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Tax Tip of the Week | No. 430 | FINALLY! Penalty Relief for Delinquent Partnership Returns October 25, 2017

Posted by bradstreetblogger in : General, tax changes, Tax Deadlines, Tax Planning Tips, Tax Tip, Taxes , add a comment

Tax Tip of the Week | Oct 25, 2017 | No. 430 | FINALLY! Penalty Relief for Delinquent Partnership Returns

In case you are unaware, some Internal Revenue Service filing due dates have changed. These new deadlines which began with the 2016 tax year for returns filed in 2017 included the Form 1065, U.S. Return of Partnership Income. The original due date for calendar-year partnerships was April 15th, the same as your personal income tax return. The new due date for calendar-year partnerships is March 15th.

S corporations have always been due March 15th. Partnerships and S corporations are known as “pass-through entities” because all items of income and expense get “passed through” and are reported on the owners’ personal income tax returns. Partnerships and S corporations generate a K-1 for each partner, shareholder or member. The K-1 provides information necessary for preparation of the owner’s personal return.

By moving the due date of partnerships up to March 15th, the IRS hopes more returns can be filed by April 15th, rather than having to file extensions due to late K-1’s. Or, to say it another way, the Internal Revenue Service hopes to get your tax money faster by taxpayers filing earlier.

However, many partnerships did not meet the new, earlier filing deadline and either filed their returns and/or their extensions late. If you are an owner of a partnership that has received a penalty notice for late filing, we may have some good news. If certain conditions are met, the Internal Revenue Service may provide you relief from the penalties normally assessed when filing a delinquent return. These types of penalties for partnerships may be quite significant since they are assessed on a per partner, per month basis. So, if you have one of these types of notices, let us know. We can help.

Sometimes we have to be thankful for the small things in life.

This week’s author….Mark Bradstreet, CPA

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 429 | Cash Method vs. Accrual Method of Accounting (Generally Speaking) October 18, 2017

Posted by bradstreetblogger in : Deductions, General, tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes , add a comment

Tax Tip of the Week | Oct 18, 2017 | No. 429 | Cash Method vs. Accrual Method of Accounting (Generally Speaking)

Many taxpayers are unaware of the method of accounting used for their business income tax returns. And, many businesses are unaware that a different accounting method may also be used for their financial statements. Yes, effectively, creating two sets of books.

Typically, the two most common accounting method choices are the cash method and the accrual method.

Use of the cash basis method of accounting (if eligible) will usually result in lower income taxes than the accrual method for a particular period of time. This is especially true when a business is growing.  However, if a business is experiencing a decline in revenues, additional taxes may be incurred as a result of reporting on the cash basis.

On the other hand, accrual basis accounting will often show the largest bottom line on your financial statements. This may be important when reporting your financial results to your bank and/or your bonding company. Both always enjoy seeing good news.

Thusly, these two methods may show significantly different results even, when accounting for essentially the same transactions. One may wonder how that could be. Well, the cash basis reports only taxable income when it is received in cash. Also, under this method, a tax deduction does not occur unless a cash disbursement for an expense has occurred.  The accrual method shows the income once the sale is completed and the expense when incurred which can more accurately reflect your net income.

The choice of an accounting method is a big one.  Its importance grows with the size of your business.  If you ever decide to change methods, please remember that some changes require Internal Revenue Service approval, while others are automatic. Regardless, your accounting method choice should be evaluated on an annual basis.

This week’s author….Mark Bradstreet, CPA

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 428 | Veteran or Widow of a Vet? Find Out About Benefits. October 11, 2017

Posted by bradstreetblogger in : General, Tax Tip, Taxes , add a comment

Tax Tip of the Week | Oct 11, 2017 | No. 428 | Veteran or Widow of a Vet? Find Out About Benefits.

You may qualify for VA Benefits at home or in assisted living if:

•    You served for at least 90 days on active duty
•    You require care or assistance with the activities of daily living on a regular basis to maintain your lifestyle
•    You are currently living in or thinking about going into an assisted-living facility
•    You are spending from your savings to pay for care
•    A family member is helping you with your care at home

If you fit some or all of these criteria, you may qualify for a little-known program known as Aid and Attendance through the Veterans Administration.

You May Not Know

It is not necessary to be impoverished to qualify – what you do need is enough out-of-pocket medical expenses to make you eligible.

These benefits are called a “pension”. However, this term tends to be confusing because it has nothing to do with the years of service as we normally think of a pension.

You did not have to serve “in theater” in order to qualify. Your disability does not need to be service-related. Benefits can be for you during your lifetime or for your spouse following death.

Can I Do It Myself?

Yes… but you must be careful. You will ultimately work with a Veterans’ Representative to complete the paperwork for your benefits. However, you should be prepared for this meeting in advance.

You must know exactly what program you want – the VA is a large complex organization, so it’s easy to make a costly error.

Finally, you must be aware that in the process of qualifying for VA benefits you may disqualify yourself for other government programs or create other tax or estate problems. Coordinating VA benefits with the rest of your estate plan is critical to assure that you receive the maximum government benefits to which you are entitled.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 427 | Top 10 Things to Know About Amending Returns October 4, 2017

Posted by bradstreetblogger in : Deductions, General, tax changes, Tax Preparation, Tax Tip, Taxes , add a comment

Tax Tip of the Week | Oct 4, 2017 | No. 427 | Top 10 Things to Know About Amending Returns

If you need to make a change or correct your federal tax return after it has been filed you will use Form 1040X. Here are the top 10 things you need to know when filing a 1040X:

1.    To file a 1040X, it must be mailed—you cannot e-file an amended return.

2.    You normally don’t need to file an amended return to correct math errors.  The IRS will automatically correct math errors and send you a bill or refund.

3.    You can track the status of the 1040X three weeks after filing.  To track the status, go to www.irs.gov and click on the “Where’s My Amended Return” link.  Note:  it can take up to 12 weeks for the IRS to process an amended return.

4.     If a refund is due from the original return, wait until you receive the refund before filing the 1040X to claim additional refund amounts.

5.     If more tax is due, file a 1040X and pay the tax as soon as possible to reduce any interest and penalties.

6.     You usually have three years to file an amended return.  See the 1040X instructions for the exact details.

7.      If you are amending more than one tax year, prepare a 1040X for each year and mail them in separate envelopes.

8.      If you use other IRS forms or schedules to make changes, attach those forms to the submitted 1040X.

9.     The most important section on the 1040X form is the “Explanation of Changes”.  You need to clearly and precisely explain why you are submitting an amended return and what changes you are making.

10.    If the changes you make on the federal return also results in a change to your Ohio return be sure to submit an Ohio amended return as well. Note: Ohio no longer uses a special amended tax return.  Instead, use the normal Ohio IT 1040 return and mark the “Amended” box located on the top of page 1.

Let us know if you have any questions about filing an amended return.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.