Industry and Lifestyle Topics and Trends
August 21st 2019
The U.S. tax system operates on a pay-as-you-go basis. This means that taxpayers need to pay most of their tax during the year, as the income is earned or received. Taxpayers must generally pay at least 90 percent (however, see 2018 Penalty Relief, below) of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. If...
The U.S. tax system operates on a pay-as-you-go basis. This means that taxpayers need to pay most of their tax during the year, as the income is earned or received. Taxpayers must generally pay at least 90 percent (however, see 2018 Penalty Relief, below) of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. If they don’t, they may owe an estimated tax penalty when they file.
The IRS has seen an increasing number of taxpayers subject to estimated tax penalties, which apply when someone underpays their taxes. The number of people who paid this penalty jumped from 7.2 million in 2010 to 10 million in 2017, an increase of nearly 40 percent. The penalty amount varies but can be several hundred dollars.
The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. As a result, many taxpayers may need to adjust the amount of tax they pay each quarter through the estimated tax system.
Here are some simple tips to help taxpayers:
Who may need to pay estimated taxes
Individuals, including sole proprietors, partners and S corporation shareholders, may need to make estimated tax payments if:
they expect to owe at least $1,000 when they file their tax return.
they owed tax in the prior year.
Taxpayers who may need to make estimated tax payments include someone who:
receives income that isn’t from an employer, such as interest, dividends, alimony, capital gains, prizes and awards.
has tax withheld from their salary or pension but it’s not enough.
has more than one job but doesn’t have each employer withhold taxes.
is a representative of a direct-sales or in-home-sales company.
participates in sharing economy activities where they are not working as employees.
Wage-earners and salaried employees can avoid estimated tax payments by having their employer withhold tax from their wages. To determine the right amount to withhold, use the Tax Withholding Estimator , available on IRS.gov. Then, based on its recommendations, they can use Form W-4, Employee’s Withholding Allowance Certificate, to tell their employer how much tax to withhold from their pay. Anyone can change their withholding any time during the year.
When to pay estimated taxes
For estimated tax purposes, a year has four payment periods. Taxpayers must make a payment each quarter. For most people, the due date for the first quarterly payment is April 15. The next payments are due June 15 and Sept. 15, with the last quarter’s payment due on Jan. 15 of the following year. If these dates fall on a weekend or holiday, the deadline is the next business day.
Farmers, fishermen and people whose income is uneven during the year may have different rules. See Publication 505, Tax Withholding and Estimated Tax, for more information.
If a taxpayer doesn’t pay enough or pays late, a penalty may apply.
How to figure estimated taxes
The IRS recommends that everyone do a paycheck checkup in 2019, even if they did one in 2018, to determine if they need to adjust their tax withholding or make estimated tax payments throughout the year. Although especially important for anyone with a tax bill for 2018, it’s also important for anyone whose refund is larger or smaller than expected. By changing withholding now or making estimated tax payments, any taxpayer can better ensure they get the refund they want next year. For those who owe, making estimated tax payments in 2019 is the best way to head off another tax-time surprise a year from now.
Taxpayers should also make adjustments throughout the year if changes occur. When figuring their estimated taxes each year, taxpayers need to account for life events, like marriage or the birth of a child, that may affect their taxes. They should also adjust for recent changes in the tax law.
Individuals, sole proprietors, partners and S corporation shareholders generally use the worksheet in Form 1040-ES. They’ll need to know their expected adjusted gross income. They’ll also need to estimate their taxable income, taxes, deductions and credits. Some taxpayers find it helpful to use information from their prior year’s tax return when they complete the worksheet. Their estimates should be as accurate as possible to avoid penalties.
Some taxpayers earn income unevenly during the year. For example, a boat repair business might do more business in the summer. Taxpayers like this can annualize their income. Under this method, they’d make unequal tax payments, based on when they receive their income, rather than four even payments. Doing so could help them avoid or lower a penalty because their required payment for one or more periods may be higher with this method. See Worksheet 2-9 in Publication 505.
How to pay estimated taxes
Taxpayers can pay online, by phone or by mail. The Electronic Federal Tax Payment System and IRS Direct Pay are two easy ways to pay. Alternatively, taxpayers can schedule electronic funds withdrawal for up to four estimated tax payments at the time that they electronically file their Form 1040.
Taxpayers can make payments more often than quarterly. They just need to pay each period’s total by the end of the quarter. Visit IRS.gov/payments for payment information.
Penalties related to estimated taxes
If a taxpayer underpaid their taxes they may have to pay a penalty. This applies whether they paid through withholding or through estimated tax payments. A penalty may also apply for late estimated tax payments even if someone is due a refund when they file their tax return.
In general, taxpayers don’t have to pay a penalty if they meet any of these conditions:
They owe less than $1,000 in tax with their tax return.
Throughout the year, they paid the smaller of these two amounts:at least 90 percent (however, see 2018 Penalty Relief, below) of the tax for the current year
100 percent of the tax shown on their tax return for the prior year – this can increase to 110 percent based on adjusted gross income
To see if they owe a penalty, taxpayers should use Form 2210.
The IRS may waive the penalty if someone underpaid because of unusual circumstances and not willful neglect. Examples include:
casualty, disaster or another unusual situation.
an individual retired after reaching age 62 during a tax year when estimated tax payments applied.
an individual became disabled during a tax year when estimated tax payments applied.
There are special rules for underpayment for farmers and fishermen. Publication 505 has more information.
2018 penalty relief
The IRS is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year. The penalty will generally be waived for any taxpayer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty.
The waiver computation is normally reflected in commercially-available tax software and in the latest version of Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions.
This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act.
The updated federal tax withholding tables, released in early 2018, largely reflected the lower tax rates and the increased standard deduction brought about by the new law. This generally meant taxpayers had less tax withheld in 2018 and saw more in their paychecks. However, the withholding tables couldn’t fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions. As a result, some taxpayers could have paid too little tax during the year if they did not submit a properly-revised W-4 withholding form to their employer or increase their estimated tax payments.
The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where they had too much or too little tax withheld when they file their tax returns.
Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their tax returns.
IRS launches new Tax Withholding Estimator; Redesigned online tool makes it easier to do a paycheck checkup
August 8th 2019
IR-2019-139, August 6, 2019 WASHINGTON — The Internal Revenue Service today launched the new Tax Withholding Estimator, an expanded, mobile-friendly online tool designed to make it easier for everyone to have the right amount of tax withheld during the year. The Tax Withholding Estimator replaces the Withholding Calculator, which offered workers a convenient online...
IRS launches new Tax Withholding Estimator; Redesigned online tool makes it easier to do a paycheck checkup
IR-2019-139, August 6, 2019
WASHINGTON — The Internal Revenue Service today launched the new Tax Withholding Estimator, an expanded, mobile-friendly online tool designed to make it easier for everyone to have the right amount of tax withheld during the year.
The Tax Withholding Estimator replaces the Withholding Calculator, which offered workers a convenient online method for checking their withholding. The new Tax Withholding Estimator offers workers, as well as retirees, self-employed individuals and other taxpayers, a more user-friendly step-by-step tool for effectively tailoring the amount of income tax they have withheld from wages and pension payments.
“The new estimator takes a new approach and makes it easier for taxpayers to review their withholding,” said IRS Commissioner Chuck Rettig. “This is part of an ongoing effort by the IRS to improve quality services as we continue to pursue modernization and enhancements of our taxpayer relationships.”
The IRS took the feedback and concerns of taxpayers and tax professionals to develop the Tax Withholding Estimator, which offers a variety of new user-friendly features including:
Plain language throughout the tool to improve comprehension.
The ability to more effectively target at the time of filing either a tax due amount close to zero or a refund amount.
A new progress tracker to help users see how much more information they need to input.
The ability to move back and forth through the steps, correct previous entries and skip questions that don’t apply.
Enhanced tips and links to help the user quickly determine if they qualify for various tax credits and deductions.
Self-employment tax for a user who has self-employment income in addition to wages or pensions.
Automatic calculation of the taxable portion of any Social Security benefits.
A mobile-friendly design.
In addition, the new Tax Withholding Estimator makes it easier to enter wages and withholding for each job held by the taxpayer and their spouse, as well as separately entering pensions and other sources of income. At the end of the process, the tool makes specific withholding recommendations for each job and each spouse and clearly explains what the taxpayer should do next.
The new Tax Withholding Estimator will help anyone doing tax planning for the last few months of 2019. Like last year, the IRS urges everyone to do a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed this year. It’s also an important step for those who made withholding adjustments in 2018 or had a major life change.
Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income and those with complex tax situations.
To get started, check out the Tax Withholding Estimator on IRS.gov.
Tax WIthholding Estimator Infographic
August 6th 2019
IRS Tax Tip 2019-105, August 6, 2019 Taxpayers who must pay the heavy highway vehicle use tax should remember they can file and pay electronically. While some taxpayers who file Form 2290 are required to file electronically, all 2290 filers can do so. These taxpayers can use e-file software to both file Form 2290 and pay what they owe. The 2019 deadline to file...
Taxpayers can file Form 2290 electronically to pay heavy highway vehicle use tax
IRS Tax Tip 2019-105, August 6, 2019
Taxpayers who must pay the heavy highway vehicle use tax should remember they can file and pay electronically. While some taxpayers who file Form 2290 are required to file electronically, all 2290 filers can do so. These taxpayers can use e-file software to both file Form 2290 and pay what they owe.
The 2019 deadline to file the Form 2290 return and pay the tax is Tuesday, September 3, for highway motor vehicles used in July. All the information needed to file is on the Trucking Tax Center. Taxpayers can use the friendly URL IRS.gov/trucker.
E-filing is the fastest way to get an IRS-stamped Schedule 1 as proof of payment. In fact, taxpayers who file 2290 can get a stamped Schedule 1 within minutes after the IRS accepts the e-filed form. While, alternatively, taxpayers can still file on paper, delivery of the paper IRS-stamped Schedule 1 can take up to six weeks.
Here are the three steps taxpayers should follow once they’re ready to file:
1. Gather information – Filers will need these things to complete and file their 2290:
Employer identification number. Taxpayers cannot use their Social Security number. Anyone who doesn’t already have an EIN can apply online. It takes the IRS about two weeks to establish a new EIN. Taxpayers should use the same name on their Form 2290 as was assigned to them with their EIN. The name control on Form 2290 must match their EIN.
Vehicle identification number of each vehicle.
Taxable gross weight of each vehicle. Filers can use the table on page 2 of the Form 2290 to calculate their tax for vehicles used in July based on each vehicle's weight. Taxpayers can use the partial-period tax tables in the Form 2290 Instructions to calculate their tax for vehicles first used in a month other than July.
2. File –There are two ways taxpayers can file Form 2290:
E-file. All taxpayers can file electronically for faster processing. Taxpayers who are reporting 25 or more vehicles are required to file electronically.
By paper. Taxpayers can complete Form 2290 and then mail it to the IRS. Filers can go to the Form 2290 Instructions for the correct mailing address.
3. Pay – There are several ways for taxpayers to pay what they owe:
Pay taxes by credit card or debit card. Filers can pay over the internet, by phone, or using their mobile device.
Electronic funds withdrawal. Taxpayers can authorize a direct debit when they file electronically.
Electronic Federal Tax Payment System. Using this system requires advanced enrollment.
July 24th 2019
IRS Tax Tip 2019-97, July 23, 2019 Tax planning should happen all year long, not just when someone is filing their tax return. An important part of tax planning is recordkeeping. Well-organized records make it easier for a taxpayer to prepare their tax return. It can also help provide answers if a taxpayer’s return is selected for examination or if the...
Good tax planning includes good recordkeeping
IRS Tax Tip 2019-97, July 23, 2019
Tax planning should happen all year long, not just when someone is filing their tax return. An important part of tax planning is recordkeeping. Well-organized records make it easier for a taxpayer to prepare their tax return. It can also help provide answers if a taxpayer’s return is selected for examination or if the taxpayer receives an IRS notice.
This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.
Here are some suggestions to help taxpayers keep good records:
Taxpayers should develop a system that keeps all their important info together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.
Throughout the year, they should add tax records to their files as they receive them. Having records readily at hand makes preparing a tax return easier.
It may also help them discover potentially overlooked deductions or credits. Taxpayers should notify the IRS if their address changes. They should also notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.
Records that taxpayers should keep include receipts, canceled checks, and other documents that support income, a deduction, or a credit on a tax return.
Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.
In general, the IRS suggests that taxpayers keep records for three years from the date they filed the return.
For business taxpayers, there's no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. The records should confirm income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.
June 14th 2019
Despite “the Amazon effect” on the world of retail, the dream of setting up a brick-and mortar retail space is still a reality. However, it does take a lot of initial work, including ample marketing research to ensure your concept has legs in your geographic marketspace. With this in mind, take note of the following additional advice to help you succeed. First, write a...
Set Up Shop
Despite “the Amazon effect” on the world of retail, the dream of setting up a brick-and mortar retail space is still a reality. However, it does take a lot of initial work, including ample marketing research to ensure your concept has legs in your geographic marketspace. With this in mind, take note of the following additional advice to help you succeed.
First, write a business plan. Put your plan in writing. Recording your plan forces you to do the necessary research and consider all areas of your business. It requires that you do extensive research and planning, including financial projections and budgeting.
Second, find a location. Where you choose to set up your store is essential and will have a major impact on its success. The old adage, “Location, Location, Location” is still true today. Be advised, however, to not overspend on real estate for your business.
Third, choose an appropriate legal structure. Choosing the right entity structure for your business is crucial because it has legal and tax implications. Ask our firm for assistance to make sure you set up the right structure.
