Accounting News and Notes

Duluth/Gwinnett CPA: 2013 Tax Planning

The train is leaving the station and it is well past time to get on. Accordingly we advise our clients to at least formally twice annually to prepare a written tax plan so as to ensure there are no undue surprises at the end of the year. If you are a business owner of an LLC, an  S Corporation, a Partnership or a proprietorship it is essential to work closely with your CPA on this most important tax issue. The below is a sample letter we might send to a  client detailing the results of their tax  planning:

Based upon your advice that:

Your anticipated current taxable income will be approximately the same as the prior year we adjusted your monthly federal and state withholding for the rest of the year and doing a larger paycheck  now to get your year to date federal withholding in line.

The federal withholding amount we established for your new monthly payroll can be used for next year  if its estimated taxable income is anticipated to be approximately the same as in prior years whereas the total state withholding amount should be adjusted to $1,000  monthly .

You anticipate your other income, itemizations and exemptions to be approximately the same as the prior year

This is to confirm that your marginal tax rate for the IRS & GA is 28% and 6% respectively.

Please be sure to forward to me a copy of your year to date check stub after you do your next regular monthly paycheck and the larger catch-up paycheck to get your year to date withholding in line and to withhold for the Owner 401K amount.

That after you withhold this from his paycheck and  that you are going to fund this along with a check with $20K of funds from the business as the employer portion for a total of $37.5K to the broker of your owner 401K funds. Please note the overall limit for 2013 from all sources (employer and employee combined) for 2013 is $51,000.

To learn more:

Year End Tax Planning: What Businesses Should Do Now
If you fail to plan, you are preparing to be surprised. Learn how you can get ready now for your year-end liability and survive the year-end tax preparation process. Visit http://www.hiscpa.com/year-end-tax-planning.html

Should You Maximize Profit or Work to Pay Fewer Taxes?
Tax Planning is an art under-girded by the science of the tax code and proper planning. Learn what you need to know to be a wise and judicious steward of your business. See http://www.hiscpa.com/profit-maximization.html

Press Release…Name Your Own Price CPA Services

As a Faith Based Christian CPA Firm we constantly work to see way that we might serve God by “Serving You One Tax Return at a Time.”

This past year to help out in this down economy we have offered to many new clients as well as clients who are unemployed, down on their luck and retired a chance to retain top quality CPA services by naming their own price. For those that have done so and their offer is reasonable it is accepted.

Join the growing number of people who are seeking out HIs CPA PC to see how a faith based CPA firm can help you navigate the maize of IRS tax law. At His CPA PC we offer:

• Corporate and Personal Income Tax Preparation

• IRS Representation, Back Taxes, Tax Advocacy and Offer in Compromise

• Financial Statements, Bookkeeping and Tax Planning

• Virtual CFO and Part-time Chief Financial Officer Services

• Tax Planning, Business Acquisitions and Business Consulting

Call John Dillard CPA today at 770 814 9304 and find out what an Award Winning CPA Firm can do for you and your business.

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell as a Faith Based CPA Firm

His CPA PC: Bookkeeping, Financial Statements, IRS Representation & Tax Preparation

His CPA PC is a full service CPA firm offering Bookkeeping, Financial Statements, IRS Representation & Tax Preparation for Gwinnett Business Owners. John Dillard CPA has been in Gwinnett since 1984 and still going strong doing CPA work while looking “beyond the numbers” while also serving as a Virtual CFO.

At His CPA PC we:

-Help Gwinnett Business Owners Buy their own building while being sure to set it up as a separate LLC (Limited Liability Company) for legal protection for both the business and the rental property. This also gives the business owner better long term flexibility in addressing business issues/sale of either of the assets independent of the other.

-Prepare Tax Returns for a physician, dentist, chiropractor, lawyers and scores of other business professionals.

-John Dillard CPA has served as a Virtual CFO for Gwinnett business owners including an attorney, recruiting agency, recruiting firm and home health care professionals.

-Assisted Gwinnett business owners with tax planning, bookkeeping guidance, financial statements and professional business consulting.

Upgrade your CPA firm tax services today.

