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Four of the Best Mobile Apps for Taxes  

We can all agree that filing taxes can become a stressful and overwhelming process. Going over boxes and more boxes of receipts isn’t anyone’s favorite activity. However, there are several mobile apps for taxes that can and will simplify the process enormously. During the last couple of years, mobile apps have become much more functional, powerful, and accessible than ever. Even when this kind of software can’t replace the experience and knowledge of CPAs, apps can still get the job done.

Whether we are self-employed and trying to keep track of our books, single or married individuals filing our taxes, or small business owners, these apps should be of great help for the coming tax season. From the popular Turbo Tax, Intuit’s QuickBooks, H&R Block’s, and even the official IRS app, these are four of the best mobile apps for taxes.

Intuit Turbo Tax Mobile App

Turbo Tax is one of the most popular tax preparation software there are available. Their free version allows you to file your 1040A and 1040EZ forms without a problem. If you purchase the Deluxe edition, though (which is also the most popular one) you can maximize your tax deductions and even submit charitable donations into deductions.

Their Premium and Self-Employed versions are ideal for small business owners and freelancer who might need more personalized assistance. The Turbo Tax Mobile App is available for both iOS and Android devices, so you can use it regardless of your equipment.

H&R Block Tax Prep

Looking for convenient alternatives when filing our tax return is essential. Thanks to the H&R Block Tax Prep app, we can get convenience and peace of mind altogether. This app has the option of taking a photo of your W-2 form to scan it, saving time and money.

Not only that, but you also get free assistance from one of the H&R Block representatives. However, H&R Block designed this app to help filing income taxes for federal and state returns. If you need more advanced filing, you will need one of the more complex mobile apps for taxes.

Intuit QuickBooks Self-Employed App

Being self-employed comes with many great benefits and advantages. But keeping track of payments and expenses can eventually become an overwhelming task. That’s why Intuit’s QuickBooks Self-Employed app is one of the best mobile apps for taxes. It will allow you to snap pictures of all your receipts, and then export those for your tax deductions. Intuit created this app with freelancers and small business owners in mind. So, if you have multiple income sources from clients and customers, QBSE is the right app for you. You can purchase the app alone or go for the QBSE and Turbo Tax apps bundle.

IRS2GO

What better way to file your tax refund than using the official Internal Revenue Service’s own mobile app, IRS2Go. It is one of the most complete mobile apps for taxes there are. Even though you can’t really submit your tax forms, the features it offers will definitely simplify the process. IRS2Go allows you to check your refund status, make payments, and find professional tax assistance near you, too. Besides, during tax season, the app provides relevant updates to its users during business days. During the rest of the year, they share policies and other relevant tips to get prepared for the coming tax season.

Charitable Contribution Deductions: How Donations Count on Your Tax Return 

As the popular saying goes, it is always better to give than receive. When we make donations to charitable organizations, we never expect anything in return. However, charitable contribution deductions can apply towards your income tax return every year. There are several aspects to take into consideration, though, in order for our donations to be valid.

First, we need to know what kind of organizations will count for charitable contribution deductions. Then, we need to understand the ISR requirements for donations and tax return deductions. We also need to be aware of how much can be reflected on our tax return from charitable contribution deductions.

What Organizations Count for Charitable Contribution Deductions?

Americans give 2% of our income as donations to charitable and non-profit organizations every year. However, when it comes to charitable contribution deductions, we must pay attention to which organization we decide to donate. Since charitable organizations need to register through the IRS, not all charities and non-profits will count against your tax return.

According to Charity Navigator, donations to individuals, foreign governments, foreign charities, and even some private foundations do not count against your tax return. Some examples of organizations that do qualify, however, include religious organizations, war veterans’ organizations, volunteer firefighters, and civil defense organizations.

Are There Any Tax Requirements for Charitable Contribution Deductions?

The first requirement we need to consider is that we must file for itemized deduction in order to qualify for charitable contribution deductions. If we file a standard deduction, then our charitable donations won’t count against our tax return. This means that we will have to list all of our deductions, including items such as mortgage, state, and local tax, medical expenses, along with charitable donations.