Forth, select a meaningful name. Your business name should clearly communicate what you sell or the services you offer. Also, if your family name is meaningful in your market area, you may want to incorporate it into your business moniker. Be sure to perform trademark searches to ensure you aren’t going to run into legal problems later.
Fifth, File for an EIN. An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number. Your EIN is used to identify a business entity for employer and tax purposes. It is required if you have employees in your retail business.
Sixth, recruit the best talent. Having the right people working for you is imperative. Hire people who fit your culture and who will deliver an exceptional customer experience.
Seventh, choose your merchandise mix. Selecting the right merchandise to sell in your retail establishment is key. Make sure you do some market research to get the right products at the right price.
Eighth, create an exceptional customer experience. Driving repeat business is critical to success, and offering a rich, unforgettable experience is a way to accomplish this. Believe it or not, 63 percent of Millennials still prefer to shop in a store over shopping online. However, they expect a high-touch experience that makes the trip to a physical location worth it.
Ninth, craft your marketing. Bases on your marketing plan, which is part of your larger business plan, begin working on your marketing before you open your retail store. Brainstorm sales promotion ideas with family and friends and begin branding and advertising prior to opening. This will give you some early name recognition and business momentum.
Tenth, and final step, conduct a soft opening. Before you have a “Grand Opening,” conduct a soft opening. Open your store with out a splashy announcement to the public for a period of time. This gives you and your staff time to work out any potential problems and fine tune operations.
Finally, once you have done the initial legwork required to set up shop, turn your focus to your customers. By making sure that every customer leaves your store delighted, you’ll encourage referrals, repeat business and help ensure long- term success.
June 10th 2019
All taxpayers should check their withholding ASAP All taxpayers should check their withholding – also known as doing a Paycheck Checkup – as soon as possible. They should do a checkup even if they did one last year. By checking their withholding, taxpayers can make sure enough is being taken out of their paychecks or other income to cover the tax owed. Here...
All taxpayers should check their wilthholding ASAP
All taxpayers should check their withholding ASAP
All taxpayers should check their withholding – also known as doing a Paycheck Checkup – as soon as possible. They should do a checkup even if they did one last year.
By checking their withholding, taxpayers can make sure enough is being taken out of their paychecks or other income to cover the tax owed. Here are some things taxpayers should know about withholding and why checking it is important:
Taxpayers should check their withholding as early in the year as possible. If someone still has not done a Paycheck Checkup, there’s still time to get their withholding on track. They should do a checkup ASAP.
Taxpayers should also check their withholding when life changes occur. These changes include things like:
Marriage or divorce
Birth or adoption of a child
Purchase of a home
Chapter 11 bankruptcy
New job or loss of job
Some taxable income is not subject to withholding. People with this income who also have income from a job may want to adjust the amount of tax their employer withholds from their paycheck. This includes income from things like:
Self-employment and gig economy income
IRA distributions, including certain Roth IRAs
Some life changes might affect a taxpayer’s itemized deductions or tax credits. The taxpayer should check their withholding if they experience changes to their:
Gifts to charity
Dependent care expenses
Child tax credit
Earned income tax credit
The best way for taxpayers to check their withholding is to use the Withholding Calculator on IRS.gov.
Pay as You Go, So You Won't Owe
Form W-4S, Request for Federal Income Tax Withholding from Sick Pay
Form W-4V, Voluntary Withholding Request
Share this tip on social media -- #IRSTaxTip: All taxpayers should check their withholding ASAP. https://go.usa.gov/xmtQK
May 28th 2019
Lately we have been discussing cyber threats and what kind of preventive measures would be best to use to protect ourselves and our clients. Earlier in the week one of staff members listened to a webinar that explained new phishing techniques that are being used to obtain people’s personal records or trick people into handing over their hard-earned money. Phishing techniques have been...
Lately we have been discussing cyber threats and what kind of preventive measures would be best to use to protect ourselves and our clients. Earlier in the week one of staff members listened to a webinar that explained new phishing techniques that are being used to obtain people’s personal records or trick people into handing over their hard-earned money. Phishing techniques have been around for years and unfortunately effected many people. However, the news of phishing scams has surfaced and people are doing their best to be proactive about not falling for them. With that being said scammers have come up with some new and interesting ways to steal your money or delicate personal information.
The best way to protect yourself from phishing scams is to understand the latest threats and phishing techniques. One of the latest threats is file sharing links, such as “drop box”. Scammers are sending you emails claiming they are someone from your address book and they are attempting to share a document with you. Once you click on the link they now have access to your computer.
Another scam that is being used is a gift card scam. This scams con people to buy gift cards on their credit card. You will get an email from the scammer claiming that your employer needs you to please purchase a gift card for clients or soon to be clients.
The next scam is a direct deposit scam. This is where the scammer will send you a convincing email explaining that an employee needs to update their bank account for a direct deposit. This will usually have a fake check provided in the email.
Then there is a text phishing scam. This scam uses a phony login page to capture your credentials. You will receive a text message saying that your account has been hacked and to please click on the link to verify your information. Once you click on the link, they can retrieve your information.
Finally the final threat I want to touch base on. This is the fake invoice threat. This is sourced form an actual vendor, actual invoice, different payment information. You will receive an email with a real invoice attached wanting you to pay.
I know all of this seems scary and it is. However there are ways to protect yourself from these criminals. First know the phishing red flags. Second stop, look, and think. If something seems wrong or looks off DON’T CLICK ON ANYTHING. Third, verify the information you are receiving. Go to a search engine and do some research on the email you received. Or call the vendor it’s from. Fourth browse directly to the site, DO NOT CLICK THE LINK IN THE EMAIL. Finally when in doubt DELETE!
If you are now in complete panic about your financial security don’t be. Here are some preventive measures you can take to protect yourself. First have you been Pwned? This site basically just lets you see if any of your cyber information has been used in scams. You can visit the site to see if you are at risk. Go to https://haveibeenpwned.com to see if any of your email address or passwords have been used in a scam. The website will instruct you on what to do from there. If you are still panicking go through and change your passwords. Don’t make your password generic. Get creative but make sure you jot them down somewhere just in case you forget them. A fun password tip is spelling your name backwards. For example if your name is Smith make your password “Htims09#” Or you can turn letters into numbers an example of this could be Sun$h!n3 aka Sunshine.
A key thing to remember is to NEVER click on any links you get in your email. Do not open attachments or give anybody personal information over email or phone. No matter how legit the email, text message, or phone call may seem. If something seems fishy it probably is. The best thing for you to do is call the business or the person directly and ask for the safest way to transfer sensitive information. Most business have an alternative route for safety. Compton Accounting currently is using Liscio. This program allows us to bypass email and securely communicate with our clients using an app. We are always looking for new ways to protect ourselves and our clients. If you need help or are in complete panic, you can call Compton Accounting and we will be happy to assist you in protecting yourself.
May 15th 2019
IR-2019-93, May 10, 2019 WASHINGTON — During Small Business Week, the Internal Revenue Service reminds small business owners and self-employed individuals to take deductions and credits that will help their bottom line. This year, National Small Business Week is May 5-11. For more than 50 years, the week has recognized the important contributions of America’s...
Small Business Deductions
IR-2019-93, May 10, 2019
WASHINGTON — During Small Business Week, the Internal Revenue Service reminds small business owners and self-employed individuals to take deductions and credits that will help their bottom line.
This year, National Small Business Week is May 5-11. For more than 50 years, the week has recognized the important contributions of America’s entrepreneurs and small business owners.
Reviewing options and eligibility now can help business owners better estimate their tax situation and plan ahead. Here are just a few key deductions and credits that can benefit small business taxpayers.
Qualified business income deduction
Many individuals, including owners of businesses operated through sole proprietorships, partnerships, S corporations, trusts and estates may be eligible for a qualified business income deduction, also called the section 199A deduction. Some trusts and estates may also claim the deduction directly.
The deduction allows them to deduct up to 20 percent of their qualified business income (QBI), plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. Income earned by a C corporation or by providing services as an employee isn't eligible for the deduction.
The deduction is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on their 2018 federal income tax returns filed in 2019.
The TCJA also made changes to losses. Under TCJA, losses from a trade or business are now limited to $250,000 or $500,000 for a joint return. This includes activities reported on Schedule C by a self-employed individual and farming activities reported on Schedule F. It also includes being an employee and certain activities reported on Schedule E. Excess business losses that are no longer allowed are treated as a net operating loss (NOL) and carried forward to the following tax year.
For most taxpayers, NOLs arising after 2017 can only be carried forward. However, certain farming businesses and insurance companies – other than life insurance – can still use a two-year carryback for certain losses. After Dec. 31, 2017, the net operating loss deduction is limited to 80 percent of taxable income. Rules for existing or pre-2018 NOLs remain the same.
Business expenses are usually deductible if the business operates to make a profit. To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that’s common and accepted in the trade or business. A necessary expense is one that’s helpful and appropriate for the trade or business. An expense doesn’t have to be indispensable to be considered necessary. Business expenses include:
Business use of a home – If a taxpayer uses part of their home for business, part of their home expenses may be deductible. These expenses may include mortgage interest, insurance, utilities, repairs and depreciation. Alternatively, a simplified method is available for figuring this deduction. Special rules and limits apply. See Publication 587 for details.
Business use of a car – If a taxpayer uses their car in their business, they can deduct car expenses. If they use it for both business and personal purposes, they must divide expenses based on actual mileage. For details, including special recordkeeping rules, see Publication 463.
Meals and entertainment – In general, taxpayers can deduct 50 percent of the cost of business meals if the taxpayer -- or an employee of the taxpayer -- is present and the food or beverages aren’t lavish or extravagant.
Rent expense – In general, a taxpayer can deduct rent as an expense only if the rent is for property used in their trade or business. If they have or will receive equity in or title to the property, the rent is not deductible.
Interest – Business interest expense is an amount charged for the use of money a taxpayer borrowed for business activities. Limits and special rules may apply. See basic questions and answers about the limitation on the deduction for business interest expense for more information.
Taxes – A taxpayer can deduct various federal, state, local, and foreign taxes directly attributable to their trade or business as business expenses.
Publication 535, Business Expenses, has more information about these and other deductible business expenses, including employee related expenses such as employees’ pay, retirement plans and insurance.
General business credits
The general business credit includes about two dozen tax credits for a variety of businesses and business activities. Often, a taxpayer who qualifies for one or more of these credits but is unable to use them for a given tax year can carry them back to a prior year or forward to future years. See Form 3800 and its instructions for details.
Employer credit for paid family and medical leave
TCJA added this new general business credit that qualified employers may claim based on wages paid to qualifying employees on family and medical leave. To claim the credit, eligible employers must have a written policy in place that meets certain requirements, including providing at least 2 weeks of paid leave to full-time employees (prorated for employees who work part time) and the paid leave must be at least 50 percent of the wages normally paid to the employee. For TY 2018, the employee’s prior year compensation from the employer must have been $72,000 or less. See Notice 2018-71 and instructions for Form 8994for details.
Tax credits can help employers hiring new workers
With many businesses now facing a tight job market, there is another general business credit that may help. The long-standing Work Opportunity Tax Credit (WOTC) is designed to help employers who hire long-term unemployment recipients, certain veterans, recipients of certain kinds of public assistance and other categories of workers with employment barriers. Certification requirements and other special rules apply. To find out more, visit IRS.gov/wotc.
Find more information about business tax credits on IRS.gov.
Publication 5318, Tax Reform: What's New for Your Business — English (PDF) | Spanish (PDF)
Tax Cuts and Jobs Act: A comparison for businesses
FS-2019-3, IRS highlights tax reform changes that affect businesses
FS-2018-19, What’s new for farmers in 2018?
FS-2018-17, The Highlights of Tax Reform for Businesses
April 24th 2019
IRS Tax Tip 2019-33, April 1, 2019 Taxpayers filing their tax returns to meet the upcoming tax filing deadline should know that the easiest way to check on their tax refund is to use "Where’s My Refund?" This tool is available on IRS.gov and through the IRS2Go app. The fastest way to get that tax refund is to use IRS e-file and direct deposit. Taxpayers can use...
Where's My Refund?
IRS Tax Tip 2019-33, April 1, 2019
Taxpayers filing their tax returns to meet the upcoming tax filing deadline should know that the easiest way to check on their tax refund is to use "Where’s My Refund?" This tool is available on IRS.gov and through the IRS2Go app. The fastest way to get that tax refund is to use IRS e-file and direct deposit.
Taxpayers can use Where’s My Refund? to start checking on the status of their tax return within 24 hours after the IRS receives an e-filed return. For a paper return, it’s four weeks after the taxpayer mailed it.
The tool has a tracker that displays progress through three phases:
1. Return Received
2. Refund Approved
3. Refund Sent
All a taxpayer needs to use “Where’s My Refund?” is their Social Security number, tax filing status and the exact amount of the refund claimed on their tax return.
“Where’s My Refund?” is updated no more than once every 24 hours, usually overnight, so there’s no need to check the status more often.
Taxpayers should only call the IRS tax help hotline on the status of their tax refund if :
It has been 21 days or more since the tax return was e-filed
It has been six weeks or more since the return was mailed
When “Where’s My Refund?” tells the taxpayer to contact the IRS
Taxpayers who owe should pay as much as possible to minimize interest and penalty charges. The taxpayers should visit IRS.gov/payments to explore their payment options.
December 5th 2018
Our hours for Christmas and New Years are:December 24th: 8 AM - 12 PMDecember 25th: ClosedDecember 26th: ClosedJanuary 1st: Closed We hope you have a safe and happy
Our hours for Christmas and New Years are:
December 24th: 8 AM - 12 PM
December 25th: Closed
December 26th: Closed
January 1st: Closed
We hope you have a safe and happy holidays!