Serving Duluth, Atlanta, Suwanee, Lawrenceville, Snellville, Johns Creek, Buford, Snellville, Grayson, Lilburn, Tucker, Norcross, Alpharetta & Beyond as a Faith Based CPA Firm

Press Release…Name Your Own Price CPA Services Offered by Duluth CPA

As a Faith Based Christian CPA Firm we constantly work to see way that we might serve God by “Serving You One Tax Return at a Time.”

This past year to help out in this down economy we have offered to many new clients as well as clients who are unemployed, down on their luck and retired a chance to retain top quality CPA services by naming their own price. For those that have done so and their offer is reasonable it is accepted.

Join the growing number of people who are seeking out HIs CPA PC to see how a faith based CPA firm can help you navigate the maize of IRS tax law. At His CPA PC we offer:

• Corporate and Personal Income Tax Preparation

• IRS Representation, Back Taxes, Tax Advocacy and Offer in Compromise

• Financial Statements, Bookkeeping and Tax Planning

• Virtual CFO and Part-time Chief Financial Officer Services

• Tax Planning, Business Acquisitions and Business Consulting

Call John Dillard CPA today at 770 814 9304 and find out what an Award Winning CPA Firm can do for you and your business. www.HisCPA.com  A Duluth CPA Firm Serving Atlanta, Alpharetta, Dunwoody, Sandy Springs, Roswell, Buford, Suwanee, Buford, Lawrenceville, Snellville, Decatur, Lilburn, Tucker, Norcorss & Beyond

Lawrenceville, Snellville, Lilburn CPA: Understanding & Avoiding IRS Underpayment Penalties

You can use this article to help you understand the things you might be penalized for on your taxes.

Penalty rates

All underpayment penalties of estimated taxes are based on the number of days the underpayment was retained as both the IRS and the State of Georgia will asses late payment penalties if they apply.

You can use IRS resource, Form 2210, to calculate the penalty owed. This form is more commonly known as the Penalty Worksheet. The form contains both instructions and guidelines for the proper completion.

No penalties charged

You most likely will not have to pay penalties for the tax year if you can apply all these things below to that tax year:

• Through your withholdings and your estimated tax you fulfilled the amount required by taxes plus 10% in the prior year.

• You paid all your required taxes on time and the calculated balance on the current tax year is not greater than 10% of the prior year. You can help yourself avoid much of the exposure to this type of tax by sufficiently adjusting your payroll withholding rather than making estimated tax payments to the IRS and the state of Georgia. This is because by tax law definition, withholdings (regardless of when they are done in a given tax year) are deemed to have been paid evenly throughout the year whereas estimated tax payments (by tax law definition) are deemed paid when they are paid.

• Your overall tax in the prior year, subtracting your withholding is less than $1,000.

• You reflected no tax liability from the prior year.

• You did not keep any withholding tax and your household was taxed less than $1,000 in the past year.

If you do not wish to calculate the penalty for yourself, as sometimes it can be an arduous task, the IRS can help you do it, that is okay because the IRS will generally figure it out for you and give you the information in the form of a bill. Please note from time to time the IRS will ease these rules as a result to economic hardships, a down economy or disasters and that there is no substitute for proper tax planning with your CPA.

You may have to calculate the IRS penalties for yourself (rather than for form 2210) if you are in any of the below circumstances below:

• You are asking for the IRS to waive part of the penalty (not all of it).

• You are calculating your penalty with the Annualized Income Installment Method.

If you have any doubts, try completing form 2210, it will help you to understand if you can lower or avoid the penalty. As an Atlanta CPA for decades I have found it essential that you retain a CPA with decades of tax and business experience. We remind you that a CPA can always help you with the completion of those forms as you go through them.

We suggest all of our business clients who are the below entity types to do tax planning at least twice annually and perhaps more often in your business is growing rapidly:

• An Small Business Corporation or S Corporation filing IRS Form 1120S.

• An C Corporation filing IRS Form 1120.

