If you’re like most small businesses, you look for ways to turn any expense into a tax break, but if you don’t know what to look for you could be leaving a lot of money on the table. When it comes time to scour your records one last time before meeting with an accountant, it makes sense to check for any additional write-offs you may have missed. To help you get your ducks in a row, here are some tax deduction’s small businesses commonly overlook:

Job Related Moving Expenses

Who doesn’t dread packing, moving and all the hassles that come with it? If you have moved in connection to your business, and your new location is at least 50 miles away from the previous location, you may qualify to deduct moving costs that would otherwise be considered personal expenses. This is another reason to pat yourself on the back for all your trouble to relocate.

Education Expenses

Entire industries can change practically overnight due to disruptive technology. Keeping your skills sharpened to keep up is a must to stay competitive. If you’ve spent money improving or keeping your skills current for your existing business or employer, you can deduct those costs.

Software

Did you upgrade a computer’s operating system in the last year? Great news! Expansions and improvements in section 179 at this moment gives you the ability to fully expense any software you may have purchased in the last year for your business.  You now have one more reason to feel good about upgrading your technology.

Home Energy Savings

Being environmentally conscious has yet another perk. You can deduct up to $500 for energy-efficient items you add to your home or make replacements with anything that can be categorized as energy saving from insulation to appliances.  If you made a decision last year to buy that solar panel for your home, you have another reason to be glad you did.

Non Cash Contributions

Giving not only makes you feel good, it can clear up space in your work area to increase productivity. You can receive a tax break on almost anything donated to charity if the items are in good or above-average shape.  To get this credit it is critical to keep the receipt from the donation. Giving up your clutter is not only someone else’s future treasure; it’s a win for you!

As you sort and gather your records for tax preparation, you may find yourself with a lot of questions or concerns about filing properly to avoid audits. Feeling overwhelmed? There are lots of ways to stay on top of it, and one way would be to meet a few times throughout the year with a tax professional to help you. For more information about tax credits or general tax help with preparing your refund visit the IRS website or schedule an appointment with one of our certified public accountants by calling 815-459-4300.

Now is a good time to hire a CPA to handle your business accounts or to consider a career in accounting and finance. Average starting salaries for accountants and finance professionals are expected to advance 3.5% this year, according to forecasters.

The certified public accountant remains the most requested accreditation in this arena.

Others in demand are: senior-level accountants and tax professionals, according to Robert Half International, the world’s first and largest specialized staffing firm.

There are three broad areas within the accounting and finance career field: auditing, finance and accounting

Auditors maintain and examine the financial records of government agencies and review the accounts of private businesses and individuals whose activities are subject to government regulations or taxation

Finance involves the study of financial resources. These professionals analyze revenue and expenses to ensure effective use of capital. They also advise businesses about project costs, make capital investments, and structure business transactions to help companies grow.

Accounting involves the financial accounts of a firm; such as conducting day-to-day bookkeeping operations, balancing the books, tracking expenses and revenue, executing payroll, and paying the bills.

In order to become a CPA in the United States, the candidate must pass the Uniform Certified Public Accountant Examination. State requirements for the CPA qualification can be summed up as the Three Es—Education, Examination and Experience. And let’s add another “E” for ethics. Over 40 of the state boards now require applicants to complete a special examination on ethics. This alone can give you peace of mind that your CPA operates under the highest of ethical standards. To find out more about Sansone  for your accounting purposes call us at 815-459-4300.

If you are a small business owner you are probably familiar with QuickBooks. But for those of you who are thinking of starting a small business and would like to know more about the benefits of using this software, here is a brief overview of the product.

QuickBooks is a business accounting software developed and marketed by Intuit, a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; and accounting professionals.

Certified QuickBooks ProAdvisers are professionals that have been certified on QuickBooks. More than 50,000 accountants, CPAs and independent business consultants are members of the QuickBooks ProAdvisor program, including Sansone & Associates.

QuickBooks is used to perform such tasks as record keeping, payroll processing and data compilation. Its payroll management feature tracks payments to employees and generates accurate payroll reports. The program allows professionals to accurately track sales and expenses which enables them to keep organized financial records at their fingertips, making them accessible online or on a personal computer.