Before we start filing our tax return, we should take care of some other procedural aspects. Even before making a donation, we must make sure the organization is a 501(c)(3) private foundation or public charity. In addition, we must keep a record of each and every contribution we’ve made to the organization, so keep the tax receipts they give you. If we made a non-cash donation, we will need a qualified appraisal of the property value.

How Much Will Be Reflected as Charitable Contribution Deductions?

Before talking about how much could be reflected as charitable contribution deductions, we must be aware that there are different amounts of yearly donations to be met. Such minimum amounts will depend on how we are deciding to file our tax return. If we are filing as a single person, or married but filing separately, we should have donated at least $12,000. Filing as head of household, the amount will go up to $18,000. If we decide to file jointly as married, then the amount will go up to $24,000.

Now, depending on our income and tax bracket is the amount of charitable contribution deductions we would be likely to receive. For 2018, the tax brackets remained with a number of seven different tax rates. These tax rates were 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Such brackets will depend on our total income plus the way we are filing our taxes, whether as a single person, a married couple, or head of household. In this case, if someone who belongs to the bracket of 37% made a $20,000 donation, they would see $7,400 reflected as charitable contribution deductions.

 

Freelancer Taxes: What You Need to Know 

Working as a freelancer might be the dream of many of us. Being your own boss, deciding when, where, and how much you work sounds enticing. Deciding on how much or how little you charge for your work is another advantage, too. However, this professional path also has its downsides. One of them is having to pay freelancer taxes.

When you work as an employee, your employer takes care of almost everything. When we work on our own, the responsibility falls upon ourselves. This is why we bring you a short list of different aspects to consider regarding freelancer taxes. From your quarterly payments to home office and professional help, we hope these tips will be helpful for you.

Pay Your Freelancer Taxes Every Quarter

One of the most important aspects freelancers need to know is that you have to pay your taxes every quarter. Since you don’t have an employer to make these payments, you must submit your Quarterly Estimated Tax payment to the IRS every three months. The due dates may vary a little every year, but for the current tax year, the dates are the following:

  • April 17, 2018
  • June 15, 2018
  • September 17, 2018
  • January 15, 2019

You should keep a portion of your payments apart so you’re able to cover this payment. Most tax advisers recommend saving anywhere from 25% to 30% of your payments to cover the quarterly freelancer tax. Employers tend to cover somewhere around half of your corresponding tax payment. Since you are your employer, you have to pay for the whole amount.

Home Office and Other Expenses

When it comes down to the yearly tax return, it might be harder for freelancers to keep an accurate and well-documented record of income and expenses. This can sound obvious to some, but we can highlight enough the importance of keeping track of each and every payment we receive. We should also document every expense that is business related. From meals and transportation to stationary and any other equipment you need.

Home office expenses are also deductible, so keep that in mind. In order for the home office tax deductible to be approved though, there is some consideration to have. First, the area should be used as an actual home office. This is a part of your house where you run your business exclusively. Having a clear division between home and office is crucial. If you use a room of your house partially for home office, you should calculate the percentage of business use and personal use.

Hiring a Professional Always Helps

There are many other tips and tricks regarding freelancer taxes that are worth learning. So, we always recommend hiring a professional accountant or tax advisor. This can be especially useful for those who just began their freelancer career. Being aware and knowledgeable of current state requirements and regulations is an essential part of freelancer taxes.

Being your own payroll department might be simple for some. We shouldn’t underestimate the real value a professional consultant can bring. Besides, learning how to take advantage of freelancer taxes returns will be beneficial, not only for your pocket but your business too.

 

Tax Prep Pricing: How Much Should I Pay for Tax Preparation Services? 

Preparing and filing our tax return can be a hassle. Especially when we don’t have a complete record of our expenses. This can also seem like a quite complex process if we’re doing it for the first time. That’s why almost 50% of us decide to hire an accountant and have them do the job for us. However, knowing how much to pay for tax preparation services might get tricky sometimes.