• An Limited Liability Corporation (LLC)

• An Limited Liability Partnership (LLP)

• A Proprietorship

• A Partnership whether you are a General or Limited Partner

Your Rights as a Taxpayer

John Dillard CPA owns a faith based Atlanta CPA firm with an award winning degreed certified accountant who has a proven track record of solving your IRS tax problems, assistance with your accounting & QuickBooks and tax preparation focused on keeping your tax bill as low as legally possible. We are conveniently located off Interstate 85 in Gwinnett County and are easily found from any location in the whole of Metro Atlanta. We focus on excellence in service with the highest standards of excellence with an determined commitment to offer quick and accurate responses. We are determined to exceed your expectations and to give you the type of service you know you deserve. Please call us for an appointment at 770.814.9304

Our Tax Services and IRS Representation Services: Our CPA

Though there are many CPA firms you can choose from in Atlanta, GA. His CPA PC is small enough that we can cater to those who desire heightened personal attention from their accountant but large enough to offer a varied set of services you would expect from a professional CPA. We offer a CPA who is experienced in offering highly skilled services in addressing IRS tax problems and tax preparation throughout metro Atlanta, GA. We also offer services including tax planning, consulting and Virtual CFO for many Atlanta, GA business owners and individuals.  Our staff is well poised to assist you with the set-up of a new business and to discuss in detail the tax ramifications of varying entity selections. Feel out a contact form today on our web site to get started.

As an Atlanta CPA firm we help you learn more about managing to reduce your taxes and to make prudent and informed business decisions by visiting our web site, our office and our blog offering you up to date tax strategies you can use today. Our staff can help you with balancing your checkbook, tax deadlines, tax rates and point you in the right direction in complex issues such as tax mitigation, back taxes and tax planning as well as when you will get your tax refund. At our website you can read information on how to use QuickBooks, learn how to electronically file your return. We constantly work to keep all of our talents and resources at your ready disposal as you are our most valuable asset…our friend and our client.

By retaining His CPA PC you will be working with an award winning CPA that has decades of wisdom and experience in IRS problems, tax preparation, QuickBooks, Virtual CFO and financial statements. Whether you live in Atlanta, GA, Gwinnett County, GA or across the country, we are here to help. Specializing in multi-state tax preparation and IRS problem resolution, we have clients from across the nation that we work with on their tax concerns.

As QuickBooks users, we have decades of the necessary training and knowledge to help you set-up and run a proficient accounting system providing the highest level of management reports to your financial team. When you hire His CPA PC, you get a faith based CPA firm that will engage you as our business partner working to achieve your business goals.

An Atlanta CPA firm, and as your most trusted adviser, we understand that your time is extremely valuable and your needs should be addresses quickly and efficiently.  By serving as your CPA and Virtual CFO we take care of the tax and administrative issues of your business so that you and work on the income producing aspects of your business. Our time tested methods will do much to increase your work load and lighten your worries. Call us today to set an appointment and let’s get started for whether you are just down the street in anywhere in Atlanta, GA, His CPA PC is here and ready to serve!

Don’t Know What You Will Owe in Taxes for 2011? 

Did Your Past CPA Surprise You With a Large Tax Bill for 2010? 

Tired of Tax Surprises from your CPA? 

As a Christian CPA Firm we look to keep all of our clients well-informed of their tax obligations well before they are due. The below is a sample letter we might send to a client to help them with their current year tax planning. Make sure you work with a CPA who seeks to avoid all “tax surprises.”

Based upon your advice that you will be filing single with no itemization’s or substantive itemized deductions, and that you anticipate netting in your business $100K after all expenses but before Owner’s Salary & Shareholder Distributions you will want to be sure to have withheld by year end $19,100 for the IRS and $5,600 for GA. 

Please be reminded that IRS tax law requires you to take a fair and reasonable salary given position and profit and that I recommend that you: 

-Pay all of your payroll taxes to both the IRS & GA via payroll withholding. As long as you do this you will not also have to pay estimated tax payments. 

-That you use a payroll service and take a monthly paycheck. 

-Please be sure to turn in a monthly expense report to get reimbursed for items you might pay personally monthly for the business such as business mileage. 

Please give me a call after you have received and reviewed so we might discuss.

John Dillard, CPA of His CPA, PC, 1940 Woods River Lane, Duluth, GA 30097  Phone 770-814-9304  www.HisCPA.com  A Christian Atlanta CPA Firm  

Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!