It is also a simple and reliable productivity tool that is used in tax preparation. Because it organizes and stores financial records in one place, it makes it easy to find the required information that your accountant will need during tax season.

This double-entry, easy-to-use bookkeeping software can also take all the data from various transactions to produce reports, charts and graphs.  As a cautionary note, this ease of use make QuickBooks a very open system and very susceptible to being used incorrectly.  Some quality time spent with an accounting professional to guide you in the use of QuickBooks is time well spent.

QuickBooks is loaded with features that allow small businesses to save time and stay organized. To find out more about how Sansone uses this user-friendly software for accounting purposes call us at 815-459-4300.

Published January 18, 2012

The economic storm that rocked many baby boomers’ nest eggs has left many of them considering a reverse mortgage as part of their retirement plan.

Reverse mortgages allow homeowners who have reached age 62 or older to draw down on their home’s equity in exchange for cash. For instance, if your house is worth $250,000 you can get up to $250,000 either as a line of credit, all in a lump sum or via monthly payments.

If there is an existing mortgage balance on the home, you’ll have to pay that off first. Just like with a home equity loan, you’ll have to pay interest on what you borrow, and there are fees and closing costs associated with a reserve mortgage. What’s different is those fees are paid upfront, and are deducted from the amount you’ll receive. Peter Ball, the president of the National Reverse Mortgage Lenders Association, says some mortgage companies are now offering the option to eliminate the fees in exchange for a slightly higher interest rate.

While your home will be paying you, you are still on tap for the taxes and insurance related to the house. If you don’t stay current on taxes and insurance your loan could become payable. According to the Federal Trade Commission, most reverse mortgages have variable interest rates which change with the market. This loan product can also use up some or all of the equity in your home, resulting in fewer assets you can leave to heirs.

With a reverse mortgage, as soon as you move or die the loan comes due. If you get sick and are away from your home for a year, the loan also becomes payable. Since most reverse mortgages done these days are backed by the Federal Housing Authority, if the house is worth less when the loan becomes due, the government will take on the difference.

When deciding if a reverse mortgage is right for you, it’s important to determine why you need the money and if there are alternatives–after all, a reverse mortgage isn’t free. “What do you need the money for and when do you need it and are their other options worth considering,” are things you need to take into account, says Ball. “A lot of seniors do have a need because they have peaks and troughs when they need cash and sometimes they have to liquidate investments at an inopportune time.” With a reverse mortgage, seniors have a line of credit they can draw upon in these instances, potentially avoiding situations where they have to cash out a stock or pay a penalty for cashing out a CD early, he says.

Reverse mortgages have gotten a bad rap over the years because of their high fees and stories of seniors who took out a reverse mortgage only to burn through the cash in a year or two and end up in a worse financial situation than when they started. According to Gregg Smith, president and COO of One Reverse Mortgage, reverse mortgages should be a tool for every senior, even those who aren’t in desperate need of cash.

Smith says a reverse mortgage makes sense for someone who has enough cash flow to live, but may not have enough to pay for supplemental long term care insurance. In that instance, they can use the reverse mortgage to cover those monthly payments, he says. “A reverse loan program really should be part of every senior’s plan. It doesn’t mean it has to be the program used.”

A reverse mortgage also makes sense for people who need cash to get out from under a mortgage or those who want the flexibility of having a line of credit, says Smith. “The industry has been exclusively working in the needs based bucket and the program’s appeal is much broader than that.”

If you are like most people, you probably have a lot of questions about how to maximize your tax refund and how to qualify for certain tax credits. To shed some light on this topic, here is a list of the top ten most common tax questions:

1. What is a split refund?

A split refund allows you to divide your refund, in any proportion, and direct deposit the funds in up to three different accounts with U.S. financial institutions.

2. What is the Earned Income Tax Credit (EITC)?

The United States federal Earned Income Tax Credit (EITC or EIC) is a refundable tax credit that helps working people with limited income.  With the EITC, you pay less in income taxes.  To qualify, you and your spouse and/or dependents must have a valid Social Security Number.

3. If parents claim their full-time college students as dependents, can their children still claim own personal exemption when they file their return?

If parents claim their full-time college students as dependents on their income tax return, their children cannot claim themselves.

