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Your Taxes Are Filed….but

June 29, 2017 by Reynolds & Rowella Leave a Comment

Your Taxes Are Filed, But You Still Have Questions? Here are answers to the 4 most common questions you may have.

Many taxpayers have questions after they file their tax returns. The IRS provides answers to many of them. These are a few of the most common.

How can I check the status of my refund?

You can go online to check on your refund if it has been 24 hours since the IRS would have received your e-filed tax return or four weeks after you mailed your paper return. Go to www.irs.gov and click on “Where’s My Refund?” You will need your Social Security number, your filing status, and the amount of your tax refund.

What records should I keep?

Keep receipts, canceled checks, or other substantiation for any deductions or credits you claimed. Also keep records that verify other items on your tax return (W-2s, 1099s, etc.). Keep a copy of the tax return, along with the supporting records, for seven years.

What if I discover that I made a mistake on my return?

If you discover that you failed to report some income or claim a deduction or tax credit to which you are entitled, you can correct the error by filing an amended tax return using Form 1040X, Amended U.S. Individual Income Tax Return.

What if my address changes after I file?

If you move or have an address change after filing your return, send Form 8822, Change of Address, to the IRS. You should also notify the Postal Service of your new address so that you’ll receive any refund you’re due or any notices sent by the IRS.

For answers to other tax questions you may have, contact us at consulting@reynoldsrowella.com

Filed Under: Tax Returns, Uncategorized Tagged With: Accounting Services Fairfield County CT, Best Accounting Firms Fairfield County CT, Filing Tax Return, Tax Returns Fairfield County CT

Think you know who a “dependent” is? The real definition may surprise you.

February 23, 2017 by Reynolds & Rowella Leave a Comment

Many people think of a “dependent” as a minor child who lives with you. This is true, but it’s important to remember dependents can include parents, other relatives and non relatives, and even children who don’t live with you.

Exemptions and your taxable income.

Each dependent deduction is worth $4,050 on your 2016 and 2017 federal income tax returns. This exemption reduces your taxable income by this amount. You’ll lose part of the benefit when your adjusted gross income reaches a certain level. For 2016, the phase-out begins at $311,300 when you’re married filing jointly and $259,400 when you’re single.

Definition of a dependent.

A dependent is a qualifying child or a qualifying relative. While there are specific rules, generally, a dependent is someone who lives with you and who meets several tests, including a support test. For qualifying children, the support test means the child cannot have provided more than half of his or her own support for the year. For qualifying relatives, the support test means you generally must provide more than half of that person’s total support during the year. There are many exceptions. For example, parents don’t have to live with you if they otherwise qualify, but certain other relatives do. If you’re divorced and a noncustodial parent, your child doesn’t necessarily have to live with you for the dependent deduction to apply.

Who can’t be claimed?

Your spouse is never your dependent. In addition, you generally may not claim a married person as a dependent if that person files a joint return with a spouse. Also, a dependent must be a U.S. citizen, resident alien, national, or a resident of Canada or Mexico for part of the year.

Contact our office at consulting@reynoldsrowella.com to learn who qualifies as your dependent. We’ll help you make the most of your federal income tax exemptions.

Filed Under: Tax Returns Tagged With: Accounting Services Fairfield County CT, Best Accounting Firms Fairfield County CT, Dependents on tax returns, Financial Planning Fairfield County CT

Offset your past or future income with a net operating loss

May 25, 2016 by Reynolds & Rowella Leave a Comment

If you reported more business expenses than income on your 2015 tax return, you may have a net operating loss. That means you have the opportunity to apply your loss to past and future tax years to generate a refund or reduce your tax liability.

Unless you elected to carry the entire loss to future years, the general rule is you can use it to offset income in the two prior years, then carry the remainder, if any, forward for the next 20 years. Here’s how it works. Your 2015 operating loss will first reduce the income you reported on your 2013 and 2014 federal income tax returns, potentially generating refunds for those years. Any remaining 2015 operating loss can be used to offset income on future tax returns, beginning with the one you’ll file next April for 2016.

One way to claim the carryback is by using Form 1045, Application for Tentative Refund. You must file Form 1045 within a year of the “loss year” – that is, by December 2016 for an operating loss reported on your calendar year 2015 tax return.

Contact us at consulting@reynoldsrowella.com to discuss other rules and tax planning moves for net operating losses.

Filed Under: Tax Returns, Uncategorized Tagged With: Accounting Services Fairfield County CT, Best Accounting Firms Fairfield County CT, Net Operating Loss

Don’t miss out on tax savings! No need to itemize to claim these deductions.

March 2, 2016 by Reynolds & Rowella Leave a Comment

Three glass jars with chalk labels used for saving US dollar bills and notes for IRA tax and college funds

Are you part of the approximately 68% of taxpayers who IRS statistics say claim the standard deduction instead of itemizing? If so, you can still deduct some expenses on your 2015 federal income tax return.

