their debt first since it’s likely to be there for most of their life.

Handled wisely, however, that debt won’t be an albatross around your neck. You don’t need to shell out your hard-earned money because of exorbitant interest rates or always feel like you’re on the verge of bankruptcy. You can pay off debt the smart way, while at the same time, saving money to pay it off even faster.

Assess the Situation

First, assess the depth of your debt. Write it down using pencil and paper or use a spreadsheet like Microsoft Excel. You can also use a bookkeeping program such as Quicken. Include every instance you can think of where a company has given you something in advance of payment, including your mortgage, car payment(s), credit cards, tax liens, student loans, and payments on electronics or other household items through a store.

Record the day the debt began and when it will end (if possible), the interest rate you’re paying, and what your payments typically are. Next, add it all up–as painful as that might be. Try not to be discouraged! Remember, you’re going to break this down into manageable chunks while finding extra money to help pay it down.

Identify High-Cost Debt

Yes, some debts are more expensive than others. Unless you’re getting payday loans (which you shouldn’t be), the worst offenders are probably your credit cards. Here’s how to deal with them.

  • Don’t use them. Don’t cut them up, but put them in a drawer and only access them in an emergency.
  • Identify the card with the highest interest and pay off as much as you can every month. Pay minimums on the others. When that one’s paid off, work on the card with the next highest rate.
  • Don’t close existing cards or open any new ones. It won’t help your credit rating, and in fact, will only hurt it.
  • Pay on time, absolutely every time. One late payment these days can lower your FICO score.
  • Go over your credit-card statements with a fine-tooth comb. Are you still being charged for that travel club you’ve never used? Look for line items you don’t need.
  • Call your credit card companies and ask them nicely if they would lower your interest rates. It does work sometimes!

Save, Save, Save

Do whatever you can to retire debt. Consider taking a second job and using that income only for higher payments on your financial obligations. Substitute free family activities for high-cost ones. Sell high-value items that you can live without.

Do Away with Unnecessary Items to Reduce Debt Load

Do you really need the 200-channel cable option or that satellite dish on your roof? You’ll be surprised at what you don’t miss. How about magazine subscriptions? They’re not terribly expensive, but every penny counts. It’s nice to have a library of books, but consider visiting the public library or half-price bookstores until your debt is under control.

Never, Ever Miss a Payment

Not only are you retiring debt, but you’re also building a stellar credit rating. If you ever move or buy another car, you’ll want to get the lowest rate possible. A blemish-free payment record will help with that. Besides, credit card companies can be quick to raise interest rates because of one late payment. A completely missed one is even more serious.

Pay with Cash

To avoid increasing debt load, make it a habit to pay for everything you purchase with cash. If you don’t have the cash for it, you probably don’t need it. You’ll feel better about what you do have if you know it’s owned free and clear.

Shop wisely, and Use the Savings to Pay down Your Debt

If your family is large enough to warrant it, invest $30 or $40 and join a store like Sam’s or Costco–and use it. Shop there first, then at the grocery store. Change brands if you have to and swallow your pride. If you’re concerned about buying organic, rest assured that even at places like Costco you will have many options. Use coupons religiously. Calculate the money you’re saving and slap it on your debt.

Each of these steps, taken alone, probably doesn’t seem like much, but if you adopt as many as you can, you’ll watch your debt decrease every month. If you need help managing debt, please call for assistance.

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The Best Financial Tool for Business Owners

What if there were a tool that helped you create crystal-clear plans, provided you with continual feedback about how well your plan was working, and that told you exactly what’s working and what isn’t?

Well, there is such a tool. It’s called the Budget vs. Actual Report and it’s exactly what you need to be able to consistently make smart business decisions to keep your business on track for success.

Clarifying Your Plan

The clearer you are about your business goals, the more likely you are to achieve them. Creating a budget forces you to examine the details of your goals, as well as how even a single business decision affects all other aspects of your company’s operations.

Example: Let’s say that you want to grow your sales by 15 percent this year.