There are several aspects to consider before we decide to hire a professional accountant to do our tax prep for us. Also, there are many factors that can influence the rates that the accountant decides to assess. In order to understand how much to pay for tax preparation services without it being too much, we will look at 3 different concepts. First, we’ll look at average pricing for tax prep reports. Then we’ll take a deeper look into how exactly tax prep services are charged. Lastly, we’ll go over alternatives to hiring a tax prep pro.

What Is the Average Pricing for Tax Preparation Services?

It is not difficult to find the average costs of tax preparation services online. All it takes is a simple Google search and then checking a couple of websites to make sure the numbers match. Both Thervo.com and thebalance.com show reports from the National Society of Accountants. These reports state that the average price for submitting an itemized Form 1040 with Schedule A is $273, and if you don’t itemize it, it can go down to $176. Also, if you need an itemized Form 1040 with Schedule C, the price can go up to $457. You can consult the NSA website directly for average prices of other forms.

How Are Tax Preparation Services Charged?

More often than not, prices for tax preparation will vary, depending on each person’s situation and record. Most of the accountants will charge a fee for each form or schedule that needs to be filed. If you have worked with the same accountant before, they might charge the same fee than last year’s, plus an additional fee for any changes. Some prefer to go for a minimum tax return fee plus an additional one, depending on the client situation’s complexity. It is not uncommon, though, to be charged on an hourly rate, or even by setting a fee for each item of data entry.

What Are Alternatives to Getting a Tax Professional?

Last week we talked about Cloud Accounting and how you might benefit from them. We bring this up because hiring a professional to help you with your tax return might not be 100% necessary for some. Getting online tax preparation services might be a better idea for some, especially for individuals who already have experience in the matter and have a clean, organized record. There might be other apps and websites like Credit Karma Tax or Wave, that allow you to keep track of your finances, not only during the tax report season but throughout the year, too.

 

Cloud Accounting for Small Businesses: What Is it? 

Technology keeps becoming more and more important in our everyday lives. The world of businesses keeps adopting ways to include it, too. After all, technology means growth, development; the future is technological. Cloud accounting is part of such technological growth. For years, accounting and bookkeeping, especially for small businesses, turns out to be a burden. This is why tax consultants and financial advise companies started to provide this service. However, with the development of accounting software, the need for professional accountants might not be as compulsory as it used to.

Originally, accounting software used to work on your company’s computer. Having to purchase, install, and master a new program resulted in having to spend money, time, storage, and effort. Cloud accounting solves most of these problems. In order to gain a full understanding, we need to analyze certain aspects beforehand. Here we will discuss what cloud accounting is, how it works, and how safe it really is.

What Is Cloud Accounting

Cloud accounting, or to be precise, cloud computing accounting software, is a type of software that assists businesses with their accounting and bookkeeping duties. The main difference between cloud accounting and regular accounting software is that the first stores its apps and clients’ information in the cloud. This means that instead of having to install a given program on your computer, everything is done online.

This can bring several benefits, especially to small business owners. Professionals consider cloud accounting quite cost-effective, as well as efficient in terms of time and storage. Cloud accounting can work as an alternative to hiring a particular accountant or bookkeeper, too.

How Does Cloud Accounting Work?

The way cloud accounting works can be quite similar to the way regular accounting software does. When we hire a cloud accounting firm or provider, we will have access to their network. This way we are able to upload the accounting information that needs to be analyzed. Instead of having to store all this data on our company’s computer, we can safely store it in the cloud. Then, all we need to access such information is a device with an internet connection.

Cloud accounting is one of the most cost-effective ways to do bookkeeping. Besides, many small, medium, and even large businesses are beginning to adopt such accounting services more and more. It also enhances information accessibility, and it keeps it safely stored, too.

How Safe Is Cloud Accounting

Despite the many threats that online services and internet connectivity have brought, cloud accounting has proven to be a safe option. To begin with, when we store sensitive financial information in portable devices like laptops, tablets, and even USB drives, such information becomes vulnerable. As anybody could lose or steal these devices, we don’t recommend storing sensitive information in them. With cloud storage, we know such cases are not possible. Besides, it provides additional back up of our data, which could be useful in case of an unfortunate event.