This week at His CPA PC (A Christian Accounting/CPA Firm) we….

What can a Christian Accountant/Virtual Part-time CFO Do For Your Business?

Continued in encouraging a client company’s president encouraging them to liquidate rather than acquire debt while serving as a part-time virtual Chief Financial Officer.

Consulted with a new business client looking to incorporate to first spend time working on their business model and business plan while working to ensure that we orders for product are received that they are ready to produce quickly and efficiently fulfill orders.

Filed tax return for Limited Liability Company that had converted to an S Corporation for tax purposes, while noting that an LLC will remain an LLC for all other legal liabilities.  As a result an S Corporation return will be filed rather than a IRS Form Schedule C as a part of a taxpayer/sole member LLC’s personal income tax return.

Continued working with a new client determine which entity choice is the best selection for the new business while working with a tax attorney.

Reduced my tax preparation fee on a client substantially to help them survive the continuing downturn in the economy, while turning their tax returns around with 24 hours ensuring that only their lowest legal possible tax was paid.

Gave free advice to taxpayer in person who is addressing back taxes and needs the advice of a CPA/IRS Representation while discussing options including an Installment Plan, Offer in Compromise or paying in full the taxes and interest to the IRS, while seeking abatement for penalties, while working to strategize a plan to get all of the taxpayers payroll tax reports and corporate and personal income tax returns current.

Followed up with several clients on tax planning issues as well as to get data to timely file their corporate/IRS Form 1120S and personal income tax returns/IRS Form 1040.

Evaluated for free, tax returns filed by other tax preparers, noting opportunities for improvement including converting a Limited Liability Company to an S Corporation for tax purposes.

Ongoing monitoring of a clients Offer in Compromise that is presently with the IRS Appeals Office. Forwarded correspondence to a taxpayer address the tax options of an Offer in Compromise advising that a predominant number of tax cases are won on appeals and not with the initial IRS letter.

Encouraged a client to file IRS Form 9465 setting up an IRS Installment Plan to pay past overdue taxes.

Filed S Corporation returns or IRS Form 1120S that were originally due March 15, 2011 for the 2010 tax year. Return was legally extended giving the taxpayer an additional six months to file corporate returns while reminding that an extension to file is not an extension to pay.

Advised a taxpayer on the rules to file their entity as an S Corporation by the filing of IRS Form 2553: Election by a Small Business Corporation being sure to follow the IRS Revenue procedures when the original deadline of March 15th is not met.

Helped taxpayers with their tax planning issues for 2011.

Discussed Penalty Abatement Issues with a Taxpayer facing a tax lien and a levy/tax problems including a Tax Summons and a Wage Garnishment.

Advised a taxpayer that a rule of IRS Installment Agreements is that the taxpayer has to remain current in filing and payment on all future tax fillings or the Installment Agreement is voided.

Receive d a lead from a business banker with whom I had networked the prior week.

Helped obtain a leader for our Bible study group to discuss the supernatural power of Fasting.

Finalized the entity selection of a  physicians about their business and personal income taxes, while advising them to set up an S Corporation.

Met with a new client to help them with their personal and corporate income tax return.

Filed a C Corporation return reflecting Net Operating Loss Carry-Forwards.

File d a Personal income Tax Return reflecting Capital Loss Carry-Forwards.

Wrote articles for the Christian Post, an on-line Christian web site.

Continued to work with a client needing to file several years of old back taxes for both their corporation and their personal income tax returns advising them to hurry as the IRS expects taxpayers to fulfill their commitments.

Participated in a Bible Study studying the life of King David: A Man After God’s Heart.

Invited a guest speaker to our Bible Study Group to talk about the Spiritual Power that can be found/unleashed by Fasting.

Finished all tax returns where complete data was present within 24 hours, some even faster.

Discussed with  a taxpayer tax  issues for past amended returns.

Reminded a taxpayer to file in all states where they transact business.

Filed several personal income tax returns helping taxpayers to ensure that every legal tax deduction is claimed.

Worked with taxpayers to ensure that their internal financial statements are in order so that their corporate tax return may be prepared while being sensitive to client bookkeeping skills, talents and expertise.

