DEBIT CARD? CREDIT CARD? CASH?“Some small business owners are intimidated by the thought of accepting credit and debit card payments. And that’s understandable- with the prospect of paying fees, plus the cost of acquiring new point of sale terminals, electronic payments can seem daunting.” (SCORE ). They made some really good points, such as: Continue reading
Don’t Guestimate Your TaxesTom Copeland wrote a great piece for National Association for Child Care (NAFCC) that is worth sharing with you.
“How much of the cost of an item can I deduct as a business expense?” is a common question of family child care providers. In general, providers should use their Time-Space Percentage to determine the portion that is deductible for items used by their business as well as their family. Such items include property tax, mortgage interest, furniture and appliances, toys, supplies, and more.
For some shared business and personal items, however, the Time-Space Percentage should not be used. These special items, called “listed property,” include a computer, printer, copy machine, fax, television, VCR, cell phone, and vehicle. For these items providers must calculate an actual business use percent, which means determining what percent of each item was used in the business.To read the rest of the article visit NAFCC.
Don’t forget to register to attend our Tax & Recordkeeping Seminar on January 24. Details for registration here.
Just finished an article in Entrepreneur Magazine. It is a columnist sharing his experience and *lessons learned* going through an audit. He thought he kept good records, but discovered there is always room for improvement.
Every year I give seminars exclusively for the child care provider community through the YMCA Child Resource Services. The entire purpose of these seminars is to give providers the best tools and tips that will help maximize their deductions, and improve their record keeping skills.This year the Audit Seminar is on Wednesday, October 22, and includes a free workbook handout of our “Secrets to Survive an IRS Audit”. Continue reading
Individuals who purchased health insurance coverage from the Health Insurance Marketplace may be getting advance payments of the premium tax credit to help pay for health insurance coverage in 2014.
If they are, it is important to report changes in circumstances, such as changes in income, marital status or family size, to the Health Insurance Marketplace when they happen.
Receiving too much or too little in advance payments of the premium tax credit can affect refunds or balance due when individuals file federal tax returns in 2015.
Reporting changes will help avoid getting a smaller refund than expected or even owing money not expected to owe.
Publication 5152, Report changes to the Marketplace as they happen, is available on www.IRS.gov/aca. Go to www.HealthCare.gov for information about health insurance coverage and financial assistance.
Source: IRS.gov Newsletter
Now is a good time for you to do a mid-year health check on your record keeping and tax status.Give us a call at 619-589-8680 and let’s set up a time for you to come in.
Deadline for financial institutions to send out Form 5498 to report balances in an individual retirement account for the year 2013.
2nd quarter estimated tax payments due for the 2014 tax year. (The normal deadline is June 15th, which falls on a Sunday, so the deadline is pushed to the next business day.)
Deadline for US citizens living abroad to file individual tax returns and to pay any tax due. You can request an additional 4-month extension (Form 4868). (You can request an automatic extension by April 15th instead if you want to.) Two tax breaks important for Americans working abroad are the Foreign Earned Income Exclusion and the Foreign Tax Credit, .
Deadline to file Foreign Bank Account Report for the year 2013. This report is required if you have over $10,000 (in aggregate) held in foreign bank accounts. Foreign Bank Account Reports have a new form number (FinCEN Form 114) and must be filed electronically. Extensions of time to file are not available.
3rd quarter estimated tax payments due for the 2014 tax year.
Final deadline to file corporate tax returns for the year 2013 if an extension was requested. (Forms 1120, 1120A, 1120S).
Final deadline to file trust income tax returns (Form 1041) for the year 2013 if an extension was requested.
Final deadline to file partnership tax returns (Form 1065) for the year 2013 if an extension was requested.
Final deadline for self-employed persons or small employers to establish a SIMPLE-IRA for the year 2014.
Final deadline to file individual tax returns (with extension). (Forms 1040, 1040A, 1040EZ.)
Last day the IRS will accept an electronically filed tax return for the year 2013. If filing after October 15th, you’ll need to mail in your tax return for processing.
Final deadline to fund a SEP-IRA or solo 401(k) for tax year 2013 if you requested an automatic extension of time to file.
Start planning any year-end tax moves.
If you are covered by an HSA-compatible health insurance policy as of December 1st, you’ll be eligible to contribute the full amount to a Health Savings Account for the year.
Last day to make any tax moves for the year 2014. Last day to set up a solo 401(k) for self-employed persons.
Marital status on this date determines your marital status for the whole year.
Source: Income Tax Deadlines; Critical IRS Deadlines in the Year 2014
Now that April 15 has come and gone – you may look at this time as an opportunity to clean up, clean out and get organized. We will be writing about tips to freshen or set up your in-home office to help you in your recordkeeping, but before we go there… let’s talk about your tax files first and what you need to keep.
Begin by gathering all of the documents and files that you pulled together to prepare your taxes. Continue reading
How should you handle parents who are divorced or separated when it comes to providing receipts?As a good practice, we advocate our child care providers issue receipts whenever they are paid. Do you have to do this? No, it just makes your record keeping easier.
The question here is when you have a child in your care, whose parents are separated or divorced, which parent do you give the receipt to? The short answer : you only give a receipt to the person who actually paid you. Make it one of your business rules, and let parents know (and include in your program materials).
But what do you do if you find yourself in a situation where one of the parents comes to you and says they have been paying the other parent for your child care services… and they need the receipt to declare it. Advise the parent that they will have to speak to the other parent because you only issue receipts to someone who has directly paid you and they will have to speak to the other parent if they are planning to claim a child care tax credit.
What happens if both parents, separated or divorced, have paid you. If you have kept a register of who paid when, then add it up and give each parent a receipt for the amount they paid. If you didn’t keep it separate, then, according to Tom Copeland, “give each of them the same receipt and mark “Duplicate” on each receipt”.
For more information about on this read Child and Dependent Care Expenses,
We always meet with our new child care provider clients to check their past deductions because many times they have not properly depreciated the day-to-day materials, furniture, and household items they use in the daily operation of their business.
We want to know about these items – even if they were purchased before the business was started. These can result in considerable tax savings for you.
It’s true! You are entitled to claim depreciation on household items that you purchased BEFORE your business was even started. In fact, you should depreciate all the items based on the lower end of the purchase price (your tax preparer will guide you) or the of the item(s) when they were first used in your business.
The list can include: beds, linens, towels, tables, chairs, desks, refrigerator, freezer, washer/dryer … are you getting the picture. Any of the items that you are using in support of your child care business is a legitimate deduction. This includes little stuff too, like pictures on the wall, garden hose, tools (for use outside).
The IRS Child Care Provider Audit Technique Guide states, “For many providers, when they start their business many items that were personal use only are used in the business. They are entitled to depreciate the business use portion of those assets.”
Publication 587 – Business Use of Your Home (See Day Care Facility)
The purpose of this publication is to provide information on figuring and claiming the deduction for business use of your home. It contains special rules for day care providers including standard meal and snack rates. Continue reading
