In 2012, the United States government passed the American Taxpayer Relief Act. Many of these tax incentives have been extended through 2013.

Research and Experimentation

Small businesses that are involved in technology and research enjoy an exclusive tax credit. This credit, known as the R&D tax credit, reduces the tax liability of certain types of small businesses.

Section 179

The Section 179 Deduction allows businesses to deduct the costs of their capital expenditures over a one-year term, as opposed to over a longer term as required in years past. Businesses can deduct up to $500,000 in capital expenditures, depending on their qualifying expenses.

Work Opportunity Tax Credit

There has been a large emphasis on putting US veterans back to work. The Work Opportunity Tax Credit offers a tax incentive to small businesses that employ veterans.

Exclusion of Gain

Small businesses that are seeking investors in order to expand their business can benefit greatly from the Exclusion of Gain tax benefit. This tax benefit excludes 100% of the financial gain of certain stock products from the income of the investor. This reduces the investor’s tax liability on his stock income.

Depreciation Tax Incentive

The process of claiming depreciation on business equipment is very complex. The addition of the Depreciation Tax Incentive for small businesses aims to simplify this process by allowing small businesses to recoup their investment costs in a faster timeframe. With this new incentive, businesses can depreciate half of the cost of their new equipment in the first year, rather than expanding the depreciation over five to ten years, depending on the nature of the equipment.

As a small business owner, it is important to make sure to take advantage of each tax incentive that you are eligible for. Tax incentives reduce your tax liability, which means that you pay less in taxes each year. Less money paid in taxes translates to more income and more money available for reinvestment back into your business. However, be careful what deductions you claim. The IRS often includes extremely specific qualifications that must be met in order to qualify for a deduction. If you claim a deduction that you are not qualified to receive you could be subjected to penalties and late fees. If you are unsure which incentives you qualify for, set up an appointment with an experienced Traverse City CPA at Harris Group Certified Public Accountants.

Traverse City CPA: (231) 946-8930     Suttons Bay CPA: (231) 271-9295

Whether you file your taxes online at home or you make an appointment with your accountant each year, preparation is the key. As soon as the calendar page turns, it is important that you start getting organized. Gathering all of your tax documents and receipts is the best way to ensure that you are not racing the tax clock come April 15th. Grab yourself two plain manila folders and start getting organized. Label the first folder “Income” and the second folder “Deductions.”

Add Up Your Income

If you work a full-time job, your employer will send you a W2 form in the mail. Some employers also post W2 forms online so that employees may access them and print them out from home. If you are a freelancer or contractor, your income will be reported to the IRS on a 1099 form. Other important tax income documents include 1099-B forms, which outline income from stock sales and forms related to income from investments, such as mutual funds, bank statements, brokerage statements, and interest income reports.

Maximize your Deductions

Tax deductions decrease your tax liability. Creating an organized file of all of your tax deductions in preparation for filing is an important step to save money and maximize your tax refund. In the “Deductions” folder, you will need to include documents such as your 1098 form. This form outlines the mortgage interest that you paid on your home and is often your biggest annual deduction. Gather your personal tax statements. These might include real estate tax payments and personal property tax statements. Include receipts for childcare expenses, charitable contributions, business expenses that were not reimbursed by your company, and work expenses if you are self-employed. You can also deduct medical expenses, such as out-of-pocket hospital payments, lab costs, eye and dental care costs, prescriptions, and even the percentage that you pay toward your insurance premiums if it exceeds 7.5% of your income.

Make Your Appointments

Once you have all of your information organized and in one place, it is time to file your taxes. The IRS begins processing tax returns on January 30, 2013. You may file before January 30th if you wish, but your return will not be approved or rejected until the IRS begins processing 2012 tax returns. If you want to visit with a Traverse City CPA you’ll need to contact them well in advance. You can contact Harris Group CPA at their Traverse City or Suttons Bay locations by calling (231) 946-8930 for Traverse City and (231) 271-9295 for the Suttons Bay location.

Most people file their annual taxes hoping to receive a generous return. However, some years you have not paid enough to the government and you end up owing Uncle Sam a significant sum of money. Owing money to the IRS is scary. If you are like most Americans, you do not have thousands of dollars stashed away to pay your tax bill. If you can’t pay your taxes, take a deep breath. The IRS has numerous provisions in place to help Americans take care of their tax obligations over time.

File Your Taxes

Many people suspect that they will owe money to the government and because of this they wait to file their taxes. Do not wait. It is important that you file your taxes by the April 15th deadline, regardless of whether you are receiving a refund or not. Filing your tax return and paying what you can before the deadline is the only way to avoid additional penalties and interest payments. If you are unable to file your taxes by the annual deadline, contact the IRS and request an extension to avoid additional fees and penalties.

Contact the IRS

The IRS can help you if you are having difficulty paying your tax bill. They can be contacted by telephone at 800-829-1040.

Take Advantage of Payment Options

The IRS is surprisingly flexible when it comes to helping Americans pay the balance of their tax bills. For people owing less than $25K in tax debt, including interest and penalties, it is possible to use the Online Payment Agreement option on IRS.gov to set up an installment payment plan that will allow payments to be made in small, manageable increments over time.

Those who owe over $25K may also qualify for an installment agreement. If you owe in excess of $25K in taxes to the IRS, it is necessary to file a 433F form and the Collection Information Statement. The IRS cannot only set up installment payments, but they do occasionally offer relief options and extensions. All of this assistance is available at IRS.gov, as well as at the phone number listed above. A certified public accountant can also walk you through this process and review your tax return to ensure that you are not over estimating what you owe.