Took time to talk to someone struggling to make major life choices and decisions about their faith walk.

Stopped whatever I was doing in the middle of tax season to give a word of encouragement, while addressing management issues. At His CPA, we believe your soul, heart and life are more important than work issues.

Followed up with present and new clients alike to ensure that their tax returns are correct, their questions are answered and that all tax returns were prepared ensuring that only their lowest legal possible tax was paid.

Consulted with prospective clients for free to evaluate their tax return preparation and the tax effects of entity selection when incorporating their new business including discussing timing issues of the best times for their business to consider incorporating.

Consulted with prospective client to encourage them not to use a CPA for bookkeeping as a bookkeeper will be able to address routine issues at a reduced rate, leaving the CPA to handle more important strategic issues and corporate and personal income tax issues.

Offered to prepare several tax returns at a reduced rate after tax season is over.

Prepared at a reduced rate a tax return for the child of one of our business clients.

Updated our web-site at www.HisCPA.com with nuances on our tax preparation issues an d Faith/Christian articles on our blog at http://www.hiscpa.com/blog/

Posted several articles on www.LinkedIn.com

Posted several articles on www.Twitter.com

Had  my wife’s car’s repaired for damage that had occurred, even though it is tax season. See, I love her.

Counseled my daughter on life/college choices.

At His CPA we believe God made us all to be much more than just someone with a job, someone going to school or a pew sitter.

God made you in His image and is looking each and every day for you to be His very hands and feet.

Seek to know what God wants you to do today for His Glory, Seeking His Will for you and your life while all the time, being Bold in Your Faith.

His CPA PC believes that the best defense is a good understanding of tax law and having a CPA who anticipates your needs and works for your best advantage. Let’s get started today on planning your wise entity choices.

Atlanta Part-Time Virtual CFO http://www.youtube.com/watch?v=ZDEgIDuDv_g&feature=mfu_in_order&list=UL

A Christian Atlanta CPA Firm: Never Underestimate the Long Term Benefits

John Dillard is a Christian Speaker/Author and Duluth GA CPA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/  or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!

Duluth CPA Presents www.HisCPA.com   Taxes by the Book: A Biblical Guide to Tax & Business Management…Avoiding the Top 10 Mistakes Taxpayers Make & Personal Income Taxes

 www.HisCPA.com   Taxes by the Book: A Biblical Guide to Tax & Business Management is now available on line at http://www.hiscpa.com/blog/ It will be published here in full and is a must read for all seeking to take God’s Principles to Tax & Business Management. 

Avoiding the Top 10 Taxpayer Mistakes

Being able to avoid the most common pitfalls taxpayers make is critical to your personal financial success.  Careful discernment and wise application of tax law is an essential and critical part of avoiding otherwise avoidable IRS notices, penalties, responsibilities, IRS audits and amendment of prepared returns.  As a Body of Believers, we are commanded to give unto Caesar what is Caesar’s.  As such and based on the premise of the U.S. tax system, we as taxpayers are solely responsible for the initial filing of our returns and the fair and just filing of our lowest legal possible tax.  Avoiding these top pitfalls that many fall prey to will be an integral step in the proper preparation of your return.

Phase-outs of Itemized Expenses

Many taxpayers fail to consider in both tax planning and preparation of their returns, that itemized expenses/Schedule A can be phased out/limited based upon a taxpayers Adjusted Gross Income (AGI) and their tax filing status.

Phase-out/Limitations of Total Exemptions

Tax law allows taxpayers to take exemptions for themselves, their dependents, their spouse if filing jointly and additional exemptions if disabled or over a certain age.  There total exemptions are then multiplied by the indexes for inflation annually and then this total is deducted in determining taxpayer’s AGI.  Like a taxpayer’s itemized expenses, these too are limited based upon a taxpayer’s AGI and filing status.

Alternative Minimum Tax

Certain items on a taxpayer’s individual return can trigger an additional tax assessment.  This amount is over and above what otherwise would have been assessed if a taxpayer solely referenced their taxable income to the appropriate tax table.  Tax law mandates that taxpayers then pay the higher of the two amounts generated either from regular tax tables or the Alternative Minimum Tax, which is calculated on Form 6251.

