IRS: Tax returns will be accepted beginning Jan. 19

Tax season kicks off Jan. 19 when the Internal Revenue Service will begin accepting electronic returns.

More than 150 million individual returns are expected to be filed in 2016 – with more than 80 percent being submitted electronically and prepared using tax preparation software, according to an IRS news release.

Early birds eager to file can work with tax preparers ahead of time, but the documents won’t be filed until the Jan. 19 start date.

For procrastinators, the filing deadline to submit is April 18 – rather than the traditional April 15. Washington, D.C., will celebrate Emancipation Day that Friday, pushing the deadline to the following Monday, according to the release.

The IRS in its release is urging taxpayers to have all year-end statements in hand before filing, including W-2 forms from employers, 1099 forms from banks and other payers and 1095-A forms for those claiming the premium tax credit.

I have this piece of advice for early birds and procrastinators alike: Have a trusted tax preparer file your return for you.

“The biggest mistake I see is that they trusted the wrong preparer. With the IRS, there’s a bigger focus on fraud prevention. People doing tax returns for others out of their garages are the people you cannot trust” .

Another bit of advice:  File – even if you think you owe – for two reasons.

In some instances, the person who thought they owed ends up receiving a refund from the government, he said. And people who don’t file can face steep penalties from the federal government.

The penalties for not filing or paying owed taxes on time include an additional 5 percent charge a month for the payment that the person failed to deliver on time. The maximum penalty is capped at 25 percent over a five-month period, but there’s also accrued interest.

Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.

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DATES TO KNOW

First day to file: Jan. 19

Last day to file: April 18

Two Websites That Can Calculate Your 2015 Tax Refund

By now, you’ve probably gotten taxes out of the way for the 2015 tax season. However, if you want to be a financially conscious person you should already be preparing for the 2016 tax filing season.

Tax Refund Calculator 2016

If you are expecting a refund, you probably want to know just how much of a refund you can expect.

Having a real life number will allow you to plan the remainder of your year correctly. However, coming up with an accurate estimation is not always easy. Therefore, this article will discuss two websites that help calculate tax refunds and estimated taxes.

H&R Block Online Calculator

H & R Block has been helping American’s with their taxes since 1955, when their first office opened. Back then, they were offering high interest loans based on someone’s estimated tax refund.

Now that those programs have been discontinued, they still make it their business to help you see what amount you can expect in your tax refund. Just go here if you would like to use the H & R Block tax refund calculator. You can rest assured it’s up to date by the latest IRS tax figures.

TurboTax Online Calculator

An increasing number of people are turning to TurboTax to get their income tax prepared and filed every year. Their user friendly tools take all the hard work and stress out of tax form preparation and will always get you the largest refund.

One popular tool is the TurboTax tax refund calculator because it is very user friendly and it is attractive. The graphics and sliders make understanding taxes very easy and it updates your estimate as you add in information.

Keep in mind you will have to estimate your withholdings so the estimate provided will be an approximate amount you can expect. However, if your salary is the same as last year, your estimation should not be too far off.

When Will You Get Your Refund?

Once you have your return accepted by the IRS your refund is based on the IRS E-file Refund Cycle Dates. It is estimated that if you electronically filed and selected direct deposit as your payment receivable method, you should get your refund in no more than 2 weeks. However, if you are waiting for a paper check it can take an additional week.

Get your tax refund faster with efile

When you eFile, you will be able to check your tax refund in real time using the “Where’s My Refund Tool” by the IRS within 24 hours after it has been received. Paper filing can take up to a month to be able to track your refund status through this tool.

Additionally, in order to use the tool you have to provide your social security number/EIN, filing status, and the exact amount of your projected refund. When you enter this information your estimated refund release date will be added. The date provided is not set in stone, which means you should check the status on a weekly basis.

