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.

2016 Standard Mileage Rates for Business, Medical and Moving

The 2016 standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes will be:

·         54 cents per mile for business miles driven

·         19 cents per mile driven for medical or moving purposes.

·         14 cents per mile driven in service of charitable organizations.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Consult with Ken A. Anaya for further detail call (844) KAA-4TAX or www.KAA4Tax.com

Tax Credit Helps Low and Moderate Income Workers Save for Retirement.

As the tax season approaches, the IRS reminds low- and moderate-income workers that they can take steps now to save for retirement and earn a special tax credit in 2016 and years ahead.

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2016 tax returns. Taxpayers have until the due date for filing their 2016 return (April 18, 2017), to set up a new individual retirement arrangement or add money to an existing IRA for 2016. However, elective deferrals (contributions) must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, or the Thrift Savings Plan for federal employees.

Employees who are unable to set aside money for this year may want to schedule their 2017 contributions soon, so their employer can begin withholding them in January.

Have questions visit our website at: www.kaa4tax.com or call (844) KAA-4Tax.

Did your ITIN Expire January 1, 2017?

Time has run out for many ITIN holders who need to file a federal income tax return in 2017 and want to avoid a long wait for a refund, according to the Internal Revenue Service.

An Individual Taxpayer Identification Number (ITIN) is used by anyone who has tax-filing or payment obligations under U.S. law but is not eligible for a Social Security number. Under a recent law change by Congress, any ITIN not used on a tax return at least once in the past three years have expired on Sunday, Jan. 1, 2017. In addition, any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN) have also expired on that date.

This means that anyone with an expiring ITIN should act now to make sure they have a renewed ITIN in time to file a return during the upcoming tax season. Failure to do so will result in refund delays and possible loss of eligibility for some tax benefits until the ITIN is renewed.

ITIN renewal applicants can get help by visiting our website at www.kaa4tax.com  or calling 
(844) KAA-4TAX.

Plan now to Use your Health FSA in 2017

Eligible employees, now is the time to begin planning to take full advantage of their employer’s health flexible spending arrangement (FSA) during 2017.

(FSA's) provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Because eligible employees need to decide how much to contribute through payroll deductions before the plan year begins, many employers this fall are offering their employees the option to participate during the 2017 plan year.

Interested employees wishing to contribute during the new year must make this choice again for 2017, even if they contributed in 2016. Self-employed individuals are not eligible.

An employee who chooses to participate can contribute up to $2,600 during the 2017 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee’s (FSA).

Throughout the year, employees can then use funds to pay qualified medical expenses not covered by their health plan, including co-pays, deductibles and a variety of medical products and services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures.

Under the use or lose provision, participating employees often must incur eligible expenses by the end of the plan year, or forfeit any unspent amounts. But under a special rule, employers may, if they choose, offer participating employees more time through either the carryover option or the grace period option.

Under the carryover option, an employee can carry over up to $500 of unused funds to the following plan year — for example, an employee with $500 of unspent funds at the end of 2017 would still have those funds available to use in 2018. Under the grace period option, an employee has until 2½ months after the end of the plan year to incur eligible expenses — for example, March 15, 2018, for a plan year ending on Dec. 31, 2017. Employers can offer either option, but not both, or none at all.

Have questions visit our website at: www.kaa4tax.com or call (844) KAA-4Tax.

Stay Cyber Safe

While the holiday season represents time with friends and family, cyber-criminals see it as a time of increased opportunity. We are sharing some tips for avoiding scams and shopping safely online during the holidays!

Tip #1 - Protect against malicious emails and phone calls

Phishing messages are designed to mislead you into revealing confidential or personal information or to allow unauthorized access to your devices. These attempts are becoming more and more sophisticated and are often branded to look like they are coming from a legitimate company. Don’t click on suspicious links in emails, tweets, texts, posts and online advertising, which can compromise your device. If the link looks suspicious, delete the message without fully opening it. Be on the look-out for clues that the email or text you have received may be fake: spelling and grammatical errors are common indicators, or headlines that don’t match the context. because you now have a mentor to help you make better financial decisions. A good accountant will know how to save you money and give you advice on the most tax efficient way to run your business.  

Tip #2 - DO NOT give out personal information. 
Reputable companies will not ask you to enter personal information, such as your credit card number, or bank accounts.