Misunderstanding Extensions

Taxpayers frequently fail to understand that an extension to file a return is not an extension of time to also pay the taxes due.  The IRS has a rigid schedule for payment of all taxes and in some cases, there is no room for flexibility whatsoever.  Taxpayers should accordingly take care to pay all of their taxes as they become due without regard to whether an extension to file has been filed/granted.  Always keep in mind an extension to file is not an extension to pay.

Determining Deductible Expenses

Taxpayers frequently fail to understand what they may and may not take as itemized expenses on their Schedule A.  Similarly, individuals often fail to stay abreast of tax law changes and the limitations, documentation and phase-outs thereof in determining their just expense.  Also, many taxpayers who have an unincorporated business/a proprietorship fail to have a good understanding of what qualifies as a business expense, the assessment of self-employment taxes and the attendant responsibility of making estimated payments.

Un-reimbursed Employee Expenses

Tax law allows those who are employees to deduct un-reimbursed business expenses, which are reported on Form 2106.  The total of these are then rolled forward to a taxpayer’s schedule of itemized expenses where they are also subject to additional phase-outs.  Often taxpayers fail to have a good understanding of what qualifies as an un-reimbursed employee expense and fail to correctly document and calculate business mileage.  They frequently fail to consider reimbursements received from their employer and inadvertently include in their mileage/travel expense amounts, their daily commute to and from the office, and these are not deductible.

Retirement Plans

This error is most frequently an error of omission as taxpayers fail to avail themselves of the many and varied options open to reduce their personal taxes and to plan for retirement.  If a taxpayer also has an incorporated or unincorporated business whether a C or S Corporation, LLC, LLP, or partnership, there are even more options for a taxpayer to implement that will allow for a dramatic reduction in both their federal and state tax liabilities.  

Going It Alone

Most taxpayers would never consider performing their own surgery and so it should be for the preparation of one’s personal taxes.  At a minimum, I suggest that you have a CPA prepare your taxes at least every three years but I would limit this exception to only very simple returns with no itemizations.  For all taxpayers who would be classified/considered as part of America’s middle class or any taxpayer who owns a business, should have their return prepared by a CPA each and every year.  Tax law changes, nuances, limitations, tax and retirement planning, investing and strategic financial issues are too critical to be satisfactorily addressed alone.

Premature IRA/Pension Distributions

All too often taxpayers will make or receive a premature distribution from their IRA/401K/Pension Plan.  This is perhaps the largest single financial mistake a taxpayer can make for several reasons.  First, these premature withdrawals are not only subject to regular federal and state taxes but most always a 10% federal penalty as well.  This serves as a double negative as not only are you paying additional taxes and penalties but you are also “diving into” your “nest egg” threatening not only your age of potential retirement but also the quality of it.  Furthermore, most all taxpayers who receive a premature distribution fall into a false sense of security wrongly believing the statutory withholding done to be adequate to meet their year-end obligation on these monies, only to find out they have woefully underpaid their taxes and are now subject to further penalties and interest.

Tax Planning

Perhaps the most common error is the failure of taxpayers to anticipate their current year’s taxable income and to plan ahead by paying the IRS and state taxes as the income is earned.  Failure of taxpayers in any of the above areas will also negatively impact their ability to plan for and pay their taxes on a timely basis.  Also the U.S. tax system is a graduated system in which the marginal tax rates increase as does a taxpayers income.  Taxpayers fail to see their return as the dynamic calculation that it is, as income and lifestyle changes and tax law continually impact a taxpayer’s final calculation of tax liability.

Personal Income Taxes

Filing Status

When you get ready to file your personal tax return, perhaps one of the biggest issues you will want to initially determine is your filing status.  This one issue will affect not only the way you compile and file your return but the actual amount of your tax obligation as well.  Tax law mandates that your filing status is determined by your marital status on the last day of the tax year, December 31st.  Frequently, taxpayers will file their returns incorrectly, believing their filing status is determined by their marital status for the predominant portion of the year.  However, this would be incorrect as it is solely one’s marital status on the last day of the year that is the determining factor.