Just like any other online service provider such as online banking, security measures are taken with utmost care. State-of-the-art technology is used in order to keep sensitive financial information safe. Site encryption and multi-factor authentication are part of the online security measures that cloud computer accounting software providers implement along many other information security policies.

We must remind you that even when cloud accounting might be a solution that fits your business needs, having a professional accountant as part of your team is always recommended. That’s until computers end up permanently and efficiently replacing us if they do at all.

 

Preparing for an IRS Audit: 3 Useful Tips 

Being the subject of an IRS Tax Audit can be intimidating. No matter how well you keep your records, being under such scrutiny can still make you hesitate. Nevertheless, an IRS audit shouldn’t make you nervous. The most important aspect here is to make sure you have complete, accurate documentation of your financial activity.

There are three different types of IRS audit you could be subject of. A correspondence audit, on which the IRS basically asks you to send them information to correct their records. This is the easiest, fastest one. An office audit, which requires you to go to an IRS office and bring specific documents. With a field audit, though, an IRS tax officer will visit your place of business and request any file or document they might consider necessary.

Regardless of the type of IRS audit, they decide to carry out, you must consider these three key concepts. Having all your documents ready does nothing but help your case. A professional attitude is a must. Also, remember you can always appeal the results if you don’t agree.

Get All Your Documents Ready in Advance

Some might say that the most important aspect of filing your income tax return. This is something that shouldn’t really be done when the due date is coming, but all year round. Being able to keep an accurate, complete record of your income and expenses is the best way to avoid an IRS audit in the first place. If you keep a tidy record and still get a notice from the IRS, you have the peace of mind that your documents are all in one place.

However, if you need to go through the process of getting documents again, don’t worry. Just start gathering your information as soon as possible, to make sure you come up with a record as complete as possible. Get in touch with as many people as possible. Bank statements and paystubs shouldn’t be a problem to get. Banks usually keep statements up to 18 to 36 months old. If you’re not able to gather every paper, document your attempts to collect them anyway.

Be Confident and Stay Professional During the IRS Audit

When the time of the IRS audit comes, we recommend hiring a professional tax consultant. This will ensure the audit follows protocol as much as it should. Not only that, but you know they won’t ask more questions than necessary. More importantly, you make sure you don’t give more information than necessary, either.

If you decide to attend the audit by yourself, remember to remain confident and to stay professional throughout the meeting. If at any point you feel the tax auditor is asking more than required, remember you have the right to interrupt the meeting and ask for a tax consultant before going any further. This will not only give you more time to get any missing paper but make the audit loosen up a bit. You can use this in your favor if it happens.

Don’t Be Afraid of Appealing the Results

Once the audit has finished and the results disclosed, keep in mind you still have the option of appealing. Usually, requesting to speak with the auditor’s manager is all it takes for them to reconsider the resolution. After that, if the outcome is not what you expected, you can appeal the results through an IRS program called Fast Track Settlement. You will meet with an Appeals Officer and present your case. This can take a couple of hours, but the result might be in your favor. If you still can’t reach a settlement, you can still submit a formal protest with the IRS Appeal Division, but this might take more than 6 months.

At this point, the only action to take left is taking the case to court. Once you get here, they only give you 90 days to respond to the IRS Notice of Deficiency. If you fail to respond, the IRS will close your case and assess the results you were disputing.

This is why we always recommend hiring a professional tax consultant. This is the best way to avoid receiving an IRS audit notice. If you still get one, though, your tax pro will know how to handle the situation, and most likely, get a resolution that favors you.

 

 

Why Do I Need A Tax Consultant? 

If you ask your friends, your family members, and even your neighbors, most of them might say that you don’t need a tax consultant. After all, research shows that 33% of Americans take care of their tax report themselves. Another 56% say they hire a tax consultant to deal with the hassle instead. The missing 11% were apparently confused by the question. If more than half of the country decides to work with a tax advisor, it might be worth it.