Closing Thoughts

Estimating your refund does not have to be hard, thanks to the Free TurboTax refund calculator and the Free H&R Block refund calculator. You can plan and make sure that you spend your refund wisely when it arrives. The IRS says that taxpayers should expect to receive their refunds within 21 days after they file their tax returns.

Lastly, keep in mind the child tax credits, earned income credits, and federal income tax brackets change yearly, therefore, you could be getting an even larger tax refund when the new laws go into place.

Five FAFSA Tips To Help You Avoid College Loans

FROM FORBES.COM

Last time this year, I was filing the FAFSA, which is the key to college financial aid. While I’d rather have a dental filling, there are some key steps that will help you get through it and avoid loans.

I’m going to square with you. The government doesn’t make it easy for you to complete the FAFSA. But in most cases, it’s the only way colleges will consider you for financial aid, so walk through it step by step.

It’s funny, but the Department of Education, which administers the FAFSA, doesn’t make any direct decisions about financial aid. Colleges do. Yet it provides a thumbnail for how much your family will be expected to contribute to college costs, which it calls the “expected family contribution (EFC).”

There’ nothing precise about the FAFSA. It doesn’t determine aid amounts, nor does it give you any money directly. It won’t even tell you exactly how much aid a college will give you. Financial aid awards are still a real black box. You’ll still have to work with a college to try and get the best deal. Here are five essential points:

 * Every detail matters on the FAFSA, so be accurate and complete.

Details like dependent and parental status are huge on the FAFSA. If a student comes from a single-parent household, for example, the chances of getting aid are much greater. Who has the child as a dependent on tax forms? Dependent and independent status are also important.

* Provide all relevant financial information.

Although you can download your tax returns, make sure the FAFSA has information from all income sources. Ultimately, the FAFSA will tell colleges how much money is available for college expenses. No college expects you to tap into retirement savings or sell your home. While you have to report that information, it’s not part of the formula.

* Asset location is important.

As I mentioned earlier, colleges will want to know about your savings, but it’s important where that money is held. If you have a stock portfolio that’s outside of a retirement account, that will count as funds that could be tapped for college.

Assets in 401(k)s, defined pensions and life insurance policies aren’t seen as “liquid” for the purposes of college financing. Colleges will downgrade your aid package if there’s a substantial amount of money in a child’s name, such as in an UGMA trust. That’s why 529 savings plan, owned by parents for the benefit of children, are better vehicles for aid qualification.

* Respect the FAFSA “window,” so file early.

Many forms of aid, such as state scholarships, are first come, first served, so file as early as you can before February 1. Next year, those deadlines will change, but for now, the early bird gets the worm. The student is the person filling out the form, so make sure he/she has their “FSA ID” so they can file a secure FAFSA.

* The FAFSA is not an aid offer.

Keep in mind that the EFC — what you’re expected to contribute to pay for college — is not written in stone. Every college may have resources they can bring to the table. You can certainly press them on tuition discounts, grants, work-study and scholarships. Also apply for outside scholarships. Many elite and private colleges have special scholarships that they can tap that they don’t advertise.

The key to understanding the FAFSA process is that it only opens the door to an aid discussion. Your main objective is to acquire as much non-loan aid as possible. And the first financial aid package a college offers needn’t be their last. You can request a “professional review” from the college’s aid office, which is an appeal for more money.

For more help on financial aid, you can start here. I also recommend “Filing the FAFSA,” which is available here.

Do you think the FAFSA will be a waste of time because your family makes too much money? Fill it out, anyway. There’s no hard-and-fast formula for aid these days. And your student may still qualify for merit aid, which is not based on financial need. Ask for any kind of grants, scholarships or tuition discount available. You won’t know about these opportunities unless you work with a college directly.

The best thing about the FAFSA expedition is that not only can you save thousands on college costs, everything you need to know in the way of advice is free. All you have to do is spend the time and work through the forms.

Expert Tax Tips For 2015 Filing Season

As you start working on your New Year's resolutions, make sure filing your taxes early is one of them.