November 13th 2018
Taking advantage of tax savings is a gift that keeps on giving. Read on and take advantage of these eight tips before the end of the year. First, use up your Flexible Spending Account (FSA) funds. Make sure you use all of the money in your FSA by December 31st, so you don’t lose it. Buy new Glasses or contact lenses, visit your dentist, and purchase any other necessary (and...
8 Tax Tips You can Use Now
Taking advantage of tax savings is a gift that keeps on giving. Read on and take advantage of these eight tips before the end of the year.
First, use up your Flexible Spending Account (FSA) funds. Make sure you use all of the money in your FSA by December 31st, so you don’t lose it. Buy new Glasses or contact lenses, visit your dentist, and purchase any other necessary (and eligible) over the counter medications or items.
Second, Make contributions to a qualified education savings account. Contributing to a child’s or grandchild’s 529 college savings plan or other qualified education savings plans means that you may be able to claim at least a partial deduction or credit on your state tax return. Be sure to check the tax rules for your state.
Third, make charitable contributions. Making a donation of clothing or household goods by December 31st allows you to deduct their fair market value on your tax return. If you prefer to make a monetary donation, send in payment by the end of the year and make sure you obtain a receipt for your records.
Forth, claim miscellaneous tax deductions. If you claim the standard deduction instead of itemizing personal deductions on your tax return, you may still be able to claim additional deductions to lower your gross income. This can include student tax breaks, electric car purchases and IRA contributions. If you have any investments that have generated deductible losses, you can use the losses to offset any gains.
Fifth, deduct your car mileage for business use. If you are self-employed, compare the actual expense method or the IRS standard mileage rate to determine which gives you a larger deduction on your car expenses. Select the method that gives you the greater write-off.
Sixth, take advantage of the gift tax. You can give up to $15,000 to an unlimited number of individuals before December 31st with out filing a gift tax return. If you’re married and file taxes jointly, you and your spouse can gift up to $28,000 per recipient.
Seventh, maximize retirement plan contributions. Contribute as much as you can to your 401 (k) and other qualified retirement plans by the end of the year in order to lower you tax bill. Keep in mind that you have until April 15th, 2019 to fund a traditional or Roth IRA for 2018.
Finally, move up deductible expenses. You may want to reduce your tax bill by moving up as many deductible expenses as possible. This can be especially beneficial to you and your income will be high. For example, make your January mortgage payment in December, giving you extra interest to deduct.
Our firm can help you implement these and other tax planning strategies before the end of the year. Reach out to us as soon as possible so we can offer you customize advice on how to lower your tax bill. Please call 844-484-8881 for our Altona office, 309-856-8888 for our Kewanee office, and 844-667-2315 for our New Windsor Office.
October 25th 2018
Issue Number: IR-2017-193 IR-2017-193, Nov. 27, 2017 WASHINGTON – During the online holiday shopping season, the IRS, state tax agencies and the tax industry remind people to be vigilant with their personal information. While shopping for gifts, criminals are shopping for credit card numbers, financial account...
National Tax Security Awareness Week No. 1: Online Security - Seven Steps for Safety
Issue Number: IR-2017-193
IR-2017-193, Nov. 27, 2017
WASHINGTON – During the online holiday shopping season, the IRS, state tax agencies and the tax industry remind people to be vigilant with their personal information. While shopping for gifts, criminals are shopping for credit card numbers, financial account information, Social Security numbers and other sensitive data that could help them file a fraudulent tax return.
Anyone who has an online presence should take a few simple steps that could go a long way to protecting their identity and personal information.
The Internal Revenue Service, state tax agencies and the tax community, partners in the Security Summit, are marking “National Tax Security Awareness Week”, Nov. 27-Dec.1, with a series of reminders to taxpayers and tax professionals. In part one, the topic is online security.
Cybercriminals seek to turn stolen data into quick cash, either by draining financial accounts, charging credit cards, creating new credit accounts or even using stolen identities to file a fraudulent tax return for a refund.
Here are seven steps to help with online safety and protecting tax returns and refunds in 2018:
Shop at familiar online retailers. Generally, sites using the “s” designation in “https” at the start of the URL are secure. Look for the “lock” icon in the browser’s URL bar. But remember, even bad actors may obtain a security certificate so the “s” may not vouch for the site’s legitimacy.
Avoid unprotected Wi-Fi. Beware purchases at unfamiliar sites or clicks on links from pop-up ads. Unprotected public Wi-Fi hotspots also may allow thieves to view transactions. Do not engage in online financial transactions if using unprotected public Wi-Fi.
Learn to recognize and avoid phishing emails that pose as a trusted source such as those from financial institutions or the IRS. These emails may suggest a password is expiring or an account update is needed. The criminal’s goal is to entice users to open a link or attachment. The link may take users to a fake website that will steal usernames and passwords. An attachment may download malware that tracks keystrokes.
Keep a clean machine. This applies to all devices -- computers, phones and tablets. Use security software to protect against malware that may steal data and viruses that may damage files. Set it to update automatically so that it always has the latest security defenses. Make sure firewalls and browser defenses are always active. Avoid “free” security scans or pop-up advertisements for security software.
Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters but longer is better. Avoid using a specific word; longer phrases are better. Use a combination of letters, numbers and special characters. Use a different password for each account. Use a password manager, if necessary.
Use multi-factor authentication. Some financial institutions, email providers and social media sites allow users to set accounts for multi-factor authentication, meaning users may need a security code, usually sent as a text to a mobile phone, in addition to usernames and passwords. For added protection, some financial institutions also will send email or text alerts when there is a withdrawal or change to the account. Generally, users can check account profiles at these locations to see what added protections may be available.
Encrypt and password-protect sensitive data. If keeping financial records, tax returns or any personally identifiable information on computers, this data should be encrypted and protected by a strong password. Also, back-up important data to an external source such as an external hard drive. And, when disposing of computers, mobile phones or tablets, make sure to wipe the hard drive of all information before trashing.
There are also a few additional steps people can take a few times a year to make sure they have not become an identity theft victim.
Receive a free credit report from each of the three major credit bureaus once a year. Check it to make sure there are no unfamiliar credit changes. Create a “My Social Security” account online with the Social Security Administration. There users can see how much income is attributed to their SSN. This can help determine if someone else is using the SSN for employment purposes.
The IRS, state tax agencies and the tax industry are committed to working together to fight against tax-related identity theft and to protect taxpayers. But the Security Summit needs help. People can take steps to protect themselves online. Visit the “Taxes. Security. Together.” awareness campaign or review IRS Publication 4524, Security Awareness for Taxpayers, to see what can be done.
September 5th 2018
First, know your numbers. Do you know how much income you need to maintain your current lifestyle in retirement? If not, you are like many others who don’t have a clear retirement saving goal. While working with a financial professional will help you drill down to an exact number, a good rule of thumb is that you will need approximately 80 percent of your current annual income in...
5 Tips to Keep Your Retirement on Track
First, know your numbers. Do you know how much income you need to maintain your current lifestyle in retirement? If not, you are like many others who don’t have a clear retirement saving goal. While working with a financial professional will help you drill down to an exact number, a good rule of thumb is that you will need approximately 80 percent of your current annual income in retirement.
Second, consider where your money will go. The lifestyle you want during retirement is another thing to consider now. Do you want to spend money on travel, entertainment and eating out when you retire? Don’t forget to factor in healthcare costs, which will likely increase significantly as you age, including the cost for long-term care.
Third, take action now. Perhaps the most important retirement preparation tip is to just do it! Make saving for retirement a priority (put if above college savings if you have kids) and set up an automatic debit to your bank account, or through your paycheck, to start growing your nest egg.
Forth, revisit your retirement plan. Your plan for funding your retirement should be updated periodically (at least every five years). Updates are based on the market, your income and expenses, and life events such as a child being born, marriage and other milestones.
Finally, ask for professional help. While you know your situation best, it cam be helpful to have an objective expert working with you to ensure you are doing everything you can to stay on track for a better retirement.
As you think about planning for retirement, don’t let balancing the life you want to live today with the live you desire in retirement add to your stress. Follow the tips above and get the advice of a financial professional to make sure your retirement is on track.
August 7th 2018
FS-2018-12, May 2018 Crooks impersonating the IRS either by phone, email or in person cost people their time and money. The IRS urges people to stay vigilant against schemes and scams and avoid becoming a victim. Here are some important tips for taxpayers to keep in mind to avoid scams:
Avoid scams: Know the facts on how the IRS contacts taxpayers
FS-2018-12, May 2018
Crooks impersonating the IRS either by phone, email or in person cost people their time and money. The IRS urges people to stay vigilant against schemes and scams and avoid becoming a victim.
Here are some important tips for taxpayers to keep in mind to avoid scams:
How the IRS initiates contact
The IRS initiates most contacts with taxpayers through regular mail delivered by the U.S. Postal Service. However, there are special circumstances in which the IRS will call or come to a home or business, such as:
When a taxpayer has an overdue tax bill,
To secure a delinquent tax return or a delinquent employment tax payment, or
To tour a business, for example, as part of an audit or during criminal investigations.
Even then, taxpayers will generally first receive a letter or sometimes more than one letter, often called notices, from the IRS in the mail.
Avoid telephone scams
Criminals impersonate IRS employees and call taxpayers in aggressive and sophisticated ways. Imposters claim to be IRS employees and sound very convincing. They use fake names and phony IRS identification badge numbers. They’re demanding and threatening – and do not reflect how the IRS handles enforcement matters.
Note that the IRS does not:
Demand that people use a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS will not ask for debit or credit card numbers over the phone. For people who owe taxes, make payments to the U.S. Treasury or review IRS.gov/payments for IRS online options.
Demand immediate tax payment. Normal correspondence begins with a letter in the mail and taxpayers can appeal or question what they owe. All taxpayers are advised to know their rights as a taxpayer.
Threaten to bring in local police, immigration officers or other law enforcement agencies to arrest people for not paying. The IRS also cannot revoke a license or immigration status. Threats like these are common tactics scam artists use to trick victims into believing their schemes.
IRS employees may make official, unannounced visits
IRS employees may make official and sometimes unannounced visits to discuss taxes owed or returns due as a part of an audit or investigation. Taxpayers generally will first receive a letter or notice from the IRS in the mail. If a taxpayer has an outstanding federal tax debt, IRS will request full payment but will provide a range of payment options.
Here are the facts:
All IRS representatives will always provide their official credentials, called a pocket commission and a HSPD-12 card. The HSPD-12 card is a government-wide standard form of reliable identification for federal employees and contractors. Taxpayers have the right to see these credentials. IRS employees can provide an additional method to verify their identification. Upon request, they’re able to provide a toll-free employee verification telephone number.
Collection employees won’t demand immediate payment to a source other than “U.S. Treasury.”
IRS employees may call taxpayers to set up appointments or discuss audits but not without first attempting to notify taxpayers by mail.
IRS employees conducting criminal investigations are federal law enforcement agents and will never demand money.
Find more information about Criminal Investigation and how to know it’s really the IRS calling or knocking on doors for audits and collection on IRS.gov.
Avoid email, phishing and malware schemes
Scammers send emails that trick businesses and taxpayers into thinking the messages are official communications from the IRS or others in the tax industry. As part of phishing schemes, scammers sometimes ask taxpayers about a wide-range of topics, such as refunds, filing status, confirming personal information, ordering transcripts and verifying personal identification numbers.
The IRS does not use email, text messages or social media to discuss tax debts or refunds with taxpayers.
Calls from IRS-contracted private collection agencies
The IRS assigns certain overdue tax debts to private debt collection agencies or PCAs. Here are the facts about this program:
The IRS will send a letter to the taxpayer letting them know the IRS has turned their case over to one of the four PCAs. The PCA will also send the taxpayer a letter confirming assignment of the taxpayer’s account to the agency.
The IRS will assign a taxpayer’s account to only one of these agencies, never to all four. The IRS authorizes no other private groups to represent the IRS.
It’s important to know that PCA representatives:
Will identify themselves and will ask for payment to “U.S. Treasury,”
Will not ask for payment on a prepaid debit or gift card, and
Will not take enforcement action.
How to report scams
Taxpayers can use these options to report phone, email and other impersonation scams:
Report impersonation scams to the Treasury Inspector General for Tax Administration. on the “IRS Impersonation Scam Reporting” webpage.
Report phone scams to the Federal Trade Commission using the FTC Complaint Assistant. Add "IRS Telephone Scam" in the notes.
Report an unsolicited email claiming to be from the IRS or an IRS-related system like the Electronic Federal Tax Payment System to the IRS at firstname.lastname@example.org.
2018 Dirty Dozen List
Private Collection of Overdue Taxes video
TIGTA: The IRS Is Calling Me? Is This for Real? video
Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency
July 18th 2018
IRS Tax Tip 2018-95, June 20, 2018 Every year the IRS mails millions of letters to taxpayers for many reasons. Here are some tips and suggestions for taxpayers who receive one: Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to...
Do's and Don’ts for Taxpayers Who Get a Letter from the IRS
IRS Tax Tip 2018-95, June 20, 2018
Every year the IRS mails millions of letters to taxpayers for many reasons. Here are some tips and suggestions for taxpayers who receive one:
Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do.
Don’t panic. The IRS and its authorized private collection agencies do send letters by mail. Most of the time all the taxpayer needs to do is read the letter carefully and take the appropriate action.
Do take timely action. A notice may reference changes to a taxpayer’s account, taxes owed, a payment request or a specific issue on a tax return. Taking action timely could minimize additional interest and penalty charges.
Do review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return, and keep it for their records.
Don’t reply unless instructed to do so. There is usually no need for a taxpayer to reply to a notice unless specifically instructed to do so. On the other hand, taxpayers who owe should reply with a payment. IRS.gov has information about payment options.
