It’s time to get organized and think about getting ready for tax time. Do you know what you need to do to get your QuickBooks Online ready for tax time? Here is a QuickBooks Online year end checklist you can use to make tax time a bit easier. Your tax preparer will thank you and they’ll be amazed at how prepared you are. The bonus for you – your tax preparer can focus on finding you tax savings rather than spending time cleaning up your books. Mike McVay, Tax Accountant 850-725-5696
QUICKBOOKS ONLINE YEAR END CHECKLIST
· If you have inventory – plan to take a physical inventory as close to year- end as possible.
· Reconcile your physical inventory with book inventory.
Reconcile and review accounts
· Reconcile all bank and credit card accounts – to ensure that all transactions are recorded.
· Review transactions in QuickBooks for proper account classification – make changes as needed.
Record personal expenses correctly
· Did you record personal expenses correctly? Personal expenses should generally be recorded as distributions or dividends.
Record major asset purchases
· Record major asset purchases as fixed assets (example, asset purchases in excess of $500). This includes equipment, furniture, etc).
· Prepare a list of fixed asset purchases for your tax preparer – including date acquired, description, and amount paid.
Clean up customer and vendor accounts
· Review Customers and Vendors to check for duplicates or missing information.
· Review accounts receivable aging for any clean up needed (old balances, etc).
· Review accounts payable aging for any clean up needed (old balances, etc).
· Review key financial reports such as the Balance Sheet and Profit & Loss for the year.
Enter a closing date in QuickBooks Online
· Enter a closing date and password so that you or your staff don’t accidentally change any balances.
Notify your tax preparer
· Notify your tax preparer that your QuickBooks file is ready for tax preparation. In QuickBooks Online you can easily give your Accountant access to your QuickBooks Online file.
Prepare 1099’s and 1096
· Every year, businesses are required by the IRS to send a Form called “1099-MISC” to certain individuals and businesses. See instructions from the IRS at “2014 Instructions for Form 1099-MISC” (see http://www.irs.gov/pub/irs-pdf/i1099msc.pdf).
Mike McVay, Certified QuickBooks ProAdvisor 850-725-5696 Mike@MikeMcVay.com
1099-MISC and W-2 season is coming up! Hard to believe it's November already.
The new due date for IRS e-file of 1099-MISC with Box 7 and W-2 is Jan. 31, 2017. This is two months earlier than the usual Mar. 31.
McVay Business Services file all 1099 forms electronically for your business. McVay Business Services will meet all new deadline in regard to your 1099's, W-2's and year-end filings.
850-725-5696 - Mike McVay - Certified QuickBooks ProAdvisor - Tax Accountant
With less than 2 months left in 2016 (where did the time go?), here are some things to consider as you weigh potential tax moves between now and the end of the year:
1. Set aside time to plan
Effective planning requires you to have a good understanding of your current tax situation, as well as a reasonable estimate of how your circumstances could change next year. There’s a real opportunity for tax savings if you’ll be paying taxes at a lower rate in one year than in the other. However, the window for most tax-saving moves closes on December 31st, so best not to procrastinate. We can help you plan. Mike McVay, Tax Accountant 850-725-5696
2. Defer income to next year
Consider opportunities to defer income to 2017, particularly if you think you may be in a lower tax bracket in the coming year. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services. Doing so may enable you to postpone paying tax on the associated income until next year.
3. Accelerate deductions
Look for opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as medical expenses, qualifying interest, and state taxes before the end of the year, rather than paying them in early 2017, could make a difference on your 2016 return.
4. Factor in the AMT
If you’re subject to the alternative minimum tax (AMT), traditional year-end maneuvers such as deferring income and accelerating deductions can have a negative effect. Essentially a separate federal income tax system with its own rates and rules, the AMT effectively disallows a number of itemized deductions. For example, if you’re subject to the AMT in 2016, prepaying 2017 state and local taxes probably won’t help your 2016 tax situation, but could hurt your 2017 bottom line. Taking the time to determine whether you may be subject to the AMT before you make any year-end moves could help save you from making a costly mistake.
5. Bump up withholding to cover a tax shortfall
If you’re going to owe federal income tax for the year, especially if you may be subject to an estimated tax penalty, consider asking your employer (via Form W-4) to increase your withholding for the remainder of the year to cover the shortfall. The biggest advantage in doing so is that withholding is considered to have been paid evenly through the year, rather than when the dollars are actually taken from your paycheck. This strategy can also be used to make up for low or missing quarterly estimated tax payments.
6. Maximize retirement savings
Deductible contributions to a traditional IRA and pretax contributions to an employer-sponsored retirement plan such as a 401(k) can reduce your 2016 taxable income. If you haven’t already contributed up to the maximum amount allowed, consider doing so by year end.
7. Take any required distributions
Once you reach age 70½, you generally must start taking required minimum distributions (RMDs) from your traditional IRA(s) and/or employer-sponsored retirement plan(s) (an exception may apply if you’re still working and participating in an employer-sponsored plan). Take any distributions by the date required – the end of the year for most individuals. The penalty for failing to do so is substantial: 50% of any amount that you failed to distribute as required.
8. Weigh year-end investment moves
Remember not to let tax considerations drive your investment decisions. However, it’s worth considering the tax implications of any year-end investment moves that you make. For example, if you have realized net capital gains from selling securities at a profit, you might avoid being taxed on some or all of these gains by selling losing positions. Any losses over and above the amount of your gains can be used to offset up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce your taxes in future years.
9. Beware the net investment income tax
Don’t forget to account for the 3.8% net investment income tax (NIIT). This additional tax applies to some or all of your net investment income if your modified AGI exceeds $200,000 ($250,000 if married filing jointly, $125,000 if married filing separately, $200,000 if head of household).
10. Get help from a professional
There’s so much to think about when it comes to tax planning. It often makes sense to review your specific circumstances with an experienced financial planner who can help you evaluate your options and determine if any year-end moves make sense for you.
Mike McVay, Accountant 850-725-5696 Mike@MikeMcVay.com
QuickBooks & Tax BLOG by Mike McVay, Accountant Pensacola. Fl
Mike McVay, Accountant