4. Can I still get a tax refund this year if I owe money on my income taxes from last   year?

The Internal Revenue Service (IRS) will most likely automatically apply your refund to any past due amounts. If you owe any federal tax, state tax, student loans, or child support, your refund may be withheld.

5. Does paying child support affect my taxes in any way?

No, child support payments are not deductible by the payer and they are not considered taxable income by the parent who receives them.

6. Can I claim the Homebuyer Tax Credit if I I purchased a home in 2011?

In General, The first-time homebuyer credit is no longer available. Homebuyers who purchased their first home in 2008, 2009 or 2010 (where the purchase contract was signed by May 1, 2010 and the purchased closed by October 1, 2010) were eligible to take advantage of the first-time homebuyer credit. However, you can deduct interest paid on your mortgage loan and real estate taxes you paid for your home. For qualifying active duty service members, the credit was extended for purchase contracts signed by May 1, 2011 and the home purchase closed by July 1, 2011

7. To qualify for head of household filing status, do I have to claim a child as a dependent?

In certain circumstances, you do not have to claim the child as a dependent to qualify for head of household filing status. For example, a custodial parent may be able to claim head of household filing status even if he or she released a claim to exemption for the child.

8. What is the American Recovery and Reinvestment Act (ARRA) of 2009?

The American Recovery and Reinvestment Act (ARRA) of 2009 is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn. The bill includes federal tax cuts, expansion of unemployment benefits and other social provisions; including domestic spending in education, health care, and infrastructure, including the energy sector. ARRA, most of the provisions of which expired at the end of 2010, provided for $787 billion of stimulus which included increased government spending and tax credit benifits for taxpayers including the homebuyer credit, home energy cridt, sales tax deduction ext.

9. What is a Lifetime Learning Credit?

The Lifetime Learning Credit is a nonrefundable tax credit up to 20% of the first $10,000 of qualified tuition and related expenses per family.

10. When is the deadline to file taxes?

The deadline to file your taxes is Tuesday, April 17, 2012.

For more information about tax credits or general tax help with preparing your refund visit the IRS website or schedule an appointment with one of our certified public accountants by calling 815-459-4300.

These are not the Audits you are looking for

As tax time approaches many people often wonder if they should use a Certified Public Accountant (CPA) or an online tax preparation service such as TurboTax®.

Let’s first look at the role of the CPA.

CPAs are well trained financial experts that have in depth knowledge of business, including income tax preparation, venture capital, estate planning, payroll processing, bookkeeping and forensic accounting to name a few.

Unlike TurboTax®, a CPA can sit down with you and directly answer any questions you might have about how to maximize your tax return. They can also identify eligible tax saver credits and numerous tax deductions.

While 21 percent of Americans use tax software to do their own taxes, 60 percent of Americans still use a live person. Even with the emergence of newer technology and various ways we use the internet to make life easier, people still trust their most important asset, their money, to a trustworthy and knowledgeable Certified Public Accountant.

TurboTax® serves as a virtual accountant to assist tax payers in doing their taxes with step-by-step guidance. But some tax deductions can be complicated and best handled by a professional. Having your taxes done by a CPA ensures that your taxes are done accurately, which can bring peace of mind if you are ever audited; this alone can outweigh the use of tax software, for many.

At Sansone, we guide our clients through a full range of tax planning and preparation decisions to minimize your tax liabilities. Our expertise and experience allow us to optimize opportunities in the application of tax rules.

For more information about how we can help you maximize your tax return, call us at 815-459-4300

Residential energy property expenses are expenses for qualified energy property (including labor costs for onsite preparation, assembly, or original installation) that meets specific standards set out in Code Sec. 25C(d). The credit allowed for energy property expenditures can’t exceed:
• $300 for any energy-efficient building property (electric heat pump water heater, electric heat pump; central air conditioner; natural gas, propane or oil water heater; or a stove burning biomass fuel to heat or provide hot water to a taxpayer’s residence in the U.S.) that meets specific energy efficiency standards;
• $150 for a qualified natural gas, propane, or oil furnace; or qualified natural gas, propane, or oil hot water boiler; or
• $50 for an advanced main air circulating fan. (Code Sec. 25C(d))
There’s no credit for expenditures made from subsidized energy financing. (Code Sec. 25C(e))