Do respond to a disputed notice. If a taxpayer does not agree with the IRS, they should mail a letter explaining why they dispute the notice. They should mail it to the address on the contact stub at the bottom of the notice. The taxpayer should include information and documents for the IRS to review when considering the dispute. The taxpayer should allow at least 30 days for the IRS to respond.
Do remember that there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of the tax return and letter when calling.
Do avoid scams. The IRS will never initiate contact using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure if they owe money to the IRS can view their tax account information on IRS.gov.
If you receive a letter from the IRS please contact Compton Accounting and we will be happy to look into it for you. Please don’t panic if you get a letter. All you have to do is give us a copy of the letter so we can review it carefully to determine the next coarse of action. Please call 844-484-8881 or stop in to any of our 3 offices.
July 2nd 2018
Compton Accounting will be closing at noon July 3rd and will be CLOSED July 4th. We hope everyone has a safe and happy
July 4th Schedule
Compton Accounting will be closing at noon July 3rd and will be CLOSED July 4th.
We hope everyone has a safe and happy holiday!
June 26th 2018
Did you receive a tax refund this year? Did you make some financial goals way back in January? Do you want to reach a new level of financial security? If you answered yes to any of these questions, then this article is for you. Check out these monetary goals to make sure you are on the right track, monetarily speaking. First, a...
9 Ways to Spend Wisely
Did you receive a tax refund this year? Did you make some financial goals way back in January? Do you want to reach a new level of financial security? If you answered yes to any of these questions, then this article is for you. Check out these monetary goals to make sure you are on the right track, monetarily speaking.
First, a full emergency fund. “Spending” your money on savings is always good strategy. Plus, it will help you relieve your worries about not having a financial cushion should you find yourself in a tight spot due to unexpected expenses.
Second, while you might not think having unpaid debt as “spending” per se it really is because you are paying interest for the price of borrowed money. Using “extra” funds will help you put more money in your pocket over the long term.
Third, rev up your retirement. You’ve heard of it so many times that it’s easy to tune this one out. However, here it is again. Topping up your retirement accounts (or starting one if you haven’t already) is one of the wisest ways to spend any disposable income.
Forth, create additional income streams. If you have a business in mind or want to purchase a rental property to create an additional income opportunity, spending your money here is a wise move. This is especially true if you use the additional income to fund one or two of the first three goals above.
Fifth, ensure your insurance is adequate. While you certainly don’t want to have too much insurance, making sure you have enough coverage, particularly when it comes to life insurance, is important. If you need to add additional coverage, make sure you check your rates at the same time to see if you could be getting a better deal.
Sixth, run a spending deficit. While you are thinking about finances, even with extra cash in hand, it’s a good idea to identify areas where you could spend less. This will help you get into the habit of allocating income for savings, investments and paying off debt.
Seventh, dampen your desire for more “stuff”. An often-overlooked way to spend wisely is not to spend at all. If you find that you buy a lot of things that end up collecting dust, it’s time to put an end to this kind of spending. Instead put the money you would have spent in your bank account.
Eighth, plan to share your wealth. If you have a desire to support a cause or charity, having extra money from a tax refund or your own savings can help. You may want to talk to a tax or financial professional to learn about the regulations around charitable giving, especially if you are looking at contributing a considerable sum.
Ninth and final tip, create a will and put your financial house in order. An important part of money management is making sure that your family and any debts or financial obligations will be taken care of upon your passing. This is a goal that should be on everyone’s financial list. It’s also another area where talking to a financial professional can help you navigate the tax laws related to estate taxes and other considerations.
Spending wisely and reaching your financial goas is all about making these habits a priority. Consider the goals and strategies laid out here and put at least a few of them on your financial to-do list. Spending wisely will benefit you now and into the future.
June 14th 2018
We just wanted to remind everyone that it is now baseball/softball season! There is a wonderful concession stand in Altona. That is ran by one of our very own, Stacy Rodriguez! Come visit Stacy and our Lions Club members for some yummy treats. Then sit and enjoy the little ones play
We just wanted to remind everyone that it is now baseball/softball season! There is a wonderful concession stand in Altona. That is ran by one of our very own, Stacy Rodriguez! Come visit Stacy and our Lions Club members for some yummy treats. Then sit and enjoy the little ones play baseball/softball!
May 29th 2018
Topic Number 308 - Amended ReturnsIf you discover an error after filing your return, you may need to amend your return. The IRS may correct mathematical or clerical errors on a return and may accept returns without certain required forms or schedules. In these instances, there's no need to amend your return. However, do file an amended return if there's a change in your filing status,...
Topic Number 308 - Amended Returns
If you discover an error after filing your return, you may need to amend your return. The IRS may correct mathematical or clerical errors on a return and may accept returns without certain required forms or schedules. In these instances, there's no need to amend your return. However, do file an amended return if there's a change in your filing status, income, deductions, or credits. Use Form 1040X.pdf, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040.pdf, Form 1040A.pdf, Form 1040EZ.pdf, Form 1040NR.pdf, Form 1040NR-EZ.pdf, or to change amounts previously adjusted by the IRS. You can also use Form 1040X to make a claim for a carryback due to a loss or unused credit; however, you may also be able to use Form 1045.pdf, Application for Tentative Refund, instead of Form 1040X. Also, if the Form 8938.pdf, Statement of Specified Foreign Financial Assets, applies to you, file it with an annual return or an amended return. See the Form 8938 Instructions for more information.
If you owe additional tax for a tax year for which the due date for filing hasn't passed, you can avoid penalties and interest if you file Form 1040X and pay the tax by the filing due date for that year (without regard to any extension of time to file). If the filing due date falls on a Saturday, Sunday, or legal holiday, filing the form and paying the tax is timely if filed or paid the next business day. If you file after the unextended due date, don't include any interest or penalties on Form 1040X; they will be adjusted accordingly.
When to File
Generally, to claim a refund, you must file Form 1040X within 3 years after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Returns filed before the due date (without regard to extensions) are considered filed on the due date, and withholding is deemed to be tax paid on the due date. Special rules apply for refund claims relating to net operating losses, foreign tax credits, bad debts, and other issues. For more information, refer to the Form 1040X Instructions.
Where to File
You can't file an amended tax return electronically under the e-file system. See Where To File in the Form 1040X Instructions for the address to mail your amended return.
Form 1040X Preparation
File a separate Form 1040X for each tax year you're amending. Mail each form in a separate envelope. Be sure to enter the year of the return you're amending at the top of Form 1040X. The form has three columns:
Column A shows original figures (the original return) or adjusted figures (prior amendments or exam changes).
Column C shows the corrected figures (what they should be).
Column B is the difference between Columns A and C. There's an area on the back of the form to explain the specific changes you're making and the reason for each change.
Attach copies of any forms or schedules affected by the change, including any Form(s) W-2 received after the original filing. You should also attach Form(s) W-2G and 1099 that support changes made on the return if there was income tax withheld. See the Form 1040X Instructions for complete instructions.
Amended Return Status
You can check the status of your Form 1040X.pdf using the Where's My Amended Return? (WMAR) online tool or the toll-free telephone number 866-464-2050 three weeks after you file your amended return. Both tools are available in English and Spanish and track the status of amended returns for the current year and up to three prior years.
You must enter your taxpayer identification number (usually your social security number), date of birth, and ZIP code in either tool to prove your identity. Once you authenticate, the web tool shows an illustrated graphic to visually communicate the status of your amended return within the processing stages: Received, Adjusted, or Completed. As a reminder, amended returns take up to 16 weeks to process and up to three weeks from the date of mailing to show up in our system. Before that time, there's no need to call the IRS unless the tool specifically tells you to do so.
State Tax Returns
A change made on your federal return may affect your state tax liability. For information on how to correct your state tax return, contact your state tax agency.
For more information, refer to the Form 1040X Instructions and What If I Made a Mistake? in Chapter 1 of Publication 17.pdf, Your Federal Income Tax for Individuals.
If you have a return that needs amended please visit or call Compton Accounting 844-484-8881. If you want more articles like this one please visit irs.gov.
February 7th 2018
Only a few days into the tax-filing season, the IRS is sounding an alarm about a new tax scam. Specifically, it's warning tax preparers to be on guard about the scam, which is aimed at stealing taxpayers' refunds by using data compromised in tax preparers' offices. The agency said it has already received a number of fake tax returns that had accurate taxpayer...
IRS warns tax preparers about a new refund scam
Only a few days into the tax-filing season, the IRS is sounding an alarm about a new tax scam. Specifically, it's warning tax preparers to be on guard about the scam, which is aimed at stealing taxpayers' refunds by using data compromised in tax preparers' offices.
The agency said it has already received a number of fake tax returns that had accurate taxpayer names, addresses, Social Security numbers and even bank account information for the victims.
In an unusual twist, some bogus refunds were actually directed to the real taxpayers' bank accounts, the agency said. A criminal, posing as a debt collector, then contacted the taxpayers saying the refunds had been sent in error and the victims should forward the money to the crook.
Because these fake returns contained all of the taxpayer's correct information, down to the right number of dependents, the IRS believes the scam started in tax-preparation offices. The agency assumes that the data was compromised because some preparers were taken in by phishing scams that then loaded malicious software onto their computer systems, making all the taxpayer information that was kept by these preparers vulnerable to theft.
Government website to help victims of identify theft
The IRS said it's still in preliminary stages of investigating the con and can't quantify how many people have been affected. But because this type of scam has a way of burgeoning overnight, the agency wanted to immediately warn preparers to secure their computer systems.
"Given the history that we have seen on scams like this, when these start, they tend to proliferate quickly," said IRS spokesman Terry Lemons. "When a scam turns out to be successful, they tend to expand. We wanted to alert tax professionals to be on the lookout."
Unfortunately for consumers -- the ultimate victims of this con -- those who find themselves hit by tax fraud have a far more difficult course than consumers whose credit card accounts have been stolen. In the latter case, consumers have a number of steps they can take to deter criminals from using that stolen information to open up new accounts.
In the former case, the first inkling that a taxpayer would get that they were victimized is when their electronically filed return gets rejected as a duplicate. At that point, in addition to reporting the fraud to the credit bureaus and the Federal Trade Commission, tax fraud victims need to fill out a special IRS form, 14039. The taxpayer's 1040 must then be filed on paper, with the fraud affidavit attached to the front.
How the tax bill will affect the returns of three American families
Be prepared that this will dramatically slow your refund. Lemons said the typical tax identity fraud takes roughly four months to investigate and resolve.
Since tax ID theft peaked in 2013, the IRS has taken a host of steps, including forming a security partnership with preparers and software companies, to stamp out tax return fraud. The agency has also launched a pilot program that has added 16-digit identifiers to some employer's W-2 information. The agency hopes this will help it spot and stop identity thieves before they take off with taxpayer refunds.
These efforts have helped cut ID theft reports nearly in half over the past year.
"We have stepped up our defenses, and the private sector tax community has worked to strengthen their security too," Lemons said.
Still, this newly discovered fraud is ominous and suggests that individual taxpayers should also be on guard.
Make sure that you keep updated security software on your home computer and ask any tax preparer you hire how your data is protected, Lemons suggested. If any of your W-2 forms contain the new 16-digit identifiers, also make sure to include that number on your tax return. That will help the IRS know the return truly came from you, not an identity crook.
December 4th 2017
Compton Accounting will be closed Monday December 25th and Monday January 1st. There will also be limited staff Friday December 22nd and Tuesday December 26th. Please contact us if you have any questions 844-484-8881. Thank you and Happy
Compton Accounting will be closed Monday December 25th and Monday January 1st. There will also be limited staff Friday December 22nd and Tuesday December 26th. Please contact us if you have any questions 844-484-8881. Thank you and Happy Holidays!
November 15th 2017
Since the holidays are quickly approaching an article produced by the IRS was sent to us about Charitable Contribution facts. I have copied and pasted it below. Please read if this is something that pertains to you. Five Facts about Charitable Contributions With the holidays around the corner, many people will be making donations to benefit charitable organizations....
Since the holidays are quickly approaching an article produced by the IRS was sent to us about Charitable Contribution facts. I have copied and pasted it below. Please read if this is something that pertains to you.
Five Facts about Charitable Contributions
With the holidays around the corner, many people will be making donations to benefit charitable organizations. However, come tax time, the person who made the donation might also benefit. That’s because taxpayers who donate to a charity may be able to claim a deduction for the donation on their federal tax return.
Here are five facts about charitable donations:
Qualified Charities. A taxpayer must donate to a qualified charity to deduct their contributions. Gifts to individuals, political organizations, or candidates are not deductible. To check the status of a charity, taxpayers can use Exempt Organizations Select Check on IRS.gov.
Itemize Deductions. To deduct charitable contributions, taxpayers must file Form 1040 and itemize their deductions. To do this, taxpayers complete Schedule A, Itemized Deductions. They file this form with their tax return.
Getting Something in Return. Taxpayers may receive something in return for their donation. This includes things such as merchandise, meals, and event tickets. Taxpayers can only deduct the amount of the donation that’s more than the fair market value of the item they received. To figure their deduction, a taxpayer would subtract the value of the item received from the amount of their donation.
Type of Donation. For donations of property instead of cash, a taxpayer can only deduct the fair market value of the donated item. Fair market value is generally the price they would get if they sold the item on the open market. If they donate used clothing and household items, those items generally must be in good condition. Special rules apply to certain types of property donations, such as cars and boats.
Donations of $250 or More. If a taxpayer donates $250 or more in cash or goods, they must have a written receipt from the charity. The statement must show: • The amount of the donation. • A description of any property given. • Whether the taxpayer received any goods or services in exchange for their gift, and, if so, must provide a description and good faith estimate of the value of those goods or services.