There are several reasons why it makes sense to hire a tax consultant. Even when it might represent an additional expense on our budget, the advantages are more. Firstly, they are experts in the matter, they have to stay updated with IRS tax code changes, and they could even help you get a higher tax return.

Tax Consultants Are the Pros

Tax advisors are accounting professionals who must obtain different certifications in order to provide guidance and consultation services. They must pass different annual regulatory tests to keep their licenses, too. This means tax consultants are more familiarized with the IRS Tax code, they know how the system works, and you might benefit from such knowledge.

Just like you would hire a professional contractor for your home improvements, or a professional doctor for your medical needs, you want should want to hire a professional tax advisor to take care of your tax duties.

Tax Consultants Are Updated with IRS Tax Code

The IRS Tax Code is about 2,600 pages long, without including additional explanations and resources. Every year, there are different Tax Law changes and reforms. Tax consultants must keep up to date in regards to those modifications. This is particularly important if you’ve been doing your taxes yourself. There might have been updates you were not aware of until now.

If you worry about making a mistake when filing your taxes, tax consultants will give you the peace of mind you needed.

You Might Be Able To Get A Higher Tax Return

Coming back to what we mentioned before, tax consultants know how the system works, and this can benefit you. Since most consultants also provide financial advice, they can guide you year-round so you can make smarter monetary decisions. This, in turn, can ensure that, when the time is due, you get a higher tax return.

Hiring a tax consultant can have great benefits in the long run. Whether you want it for your business or for your personal expenses, choosing the right consultant for you will definitely show results.

 

What Can Happen If I Don’t File My Income Tax Return?

Most of us have been in the situation of almost forgetting to complete our Income Tax Return files, whether it is because of our hectic schedules, stress, work, family life, or whatnot. Maybe it only slipped our mind this one time, or there might even be someone out there who thought their income did not reach the amount required for a tax return to be necessary. 

Whether it was because of a lack of time, a distraction, or a misbelief, failing to file income tax return, or to pay the corresponding bill, if it happened to be the case, can have several consequences, from fines and penalties, to losing our refund, and even ending up doing some time in jail, and regardless if we face them or not, it all stays on our record for the Internal Revenue Service agency, and will eventually catch up with us. 

Penalties and Interests 

There are different penalties to which we can be subject, depending on our particular case. If we forgot to file our income tax report, or if we simply didn’t by the established deadline, we will be subject to a penalty of 5% of the unpaid taxes, this for each month that we fail to report, with a maximum penalty of 25%. The maximum amount we can pay as a penalty is of $135, however, after we’ve reached the limit penalty amount but still haven’t paid the owed taxes, such balance will start accruing interests, which cannot be waived by the IRS. 

In the event that we had filed our income tax return, and ended up owing a given balance, but failed to cover such payment, there are still penalties that apply, but they are lesser than when we fail to file. The failure-to-pay penalty consists of 0.5% of the unpaid taxes for every month we pay late, and this penalty also has a maximum of 25%, and just as the failure-to-file penalty, will start accruing interests after the maximum percentage has been reached.  

Missing Refund 

We must keep in mind that the penalties above apply for those of us who ended up owing taxes to the IRS, and not being eligible for a refund as a result of having over-paid taxes during a given tax year. However, there can still be consequences if we fail to file our income tax return and instead of earning a balance to pay, we qualified for a tax return refund. If this was the case, we would not be eligible to receive such refund, and we would have to cover any pending balance we might owe for previous years. 

Property Seize and Imprisonment 

Being subject to penalties and losing our refunds are not the only consequences of failing to file our income tax report. Depending on the amount that is owed, and if there happened to be an audit, you would eventually receive notifications to cover the debt. If we don’t take action and decide to ignore those notices, the IRS can (and will) seize of your property in order to collect the payment. Imprisonment for tax evasion is not really common, but it is possible, especially if we deliberately failed to report additional income, committing tax fraud in order to not pay taxes for those balances.

