Tax Partners Northwest LLC
Your partners in tax

Recent News Updates

What do we do after tax season?
5/3/17, 10:50AM

People ask us all the time what we do after tax season.  Everyone’s filed their returns by April 15, right?  So what are we doing the rest of the time?


This is an interesting question, and there is no fixed answer.  First of all, no, not everyone has filed their returns by April 15.  A fair number of people go on extension and we work on those returns during the summer.


Some people haven’t filed their tax returns for several years, so we help them get caught up.  If necessary, we can advise them on setting up a payment plan to take care of what they owe.


Just as tax season is wrapping up, the IRS sends out a flurry of letters requesting more information about the returns that were filed last year.  These are scary letters and imply that you owe a lot of money.  Usually when we have a chance to review them, we can reduce what you owe.  Sometimes we even get a refund for a new client when we make a correction.  I always want to thank the IRS for calling this to our attention!


We help taxpayers who are under audit.  Because we are all CPAs or Enrolled Agents, we can represent a taxpayer so they don’t have to deal with the IRS.  We can speak for you in the Examination, Collection and Appeals departments, and help you work out the most favorable settlement possible.


We offer tax planning to new and existing clients.  When something is about to happen that may impact your tax situation next year, why not come in and talk to us beforehand?  Often there are different ways you can handle the same transaction, and one of them might save you a lot of tax money.  Even if you know you’re going to have to pay, we can help you estimate how much, and talk to you about making estimated payments to avoid penalties.


In a year like this one, we spend a fair amount of time reviewing the new tax regulations that are being proposed to Congress.  We keep up on this, so we can let you know when something might impact your financial situation.


And finally, there’s continuing education.  Each of us is required to take a minimum of between 24 and 40 hours of continuing education each year.  Of course we take more than that, there are so many things to learn and our tax code is continuously changing and evolving.  We want to be sure that we provide you with the best and most up to date information available.


The best thing about what we do is that it’s always exciting!

Thinking about an IRA?
4/1/17, 9:01PM

Did you contribute to an Individual Retirement Arrangement last year? Are you thinking about contributing to your IRA now?  Have you done your taxes and aren't happy with your bottom line? If so, you may have questions about IRAs and your taxes. Here are some IRS tax tips about saving for retirement using an IRA.  Contributing to an IRA is one of the only things you can still do today that will affect last year's tax return.


Age Rules. You must be under age 70½ at the end of the tax year in order to contribute to a traditional IRA. There is no age limit to contribute to a Roth IRA.


Compensation Rules. You must have taxable compensation to contribute to an IRA. This includes income from wages and salaries and net self-employment income. It also includes tips, commissions, bonuses and alimony. If you are married and file a joint tax return, only one spouse needs to have compensation in most cases.


When to Contribute. You can contribute to an IRA at any time during the year. To count for 2016, you must contribute by the due date of your tax return. This does not include extensions. This means most people must contribute by April 18, 2017. If you contribute between Jan. 1 and April 18, make sure your plan sponsor applies it to the year you choose (2016 or 2017).


Contribution Limits. In general, the most you can contribute to your IRA for 2016 is the smaller of either your taxable compensation for the year or $5,500. If you were age 50 or older at the end of 2016, the maximum you can contribute increases to $6,500. If you contribute more than these limits, an additional tax will apply. The additional tax is six percent of the excess amount contributed that is in your account at the end of the year. 


Taxability Rules. You normally don’t pay income tax on funds in your traditional IRA until you start taking distributions from it. Qualified distributions from a Roth IRA are tax-free.


Deductibility Rules. You may be able to deduct some or all of your contributions to your traditional IRA.


Saver’s Credit. If you contribute to an IRA you may also qualify for the Savers Credit.  It can reduce your taxes up to $2,000 if you file a joint return.


Unsure whether you can or should contribute to an IRA?  Call us, we're always happy to help with your tax planning!



Donate time to charity?
3/20/17, 11:49AM

Did you donate your time to charity last year? If you traveled for it, you may be able to lower your taxes. Here are some tax tips that you should know about deducting charity-related travel expenses:


 Qualified Charities.  To deduct your costs, you must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are generally qualified, and do not need to apply to the IRS. Ask the group about its status before you donate.


Out-of-Pocket Expenses.  You may be able to deduct some of your costs including travel. They must be necessary while you are away from home. All  costs must be:



                        Directly connected with the services you provide to the charity,

                        Expenses you had only because of the services you gave, and

                        Not personal, living or family expenses. 


Genuine and Substantial Duty.  Your charity work has to be real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip. 


Value of Time or Service.  You can’t deduct the value of your time or services that you give to charity. This includes income lost while you serve as an unpaid volunteer for a qualified charity. 


Travel You Can Deduct.  The types of expenses that you may be able to deduct include:


                        Air, rail and bus transportation,

                        Car expenses,

                        Lodging costs,  

                        Cost of meals, and

                        Taxi or other transportation costs between the airport or station and your hotel. 