Taxpayers can also use the Interactive Tax Assistant, Can I Deduct my Charitable Contributions? This tool helps determine if charitable contribution is deductible.
Tax Topic No. 506 – Charitable Contributions
August 29th 2017
Walking in to a grocery store with a budget is easy, but sticking to that budget can get a little tricky. The stores are good at strategically placing things in the perfect spot to make us buy it. I took it upon myself to do some research about how to avoid spending unnecessary money. First, make a list before you leave the house. It’s important to go into a grocery store with a...
How to Save Money at the Grocery Store
Walking in to a grocery store with a budget is easy, but sticking to that budget can get a little tricky. The stores are good at strategically placing things in the perfect spot to make us buy it. I took it upon myself to do some research about how to avoid spending unnecessary money.
First, make a list before you leave the house. It’s important to go into a grocery store with a plan. Try to gather some meal ideas for the week that you want to prepare. Then only get what you need to prepare those meals. Then take a look at the ads for your local grocery stores and make a list of the best deals and where they come from. Having a list of items that are on sale is imperative. Not only will it help you avoid impulse buying, it will also help you get in and out of the grocery store faster so you can get on with the rest of your life.
Second, focus on the sale items. This is crucial for saving money on groceries. Your list should consist of what’s on sale each week. Learn to appreciate variety in your diet, it will save you a fortune over time.
Third, don’t shop hungry. I know you’ve heard this rule before, but it’s true. You will have less patience and less self-control. Leaving you powerless against impulse buying. Do yourself a financial favor and eat before you go shop.
Fourth, know the average prices so you can spot a good deal. How will you know a good deal from a terrible deal if you don’t know how much items normally cost? The more aware you become while you shop for groceries, the more familiar you will become with pricing.
Fifth, if it’s on sale (and you’ll use it) stock up. Stocking up on items that go on sale is always a good idea. You can even stock up on produce by picking out items that are not ripe yet. This will give you a few days or weeks before you have to consume them. Just be aware of expiration dates when stocking up.
Sixth, buy generic. Generally, generic is of equal value of name brand. Occasionally, it is the exact same product in a different package. So save money by going for the more reasonable, generic choice.
Finally, keep your eye on the cashier. When you go through the checkout line, make sure you are watching as the cashier rings up your purchases. Then, if an item rings up at the wrong price, you can correct it. If you don’t watch closely, you might be overcharged. Sometimes cashiers make mistakes and ring an item up twice. Make sure to look at your receipt before you leave or if available watch your running total on the debit or credit card machine. That way you can account for every item that was purchased.
If you want the full article please visit the link below. It gives many more tips and tricks on how to save money in the grocery store as well as at home.
July 25th 2017
Compton Accounting is constantly updating and training our staff in the newest tax laws to better serve our clients. Recently we sent our staff to an Accredited Tax Preparers (ATP) course. In this course the tax preparers learned the existing tax code and the preparation of individual tax returns. Their expertise covers comprehensive 1040 issues including:...
Compton Accounting is constantly updating and training our staff in the newest tax laws to better serve our clients. Recently we sent our staff to an Accredited Tax Preparers (ATP) course. In this course the tax preparers learned the existing tax code and the preparation of individual tax returns. Their expertise covers comprehensive 1040 issues including: supporting schedules, self-employed returns and ethics. Our tax professionals have completed a minimum of 60 hours of formal coursework and have a minimum of three years work experience in taxation.
At this time we would like to congratulate Kelly Cheline, Molly Cheline, Cari Main, and Kim Wexell for recently completing this course and earning their designation as an ATP If you have any questions or tax issues, please call one our offices today.
July 17th 2017
If a vacation is part of your summer plans, but your budget is tighter than you would like, check out these tips to keep your cash outlay reasonable- without sacrificing any of the fun or adventure. Tip 1: Time your vacation right. When planning your vacation, time your trip so that you arrive when the local kids are either...
If a vacation is part of your summer plans, but your budget is tighter than you would like, check out these tips to keep your cash outlay reasonable- without sacrificing any of the fun or adventure.
Tip 1: Time your vacation right. When planning your vacation, time your trip so that you arrive when the local kids are either still in school or back to school. This will usually mean that you are hitting venues off peak times and can expect to pay less for attractions and lodging.
Tip 2: Rent a home not a hotel. You have likely seen advertising to rent a home rather than staying in a hotel. For summer travelers, this can be an economical alternative. Plus, if you have a larger group and/or kids it may be more comfortable as well.
Tip 3: Try out the new hotel on the block. If you prefer a hotel, but the prices are creating a cramp in your budget, look for new hotels that offer a low introductory rate. When you book a stay at a new hotel during the soft launch period, you can maximize savings by paying substantially less than the standard rate.
Tip 4: Try these frugal food fixes. Food often comprises a major part of any travel budget. One easy way to save money on meals is to book a vacation rental property with a full kitchen. If you don’t want to cook every meal on vacation, book a hotel with a kitchenette or at least a fridge and microwave so that you can make some lighter meals and snacks. Doing this can save you hundreds of dollars over the course of your getaway.
Tip 5: Avoid being gouged by gas prices. If your budget is really tight- or you just want to be sure you don’t pay a penny more than you need to for fuel-monitoring gas prices can help you decide whether it makes sense to fill your tank today for tomorrow’s road trip. Using an app like Fuelcaster can help you keep tabs on local gas prices.
Tip 6: Find the freebies. The easiest way to make your vacation dollars go further? Find activities that cost you nothing! Wherever you travel, there are likely some free activities that you can add to your itinerary if you are willing to do a little research. From parks and parades to food and festivals, see what complimentary events you can enjoy.
Tip 7: Make the most of membership discounts. Whether you have an AARP or AAA membership or you belong to an alumni or other association, be sure to check out if there are travel and attraction discounts that you can access through your affiliations. Taking a trip away from home and discovering new places is a time-honored summer tradition. However vacations can put a strain on your wallet, so use these tips to keep your trip frugal and fun!
June 5th 2017
Throughout the day we put ourselves at risk for identity theft without even knowing it. I recently read an interesting article on msn.com explaining the things we do every day that puts our identity at risk. We will touch base on a few of the most common mistakes I hear about or do myself. We live in such a tech savvy world it is easy to make these common mistakes. First, you...
How Are You Putting Your Identity at Risk?
Throughout the day we put ourselves at risk for identity theft without even knowing it. I recently read an interesting article on msn.com explaining the things we do every day that puts our identity at risk. We will touch base on a few of the most common mistakes I hear about or do myself. We live in such a tech savvy world it is easy to make these common mistakes.
First, you don’t password protect your cellphone. Your smart phone can be a HUGE financial risk. If you are constantly checking your cellphone you have probably turned off your passcode for convenience. Just know when you do this if your phone is ever lost or stolen, an unlocked phone can give thieves access to your personal information.
Second, you don’t monitor your financial accounts. If you don’t use a credit or debit card on a day to day basis, you may think it’s pointless to check your account. However, it doesn’t take long for an identity thief to drain your account or rack up a bunch of charges. The sooner you detect the thief the better. A good way to prevent this is to get into a routine of regularly checking your accounts. Notify your bank as soon as possible if you suspect anything suspicious.
Third, you post your whereabouts on social media. Updating your friends and family of your whereabouts on social media might seem like a good way of including them in your experiences. However, it’s also a good way to let thieves know you are out of town and the items in your home are up for the taking.
Fourth, using public WiFi. Most people won’t think twice when they are at a hotel or coffee shop to use the public WiFi. We use it to check our online bank accounts or pay a bill we may have forgotten to pay before we left. Unsecure networks are a hacker’s playground. Some hacking tools are available for free online, according to the FTC. And these tools, even thieves with limited know how, can track your online activity and steal your information.
Fifth, you don’t secure your home WiFi. You are putting your personal information at risk if you don’t secure your network. An open network raises the threat of a thief accessing information on your device. A good way to protect yourself is to change the name of your wireless router as well as your router’s standard default password. When choosing a password make sure it’s a strong password. You want to do a combination of letters, numbers, and symbols.
Sixth, you don’t shred financial offers. When you receive offers in the mail don’t just throw them in the trash. A dumpster diver could collect these offers and apply for them in your name. Then they could rack up thousands of dollars in charges.
Seventh, you click on email links. Granted this may seem harmless to click an email link from your bank. However identity thieves have designed fake websites and then send phishing emails asking you to update your personal information.
If there’s a problem with your account your bank will send you an email asking you to sign into your account to update your information.
Eighth, not reporting a missing driver’s license. If you ever misplace your driver’s license don’t dismiss the problem and think that it will eventually show up. If your license falls into the wrong hands this person could swap your photo with theirs and attempt to use your license as their own. If the person who steals your license happens to get a speeding ticket and doesn’t pay the ticket or appear in court you could face the consequences.
If you happen to misplace your license you can apply for a replacement card in person at your nearest DMV. You should also report a stolen driver’s license to the police.
Finally, you don’t lock your mailbox. You may think this is unnecessary to lock your mailbox since it’s illegal for someone to open your mail without permission. However people that are out to steal your identity aren’t exactly law-abiding citizens.
You can protect yourself by installing a lock on your mailbox. They make mailboxes with slits in the front so your mail carrier can slip it through. You can also pay to have a P.O. Box.
If you would like to read this full article please use the link below.
May 5th 2017
Recently at Compton Accounting we have had the unfortunate conversation about identity theft. With that being said we wanted to do some research about the scams that are costing taxpayers so much money. If you want to reference this information please go to www.irs.gov and type the “Dirty Dozen” in the search bar. Unfortunately identity theft is everywhere and is...
Recently at Compton Accounting we have had the unfortunate conversation about identity theft. With that being said we wanted to do some research about the scams that are costing taxpayers so much money. If you want to reference this information please go to www.irs.gov and type the “Dirty Dozen” in the search bar. Unfortunately identity theft is everywhere and is getting harder to avoid as time progresses. Please read the information below to educate yourself on some of the different kinds of scams that are out there. If you have any questions about how to protect yourself against identity theft please don’t hesitate to contact us at 844-484-8881.
Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2017-15)
Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2017-19)
Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number. Though the agency is making progress on this front, taxpayers still need to be extremely cautious and do everything they can to avoid being victimized. (IR-2017-22)
Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. There are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2017-23)
Fake Charities: Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2017-25)
Inflated Refund Claims: Taxpayers should be on the lookout for anyone promising inflated refunds. Be wary of anyone who asks taxpayers to sign a blank return, promises a big refund before looking at their records or charges fees based on a percentage of the refund. Fraudsters use flyers, advertisements, phony storefronts and word of mouth via community groups where trust is high to find victims. (IR-2017-26)
Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities and/or satisfy the requirements related to qualified research expenses. (IR-2017-27)
Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions such as charitable contributions and business expenses or improperly claiming credits such as the Earned Income Tax Credit or Child Tax Credit. (IR-2017-28)
Falsifying Income to Claim Credits: Don’t invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by con artists. Taxpayers should file the most accurate return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. In some cases, they may even face criminal prosecution. (IR-2017-29)
Abusive Tax Shelters: Don’t use abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2017-31)
Frivolous Tax Arguments: Don’t use frivolous tax arguments to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000. (IR-2017-33)
Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. The IRS offers the Offshore Voluntary Disclosure Program to enable people to catch up on their filing and tax obligations. (IR-2017-35)
March 17th 2017
If you’re lucky enough to get a tax refund, it’s important to not lose sight of the fact that it’s not a gift from the IRS. It is in fact your hard-earned money coming back to you, which means it’s important to use the money wisely. Here are a few ways to do that. First option, Rev-Up your rainy day fund. It...
Happy Tax Refund
If you’re lucky enough to get a tax refund, it’s important to not lose sight of the fact that it’s not a gift from the IRS. It is in fact your hard-earned money coming back to you, which means it’s important to use the money wisely. Here are a few ways to do that.
First option, Rev-Up your rainy day fund. It may not be as exciting as a trip to Tahiti, but having a cash cushion to ease the pain of unexpected expenses can provide priceless peace of mind. Without some extra funds on hand, you may be just one monetary surprise away from financial hardship. To avoid this, take a significant chunk of your tax refund and make a deposit to your rainy day fund.
Second option, cancel out high interest debt. Nothing can stall efforts to boost your financial position faster than being burdened by high interest debt such as credit card balances, payday loans, title loans, debt consolidation loans or high interest private student loans. Using your tax refund is a great way to eliminate high- Interest debt without putting a squeeze on your everyday budget.
Third option, pay down your mortgage or make home improvements. If you’ve covered points 1 and 2 above, consider whether you can use your tax refund to pay off some of your mortgage loan, which can save you money in the long run. Or, if you’re looking to move in the nearer term, consider whether a new roof or updating your kitchen might help boost the resale value of your home.
Fourth option, invest in a tax-sheltered account. Using your tax refund to get a head start on Roth IRA contributions or 529 college savings plan contributions is an excellent use of your tax refund, especially if you’ve already maxed out your 401 (k) contributions and are still in your working years.
Fifth option get a new business up and running. Have you ever dreamed of starting a new business but never quite have the seed money to get started? If you’re already debt-free, you can use your refund to get your new venture up and running---or, if there’s not enough startup funds, you can at least sock away what you have to help you move closer to your business goals.
Sixth option, treat yourself! Depending on the size of your refund and if you’re in the clear from debt perspective, it’s reasonable to consider splurging a little bit. For example, if there’s something you’ve had your eye on like a vacation or something new for your home. Just keep it with in your budget, of course!
There are many different ways to approach the use of your tax refund, but no matter how you choose to use it, consider having a plan rather than treating it as mad money. After all, you earned it!