Electronic Payments

The IRS is set up to process and receive electronic payments of tax bills. Using the electronic payment option, individuals can send full or partial payments of their tax bills directly to the IRS through their online bank system.

Regardless of the way you make payments, it is important that you contact the IRS and discuss your tax bill and arrange payment options if you will not be able to pay the full amount owed by April 15th. Failure to address the situation and set up a payment plan can result in wage garnishment and even jail time.

Meeting with an experienced Traverse City CPA early help to ensure that you have taken all of the deductions available to you and that you are prepared to start a payment plan if necessary. You can schedule an appointment with Harris Group Certified Public Accountants at their Traverse City or Suttons Bay locations by calling (231) 946-8930 (Traverse City); (231) 271-9295 (Suttons Bay) or fill out a form online.

Unless you are a freelancer or independent contractor, your employer is required to take certain tax withholdings from your paycheck. Chances are good that you have noticed these withholdings when you review your paystub. If you are like most Americans, you likely wonder where, exactly, all of this money is going every week. New tax laws have changed withholding guidelines. After February 15th, you are likely to see changes to the withholdings that your employer takes each paycheck.

Common Payroll Withholdings

The most common payroll withholdings taken by employers to date include Federal Medicare Tax, Social Security Tax, and State Tax Withholding. If you participate in your employer’s retirement plan or 401k, you likely have a certain percentage of your paycheck withheld as part of your 401k contributions.

Changes to Payroll Withholdings

The year 2013 has brought about many changes in regard to Federal taxes and payroll withholdings. The IRS has recently released a new chart outlining the new tax rates that are in effect for 2013. Employers should refer to Notice 1036 in order to determine the withholding methods and percentage changes that must be implemented this New Year. Notice 1036 includes all tax changes, including the return to a 6.2% Social Security rate that will affect the bottom line of most Americans. Employers must begin using this new withholding table and implement all percentage changes by no later than February 15th, 2013.

What You Should Do

Employers and payroll companies will handle all of the paperwork and adjustments required in order to comply with these new payroll withholding requirements. Employees do not need to complete new W4 withholding forms or file any additional paperwork in order to ensure compliance with the new regulations.

Adjusting Withholdings

The IRS does urge employed Americans to review their tax withholdings each year. Families who have multiple jobs, multiple children, or those who are facing life changes such as getting married or buying a home might want to consider adjusting their tax withholdings. You can easily adjust your tax withholdings by completing an updated W4 form, and submitting it to your employer or payroll company. If you typically receive a large refund from the IRS after filing your taxes each year, or if you often owe a large sum of money in additional taxes, adjusting your withholdings might help you properly adjust the amount that you pay in taxes each year.

If you have further questions about you tax withholdings and if you should adjust your withholdings you can contact a Traverse City CPA like Harris Group Certified Public Accountants with offices in Suttons Bay and Traverse City, MI.

Tax season is not the best time of year to develop a strategy with your accountant. This requires planning in advance and consistent action, which is why it’s is a good idea for business owners to meet with their accountant at least on a quarterly basis. There are many business decisions that you make throughout the year that can have a significant impact on your taxes. For example, changing your business structure (LLC, c-corp, s-corp), hiring an employee vs. outsourcing to an independent contractor, business location, employee payment structure etc. This is not intended to be an all-inclusive list or to serve as professional advice. It is meant to highlight the fact that a large number of the decisions you make throughout the year will have an effect on your business taxes. Making these decisions without receiving proper professional council could leave you with a bundle of unexpected taxes. Planning ahead and communicating with your CPA on a regular basis will give you the best outcome.

When you do meet with your CPA bring all receipts and financial business records that your accountant does not already have. There are strict IRS rules that require that all tax deductions be accompanied with proper documentation. Your accountant should inform you of possible tax deductions that you might not be aware of, and what information is needed to properly record the deduction. Your accountant should not assume that you have discussed all of the possible legal tax deductions.

Common deductions that may be overlooked and your accountant should be asking you about are:

- Donations, including non-cash contributions.

- Business use of a personal vehicle.

- Home office

- Business trips

It’s all about the details. Most people know that under some circumstances these items can be used as legal deductions, but without all of the details that knowledge isn’t very useful. Is your accountant sharing the specific circumstances with you, and helping you choose the best way for you to provide accurate documentation? If not, ask them to at your next appointment.

Do you have more questions or would you like to schedule a free, no obligation consultation? Just fill out the short form below and someone from our office will contact you.

Our nation’s tax structure is constantly evolving and becoming increasingly complicated.  Tax software programs cannot fully understand every nuance of your financial life. Seasonal tax preparers may not have the expertise to provide comprehensive service.  Which is why it is important to retain an experienced and competent tax preparer.

At Harris Group, every situation is unique and we take an individual approach to each client.  Choosing a CPA for tax preparation assures a quality return prepared by professionals with technical and strategic tax expertise.  We provide consultation services to minimize your tax liability without losing sight of your financial goals and objectives.  Tax planning throughout the year is critical to developing strategies designed to minimize Federal and State tax liabilities.

We help individuals of all income levels and those with closely held companies.  Small business owners are often interested in structuring their business in a tax effective manner while maximizing their cash flow with minimal effect on the fundamental needs of the business. The professional staff at Harris Group has the knowledge and skills to help clients thrive in the competitive marketplace.

Harris Group can assist you with the following:
•    Tax Preparation & Planning
•    Individual Income Tax Returns
•    Partnerships and LLCs
•    C Corporations
•    S Corporations
•    Estate and Gift
•    Fiduciary
•    Tax Exempt (Status)
•    Personal Property
•    Pension
•    State and Local (Taxes)

We will also represent you should Federal or State taxing authorities select your personal or business return for an audit.