                Travel You Can’t Deduct.  Some types of travel do not qualify for a tax deduction. For example, you can’t deduct your costs if  a significant part of the trip involves recreation or a vacation.


Ten Facts That You Should Know about Capital Gains and Losses
2/14/17, 11:41PM

When you sell a capital asset the sale results in a capital gain or loss. A capital asset includes most property you own for personal use or own as an investment. Here are ten facts that you should know about capital gains and losses:


1. Capital Assets.  Capital assets include property such as your home or car, as well as investment property, such as stocks and bonds.


2. Gains and Losses.  A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.


3. Net Investment Income Tax.  You must include all capital gains in your income and you may be subject to the Net Investment Income Tax. This tax applies to certain net investment income of individuals, estates and trusts that have income above statutory threshold amounts. The rate of this tax is 3.8 percent.


4. Deductible Losses.  You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.


5. Long and Short Term.  Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is long-term. If you held it one year or less, the gain or loss is short-term.


6. Net Capital Gain.  If your gains are more than your losses, the difference between the two is a net capital gain. If your net capital loss is more than your net capital gain, you have a capital loss. 


7. Tax Rate.  The capital gains tax rate usually depends on your income. The maximum long term capital gain tax rate is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. Short term gains are taxed at your regular income tax rate.  


8. Limit on Losses.  If you have a capital loss, you can deduct it on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return. 


9. Carryover Losses.  If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they happened in that next year.


10. Forms to File.  You will report your sales of capital assets on form 8949 and Schedule D. 


Questions?  Call us!


Deducting charitable donations
2/3/17, 8:33PM

When you give a gift to charity, it helps others in need. It may also help you at tax time. You may be able to claim the gift as a deduction that may lower your tax. Here are eight tax tips you should know about deducting your gifts to charity:


1. Qualified Charities.  You must donate to a qualified charity if you want to deduct the gift. You can’t deduct gifts to individuals, political organizations or candidates.


2. Itemized Deduction.  To deduct your contributions, you must file Form 1040 and itemize deductions on Schedule A.


3. Benefit in Return.  If you get something in return for your donation, your deduction is limited. 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. Donated Property.  If you gave property instead of cash, the deduction is usually that item’s fair market value at the time of donation. Fair market value is generally the price you would get if you sold the property on the open market.


5. Clothing and Household Items.  Used clothing and household items must be in at least good condition to be deductible in most cases. Special rules apply to cars, boats and other types of property donations.


6. Form 8283.  You must file form 8283, Noncash Charitable Contributions, if your deduction for all noncash gifts is more than $500 for the year.


7. Records to Keep.  You must keep records to prove the amount of the contributions you made during the year. The kind of records you must keep depends on the amount and type of your donation. For example, you must have a written record of any cash you donate, regardless of the amount, in order to claim a deduction.


8. Donations of $250 or More.  To claim a deduction for 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 the organization provided any goods or services in exchange for the gift.


Still have questions?  Call us!

Happy New Year!
1/1/17, 9:02PM

The deadline to e-file forms 1099 with the IRS is January 31. Penalties of $50 per late 1099 begin on February 1! 


If, related to your business or rental property, you paid anyone $600 or more during 2016, you might need to issue IRS Forms 1099-MISC to those people and businesses. 


When you must issue a 1099-MISC


The Internal Revenue Service requires you to report certain payments you make as part of your business.


If the following four conditions are met, you must generally report a payment as non-employee compensation.


* You made the payment to someone who is not your employee;


* You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);


* You made the payment to an individual, partnership, LLC, estate, or, in some cases, a corporation; and


* You made payments to the payee of at least $600 during the year."


What should you include on Form 1099?


Generally, you do not issue a Form 1099-MISC for non-employee compensation paid to a corporation.  Payments to corporations are reported only if they are for medical, health care, veterinary, legal or fishing activities.


EXAMPLE: If a business paid a self-employed photographer, Smith Photography, an unincorporated sole proprietor who files a Schedule C, $750.00 for taking publicity photos or photos used in a catalog, the business would have to issue a Form 1099-MISC.  If the photographer was Wilson Photography, Inc. no Form 1099 would be required.


Payments for rent, made by your business, are also subject to 1099 reporting.


You must include the payee's Social Security Number or Employer Identification Number and legal address on the Form 1099.  If you do not have this information, have the payee complete Form W-9 and return it to you.  You don't need the original form; a copy is acceptable. Our firm recommends that you obtain a completed Form W-9 from any new contractor BEFORE you issue any payments to them.


Having Tax Partners Northwest prepare the forms


We are able to prepare forms 1099-MISC and e-file them for you.  There is an additional charge separate from your income tax preparation for this service.  In order to complete these forms:


Please provide us with a list of those contractors you need to issue a form to.  We will need:

Name as it appears on the payments you made.

Address of the person you paid.

Social security number or employer identification number of the person you paid.

Total amount you paid them during 2016.


We are available after January 2 to start filing 1099 forms, and would prefer to do them as soon as possible.  After January 21, please call our office before submitting your 1099 documents to us.


Any questions?  Call us at 425-582-8269.

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