January 16th 2017
The IRS expects to issue more than nine out of 10 refunds in less than 21 days. However, the Protecting Americans from Tax Hikes (PATH) Act mandates the IRS hold refunds on tax returns claiming the EITC or the Additional Child Tax Credit (ACTC) until mid-February. The change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent tax...
The IRS expects to issue more than nine out of 10 refunds in less than 21 days. However, the Protecting Americans from Tax Hikes (PATH) Act mandates the IRS hold refunds on tax returns claiming the EITC or the Additional Child Tax Credit (ACTC) until mid-February. The change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent tax fraud.
The IRS will begin releasing EITC and ACTC refunds starting Feb. 15, but cautions taxpayers that these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27. The IRS wants taxpayers to know it will take additional time for their refunds to be processed and for financial institutions to accept and deposit the refunds to bank accounts. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving President’s Day may affect their refund timing.
Where's My Refund? on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers will not see a refund date on Where's My Refund? or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so Where’s My Refund? remains the best way to check the status of a refund.
*This information is directly from:
December 19th 2016
Many businesses incur costs on wining and dining clients—especially at holiday time. You might be tempted to think that this is an easy tax deduction, but this is not always the case. Here are the rules you need to know to optimize these types of deductions. First, only 50% of your meal expense is deductible. If you hold a customer lunch that includes a business-related...
Many businesses incur costs on wining and dining clients—especially at holiday time. You might be tempted to think that this is an easy tax deduction, but this is not always the case. Here are the rules you need to know to optimize these types of deductions.
First, only 50% of your meal expense is deductible. If you hold a customer lunch that includes a business-related discussion, you can only deduct 50% of the cost.
To be treated as a deductible cost at 50%, the meal must be directly related to the conduct of your business or the meal must directly precede or follow a substantial business discussion. So taking your clients out for a nice holiday lunch after a regular business meeting would be fine in this case.
Second, standard meal allowance rates can ease recordkeeping. Having difficulty keeping records and receipts for meals when out of town on business. You can just deduct a standard meal allowance. It may be less than your actual meal costs, but you won’t need receipts. If you have employees who travel on business, you may want to use the standard rate to reimburse them for their meal costs out of town. For 2016, the standard meal and incidentals allowance is usually $68 per day within the continental United States. It’s higher in New Yok City, San Francisco and other high-cost locations, including some resort areas. The U.S. General Services Administration publishes the daily standard rates by state. Using this rate does not relieve you of the responsibility to keep a record of the time, place and business purpose of the trip.
Third, records are required. When you claim a deductible meal, you need certain records to back up your claims. Technically no deduction can be claimed without these records, although there are some limited exceptions. The IRS looks closely at deductions for meal costs because of the potential for abuse. If your tax return is questioned, the IRS will ask to see records stating when, where and why you had the meal. You don’t need receipts for meals costing less than $75.
There are a number of apps for your smartphone that can assist you, allowing you to input the date, location, details and take a photo or scan the receipt—making record keeping easier.
Forth, holiday parties are 100 % deductible. If you hold a party for your staff in your facility or at a restaurant, you can deduct all of the costs. As long as the party is for the benefit of all employees, you can write off 100% of your costs.
As we’ve outlined here, the tax law has specific rules and limitations that curtail or prevent businesses from deducting meal costs that seem like they would be legitimate write offs. If you have any questions please contact our office at 844-484-8881 to make sure you’re in compliance with tax rules.
October 6th 2016
Estate Sale Tips: When a relative passes away, leaves their home to live in a nursing facility or just downsizes their estate as they grow older, family members must often decide what to do with the assets of their estate. This is where an estate sale may come into play. If you’re considering holding one, here are some pointers from U.S. News & World Report to...
Estate Sale Tips
Estate Sale Tips:
When a relative passes away, leaves their home to live in a nursing facility or just downsizes their estate as they grow older, family members must often decide what to do with the assets of their estate. This is where an estate sale may come into play. If you’re considering holding one, here are some pointers from U.S. News & World Report to help you make an estate sale a financial success.
1. Think family first. Make sure family members get a chance to review estate items before you put items up for sale in case they want to take any mementos. Determining which items should be sold will vary according to the preferences and needs of each family. Having a proactive discussion between family members can help head off any hard feelings later.
2. Research which items may be valuable. Do your homework to discover what potentially high-value items sell for and where you can sell them. This could include online research (try Craigslist and eBay), visiting antique stores, and calling auction houses and vintage stores.
3. Evaluate whether an estate sale is worth having. If you have enough high-value items, it may be worth investing the time and effort to hold an estate sale, but if you don’t have much to sell, you might be better off donating the estate items and taking a tax deduction.
4. Consider professional help. Trying to conduct a valuation on someone else’s items is time consuming, and it may be difficult to do from an emotional standpoint. If this is the case, consider hiring an appraiser who can give you a realistic view of what items might sell for and which items are worth putting on the market.
5. Vet any company you hire to handle an estate sale. If you decide to go ahead with an estate sale, but you want to hire someone to handle it, be sure to get referrals from trusted professionals and check credentials. Also make sure to outline everything in a written contract, including what percentage the company will take and how much prices can be lowered from what has been originally discussed. Understand that this option, while the quickest, is likely to yield you the lowest return on investment. Consider hiring an appraiser who can give you a realistic view of what items might sell for and which items are worth putting on the market. Being the executor of a loved one’s estate is not an easy task, but our firm can help you determine how to handle the financial and tax implications of doing so. We are here to support you, so please contact us if you need assistance.
August 31st 2016
Good Afternoon, I would like to take this time to go over all of the services that Compton Accounting offers. Compton Accounting does not only specialize in tax returns. We also specialize in: Tax Planning & Preparation, Accounting & Bookkeeping, Full-Service Payroll, Controllership, Business Consulting, Licensing for automobiles, water billing, and notarizing...
Compton Accounting Services
Good Afternoon, I would like to take this time to go over all of the services that Compton Accounting offers. Compton Accounting does not only specialize in tax returns. We also specialize in: Tax Planning & Preparation, Accounting & Bookkeeping, Full-Service Payroll, Controllership, Business Consulting, Licensing for automobiles, water billing, and notarizing documents.
Compton Accounting will do everything we can to make your life easier. If you get any correspondence from the IRS, Compton Accounting will research your letter for you to help you figure out the best way to handle it. Since we provide service in the accounting industry, working with the IRS is something we do specialize in. If we have any clients bring in a letter, we research the information in the letter with their records and additional resources to see the best way to handle the situation.
We work with many businesses in various industries such as: Restaurants, Farmers, Automotive Repair Shops, and Not for Profits. We help these clients financially run their business the best we possibly can. We offer services that make communication easy between us and our clients. We offer web based portals to ensure that communication with our clients is 100% secure. Along with our portals, we offer remote access so our accounting & payroll clients can enter their information from their site. We are always looking for more convenient ways to communicate with our customers. We also offer temporary portals for bankers and lawyers, if needed, to exchange your sensitive personal/business information, with the proper consent. Temporary portals are similar to client portals but they expire with 30 days.
We are experts in tax and accounting so our clients can concentrate on their areas of expertise. We do what we do so you can do what you do. If you have any questions or need help with your tax or accounting needs please give us a call at 844-484-8881 or visit www.comptonaccounting.com.
August 12th 2016
IRS Summertime Tax Tip 2016-14, August 3, 2016 If you pay for...
Back to School? Learn about Tax Credits for Education
IRS Summertime Tax Tip 2016-14, August 3, 2016
If you pay for college in 2016, you may receive some tax savings on your federal tax return, even if you’re studying outside of the U.S. Both the American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe, but only the AOTC is partially refundable.
Here are a few things you should know about education credits:
American Opportunity Tax Credit ‒ The AOTC is worth up to $2,500 per year for an eligible student. This credit is available for the first four years of higher education. Forty percent of the AOTC is refundable. That means, if you’re eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any tax.
Lifetime Learning Credit ‒ The LLC is worth up to $2,000 per tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.
Qualified expenses ‒ You may use only qualified expenses paid to figure your credit. These expenses include the costs you pay for tuition, fees and other related expenses for an eligible student to enroll at, or attend, an eligible educational institution. Refer to IRS.gov for more on the rules that apply to each credit.
Eligible educational institutions ‒ Eligible educational schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify. If you aren’t sure if your school is eligible:
· Ask your school if it is an eligible educational institution, or
· See if your school is on the U.S. Department of Education’s Accreditation database.
Form 1098-T ‒ In most cases, you should receive Form 1098-T, Tuition Statement, from your school by February 1. This form reports your qualified expenses to the IRS and to you. The amounts shown on the form may be either: (1) the amount you paid for qualified tuition and related expenses, or (2) the amount that your school billed for qualified tuition and related expenses; therefore, the amounts shown on the form may be different than the amounts you actually paid. Don’t forget that you can only claim an education credit for the qualified tuition and related expenses that you paid in the tax year and not just the amount that your school billed.
Income limits ‒ The education credits are subject to income limitations and may be reduced, or eliminated, based on your income.
Interactive Tax Assistant tool ‒ To see if you’re eligible to claim education credits, use the Interactive Tax Assistant tool on IRS.gov.
July 25th 2016
There are three driving forces behind every successful business; cash flow, credit and creativity. Those forces take on even more importance when it comes to a seasonal business. Here are some helpful tips to use in improving your current business or starting a new one. First, know the numbers. Seasonal businesses are tough, and their owners must be tougher with a thorough knowledge...
Seasonal Business Blues
There are three driving forces behind every successful business; cash flow, credit and creativity. Those forces take on even more importance when it comes to a seasonal business. Here are some helpful tips to use in improving your current business or starting a new one.
First, know the numbers. Seasonal businesses are tough, and their owners must be tougher with a thorough knowledge of their business financials. Being able to manage finances accurately and effectively is crucial. Considering the income fluctuations of a seasonal business, it’s imperative to have a firm handle on cost, as well as knowing when to tap into credit and when it makes sense to ramp up or reduce activity based on objective numbers.
Second, keep cash flow current. Having a small business it is important to know the key financials and how to keep your cash flowing. Of course, if you don’t know what’s coming in and going out down to the penny, you need to take action to fix the situation with a good accounting system, or hire an accounting firm to do it for you.
In addition you’ll need a quick and efficient invoicing system, so you can easily keep track of which clients are current on payments and which ones are falling behind. This information can help you quickly identify and rectify situations that may put a squeeze on your future cash flow.
Third, expand your demand. When your off season comes around that is a good time to take a look at your business. Look at ways to improve your business to your current customers and look more appealing to new customers. Take a look at your current products or services and consider ways to grow interest in them; or consider what complementary items/ services you could introduce to attract new clients.
Forth, control your use of credit. Not all cash flow and seasonality influences can be controlled and that’s why it’s essential to keep extra cash on hand to cushion any unexpected blows to your business. A credit card or line of credit is one way to bridge a cash flow gap, especially if you are just starting out and not eligible for larger bank loans. However it is important to not get in over your head. Developing a good financial plan will help you with that.
Finally, it’s important to take a long view of your seasonal business. Although your business may operate only part of the year, it’s important to think about it as a 12-month operation. This will ensure that you not only plan ahead for new opportunities and maximize existing ones, but that you also set aside enough cash to pay any overhead costs that exist even when your business is in its off season.
If you are wanting to start a new business or improve your current business please call Compton Accounting and we will be happy to help you 844-484-8881.
June 15th 2016
Compton Accounting has gone through many changes and updates in the last several months. Our first change has been offering portals to our clients. Portals are a more secure way to exchange information. Our goal is to have as many clients as possible on portals, so that we can communicate with everyone more securely. If you can login to an email, you can use a portal. It is that easy. You can...
Changes at Compton Accounting
Compton Accounting has gone through many changes and updates in the last several months. Our first change has been offering portals to our clients. Portals are a more secure way to exchange information. Our goal is to have as many clients as possible on portals, so that we can communicate with everyone more securely. If you can login to an email, you can use a portal. It is that easy. You can also access your portal from anywhere. If you need a copy of your tax return or any other financial information all you have to do is log in to your portal using a computer, smart phone, or tablet. If you are interested in a portal or have a few questions please call Compton Accounting 844-484-8881 and Laura will be happy to answer any of your questions.
Our next big change is our phone system. We recently got a more up to date phone system which unfortunately caused us to change our phone number. As of right now if you call the Altona or New Windsor office you will hear a recording stating that the Altona and New Windsor office has a new phone number. Altona’s new number is 844-484-8881 and New Windsor’s new number is 844-667-2315. The official change of the phone numbers will be July 22nd 2016. If you have any questions please feel free to call or email us.
May 13th 2016
We have been receiving a lot of phone calls from our clients stating that they have been getting phone calls from the IRS stating that they owe money. We are here to inform you that these phone calls are 100% fake. There is no truth to these phone calls at all. The caller will call your phone and claim to be an employee of the IRS. They are very convincing when they call. They use...
We have been receiving a lot of phone calls from our clients stating that they have been getting phone calls from the IRS stating that they owe money. We are here to inform you that these phone calls are 100% fake. There is no truth to these phone calls at all.
The caller will call your phone and claim to be an employee of the IRS. They are very convincing when they call. They use fake names and fake IRS identification badge numbers. They also may know a lot about you. Then to make matters worse they alter the caller ID to make it look like the IRS is calling.
Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit or wire transfer. If the victim refuses to cooperate, they then threaten with arrest, deportation or suspension of a business or driver’s license. In many cases the caller becomes hostile or insulting. Or victims may be told they have a refund due to try to trick them into sharing private information. If the phone isn’t answered, the scammers often leave an “urgent” callback request. As real as it all may seem these calls are completely FAKE.