Filing Status/Dependent/Exemptions

Determining your filing status, exemptions and dependents will be three critical aspects of determining your lowest legal possible tax.  If you are a single taxpayer and have a child who is also your dependent who lives with you full time, you may file as Head of Household, which will allow your income to be taxed at a lower rate.  In a situation with a child having two parents who do not live together, typically a parent with primary legal custody will be the one allowed to claim Head of Household.

Taxpayers who are married may also file returns, Married Filing Separately.  These tax rates/brackets are the highest of the four brackets and are generally the least advantageous.  However, if a taxpayer is married and either of them have a tax obligation that either occurred while they were single or married filing separately, then it would be prudent to consider filing Married Filing Separately to avoid having either the IRS or state merging their files, collection efforts and obligations.

Dependents

All taxpayers (who are not claimed as dependents by others) are allowed dependents, which reduces taxable income.  If married and filing a joint return, you are allowed to claim your spouse as a dependent.  Taxpayers generally can claim as dependents family members and children, provided they provide over half of their support and they live with the taxpayer full time.  Generally children can be claimed until they become of legal age (18) and then be claimed for several years beyond that provided they are a full time student for more than five months a year.  If a child files their own return and claims themselves, then a parent, who otherwise would have qualified to claim the child, are precluded from also claiming the child.  Each dependant qualifies the taxpayer to take an exemption which is a statutory amount indexed annually for inflation. This total reduces a taxpayer’s gross income in determining the taxable amount.

Exemptions

The number of dependents a taxpayer has is one of the key factors used in calculating the total number of exemptions.  To this total taxpayers who are disabled, blind, or elderly are allowed to take an additional exemption when determining their taxable income.  One’s total dependents and additional exemptions are then multiplied by that year’s amount to determine the total reduction in taxable income.  Exemptions, like itemized deductions, are by law phased out/reduced based upon the taxpayer’s filing status and adjusted gross income.

Tax law and its correct application and the correct determination of your lowest legal possible tax bill are as important to us as they are to you.

His CPA PC (A Metro Atlanta Christian CPA Firm)    www.HisCPA.com

Atlanta CPA on…Prudent Entrepreneurs Plan…And Then Plan Again 

Avoid Failure: Think Ahead (Squirrels to it and you’d be nuts not to do it as well)

Prudent entrepreneurs plan, not because their CPA tells them to, but because they understand that it increases their chances for success. Although, there are a few successful companies whose owners fly by the seat of their pants and never get around to writing a business plan. However there are many more who fail for the lack of a formal plan, not because of it. How much better might they have done had their good ideas been coupled with some strategic planning?

While preparing taxes we work with our clients to ensure that we also serve as a trusted adviser offering:

Tax Planning

Financial Insight

Part-time Virtual CFO Services

Be sure that you work with a CPA who is much more capable than just being a bean  counter. The below is a sample letter we might send to a client to help them with not only their financial and tax issues but their management issues as well:

Got the data for your returns and noted that I need… 

Copies of W-2′s and W-3 

For you to adjust your internal books so that total retained earnings other than stock at 12-31-10 should be $10,000. 

I would anticipate that the $15,000 of deposits on the Balance Sheet that have now been there for over a year are now income. Please review/advise. To record this as income you will debit Customer Deposits and credit Sales. 

Please forward any cash contributions to charity, interest income, dividends, capital gains etc.

Last year you had some independent contractor income. Please advise as to any 2010 amounts. 

Please forward your mortgage interest and student loan interest as it was not in the original information forwarded. 

Evaluate your allowance for doubtful accounts against your accounts receivable ageing while paying particular attention to problem accounts and those over sixty days due. 

Evaluate setting up a line of credit to help fund any unanticipated changes in cash flow or perhaps even more important growth issues. We do not want to forgo any prudent business opportunities for failure of a lack of cash. 

After you have made all of the changes please resend your balance sheet and profit and loss.

Do not hesitate to call might you have any questions. 

Need Help With Your Atlanta Financial Statements or Bookkeeping?

His CPA PC…A Christian CPA Firm: Never Underestimate the Long Term Benefits Serving as a Metro Atlanta  CPA for Decades  www.HisCPA.com

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