Taxes Filed - What To Do Next!

So, you have finally filed your taxes, your anxiously awaiting your return or in some unfortunate situations, trying to figure out how to pay back what you owe the IRS. Remember, that what you do after you file your taxes is just as important as what you do before you file.

 

Refund: If you received a refund, consider what you will spend it on. Will you save for the following year, pay off unnecessary debt or will you finally take that desperately needed vacation?

 

Do you owe? Make plans now to start paying off any IRS debt, don't build up any additional interest if at all possible. The IRS Fresh Start program makes it easier for taxpayers to pay back taxes and avoid tax liens. Even small business taxpayers may benefit from Fresh Start.

You can also set-up an Online Payment Agreement with the IRS if you owe $50,000 or less in combined tax, penalties, and interest, and filed all required returns. You may also qualify for a short-term agreement if your balance is under $100,000. Once you have set-up a payment arrangement - the IRS will give you the ability to Pay online through a bank account or debit/credit card.

Start Collecting and Saving: Collect things during the year that you’ll need to file for next years taxes. Examples include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks or other proof of payment and any other records to support deductions or credits claimed. You should typically keep records relating to property at least three years after you’ve sold or otherwise disposed of the property. Having a designated place for tax documents and receipts is a good idea. It will make preparing your return easier, and it may also remind you of relevant transactions. Good record keeping will also help you prepare a response if you receive an IRS notice or need to substantiate items on your return if you are selected for an audit.

If you have questions throughout the year - its okay to contact your accountant or tax advisor. They are there to help even before issues arise, so take advantage of their knowledge and expertise, so you know what to prepare for now. This includes understanding what new changes in your life will mean for your filing status. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. There’s much more information about determining your filing status in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.

Dog Related Tax Deductions

Have you ever wondered if dogs were tax deductible? As much as we all believe that our pets are members of our family, the IRS sees things differently - so, you will not be able to claim your pet as a dependent; however, there are certain exceptions to the rule.

You can deduct the cost of shipping your car and your household pets (including dogs, cats, birds, fish, etc.) to your new home. There is a catch though:

• Your move is closely related to the start of work.
  
• You meet the distance test.
  
• You meet the time test.
  

For more information - Review Publication 521

 

If you own a guard dog (size and breed do matter here) to protect your business - keep your records and all work-related expenses. This would include dog food, any special training or veterinary bills.

If you open your home (or heart) to foster animals in need: Foster animals from a qualified nonprofit are deductible on Schedule A as a charitable donation. Keep in mind that expenses should go toward caring for these animals, such as buying them food, pet supplies and put towards any vet visits.

Service animals are considered to be part of your medical expenses, so they are also tax deductible if you itemize.
  
Claiming tax benefits could require some creativity, convincing the IRS that you have reason to deduct pet-related expenses and good old research. The information is out there, it just takes due diligence. To make things even easier, working with a knowledgeable consultant or accountant can take all the guess work out of the equation. If  you have any pet-related expense questions - contact us - we can help!

Did you make any Charitable Contributions in 2016?

It is best to have all charitable contributions in receipt form to back up the donation of $250 or more. The tax law says no write-off is allowed should you not have a receipt or letter from the organization. Cash donations of less than $250 made in 2016 are not allowed unless you retain either a bank record that proves the donation. Like for example, a canceled check, bank statement, or debit/credit card statement. Taking it one step-up is to have a written acknowledgment from the organization on their letterhead. Small undocumented cash contributions, such as money placed on church collection plates and cash dropped in red buckets (Salvation Army) at Christmas time won't qualify for write-offs. Get a receipt or have a canceled check from the charity to lock in your rightful tax break.

As for noncash charitable donations of used clothes and household items, you get no deduction unless the stuff is in “good” condition. “Household items” include furniture and furnishings, electronics, appliances, linens, and the like. In other words, you get no charitable write-off for donated junk. See IRS Form 8283 at www.irs.gov for more details on the rules for noncash donations. 

Talk with your Tax preparer: Ken A Anaya about this deduction.

Business Owner News - Sales and Use Tax Rate Decreases January 1, 2017

Due to Voter-approved Proposition 30 along with The Schools and Local Public Safety Protection Act of 2012, the one quarter of one percent (0.25 percent) temporary statewide sales and use tax rate expired on December 31, 2016. As a result, effective January 1, 2017, the California statewide sales and use tax rate will decrease by 0.25 percent from the current rate of 7.50 percent to the new rate of 7.25 percent. In some instances the total tax rate in many cities and counties will remain higher than the statewide rate because of local voter-approved district taxes in those areas.

Need more clarification in filing a Sales Tax Return contact Ken A Anaya at www.KAA4Tax.com or call toll FREE (844) KAA-4TAX.