There are also other scams that are out there that are tricking our clients into giving out their personal information. These scammers are sending out emails that are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. These phishing schemes can ask taxpayers about wide range of topics. Emails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.
When people click on these email links, they are taken to sites designed to imitate an official-looking website, such as IRS.gov. These sites ask for Social Security numbers and other personal information, which can be used to file false returns. These sites may also carry malware, which can infect people’s computers and allow criminals to access your files or track your keystrokes.
So please note that the IRS will NEVER: 1. call to demand immediate payment, nor will the agency call about taxes owed without having mailed you a bill; 2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe; 3. Require you to use a specific payment method for your taxes such as a prepaid debit card; 4. Ask for credit or debit card numbers over the phone; 5. Threaten to bring in local or other law- enforcement groups to have you arrested for not paying.
**YOU MAY REPORT INSTANCES OF IRS-RELATED PHISHING ATTEMPTS AND FRAUD TO THE TREASURY INSPECTOR GENERAL FOR TAXADMINISTRATION AT 1-800-366-4484. **
If you would like more information please visit www.irs.gov or call Compton Accounting at 309-484-8888.
April 27th 2016
There are many ways to save and properly spend your money. At Compton Accounting it is our job to help you use your money wisely. I found some helpful tips to help you get the most out of your paycheck. Now if you are just starting out on your own it is important to start saving for your retirement sooner rather than later. I know most of us think that when you’re 25...
Simple Financial Tips
There are many ways to save and properly spend your money. At Compton Accounting it is our job to help you use your money wisely. I found some helpful tips to help you get the most out of your paycheck.
Now if you are just starting out on your own it is important to start saving for your retirement sooner rather than later. I know most of us think that when you’re 25 retirement should be the farthest thing from your mind. However this is not the case. If your job offers a 401k plan, sign up at your first opportunity. Now if your job doesn’t offer a 401k plan you can place some of your money into an IRA. Naturally the more you earn, the more you can stash. Stock away at least 7% (if you can) of your earnings in the beginning, and increase it each year until you’re diverting 15% a year.
After you have set up your 401 K plan your next step is place a value on money. Money doesn’t buy happiness but it does buy you comfort. Just understand what it’s worth. What I mean is money is what you earn in exchange for your time in some productive pursuit. For example you earn $15 an hour at your job, and you are considering buying a new TV for $800. You may calculate that you spend 53 hours, or about 7 days earning that money. Keep in mind this is a rough estimate depending on your area and taxes. So next time you make a purchase do some quick calculations in your head to determine if whatever you are buying is worth it.
Credit cards can be a wonderful thing, or they can be a terrible thing depending on how you use them. Our advice when you use a credit card is use them sparingly, and if you are going to use them spend an appropriate amount that you can pay off quickly. Credit cards have an interest rate and some are much higher than others. We know how easy it is to pay for things with plastic but don’t fall into the trap of interest rates.
Next be prepared for the unexpected. At some point you might lose your job through no fault of your own. Prepare today by stashing money in an accessible emergency fund. The easiest way to do this is to put some of your money in a savings account. We do advise that you try not to use that 401 k money for emergencies. It will cost you plenty, between income and penalty taxes. So before you make any kind of decision to take money out of a 401k please talk to an advisor first.
Finally, be thankful for your good fortune. It’s not all about money, you will have abundance through strong family ties and solid relationships. Take some time out each day to reflect on the good in your life. Spend at least 1 day a week in some sort of activity you like to do. Then take a minimum of 1 week vacation annually if you possibly can so you can totally unplug and unwind.
I hope some if not all of this has been helpful. If you have any questions please call Compton Accounting at 309-484-8888. We will help you in any way that we can.
March 22nd 2016
Many of us view a tax refund as ‘bonus’ cash; however, it really should be utilized just as any of your other income would be and managed purposefully. So if you’re anticipating a tax refund this year, make sure you have a plan for your money. Prior to receiving a tax refund, think about your personal financial situation to determine what your needs are. First you...
How to Use Your Refund
Many of us view a tax refund as ‘bonus’ cash; however, it really should be utilized just as any of your other income would be and managed purposefully. So if you’re anticipating a tax refund this year, make sure you have a plan for your money. Prior to receiving a tax refund, think about your personal financial situation to determine what your needs are.
First you could save the money for a rainy day or a stormy one. Although it may not seem like a very exciting way to use your refund, the peace of mind that establishing or adding to your emergency fund will give you is priceless. Financial experts advise that your fund should have about six to eight months’ worth of savings in an easily accessible interest bearing account.
Next reduce any high interest debt. Putting money away for a monetary emergency, paying off any high interest debt you may have is the next best thing to do.
It is also important to make a list of needs not wants. If there are some necessity items that you desperately need such as repairs on our vehicle, dental check-ups for your children or an essential house repair. Just be sure that any spending you do is on essential items.
Make a budget and fund it. If you don’t already have a budget, receiving your refund may be the incentive you need to create one. Once you have your budget organized, consider using your refund to seed bank accounts for key purchases such as holiday gifts, car down payments, and college savings.
You could top up tax sheltered accounts using your tax refund or start or top up a traditional Roth IRA or to contribute to a 401 K or a 529 college savings plan offers you a double bonus. Not only will you be compounding dollars and interest for your future retirement or college tuition needs but you may be creating a deduction for next tax season.
Finally if you have some funds left over from your refund after taking care of savings, debts, and necessities, maybe this year’s tax refund can go towards funding a dream like a family trip or a memorable location or even starting your own business.
I hope I have helped you find a better more efficient way to use your tax refund. If you have any questions please feel free to give Compton Accounting a call at 309-484-8888. Have a wonderful day.
February 19th 2016
Compton Accounting just recently found out that there is a new IRS scam happening right now. USA Today Reporter Kevin McCoy reports that email and texting scams are designed to trick U.S tax payers into providing personal data. So far this year 400%, the IRS warned Thursday in a renewed consumer alert. The Schemes involve “phishing” messages designed to trick taxpayers...
Compton Accounting just recently found out that there is a new IRS scam happening right now. USA Today Reporter Kevin McCoy reports that email and texting scams are designed to trick U.S tax payers into providing personal data. So far this year 400%, the IRS warned Thursday in a renewed consumer alert.
The Schemes involve “phishing” messages designed to trick taxpayers into believing the emails and texts represent official communications from the IRS, tax software companies or others in the tax industry. The IRS DOES NOT contact tax payers using electronic methods such as cell phones, telephones, computers, etc. They ONLY contact taxpayers by U.S.P.S mail.
The messages typically ask for data related to tax refunds, filing status, or seek confirmation of personal information, including ordering IRS transcripts or verification of IRS Personal Identification Numbers, the tax agency said.
When consumers CLICK on the email links, they are sent to what appear to be government websites that ask for Social Security numbers and other personal information that identity thieves can use to file false tax returns and collect refunds, the IRS said. The sites may also contain malware that infect taxpayers’ computers and enable cyberthieves to gain access to file or track consumers’ keystrokes to get personal data.
“This dramatic jump in these scams comes at the busiest time of tax season", IRS Commissioner John Koskinen warned. “Watch out for fraudsters slipping these official-looking emails into inboxes, trying to confuse people at the very time they work on their taxes. We urge people not to click on these emails.”
Additionally, tax professionals have reported being targeted by similar phishing scams that seek their online credentials for IRS services.
The IRS said it is working with state revenue departments, tax preparation companies and others in the tax industry to address the scams.
Compton Accounting urges you to please be careful. NEVER give out your personal information over the phone. If someone from the IRS calls you DO NOT give them ANY information. Please just hang up and report the incident. You work hard for the money you earn. Don’t let someone else take it away from you. I wish everyone a happy and safe tax season.
January 25th 2016
Tax time is quickly approaching, you may have started receiving tax information in the mail. Taking action now is the best way to avoid the stress associated with last-minute tax filing. By taking the following steps, you will be breathing a lot easier when tax time comes. First, collect and consolidate your information. Gather all of your tax-related documents in one place. These...
Timely Tips for Tackling Taxes
Tax time is quickly approaching, you may have started receiving tax information in the mail. Taking action now is the best way to avoid the stress associated with last-minute tax filing. By taking the following steps, you will be breathing a lot easier when tax time comes.
First, collect and consolidate your information. Gather all of your tax-related documents in one place. These generally include receipts for charitable donations, business expenses, property tax records, and medical bills. (NOTE: In order to write off medicals bills on your taxes the amount that YOU paid has to be at LEAST $15,000.) If this step is difficult, make a mental note to organize your tax documents as they accumulate next year.
Next, create a tax information center. You will receive additional tax documents by mail and email in the next few days such as a W-2 from your employer or a notice from your bank showing the mortgage interest you paid. As these documents and emails come in, add them to the collection that you created. This will help you find them easily when you’re ready to file your tax return.
Then, you will want to decide if a retirement or education account contribution is in order. If you have the means, consider contributing to your retirement fund or an education fund. You can contribute to eligible retirement and education accounts before the April 15th tax deadline and get a deduction for the tax year.
Finally, prepare yourself to pay additional taxes at filing time. By getting a jumpstart on your taxes, you should be able to ascertain if you will owe a significant amount of unpaid taxes. If you think this is the case, now is the time to start saving. Start making some adjustments to your budget where you can. Then of course consider adjusting your tax withholding or estimated tax payments (if you are self-employed) so that you can correct the situation for next year.
Being prepared is one of the best tax strategies you can have. While you may think that tax season is months away it will come around quickly. By taking these simple steps, you’ll be a lot less stressed when the April tax dead line is here. Also if you have any questions please call Compton Accounting and we will help you with all of your tax and accounting needs 309-484-8888.
December 9th 2015
It’s time to celebrate the holidays again. We all know that this time of year can be very stressful. Between cooking a big meal, running to numerous holiday parties, sending Christmas cards, and not to mention all of the holiday gifts you buy for your family and friends. No wonder why you are so stressed out. So we here at Compton Accounting have come up with some helpful hints to make...
How to Prevent Holiday Headaches
It’s time to celebrate the holidays again. We all know that this time of year can be very stressful. Between cooking a big meal, running to numerous holiday parties, sending Christmas cards, and not to mention all of the holiday gifts you buy for your family and friends. No wonder why you are so stressed out. So we here at Compton Accounting have come up with some helpful hints to make your holiday season a little more enjoyable.
First, omit over-the-top spending. Buying expensing (or too many) gifts can cause financial stress. Realistically you don’t have to buy the best of everything or spend countless hours picking out the perfect gift. Consider setting a spending limit or choose moderately priced presents. You can also buy the same gift for numerous people. Especially if they don’t live close to one another. Who is really going to know?
Next, you can share the holiday cooking. There is no shame in doing a potluck and asking your family and friends to bring a dish. That is also a fun way for everybody to bring some of their traditions to your party. If you don’t want to ask your guests to bring a dish there is also no shame in visiting the “pre-made” section at your grocery store. If you don’t want to make pie from scratch you don’t have to anymore. If you don’t really love to cook or don’t have time then there is really no point in making everything from scratch anyways.
Now for Christmas cards. You can streamline your Christmas card list. Only send to people you keep in contact with. You don’t have to send a Christmas card to everybody, especially the ones you haven’t talked to in a really long time. Only send to people that you keep in contact with or want to stay in contact with.
Finally wrapping gifts. If you don’t want to wrap all of the gifts you bought, you don’t have to. If you are still wrapping stocking stuffers, don’t. That is what the stocking is for. Also if you haven’t discovered the utility of gift bags over wrapping paper, maybe this is the season to do so. However if you like the way the wrapping paper looks under the tree they do have services that will wrap your presents for a small fee. They are usually at malls and consist of high school kids working a fundraiser. Or you can always guilt trip your kids into doing it.
Well we hope you all have a wonderful and safe holiday season. From our family to yours Happy Holidays!
November 19th 2015
Good Afternoon, It's getting to be that time of year again. Tax time is quickly approaching and it's time to start preparing for the upcoming tax season. If you have any questions about what you need to do for this tax season please give us a call and we will be happy to help you. Compton Accounting is also taking pre tax appointments for anybody who has questions or just...
Year End Planning
It's getting to be that time of year again. Tax time is quickly approaching and it's time to start preparing for the upcoming tax season. If you have any questions about what you need to do for this tax season please give us a call and we will be happy to help you.
Compton Accounting is also taking pre tax appointments for anybody who has questions or just wants to review their tax information before the end of the year. If you feel as if you need an appointment give Compton Accounting a call and Laura will be happy to put you on the calendar. However please call sooner rather than later so you can get a good time that works best for you.
October 15th 2015
Good Morning! I hope everyone is enjoying this beautiful fall weather. I wanted to update everybody on how we are bettering ourselves to serve you more efficiently. I'm not sure if everyone is aware of all of the training and conferences that our staff goes through, to make sure we are as up to date as possible for all your tax...
Good Morning! I hope everyone is enjoying this beautiful fall weather. I wanted to update everybody on how we are bettering ourselves to serve you more efficiently.
I'm not sure if everyone is aware of all of the training and conferences that our staff goes through, to make sure we are as up to date as possible for all your tax and accounting needs.
For the better part of September Mr. Compton was out at different tax seminars learning all that he could to better serve you as his client. He was educating himself on any updates or changes that are going to happen for this upcoming tax season.
As for our staff, they are currently preparing to leave at the end of this month for a 2 day tax school to get any updates on changes that could happen for the upcoming tax season.
Our staff also has training through phone conferences and webinars throughout the year to better serve you.
We also would like to give one of our staff members Holly Pierce a big congratuations for recently earning her EA License. That takes a large amount of time and dedication to do that. Good Job Holly!!!