Tip #3 – Have up-to-date security/antivirus software on your devices. 
The tools within these programs will help detect and remove viruses that can steal your identity while online. Check for a closed padlock in your web browser’s address bar or a URL address and an address that begins with HTTP or HTTPS. They indicate the website is encrypted or secured. Protect your personal information by being alert to the kinds of information being collected to complete a transaction. Ensure the requested information is needed only to complete the transaction. Fill out only required fields on checkout forms. Check the website's privacy policy to understand how your information will be stored and used..

Tip #4 - Create passwords that combine different numbers, letters and symbols. Cyber-criminals often try to use stolen credentials from one site to access other online accounts, so don’t use the same password across multiple sites. Change passwords often. 

Tip #5 - Report suspicious activity. If you suspect you have been a victim of phishing or online fraud, contact your financial institution, local police and your credit card company immediately, and check your credit to safeguard against identity fraud.  

Did you sell your Home in 2016?

Usually, profits you earn are taxable. However, if you sold your home, you may not have to pay taxes on the money you gain. Here are ten tips to keep in mind if you sold your home this year.

1. Exclusion of Gain. You may be able to exclude part or all of the gain from the sale of your home. This rule may apply if you meet the eligibility test. Parts of the test involve your ownership and use of the home. You must have owned and used it as your main home for at least two out of the five years before the date of sale. 

2. Exceptions May Apply. There are exceptions to the ownership, use and other rules. One exception applies to persons with a disability. Another applies to certain members of the military. That rule includes certain government and Peace Corps workers. For more information on this topic contact KAA Data Accounting & Consulting (844)KAA-4TAX or www.kaa4tax.com. 

3. Exclusion Limit. The most gain you can exclude from tax is $250,000 as a single filer. This limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain. 

4. May Not Need to Report Sale. If the gain is not taxable, you may not need to report the sale to the IRS on your tax return. 

5. When You Must Report the Sale. You must report the sale on your tax return if you can’t exclude all or part of the gain. You must report the sale if you choose not to claim the exclusion. That’s also true if you get Form 1099-S, Proceeds From Real Estate Transactions. 

 6. Exclusion Frequency Limit. Generally, you may exclude the gain from the sale of your main home only once every two years. Some exceptions may apply to this rule. 

7. Only a Main Home Qualifies. If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time. 

8. First-time Home buyer Credit. If you claimed the first-time home buyer credit when you bought the home, special rules apply to the sale. For more information on these rules discuss them with Ken A Anaya. 

9. Home Sold at a Loss. If you sold your main home at a loss, you may or may not be able to deduct the loss on your tax return. This must be discussed with your tax preparer. 

10. Report Your Address Change. After you sell your home and move, update your address with the IRS and State of California. To do this, you must file the proper forms with the IRS and State of California. If you purchased health insurance through the Health Insurance Marketplace, you should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. 

Please contact us at (844)KAA-4TAX or www.KAA4Tax.com with any question you may have regarding this Blog.

Look for your W-2 more timely in the New Year!

Enacted last December, our government created a new law which means employers need to file their copies of Forms W-2 and 1099’s by Jan. 31. These forms also go to the Social Security Administration (State of California) much faster this year. Employers reporting Employee earnings and non-employee compensation such as payments to independent contractors (for example Sub-Contractors in the Construction industry, Commissions earned in Real Estate, or Rents paid in Nail and Beauty Salons) submitted to the IRS are now due Jan. 31. Employers have long faced a Jan. 31 deadline in providing copies of these forms to their employees but were not always followed. That date has not changed but now must be filed with the IRS and State of California.

In the past employers normally had until the end of February, if filing on paper, or the end of March, if filing electronically, to send in copies of these forms. Now the IRS is working with the payroll community and other partners to spread the word as January 31, 2017 is now the DEADLINE.

The reason for the change is to helps stop fraud or errors. The new Jan. 31 deadline will help the IRS to spot errors on returns filed by taxpayers. Having these W-2s and 1099s sooner will make it easier for the IRS to verify legitimate tax returns and get refunds to taxpayers eligible to receive them. The changes will allow the IRS to send some tax refunds faster. Please contact us should you have any questions with this blog (844) KAA-4TAX or www.KAA4Tax.com

How to Become the Most Interesting Accountant

Valuable Information from a blog I stumbled upon this afternoon: How to Become the Most Interesting Accountant in Just 6 Steps. By Bryce Sanders (President of Perceptive Business Solutions, Inc.) 

