Tax Partners Northwest LLC
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Recent News Updates

Tips for Self Employed Taxes
1/15/15, 7:11PM

Starting your own business is exciting, but it can lead to headaches at tax time.  Even if you’ve done your own taxes for years, a new business means new forms, new records and new taxes.

 

If you are an independent contractor or run your own business, there are a few basic things to know when it comes to your federal tax return. Here are six tips you should know about income from self-employment:

 

Self-employment income can include income you received for part-time work. This is in addition to income from your regular job.  You should report everything you received, including tips, whether or not you received a tax form.

 

Income from self-employment is reported on Schedule C or Schedule C-EZ with your Form 1040.

 

Self-employment tax must be figured on any profit.  Wait, what?  I have to pay extra tax because I’m self-employed?

 

When you work for an employer, the employer withholds social security and medicare tax, matches them, and sends it in.  When you are self-employed, you still need to pay into social security and medicare, but you have to pay both shares yourself.  Figure the tax on Schedule SE. 

 

You may need to make estimated tax payments. When you are not having tax withheld from your paycheck, you need to send in your own payments so you don’t owe too much money at tax time.  You may be charged a penalty if you do not pay enough taxes throughout the year.

 

You can deduct some expenses you paid to run your trade or business. You can deduct most business expenses in full, but some must be ’capitalized.’ This means you can deduct a portion of the expense each year over a period of years.

 

You can deduct business costs only if they are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business.

 

At Tax Partners Northwest, we specialize in helping small business owners with their bookkeeping and taxes.  We’d love to help you too!  Give us a call or send us an email to schedule an appointment.


Tax time!
1/6/15, 7:19PM

The holidays are over, the days are getting (slightly) longer, and it's time to start thinking about filing your tax return!  The tax geeks here at Tax Partners Northwest are unreasonably excited about this, and are looking forward to seeing you!

 

Let us know if you would like to receive an organizer, to help you remember all the paperwork you're looking for.  Check the information tab for a list that may help jog your memory.  If you're always waiting for that last one document, give us a call and schedule a time to come in early.  We'd appreciate the chance to meet with you and start working before everything gets crazy.  Then once you get that last form, it will be a quick matter to finish you up and schedule your review.

 

Be sure to call us if you have any questions, and happy new year!


End of year charitable donations
12/4/14, 6:13PM

Many people give to charity each year during the holiday season. Remember, if you want to claim a tax deduction for your gifts, you must itemize your deductions. There are several tax rules that you should know about before you give.

  1. Qualified charities. You can only deduct gifts you give to qualified charities. They should be able to tell you if they are a 501(c)3 organization. Remember that you can deduct donations you give to churches, synagogues, temples, mosques and government agencies. The charity must be based in the United States.
     
  2. Monetary donations. Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.
     
  3. Household goods. Household items include furniture, furnishings, electronics, appliances and linens. If you donate clothing and household items to charity they generally must be in at least good used condition to claim a tax deduction. If you claim a deduction of over $500 for an item it doesn't have to meet this standard if you include a qualified appraisal of the item with your tax return.
     
  4. Records required. You must get an acknowledgment from the charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.
     
  5. Year-end gifts. You can deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2014. This is true even if you don't pay the credit card bill until 2015. Also, a check will count for 2014 as long as you mail it in 2014.
     
  6. Special rules. If you give a car, boat or airplane to charity, special rules apply. The charity should provide you with a 1098 form that shows the value you may deduct. If the charity decides to keep the vehicle for its own use, you may use the fair market value as a deduction.

Scammers are calling now!
10/27/14, 4:12AM

Beware of sophisticated phone scams that try to separate you from your hard earned money.

 

Victims of these increasingly bold scams are contacted by phone and told that they owe the IRS money immediately. If the victims seem reluctant, the scammers threaten the taxpayers with arrest, suspension of drivers or business license or even deportation. The caller becomes increasingly aggressive, even hostile and insulting.

 

Sometimes these callers will say that you have a refund due in order to trick you into revealing your private information. They can even alter the caller ID to make it appear as though the IRS is actually calling.

 

If you are called by someone on the phone claiming to be from the IRS, tell them that you are represented by an enrolled agent. Give them the name and contact information of your enrolled agent and nothing more.