3 Tax Tips for Small Business Owners

Whenever we decide to start our own business, chances are we will find ourselves (if we haven’t already) struggling to keep the boat afloat financially, and whether we obtained a business loan, or went to our family savings account in order to keep the funds flowing through the veins of our company, one of the main obstacles small business owners face during the first couple of years of our enterprise has to do with its capital.  

You may not know this, but there are several tax return tips and tricks that might be useful, and that can help us receive some of the money we are investing in equipment and resources to keep our company working back to our business budget, allowing us to invest such money again,  improving our operations, facilities, and therefore making our company more profitable.  

Do Use Tax Software 

One of the best ways to save money on our company budget is through purchasing tax filing software to help us with preparing and filing our tax reports online, and there are several options out there that will do so in an accurate, reliable, and timely manner. By doing so we can make sure that we are not being eligible for an IRS fine or penalty fee due to an error in one of our spreadsheets or paper reports that could have been easily corrected by using specialized software. 

According to the IRS, online tax reports submitted online that have errors sum up to 1%, and reports submitted through paper go up to 21%, which makes online filing more accurate and reliable than paper. If you’re not willing to take the chances and 99% accuracy still won’t do it for you, hiring a tax specialist to double check the software reports wouldn’t hurt. 

Home Office Is Deductible 

A common situation among small businesses and young startups is beginning to run operations based on home office settings, as renting a dedicated space for our company might go beyond our initial budget or funding capabilities. Well, turns out this tight situation might be an advantage for you, since expenses that are generated by Home Office activities can be deductible, but you have to make sure that there is a room or a part of your home that is used exclusively for business, and never for personal use, in order for it to be a legitimate claim. 

If you are not sure about what percentage of your home is actually being used for your business, there is a simple rule to get an accurate idea of how to divide the cost of utilities, rent, maintenance, mortgage, and any other house expense. All you need to do is measure your workspace and then divide that by the square footage of your home. This will give you a clear idea of just how much falls under the Home Office deduction. 

Use Your Own Car Instead 

Just as it happens with home offices, acquiring a designated car for our company may be a luxury that small business owners might not be able to afford during the first couple of years of operations, and using our own car is the only option available. Car usage for business can also be deductible from your tax return, just like when we claim a Home Office deduction, we need to calculate what percentage of our car use and expenses are generated by business operations. 

We can determine how much we are using our car for business by keeping track of mileage that we drive for business and then divide that by the total mileage of the day, week, or month, however you decide to track it. We can take advantage of several apps to helps us keep our records as accurate as possible. This can also help us realize what percentage of gas, insurance, and repairs will be added to our business tax report. 

taxes

Most Unheeded Tax Deductions

Amongst the chaos of the daily life of the American citizen, it is easy to overlook common tax deductions that will save you money at the end of the year. The deductions that are missed due to the stress of waiting until the last minute to do your taxes can possibly save you hundreds more dollars. Here are a few tax deductions that are commonly overlooked.

Party Expenses

Throwing parties is an effective strategy for maintaining suitable relationships with your clients and attracting new business with associates. If you throw a party that is related to your business in any way, then you can use the money you spend on it as a tax deductible. However, it is important to remember that when it comes to entertainment, the IRS can be reasonably strict. In order for party expenses to qualify as a deductible, there must be a business discussion before, during, or after the event. Also, remember to document the event in the form of pictures, videos, or invitations.

Moving Expenses

If you have a new job and it is at least 50 miles from your old residence, then your moving expenses are tax deductible. It is important to remember that the IRS wants you to take the shortest possible route between your new job and your old residence, or the expenses will not qualify as tax deductibles. Also, you must work for a minimum of 39 weeks during the year from the moment you arrive at your new residence.

Mileage Expenses

Vehicle expense are tax deductible if you are using your car for business, medical, or charitable purposes. If you owned or leased a vehicle in 2017, American citizens were able to deduct 53.5 cents per mile. By keeping detailed records, you can choose to use the actual vehicle expenses instead of the standard mileage rate. Lastly, the standard mileage rate may not be used for more than 4 vehicles simultaneously or any vehicle used as equipment.