Filing early for taxpayers who have all their tax documents has its benefits.

Filing early will help you get your refund quicker, but it also helps to prevent taxpayers from becoming victims of identity theft during the e-filing season.

Each year, many taxpayers unfortunately find out their tax return will not be accepted for e-filing purposes because someone else has used their social security number. When this happens, the individual will need to file their tax return manually with an explanation and documentation as to why their return would not be accepted for e-filing. Also, you may need to get your accountant to file Form 14039 Identity Theft Affidavit in order to report your ID Theft and get a PIN to file future returns.

So here are the dates you need to know this year: The IRS announced the start of the 2015 tax filing season is January 19, 2016. This year, the tax filing season will continue until April 18 for non-extended returns. The normal filing date of April 15th is extended to Monday, April 18th because the 15th is the celebration of Emancipation Day in Washington, D.C.  But you need to keep in mind the Wisconsin state return may or may not have all its tax forms finalized by the January 19th date.

Another reminder: Your personal life could affect your taxes this year. A major life change such as getting married, having children and buying a new home or starting a new business can have an impact on an individual’s or married couple’s return. That means you need to keep organized records and stay in touch with your accountant or financial advisor throughout the year and not just during the tax filing season. ​

And that's another big pointer! The key to end-of-year tax planning is to keep organized tax records throughout the year while staying in regular contact with your tax accountant or financial advisor. A good way of keeping the records is to establish a filing system whereby tax documents (ex. Charitable Contribution Statements, W-2’s, 1099’s, 1098 Mortgage Interest and 1098-T Tuition Statement) can be filed as soon as they come in the mail.

A tax organizer/checklist and good working relationship with your accountant goes a long way in getting prepared for tax season.  With the prior tax year’s history entered into the software, the tax organizer/checklist can be an invaluable piece of information in getting everything ready for tax season.

5 Tax Talks to Have With Your Financial Adviser Now

Most people don’t think about taking action to lower their tax bill until March or April, when it’s too late to do much about it. But if you are proactive in the last weeks of December, and do some smart tax planning, you can potentially save a lot of money on your 2015 taxes and stress when tax season comes around.

At my wealth management firm, we are now busy analyzing each client’s portfolio and tax situation to make sure we coordinate with his or her tax adviser to help avoid any unnecessary taxes for 2015.

Here are five tax discussions to have with your adviser now:

1. Capital gain distributions Due to 2015 profit-taking by investment managers, some investments are expected to post higher than average capital gains distributions to their investors this year. If these investments are held in non-retirement accounts, the distributions are taxable in 2015. Now may be an excellent time to focus on year-end tax planning related to your portfolio.

If you are proactive in the last weeks of December, you can potentially save a lot of money on your 2015 taxes — and stress.

2. Harvesting tax losses  If you have capital gains this year, you typically will pay a tax rate of 15 to 23.8 percent for long-term gains (assets owned longer than one year) and your ordinary- income tax rate of up to 39.6 percent for short-term gains (assets owned for less than 12 months). If you have any stocks, bonds or mutual funds with losses that you haven’t taken yet, it may make sense to “harvest” some of these losses — which means selling the investments to realize the losses and then using the losses to offset your 2015 gains, dollar-for-dollar.

3. Roth IRA conversions If you have suffered a lower than normal taxable income year or had an ordinary income loss, you may want to consider a Roth IRA conversion for a certain dollar amount. The advantage of converting your traditional IRA to a Roth IRA: You don’t pay income tax on a Roth IRA when you withdraw money in retirement, though you will pay income tax on the traditional IRA contributions. The advantage of a conversion in a lower-income year is that you may be in a lower tax bracket than otherwise, so the taxes due will be less.

Alternatively, if you have a traditional IRA that declined significantly in value, you may want to consider converting it to a Roth IRA at a discount, depending on how long you plan to hold that asset. That’s because, due to the loss in the IRA’s value, the taxes owed on the transfer will be less than if investment hadn’t taken a plunge.