Does that mean you need to hire another salesperson? When will the business start to see new sales from this person? Do you need to set up an office for them? New phone line? Buy them a computer? Do you need to do more advertising? How much more will you spend? When will you see the return on your advertising expenditure?

Navigating the Ship

Once you clarify your goals, then you start making business decisions to help you reach your desired outcome. Some of those decisions will be great and give you better than expected results, but others might not.

This is when the Budget vs. Actual Report becomes an effective management tool. When you compare your budgeted sales and expenses to your actual results, you see exactly how far off you might be with regard to your budget, goals, and plans.

Sometimes you need to adjust your plan (budget) and sometimes you need to focus more attention to areas of your business that are not performing as well as you planned. Either way, you are gleaning valuable insights into your business.

It’s like sailing a boat. You may be off-course most of the time, but having a clear goal and making many adjustments helps you reach your destination.

Just Do It

We often know what we need to do but don’t take the necessary action. It may seem like a huge hassle to create a budget and then create a Budget vs. Actual Report every month, but as with any new skill, it does get easier.

Turn your dreams into reality. Give the office a call and let a tax and accounting professional guide you through the budgeting process.

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Five Tips for Safeguarding Your Records

Some natural disasters are more common in the summer, but major events such as hurricanes, tornadoes and fires can strike at any time. It’s always a good idea to plan for what to do in case of a disaster. Here are some basic steps you can take right now to prepare:

1. Backup Records Electronically. Many people receive bank statements by email. This is a good way to secure your records. You can also scan tax records and insurance policies onto an electronic format. You can use an external hard drive, CD or DVD to store important records. Be sure you back up your files and keep them in a safe place. If a disaster strikes your home, it may also affect a wide area. If that happens you may not be able to retrieve your records.

2. Document Valuables. Take photos or videos of the contents of your home or business. These visual records can help you prove the value of your lost items. They may help with insurance claims or casualty loss deductions on your tax return. You should store them with a friend or relative who lives out of the area. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.

3. Update Emergency Plans. Review your emergency plans every year. Personal and business situations change over time as do preparedness needs, so update them when your situation changes. Make sure you have a way to get severe weather information and have a plan for what to do if threatening weather approaches. In addition, when employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

4. Get Copies of Tax Returns or Transcripts. Use Form 4506, Request for Copy of Tax Return, to replace lost or destroyed tax returns or need information from your return. You can also file Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return. If you need assistance filling this form out, please call.

5. Check on Fiduciary Bonds. Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

If you fall victim to a disaster, Help is just a phone call away. Don’t hesitate to call the office regarding any disaster-related tax questions or issues you might have.

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Start Planning Now for Next Year’s Taxes

You may be tempted to forget about your taxes once you’ve filed your tax return, but did you know that if you start your tax planning now, you may be able to avoid a tax surprise when you file next year?

That’s right. Now is a good time to set up a system so you can keep your tax records safe and easy to find. Here are five tips to give you a leg up on next year’s taxes:

1. Take action when life changes occur. Some life events such as a change in marital status or the birth of a child can change the amount of tax you pay. When they happen, you may need to change the amount of tax withheld from your pay. To do that, file a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer. Call if you need help filling out the form.

2. Report changes in circumstances to the Health Insurance Marketplace. If you enroll in insurance coverage through the Health Insurance Marketplace in 2016, you should report changes in circumstances to the Marketplace when they happen. Reporting events such as changes in your income or family size helps you avoid getting too much or too little financial assistance in advance.

3. Keep records safe. Print and keep a copy of your 2015 tax return and supporting records together in a safe place. This includes W-2 Forms, Forms 1099, bank records and records of your family’s health care insurance coverage. If you ever need your tax return or records, it will be easier for you to get them. For example, you may need a copy of your tax return if you apply for a home loan or financial aid for college. You should use your tax return as a guide when you do your taxes next year.

4. Stay organized. Make tax time easier on everyone by having your family place tax records in the same place during the year. That way you won’t have to search for misplaced records when you file your return next year.