  • Individual retirement account (IRA) contributions – For 2015, you may qualify to deduct up to $5,500 in contributions to a traditional IRA. That increases to $6,500 if you’re age 50 or older. Income limitations may apply in some cases. The same limits apply to Roth IRA contributions, which are not deductible.
  • Health Savings Account (HSA) contributions – HSAs are IRA-like accounts set up in conjunction with a high-deductible health insurance policy. The annual contributions you make to your HSA are deductible. Contributions are invested and grow tax-free, and you withdraw the money tax-free to pay unreimbursed medical expenses. The HSA contribution limit for 2015 is $3,350 for individuals and $6,650 for families. You can contribute an additional $1,000 when you’re age 55 and older.
  • Student loan interest and tuition fees – Deduct up to $2,500 of interest on student loans for yourself, your spouse, and your dependents. For 2015, you can also deduct up to $4,000 of tuition and fees for qualified higher education courses. Income limitations apply, and you must coordinate these deductions with other education tax breaks.
  • Self-employment deductions – If you’re self-employed, you can generally deduct the cost of health insurance premiums, retirement plan contributions, and one-half of self-employment taxes.
  • Other deductions – Don’t overlook deductions for alimony you pay, certain moving expenses, and early savings withdrawal penalties. Educators can deduct up to $250 for classroom supplies purchased in 2015..

Please contact us at consulting@reynoldsrowella.com for more information on these and other deductions you may be entitled to claim on your 2015 return.


 

Filed Under: Tax Returns Tagged With: Accounting Services Fairfield County CT, IRA CONTRIBUTIONS, Tax Returns Fairfield County CT

Corporate minutes support tax deductions

February 10, 2016 by Reynolds & Rowella Leave a Comment

Young handsome businessman sitting in chair with cup

Corporate minutes support tax deductions

Well-documented corporate minutes can provide valuable supporting evidence if the IRS questions choices you make on your tax returns. Minutes are especially important when related-party transactions are involved, such as payments, loans, or distributions between the company and you or other owners. For example, the IRS may challenge the amount of your compensation. Corporate minutes that document the factors considered by the board in approving the compensation can be a defense against this type of challenge.

Another area to consider is the amount of earnings your business retains instead of distributing the funds as taxable dividends. A penalty can apply to retained earnings over a certain limit unless the needs of your business justify the amount. Corporate minutes can help by spelling out the reasons your company needs to retain funds – for example, to purchase assets or for working capital.

Does your company have a tax-qualified retirement or a stock option plan? The minutes should show decisions by the board when adopting or modifying the plan. Other information to include: annual decisions on the contribution percentage made to profit-sharing plans, and the amount of fringe benefits, such as medical reimbursement accounts.

If your corporate minutes need updating, please contact
us at consulting@reynoldsrowella.com we can suggest
an attorney to help in the process.

 

 

Filed Under: Tax Returns Tagged With: Accounting Services Fairfield County CT, IRS Tips, stock option plan, Tax qualified retirement plan, Tax Returns Fairfield County CT

Shall I sleep on it?

January 27, 2016 by Reynolds & Rowella Leave a Comment

Relaxed young executives having a meeting indoors. Multiracial group of people sitting in office lobby discussing business.

Ah, the procrastinator’s dilemma. We all have tasks that we dread doing.
That could be as simple as making your bed to filing your tax return.

 

Shall I sleep on it or I will get to it tomorrow is said everyday throughout millions of business every single day. Mostly by the employees, but many owners are guilty of this was well. Why do we procrastinate and what can we do to motivate those to do the difficult tasks first?

One way to motivate your employees (or yourself) is to assign a subjective value to the task relative to the price of thinking about it all night. When you complete that daunting task, it is a great feeling of relief and accomplishment. William James once said, “Nothing is so fatiguing as the eternal hanging of an uncompleted task”. You could think about how miserable the task will be or you can attack it and get it done.

In 1989, George Loewenstein and Richard H. Thaler penned an article for the Journal of Economic Perspectives around the idea of delay discounting. Basically, people are willing to accept less now than wait for a larger gain. In today’s terms, think about that $20 item from Amazon that you are willing to pay $17 in shipping to get it on Monday rather than free shipping that will get it there on Wednesday. Delay discounting is a component of procrastination that is relative to the length of time before the deadline and the reward. Further away the deadline, less important it is or less attractive the reward or satisfaction of getting it done. I think I mastered in this subject in high school and book reports.

People like to feel rewarded, so they tend to work on the easier tasks first. There is a sense of accomplishment when things are checked off the list.

So, how do you motivate those employees or yourself to focus on the major items? Well, push the small items to someone else. Try to devoid yourself of the “daily minutia” to less experienced staff and train them. Place a value on the items you need to get done and get the high value items done first. Think to yourself, what would happen if I didn’t get ABC done today versus how much better and productive I would be if I got XYZ done?

When you strip out the easy tasks, all is left are the important ones and you can focus on the XYZ tasks. Associate those difficult with your own identity. People are motivated by a positive self identity and the more aligned they are with their tasks, the more efficient and effectively they will be done.

OTHERWISE, YOU CAN ALWAYS HIRE A CONSULTANT TO HELP YOU OUT WITH
THOSE TASKS NO ONE WANTS TO DO!

 

If you would like more information on how we can help streamline your day to day operations, please contact us at:    consulting@reynoldsrowella.com.

 

 

Filed Under: Tax Returns Tagged With: Accounting, Filing Tax Return, Reynolds and Rowella, tax return.

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