4.Maximizing retirement plan contributions If you are a solo self-employed business owner, you may be able to set up an inexpensive retirement plan that would let you contribute up to $53,000 if you’re under 50; up to $59,000 if you’re over 50. These contributions would be tax deductible for 2015 if you establish and partly fund the plan by December 31.

5. Taking any Required Minimum Distribution (RMD) from an IRA or retirement plan. If you’re 70 1/2 or older, you must take your RMD before December 31. If you don’t, the IRS will levy a severe penalty —50 percent on the amount you were required to take.

14 Things to Consider Before Hiring a Part Time Accountant

FROM http://smallbiztrends.com/

As an entrepreneur, you should be worried about running
your business, not organizing your finances. That said, even a small financial misstep or oversight can really hurt your company. Here are14 Things to Consider Before Hiring a Part Time Accountant:

1. Trust but Verify

“First, don’t hire someone based on their cost. This is your money you’re talking about. If someone is charging significantly less than everyone else, there’s a reason why. Second, you need to hire someone to verify the work of the first party. Nothing keeps a consultant honest like peer review.” 

2. Make Sure Their Power Has Limitations

“The person doing your bookkeeping entries must not have the power to write checks or spend money. The people who are allowed to spend money cannot alter their purchase entries in your accounting system. If you ever set up a structure where one person can cover up their commute or nail salon expenditures, you’ve got a recipe for disaster. The temptation is just too high for most people.” 

3. Test Their Digital Savvy

“Before I found my current CFO, I worked with a money manager who wanted to do things the “old school” way and just wasn’t understanding the online tools and technology I used to automate bookkeeping and financial tasks. In hiring a new person for the role, I tested technical savvy and familiarity with online tools and systems and I ended up with someone perfect for our business.” 

4. Evaluate Your Needs

“If your monthly spend is less than $10,000, keep your fixed costs low and hire a professional bookkeeper. If you have more than 10 employees and some revenue or external capital, it’s advisable to loop in an experienced CPA who will function as a part–time controller. If you are a high-growth startup and need a strategic financial advisor who will go beyond the month-end close, search for a part–timeCFO.” 

5. Pair Software and Industry Knowledge

“Hiring a part–time person to manage finances might not be the best idea as contracting can likely get you better and scalable talent. If you are set on this, look for someone who knows the software platform that you have. That can be a big issue. Industry knowledge is great, but not super important in most cases. Lastly, check all their references.” 

6. Set Up a Regular Schedule to Check In

“When starting to work with a part–time finance person for your business, make sure that you set up a regular cadence for checking in. It is important to organize your finances in an ongoing way to avoid getting backlogged during crunch times for reporting, taxes or fundraising. Bi-weekly or monthly works best, depending on how much work you are outsourcing.” 

7. Be Up Front with Their Responsibilities

“If you are hiring someone part–time, there has to be a clear job description and tasks to accomplish. It’s important for them to have a defined role so they aren’t stretched too thin. Additionally, set up and stick to a regular check in schedule. You must be in the know about what is going on with your books.” 

8. Don’t Do Business with Relatives

“Stay away from hiring non-financial family members. Many people look to their family to help with finances because they think they are going to save money and that they can trust family members. However, having inaccurate books or not setting up and maintaining budgets, spells trouble. Hire the most talented person you can find who has the experience and know-how you need.” ~ Marjorie Adams, Fourlane

9. Partner Up with an Expert

“If you’re working with someone part time, make sure they are closely working with a financial advisor, business consultant, or CPA who can advise them on the best way to organize your finances. Let an expert guide your part–time employee to make sure your finances are being maximized and properly organized. It’s easy to create chaos with finances without proper guidance. Involve an expert!” 