5. Consider itemizing. You may be able to lower your taxes if you itemize deductions instead of taking the standard deduction. Owning a home, paying medical expenses and qualified donations to charity could mean more tax savings. A list of deductions is found in the instructions for Schedule A, Itemized Deductions. As always, if you have any questions please call.

Ready to save money on your taxes?

Planning now can pay off with savings at tax time next year. Call today and get a jump start on next year’s taxes.

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Six Facts About Charitable Donations

If you give money or goods to a charity in 2016, you may be able to claim a deduction on your federal tax return. Here are six important facts you should know about charitable donations.

1. Qualified Charities. You must donate to a qualified charity. Gifts to individuals, political organizations or candidates are not deductible. An exception to this rule is contributions under the Slain Officer Family Support Act of 2015. To check the status of a charity, use the IRS Select Check tool found on IRS.gov.

2. Itemize Deductions. To deduct your contributions, you must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with your federal tax return.

3. Benefit in Return. If you get something in return for your donation, you may have to reduce your deduction. You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services.

4. Type of Donation. If you give property instead of cash, your deduction amount is normally limited to the item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market. If you donate used clothing and household items, they generally must be in good condition, or better, to be deductible. Special rules apply to cars, boats and other types of property donations.

5. Form to File and Records to Keep. You must file Form 8283, Noncash Charitable Contributions, for all noncash gifts totaling more than $500 for the year. If you need to prepare a Form 8283, you can prepare and e-file your tax return for free using IRS Free File. The type of records you must keep depends on the amount and type of your donation. To learn more about what records to keep please call the office.

6. Donations of $250 or More. If you donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether you received any goods or services in exchange for the gift.

Questions about deducting charitable donations? Call the office anytime. We’re here to help.

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Who Can Represent You Before the IRS?

Many people use a tax professional to prepare their taxes. Tax professionals with an IRS Preparer Tax Identification Number (PTIN) can prepare a return for a fee. If you choose a tax pro, you should know who can represent you before the IRS. There are new rules this year, so the IRS wants you to know who can represent you and when they can represent you.

Representation rights, also known as practice rights, fall into two categories:

  • Unlimited Representation
  • Limited Representation

Unlimited representation rights allow a credentialed tax practitioner to represent you before the IRS on any tax matter. This is true no matter who prepared your return. Credentialed tax professionals who have unlimited representation rights include:

  • Enrolled agents
  • Certified Public Accountants
  • Attorneys

Limited representation rights authorize the tax professional to represent you if, and only if, they prepared and signed the return. They can do this only before IRS revenue agents, customer service representatives and similar IRS employees. They cannot represent clients whose returns they did not prepare. They cannot represent clients regarding appeals or collection issues even if they did prepare the return in question. For returns filed after Dec. 31, 2015, the only tax return preparers with limited representation rights are Annual Filing Season Program Participants.

The Annual Filing Season Program is a voluntary program. Non-credentialed tax return preparers who aim for a higher level of professionalism are encouraged to participate.

Other tax return preparers have limited representation rights, but only for returns filed before Jan. 1, 2016. Keep these changes in mind and choose wisely when you select a tax return preparer.

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Education Tax Credits Help You Pay for College

Are you planning to pay for college in 2016? If so, money you paid for higher education can mean tax savings on your tax return when you file next year. If you, your spouse or your dependent took post-high school coursework last year, you may be able to take advantage of education credits that can help you with the cost of higher education. Taking advantage of these education tax credits can mean tax savings on your federal tax return by reducing the amount of tax you owe. Here are some important facts you should know about education tax credits.

American Opportunity Tax Credit:

  • You may be able to claim up to $2,500 per eligible student.
  • The credit applies to the first four years at an eligible college or vocational school.
  • It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund.
  • It is available for students earning a degree or other recognized credential.
  • The credit applies to students going to school at least half-time for at least one academic period that started during the tax year.
  • Costs that apply to the credit include the cost of tuition, books and required fees and supplies.

Lifetime Learning Credit:

  • The credit is limited to $2,000 per tax return, per year.
  • The credit applies to all years of higher education. This includes classes for learning or improving job skills.
  • The credit is limited to the amount of your taxes.
  • Costs that apply to the credit include the cost of tuition, required fees, books, supplies and equipment that you must buy from the school.