 

The reason these scams continue is because they are successful. The reason that they are so successful is that the scammer is very convincing. The IRS will never ask for a wire transfer or credit card numbers over the phone. As a matter of fact, your first contact with the IRS will almost never be by the phone or email. You will usually receive numerous correspondences through the US postal service before the IRS uses alternative means to contact you.

 

In truth, the IRS never initiates contact with taxpayers by email, text, Facebook, or any kind of electronic means to request personal or financial information. And if the caller is asking for information on your bank or credit card accounts, or for PINs or passwords, you can bet he or she is NOT calling from the IRS!

 

The IRS has developed a list of common characteristics of these scams. They are as follows:

 

  1. Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
     
  2. Scammers may be able to recite the last four digits of a victim’s Social Security number.
     
  3.  Scammers will spoof the IRS toll-free number on the caller ID to make it appear it’s the IRS calling.
     
  4. Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
     
  5. Victims hear background noise of other calls being conducted to mimic a call center.
     
  6. After threatening victims with jail time or drivers license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

 

If you receive a call from one of these phony IRS scammers, remember, tell the caller that you are represented by an enrolled agent and give them my name and contact information. You should then get off the phone and notify me about the situation as soon as possible.


Thinking about IRAs?
10/22/14, 6:16PM

As we get closer to the end of the year, we get lots of questions from people about Individual Retirement Arrangements. Do you have an IRA? Will making a contribution save you money on taxes? What’s the difference between a Traditional IRA and a Roth IRA?

 

Here are answers to some frequently asked questions about IRAs. Let us know if you have questions about how these rules apply to you!

 

  1. You must be under age 70 1/2 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.
     
  2. 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’re married and file a joint return, generally only one spouse needs to have compensation. If you are retired and your only income is from social security, pensions and investments, you will not be able to make an IRA contribution.
     
  3. You can contribute to an IRA at any time during the year. To count for 2014, you must make all contributions by the due date of your tax return. This does not include extensions. That means you usually must contribute by April 15, 2015. If you contribute between Jan. 1 and April 15, make sure your plan sponsor applies it to the right year.
     
  4. In general, the most you can contribute to your IRA for 2014 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 2013, the maximum you can contribute increases to $6,500.
     
  5. You may be able to deduct some or all of your contributions to your traditional IRA. You can’t deduct contributions to a Roth IRA. When you take money out of your traditional IRA, you will be taxed on your distributions. Qualified distributions from a Roth IRA are tax-free.
     
  6. If you contribute to an IRA you may also qualify for the Saver’s Credit. The credit can reduce your taxes up to $2,000 if you file a joint return.

 

Still not sure what kind of IRA is right for you? Give us a call! We are happy to meet with our clients and help you plan the best way to save for retirement.


Time to file that tax return!
10/15/14, 7:35PM

If you are one of the nearly 13 million taxpayers who asked for more time to file your federal tax return this year, the extra time is about to expire. If you haven’t yet filed, here are some things that you should know:

 

  • Know the deadline. Oct. 15 is the last day to file for most people who requested an automatic six-month extension.
  • Don’t overlook tax benefits in the rush. Make sure to check if you qualify for tax breaks that you might miss if you rush to file. This includes the Earned Income Tax Credit and the Savers Credit. The American Opportunity Tax Credit and other education tax benefits can help you pay for college.
  • Use IRS Direct Pay. If you owe taxes the best way to pay them is with IRS Direct Pay. It’s the simple, quick and free way to pay from your checking or savings account. Just click on the ‘Pay Your Tax Bill’ icon on the IRS home page.
  • File on time. If you owe taxes, file on time to avoid a late filing penalty. If you owe and can’t pay all of your taxes, pay as much as you can to reduce interest and penalties for late payment. Your tax pro can help you set up a payment plan for the rest.
  • Plan ahead. It’s not too late to take a look at your pay stub and do some planning for 2014. If you weren’t expecting to owe for 2013, there’s still time to make changes in 2014.
  • More time for the military. Some people have more time to file. This includes members of the military and others serving in a combat zone. If this applies to you, you typically have until at least 180 days after you leave the combat zone to both file returns and pay any taxes due.
  • New filing status rules may apply. New rules apply to you if you were legally married in Washington, or another state or foreign country that recognizes same-sex marriage. You and your spouse generally must use a married filing status on your 2013 federal tax return. This is true even if you and your spouse now live in a place that does not recognize same-sex marriage.

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