Happy New Year from Holt Pros!

Holt Pros wishes you a very successful and Happy New Year!

Enrolled Agents (EA) – Trusted Tax Preparers

Learn about Enrolled Agents (EA) with this great video!

Proud member of the National Association of Enrolled Agents!

Commit to Your Community

Excellent article by 30 Second Marketing Tips on the advantages of making a commitment to your community. Reach out and make a difference  in your community.

  Make a Commitment to Your Community – by 30 Second Marketing Tips

14 States with Minimum Wage Increases for 2014

Fourteen states have announced an increase in their minimum wage rate. Employers in these states should update their payroll records accordingly, install applicable payroll tax table updates in their payroll system and update their state regulated wage posters for employees.

Consult your applicable state labor department website for additional information.

Merry Christmas from HoltPros!

Holt Pros wishes you and your family a blessed Merry Christmas!

Business Tax Filing Season Begins January 13, 2014

The IRS will begin accepting 2013 business tax returns on Monday, January 13, 2014. This start date applies to both electronically-filed and paper-filed returns.

Business returns include any return that posts on the IRS Business Master File (BMF). BMF returns include a variety of income tax and information returns such as Form 1120 filed by corporations, Form 1120S filed by S corporations, Form 1065 filed by partnerships and Form 1041, the return filed by estates and trusts. It also includes various excise and payroll tax returns, such as Form 720, Form 940, Form 941 and Form 2290. The IRS expects to be able to begin processing any of these business returns on Jan. 13.

The Jan. 13 start date does not apply to unincorporated small businesses that report their income on Form 1040. The start date for all 1040 filers is Jan. 31, 2014. Although the IRS encourages these small businesses to begin preparing their returns now, it will not be able to accept these or any other individual returns or begin processing them until Jan. 31. This includes sole proprietors who file a Schedule C, landlords who file a Schedule E and farmers who file a Schedule F.

2014 Tax Filing Season for 1040 Filers Opens January 31, 2014

The Internal Revenue Service announced they plan to open the 2014 tax filing season for all 1040 filers filing their 2013 income taxes, on January 31, 2014. This includes all small business owners that file on Schedule C as sole proprietors, Schedule F as Farmers, or Schedule E as landlords. Anyone expecting a tax refund is strongly encouraged to file electronically (e-file) to receive their refund in the fastest manner.

Personal Files – How Long to Keep?

Personal files are always challenging but the best way to tackle the piles is stay on top of it and be consistent with your system. Follow these basic rules on personal file record retention.

Bank Records: Keep deposit and ATM receipts until you reconcile your bank account each month. Retain your monthly bank statements with your tax records to support your payments for your tax deductions.

Credit Card Bills: Once you have reviewed them and paid them, file any that support tax deductions with your tax records.

Tax Records: Retain tax records and supporting documents for 7 years.

Insurance Policies: File original policies until they are replaced when renewed.

Investment Statements: If your annual investment statement gives details of all activity of all transactions, you can shred the monthly and quarterly statements. Investment statements with cost basis should be retained until the asset is disposed. The documents then become supporting documentation for your tax return for the period when the disposal occurs.

Payroll Check Stubs: Keep the current year’s records until you have reconciled them to your annual W-2 form. Always keep at least 4 of the most current pay stubs for document requirements for possible financing needs.

Receipts: Maintain receipts for any purchases that include a warranty. Use credit card receipts to reconcile against your monthly credit card statement and then shred. Keep receipts for any possible purchases that might need returning. File receipts for all tax deductions with your tax records.

Loan Documents: Maintain until the loan is paid in full.

Warranty Records: Keep original purchase receipts with the warranty documents for major appliances, electronics, household repairs, or automobiles. The documents can be shredded when the warranty expires or the item is disposed.

Vehicle Records: Maintain receipts, registration and title information as long as you own it.

Permanent Records: Wills, Life Insurance Policies, Estate Planning documents, defined benefit plan documents, retirement plan documents should be retained indefinitely.

Stay on top of your piles and consider all paperless options especially for those items that you need to retain for the longest period or indefinitely. Have a simple system and be consistent with processing your paperwork. Happy filing!

Pay it Forward – Add a Charity to Your Christmas List!

Paying it forward can be a rewarding experience when you realize your efforts are making a difference in someone’s world. You may also be able to qualify for a charitable tax deduction as well. Some options to consider as you are making your Christmas lists are:

Special Tax-Free Charitable Distributions for Certain IRA Owners

This provision, currently scheduled to expire at the end of 2013, offers older owners of individual retirement arrangements (IRAs) a different way to give to charity. An IRA owner, age 70½ or over, can directly transfer tax-free up to $100,000 per year to an eligible charity. This option, can be used for distributions from IRAs, regardless of whether the owners itemize their deductions. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible.

To qualify, the funds must be transferred directly by the IRA trustee to the eligible charity. Distributed amounts may be excluded from the IRA owner’s income – resulting in lower taxable income for the IRA owner. However, if the IRA owner excludes the distribution from income, no deduction, such as a charitable contribution deduction on Schedule A, may be taken for the distributed amount.

Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.

Amounts transferred to a charity from an IRA are counted in determining whether the owner has met the IRA’s required minimum distribution. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats amounts distributed to charities as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions. See Publication 590, Individual Retirement Arrangements (IRAs), for more information on qualified charitable distributions.

Rules for Charitable Contributions of Clothing and Household Items

To be tax-deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more that includes, among other things, a description of the items contributed. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

Reminders

To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following additional reminders:

• Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2013 count for 2013. This is true even if the credit card bill isn’t paid until 2014. Also, checks count for 2013 as long as they are mailed in 2013.
• Check that the organization is eligible. Only donations to eligible organizations are tax-deductible. Exempt Organization Select Check, a searchable online database available on IRS.gov, lists most organizations that are eligible to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the database.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2013 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
• For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.
• The deduction for a car, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
• If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.
• And, as always it’s important to keep good records and receipts.

Remember to add a charity to your Christmas list and pay if forward this year! Someone will benefit greatly from your generosity!

Business Files – How Long to Keep?

As 2013 ends and 2014 begins you will want to organize your business files and prepare for the change in tax years. Get ready to shift your records from active to storage. Clear your storage files for any records not needed. It is advisable to shred the documents that are past the retention record recommendation period.

Basic rules for document retention are:

Income  Tax Returns: It is advisable to retain income tax returns and all supporting documents for at least 7 years.

Employment Tax Records: Retain all employment tax records and all supporting documents for at least 4 years.

Asset Records: All asset records should be kept until the year you dispose of the asset. The asset documentation then becomes a supporting document for the tax return for the period of time when the asset is disposed.

Employee Records: Employee documents should be retained for a minimum of 7 years after an employee has been terminated. If there are any worker’s compensation claims or legal disputes, the files should be retained at least 4 years after the claim or dispute was settled final.

Financial Records: Cancelled checks, financial statements, bank statements, credit card statements and general ledgers should be retained for 7 years.

Develop your Document Management system and take charge of your records. Happy Filing!