The Tuition and Fees Deduction is:

  • Claimed as an adjustment to income.
  • Claimed whether or not you itemize.
  • Limited to tuition and certain related expenses required for enrollment or attendance at eligible schools.
  • Worth up to $4,000.

The following applies to all three credits and deductions as well:

  • The credits apply to an eligible student. Eligible students include you, your spouse or a dependent that you list on your tax return.
  • You must file Form 1040A or Form 1040 and complete Form 8863, Education Credits, to claim these credits on your tax return.
  • Your school should give you a Form 1098-T, Tuition Statement, by February 1, 2017, showing expenses for the year. This form contains helpful information needed to complete Form 8863. The amounts shown in Boxes 1 and 2 of the form may be different than what you actually paid. For example, the form may not include the cost of books that qualify for the credit.
  • You can’t claim either credit if someone else claims you as a dependent.
  • You can’t claim either AOTC or LLC and the Tuition and Fees Deduction for the same student or for the same expense, in the same year.
  • The credits are subject to income limits that could reduce the amount you can claim on your return.
  • Use the Interactive Tax Assistant tool at IRS.gov to see if you’re eligible to claim these education tax credits.

Even if you can’t take advantage of any of these tax credits, there could be other education-related tax benefits that you can claim. Call the office if you have any questions.

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Tax Tips for Members of the Military

Special tax benefits apply to members of the U. S. Armed Forces. For example, some types of pay are not taxable, and special rules may apply to some tax deductions, credits, and deadlines. Here are ten of those benefits:

1. Deadline Extensions. Some members of the military, such as those who serve in a combat zone, can postpone some tax deadlines. If this applies to you, you can get automatic extensions of time to file your tax return and to pay your taxes. For example, service members stationed abroad have extra time (until June 15) to file a federal income tax return. Those serving in a combat zone have even longer, typically until 180 days after they leave the combat zone. They may also qualify to delay payment of income tax due before or during their period of service. Please call the office for details, including how to request relief.

2. Combat Pay Exclusion. If you serve in a combat zone, certain combat pay you receive is not taxable. You won’t need to show the pay on your tax return because combat pay isn’t included in the wages reported on your Form W-2, Wage and Tax Statement. Service in support of a combat zone may qualify for this exclusion.

3. Earned Income Tax Credit (EITC). If you get nontaxable combat pay, you may choose to include it to figure your EITC. You would make this choice if it increases your credit. Even if you do, the combat pay stays nontaxable.

4. Moving Expense Deduction. You may be able to deduct some of your unreimbursed moving costs. This applies if the move is due to a permanent change of station. Use Form 3903, Moving Expenses

5. Uniform Deduction. You can deduct the costs of certain uniforms that regulations prohibit you from wearing while off duty. This includes the costs of purchase and upkeep. You must reduce your deduction by any allowance you get for these costs.

6. Signing Joint Returns. Both spouses normally must sign a joint income tax return. If your spouse is absent due to certain military duty or conditions, you may be able to sign for your spouse. In other cases when your spouse is absent, you may need a power of attorney to file a joint return.

7. Reservists’ Travel Deduction. If you’re a member of the U.S. Armed Forces Reserves, you may deduct certain costs of travel on your tax return. This applies to the unreimbursed costs of travel to perform your reserve duties that are more than 100 miles away from home.

8. Nontaxable ROTC Allowances. Active duty ROTC pay, such as pay for summer advanced camp, is taxable. But some amounts paid to ROTC students in advanced training are not taxable. This applies to educational and subsistence allowances.

9. Civilian Life. If you leave the military and look for work, you may be able to deduct some job hunting expenses. You may be able to include the costs of travel, preparing a resume and job placement agency fees. Moving expenses may also qualify for a tax deduction.

10. Retirement Savings. Low-and moderate-income service members who contribute to an IRA or 401(k)-type retirement plan, such as the federal government’s Thrift Savings Plan, can often claim the saver’s credit, also known as the retirement savings contributions credit, on Form 8880, Credit for Qualified Retirement Savings Contributions.