10. Communicate Clearly

“Whenever you hire someone to work with you on your business, you need to have open and clear lines of communication. That includes letting them know exactly what you need and require, as well as what their responsibilities are from the start. The earlier you can establish great communication, the faster you will be able to build trust and have a great working relationship.” 

11. Don’t Skimp

“This person is managing one of the most important aspects of your business. Pay them what they’re worth. If you get an offer from a potential hire that seems too low, that’s usually a sign of inexperience and can — in some cases — be an indicator of competency. Don’t skimp! Spend the extra you need to hire an expert and don’t entrust your finances to anything less.” 

12. Make Sure They Understand Your Industry

“If you’re looking for truly value-add finance support, make sure the candidate understands your industry and business model. Don’t hesitate to ask them what they think of your industry and your specific business model. If they can’t tell you something you don’t know already, (specific tax code, financing options), that’s a yellow flag.” 

13. Plan Ahead

“Be specific on duties. What are you handling as founder/owner and what they will be handling? Make sure they are clear on what reports they have access to, who they can divulge confidential information to, what is expected in terms of payroll, liabilities, payments, authorizations, deposits, forecasting and other specific duties.” 

14. Know Your Business

“It’s important that you know your business when it comes to cash flow, expenses, market forces, etc. Build a dashboard with tasks that you would like yourpart–timeresource or contracted company to provide you with on a monthly basis apart from the usual deliverables. Personally onboard the person/contracted company and share the challenges and your concerns. Be on same page for tools, policies, process and expectations.” 

Be tax-savvy as this year ends and the new one begins

A new year is upon us and with it comes tax season. Now is the time to gather documents in preparation for tax time and to consider a few end-of-year strategies when it comes to taxes. An additional tax-related issue to consider at this time is the Affordable Care Act’s open enrollment period, which ends next month.

It’s time to collect your end-of-year documents to be ready for filing your 2015 tax return. The holidays are a very busy time. Taxes and documents may be the last thing on your mind, but it’s important that you keep track of a few key pieces of information.I offer this list of items to keep handy for tax time:

1.       W-2 Forms – W-2s issued by employers show income, taxes taken out, and other data essential for filing. Save W-2s for every person in the household and for every job held in 2015.

2.       Other Income statements – This form shows other income such as unemployment, social security, school loans, health care reimbursement, interest income, dividends, sale of stock or income from any contract work.

3.       Payment Statements – This form shows payments made such as property taxes or school loans.

4.       Expense Statements – Documents showing all payments and expenses related to self-employment, including cash receipts, credit card receipts and any statements of income or interest from savings accounts and investments.

5.       Bank Account Numbers – These are necessary for a direct deposit of tax refunds. 

The more information you have, the better prepared you will be. When using a tax service, it’s vital to provide as much documentation as possible. The more data I have, the better I can assist in maximizing your refund or significantly lowering any taxes owed.

In addition to getting documents in order, tax payers should consider planning their deductions for the year. Move a charity or tax payment to December that you would normally do in January, or the reverse if you don’t have enough to itemize. Doing so would allow for itemizing every other year and coming out ahead overall.

You should also look at your IRA contributions, you have until April 15 to make a contribution for 2015.I advise against taking a late IRA distribution or 401K distribution if you had a lot of income in 2015 and expect less in 2016.

Another thing to consider is health insurance. Open enrollment for the Affordable Care Act ends January 31, 2016. The Affordable Care Act requires all Americans to have health insurance, whether purchased through www.healthcare.gov or through a commercial insurance company. Everyone filing a tax return must now report their health coverage to the IRS.

Uninsured individuals may face a tax penalty from the IRS. The fee for 2015 reflects an increase from 2014. Penalties for being uninsured are $325 per person or 2% of yearly household income. That fee will increase again next year to $695 per person or 2.5% of household income over the threshold.

Individuals who could not afford health coverage may qualify for an exemption and would not have to pay a fee. It’s important for people to know that exemptions are available and to understand the steps to take to request one.