The 6 steps:

1. Interested in Others. In dating, people are obsessed with talking about themselves. If people love to talk about themselves, use this to your advantage. Example: “Thanks for sponsoring this exhibition of Rodin sculptures. How did you get interested in Rodin?” or “Congratulations on the acquisition of that software company. How do you see it fitting into your overall firm strategy?” Outcome: They enjoyed meeting you because they told their favorite stories.

2. Depth. Successful people know lots of airheads. They are also surrounded by people telling them what they want to hear. You need a diversity of knowledge. Are you reasonably smart or not? Example: “You brought up the economic slowdown. The U.S. and U.K. economies are doing well. but now Europe’s having problems. Even Germany is having a rough time, according to The Economist.” Outcome: You took a position and referenced your sources. You are direct and well-read.

3. Experiences. Be able to tell a good story. Senior executives need to engage audiences. They appreciate the skill. Often when cultivating well-off individuals we want to be seen as fitting into their world and we exaggerate our accomplishments. They can tell. Charitable giving is a good area of common ground. It’s likely you are both givers (vs. takers) if you are meeting at a charity function. Example:“We support the arts in our community. Not on your scale, of course. We do what we can for the historical society and the symphony?”Outcome: By using their support for the event you are attending as your guide you have demonstrated you share the same values.

4. Tact. You can have a point of view, but don't push it! You've just met this person. You don't know if they smoke, own a gun, or vote conservative. Endorsing an extreme position can make you come across radical. Example: "With all we know about smoking, I think anyone who still smokes is an idiot. They are a menace to society." Outcome: They may have been thinking about ducking outside for a cigarette. Now its an ideal opportunity to get away from you.

5. Sense of Humor. See the fun in everyday situations. Some people have naturally upbeat attitudes. People like them. They want to be around people who can roll with the punches. Example: “The cab driver who picked me up at the airport told me he had a second job as a bounty hunter! Imagine that!” Outcome: You made them laugh. People like other people who have that skill.

Local Knowledge :

Example: " I'm glad the new bypass was approved. It will cut down on commuting time. More important, it will absorb the truck traffic and make several of those undeveloped properties that are zoned commercial a lot more attractive for manufacturing." Outcome: You understand the impact of local votes and legislative decisions on the local economy. You get it! Meeting movers and shakers in a social setting is very similar to dating. It’s not that hard to make yourself interesting to another person. Done well, it’s extremely unlikely they will find you boring.

The Benefits of hiring an Accountant

Every business is unique. Because of this, accounting needs vary. To meet your company’s needs, KAA Data and Accounting provides a suite of services certain to fulfill the requirements of virtually any small business.

KAA Data and Accounting can help out at any stage of growth with your business. We offer services beyond payroll and tax returns. We are here to rid you of time-consuming tasks and give your the opportunity to focus on the more important things, like generating revenue. We also give you the peace of mind that you are working with trusted individuals who know the importance of taking care of even the smallest detail.

Small business accounting can become complicated and confusing if you are handling it on your own. If you feel that you are at the point where you are losing control of who owes you or how much you owe, then it is probably time to hire a professional who can help you get back on track!

The Benefits of hiring an accountant:

1- We know what we are doing: We can help save you money in missed deductions. You are also paying for peace of mind because you now have a mentor to help you make better financial decisions. A good accountant will know how to save you money and give you advice on the most tax efficient way to run your business.  

2- It allows you to focus on running your business: Having to handle the paperwork and keep up to date on expenses verses revenue can be extremely time consuming and actually take you away from what you do best, running your business!

3- Help you fill out forms correctly and in a timely manner: We ensure that your tax return and any other documentation is filled out correctly and more importantly, we ensure it is completed on time. If you miss a deadline for important documents like tax returns, you could face a fine.

Profit and Growth Expert

We trust that if you were forming a team for an upcoming golf tournament, you would want to recruit an expert like Tiger Woods. Although we may not be the golfer Tiger Woods is, we do take our job as your Profit and Growth Expert just as seriously. While our goal is not to minimize your golf swings, we do aim to maximize your profit dollars. This entails a monthly analysis of your financial results, consultation in areas of profit improvement, and the implementation of strategies designed to lower your tax liability. Together, we will examine past experiences, determine where you want your business to go, and discuss how that can happen. That’s our role as your Profit and Growth Expert.