Getting Tax Help

Although most military bases offer free tax preparation and filing assistance during the tax filing season, you may need to contact an accounting professional during other times of the year. Don’t hesitate to contact the office with any questions you have about your taxes–no matter what time of the year it is.

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Using Sales Receipts: When and How

How do you let your customers know how much they owe you, and for what products or services? In these days of ecommerce and merchant accounts, your customers may provide a credit card number over the phone or on a website. Or perhaps you send invoices after a sale and receive checks or account numbers in the mail. QuickBooks can help you both create the invoices and record the payments.

There’s another type of sales document that you can use in certain situations: the sales receipt. You’d probably be most likely to use one of these when customers pay you in full for products or services at the same time they receive them.


Figure 1: If you receive full payment for a product or service at the same time the customer receives it, you should use a sales receipt

Completing a sales receipt is similar to filling out an invoice or purchase order. Click Create Sales Receipts on QuickBooks’ home page or open the Customers menu and select Enter Sales Receipts. A screen like the one above will open.

Choose a Customer from the drop-down list and a Class (if applicable). If you have created more than one Template (more on that later), make sure that the correct one appears in the field. Verify that the appropriate Date and Sale No. read as they should. Click on the type of payment you’re receiving, and enter the check or credit card number where necessary (a small window will open for the latter).

Note: If you are working with a type of payment that does not appear in the four icons, click on the arrow below More to add it.

Now you’re ready to select the products or services you sold by clicking on the arrow in the field under Item to open the available list (if you have not created a record for what you’re selling, select and complete the fields in the New Item window that opens). Enter the quantity (Qty. ). The Rate, Amount, and Tax fields should fill in automatically, based on the information you entered when you create the item’s record.

When you’ve entered all of the items that the customer is paying you for, you can choose which Customer Message will appear on the sales receipt (you can see your options in the drop-down list found in the lower left corner of the screen). Anything you enter in the Memofield will be for your internal use only; it will not appear on the printed or emailed sales receipt.

Click Save & Close or Save & New.

Customizing Sales Receipts


Figure 2: QuickBooks provides tools for customizing forms, including sales receipts.

QuickBooks’ forms contain the fields most often used by small businesses. But you can alter them in numerous ways to meet your company’s needs. To customize a sales receipt, open the Sales Receipt window and click on the Formatting menu. Select Manage Templates.

You’ll want to make a copy of the original sales receipt so that the original will always be available. Click the Copy button in the lower left. “Copy of Custom Sales Receipt” appears in the list of templates. In the Preview pane on the right, click in the field next to Template Name and replace the existing name with a new, more descriptive one if you’d like. Click OK.

The Basic Customization window opens. Click on Additional Customization at the bottom of the screen. You’ll see a window like the one in the image above. Click the Columns tab. The list on the left displays all of the columns that can be included in the body of your sales receipt.

Click in the boxes below Screen and Print to indicate which columns should display on your QuickBooks screen and which should appear on the customer’s copy. The numbers in the Order column can be changed to reflect which column will come first, second, etc.

Numerous Options

There’s a lot more you can do to customize your QuickBooks forms. And there are other situations where you might want to issue a sales receipt. If you would like to explore these and other elements of QuickBooks, please call the office to schedule a time that is convenient for you.

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Tax Due Dates for July 2016

July 11

Employees Who Work for Tips – If you received $20 or more in tips during June, report them to your employer. You can use Form 4070.

July 15

Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in June.

Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in June.

August 1

Employers – Social Security, Medicare, and withheld income tax. File Form 941 for the second quarter of 2016. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until August 10 to file the return.

Employers – Federal unemployment tax. Deposit the tax owed through June if more than $500.

Employers – If you maintain an employee benefit plan, such as a pension, profit-sharing, or stock bonus plan, file Form 5500 or 5500-EZ for calendar-year 2015. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends.

Certain Small Employers – Deposit any undeposited tax if your tax liability is $2,500 or more for 2016 but less than $2,500 for the second quarter.

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