Here at Compton Accounting we want to do the best job we can to take care of you as our clients. If you have any questions that you need answered please give us a call at 309-484-8888.
September 29th 2015
You love to [insert hobby] but does that mean you should make it your livelihood? Here's what you should consider before making the leap. Am I up for the challenge? Starting a business based on your hobby can be deeply fulfilling, but it almost definitely won't be easy. If you're looking for an escape, a life break, or simply a less effortful alternative to a straight job, then...
Should Your Hobby be Your New Business?
You love to [insert hobby] but does that mean you should make it your livelihood? Here's what you should consider before making the leap.
Am I up for the challenge? Starting a business based on your hobby can be deeply fulfilling, but it almost definitely won't be easy. If you're looking for an escape, a life break, or simply a less effortful alternative to a straight job, then turning your passion into a business probably isn't it. You may want to talk to a few successful business owners before you start.
Learn about the risk and the rewards of an entrepreneurship. In an ideal world, we would all love our jobs and be pursuing our passions while we make a great living. Sometimes that is just not possible or it will involve extraordinary circumstances.
Will I enjoy doing my hobby on a deadline? You love baking cakes for friends and family, but according to Candice Landau entrepreneur and BPlans site editor, you need to dig deeper and be honest with yourself: Will you enjoy turning cakes out day in and day out under time pressure for years on end?
Will I enjoy doing this with a financial gun to my head? Landau writes, "There's a difference psychologically, between doing something for fun and doing it because if you don't, you won't be able to pay rent. Anticipate this truth and think deeply about it.
Is this hobby my outlet for relaxation? If you love to take pictures as part of your leisure time, you will, as Landau states, have to find something else to do to unwind your hobby will no longer have that effect.
Making your hobby your new business is not an easy task as stated above. However it has been done by many people and they love doing it. If you have truely considered making your hobby your new business please give Compton Accounting a call so we can help point you in the right direction 309-484-8888.
August 27th 2015
I hope everyone has had a lovely summer so far. Here at Compton Accounting we have been busy with many changes trying to update our systems and our client procedures. The first major change that is going to happen is we are updating our phone system. We have been working closely with a phone distributing company that will help us update our system so that we as a firm will run more...
PHONE NUMBER CHANGE
I hope everyone has had a lovely summer so far. Here at Compton Accounting we have been busy with many changes trying to update our systems and our client procedures.
The first major change that is going to happen is we are updating our phone system. We have been working closely with a phone distributing company that will help us update our system so that we as a firm will run more effectively and efficiently for your convenience.
With that being said we wanted all of our clients to know that after Labor Day we will be making changes to the phone numbers. We ask that you use the primary numbers for all three of our offices. The primary numbers are: Altona 309-484-8888, Kewanee 309-856-8888, and New Windsor 309-667-2315. So if you have any of the other numbers saved anywhere please be aware that if you call any of our other lines, you will get a recording stating that these numbers are no longer in use. If you have any questions or concerns please feel free to contact us and we will answer any questions you have.
July 31st 2015
Abstract: In late June, the Supreme Court determined that same-sex couples can exercise the fundamental right to marry in all states and that there is no lawful basis for a state to refuse to recognize a lawful same-sex marriage performed in another state. This article describes the decision's impact on many same-sex couples in regard to state taxation, estate planning, and a wide variety of...
Supreme Court Legalizes Same -sex Marriages in All States
Abstract: In late June, the Supreme Court determined that same-sex couples can exercise the fundamental right to marry in all states and that there is no lawful basis for a state to refuse to recognize a lawful same-sex marriage performed in another state. This article describes the decision's impact on many same-sex couples in regard to state taxation, estate planning, and a wide variety of legal rights. However, it notes that the ruling doesn't apply to forms of same-sex partnerships other than legal marriage.
Supreme Court Legalizes Same-sex Marriages in All States
Since the Supreme Court's 2013 Windsor decision, same-sex couples who are legally married under state or foreign laws have been treated as married for federal tax purposes just like any other married couple. The Supreme Court's Obergefell decision (issued in late June) now requires all states to license and recognize marriages between same-sex couples. Specifically, the decision states that same-sex couples can exercise the fundamental right to marry in all states and that there is no lawful basis for a state to refuse to recognize a lawful same-sex marriage performed in another state.
Therefore, same-sex couples who are legally married in any state are now allowed to file joint state income tax returns wherever they reside. They are also entitled to the same inheritance and property rights and rules of intestate succession that apply to other legally married couples. Therefore, same-sex couples should now be able to amend previously filed state income, gift, and inheritance tax returns for open years to reflect married status and claim refunds. Furthermore, these couples likely need to rethink their estate and gift tax plans.
Before the Obergefell decision, members of married same-sex couples who live in states that did not previously recognize same-sex marriages had to file state income, gift, and inheritance tax returns as unmarried individuals. This caused additional complexity and expense in filing state returns.
Other implications of an individual's marital status include spousal privilege in the law of evidence; hospital access; medical decision-making authority; adoption rights; the rights and benefits of survivors; birth and death certificates; professional ethics rules; campaign finance restrictions; workers' compensation benefits; health insurance; and child custody, support, and visitation rights.
Note: The ruling does not apply to individuals in registered domestic partnerships, civil unions, or similar formal relationships recognized under state law, but not denominated as a marriage under the laws of that state. These individuals are considered unmarried for federal and state purposes. However, these state-law “marriage substitutes” might be eliminated now that all states must allow same-sex marriages. Individuals in these relationships can now obtain marriage licenses, get married, and thereby qualify as married individuals for both state and federal tax purposes.
June 25th 2015
We get a few clients calling and asking about FEIN numbers. The typical questions we get are: What is it, Do I need one, How do I get one? According to www.irs.gov "An Employer Identification Number(EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entitiy. Generally, businesses need an EIN." Before applying...
We get a few clients calling and asking about FEIN numbers. The typical questions we get are: What is it, Do I need one, How do I get one? According to www.irs.gov "An Employer Identification Number(EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entitiy. Generally, businesses need an EIN."
Before applying for an EIN number ask yourself these questions:
*Do I have employees?
*Do I operate my business as a corporation or a partnership?
*Do I file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
*Do I withhold taxes or income, other than wages, paid to a non-resident alien?
*Do I have a Keogh Plan (retirement play for self-employed people)?
*Am I involved with any of the following types of organizations:
~Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
~ Real estate mortgage investment conduits
How do you apply for FEIN? You may apply for an EIN in various ways and now you may apply online. This is a free service offered by the Internal Revenue Service and you can get your EIN immediately. First you must check with your state to make sure you need a state number or name of entity, this step is very important. To get more detailed information on how to apply for an EIN number please visit www.irs.gov and type in the search box "EIN". However we ask that you please call us if you think you need an EIN. We will be glad to help you with this process.
May 18th 2015
The Internal Revenue Service has issued a consumer alert recently providing taxpayers with tips to protect themselves from email and telephone scam artists pretending to be with the IRS. These callers/emailers may demand money or may say that you have a refund coming to you and request your private information. DO NOT give them any information, this is a SCAM. They may...
SCAMS, SCAMS, SCAMS
The Internal Revenue Service has issued a consumer alert recently providing taxpayers with tips to protect themselves from email and telephone scam artists pretending to be with the IRS.
These callers/emailers may demand money or may say that you have a refund coming to you and request your private information. DO NOT give them any information, this is a SCAM. They may even know alot about you and they also have the capabilities to alter the caller ID to camouflage it to look like an IRS phone number. They also use fake names and phony IRS identification badge numbers. If you don't answer their call they will usually leave an "urgent" message demanding you to call them back.
**Note: If your first notification from the IRS is an email, DO NOT open it. If you open the email or any of the attachments to the email this can allow the scamers to hack into your computer and steal your personal information.
According to irs.gov here are a few simple tips to determine if the phone call/email is a scam or not:
1. Call and demands immediate payment. The IRS will not call about taxes owed without first having mailed you a bill/ notice.
2. Demand that you pay taxes with out giving you the opportunity to question or appeal the amount they say you owe.
3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
4. Ask for credit or debit card numbers over the phone or by email.
5. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you receive a phone call or an email that is a scam here is what you do according to irs.gov:
*If you know you owe taxes or think you might owe, call the IRS at 1-800-829-1040. The IRS call center can help you with a payment issue.
*If you know you don't owe taxes or don't have a reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) AT 1-800-366-4484 or at www.tigta.gov
*You can file a complaint using the FTC Complaint Assistant (irs.gov); choose "Other" and then "Imposter Scams" . If the complaint involves someone impersonating the IRS, inclue the words "IRS Telephone Scam" in the notes.
REMEMBER, the IRS does not use unsolicited email, text messages or any social media to discuss your personal tax issue. For more information on reporting tax scams, go to www.irs.gov and type "scam" in the search box.
April 28th 2015
At Compton Accounting we get a lot of questions regarding how long our customers should keep their tax documents. If you look at some resources they will tell you to save up to 3 years. However, Compton Accounting recommends that you save up to 7 years, and here is the reason why. According to www.irs.gov the time period to file a claim for a credit or refund is generally 3 years from...
At Compton Accounting we get a lot of questions regarding how long our customers should keep their tax documents. If you look at some resources they will tell you to save up to 3 years. However, Compton Accounting recommends that you save up to 7 years, and here is the reason why.
According to www.irs.gov the time period to file a claim for a credit or refund is generally 3 years from the date the original tax return was filed ( or the due date for filing the return if the return was filed before that date), or 2 years from the date the tax return was paid, whichever date is later. However, if you would need to file a claim for an overpayment resulting from a bad debt deduction or a loss from worthless securities, you must make the claim 7 years from when the tax return was due.
Now if you don't have the space to save 7 years worth of tax documents Compton Accounting would be happy to set you up a portal so you don't have so much paper to store. All you have to do is call Compton Accounting at 309-484-8888 and ask for Laura. She will set you up with a portal and upload all of your tax documents we have on file in there for you. Then you can access your information anytime you want to access it.
Something to also keep in mind. If you are destroying ANY tax documents, please destroy them properly. They need to be shredded so none of your information can be stolen. A tax return is a perfect road map for an identiy theif to steal your information.
March 20th 2015
A service that Compton Accounting has added to its criteria is licensing for cars and trucks. We not only can do registration stickers, but at the Altona location you can do title and registration work as well. So no more going to the DMV, taking a number and waiting. However there are small convenience fees, such...
Vehicle Licensing Available Here
A service that Compton Accounting has added to its criteria is licensing for cars and trucks. We not only can do registration stickers, but at the Altona location you can do title and registration work as well. So no more going to the DMV, taking a number and waiting. However there are small convenience fees, such as:
Stickers: Title & Registration Fee:
1 to 3 stickers are $7.50 $25.00 per transaction
4 to 6 stickers are $15.00
7 to 9 stickers are $22.50
Altona is not our only location that does licensing work. If you need a new registration sticker, you can visit our New Windsor location as well. If you need title and registration work you have to come to our Altona office. If you have any questions about licensing work please call 309-484-8888 and ask for Laura or you can call 309-667-2315 for the New Windsor location and ask for Molly.
February 16th 2015
Good Morning everyone! I just wanted to give a quick reminder that we are offering all of our clients the opportunity to use portals for their tax returns and other financial documents. They are easy to use and 100% secure. All you have to do to use the portal is have an active email account, and give us your email when you bring us your information. After that we will set up your portal. You...
Good Morning everyone! I just wanted to give a quick reminder that we are offering all of our clients the opportunity to use portals for their tax returns and other financial documents. They are easy to use and 100% secure. All you have to do to use the portal is have an active email account, and give us your email when you bring us your information. After that we will set up your portal. You can access your financial documents anytime anywhere.
So if you have any questions about portals please feel free to give us a call or talk to Laura when you drop off your tax information she will be happy to help you with questions you might have.
January 16th 2015
Good Morning I hope everybody is keeping warm durning these cold wintery months. I know here at Compton Accounting we have been busy prepping the office for tax season to make sure that everything runs as smoothly as possible. However we do need some help from you to make sure that we get everything done and mailed on time for tax season. For example we need all of your 1099 information so we...
Tax Season Preperation
Good Morning I hope everybody is keeping warm durning these cold wintery months. I know here at Compton Accounting we have been busy prepping the office for tax season to make sure that everything runs as smoothly as possible. However we do need some help from you to make sure that we get everything done and mailed on time for tax season. For example we need all of your 1099 information so we can get those done in a timely manner. We also need any W-2 information for clients that we don't already have info for. Keep in mind that these do not have to be mailed out until January 31st however we would like the documentation before that so we can have plenty of time to process the information. We just want to ensure that everybody gets all the documentation that they need to properly file their taxes.
If you obtained health insurance on www.healthcare.gov you should receive a form 1095-A in the mail or you can log back into the website and download this form. We are not clear if the health insurance providers will be issuing form 1095-B. If you have insurance through your employer you may receive a form 1095-C. In short please bring in any documents you may have a question on and we will be happy to help you. If you have any questions before coming in please don't hesitate to call us and we will be happy to help you.
December 15th 2014
Season's Greetings, I hope all is well with everyone. As most of you are aware tax season is quickly approaching. I know here at Compton Accounting we are busy preparing for yet another busy tax season. We have been gathering, printing, and stuffing envelopes full of tax information for clients to make sure that you are as up to date as possible on all of the new tax information. If you...
Merry Tax Season
Season's Greetings, I hope all is well with everyone. As most of you are aware tax season is quickly approaching. I know here at Compton Accounting we are busy preparing for yet another busy tax season. We have been gathering, printing, and stuffing envelopes full of tax information for clients to make sure that you are as up to date as possible on all of the new tax information. If you haven't already you should or will be getting an envelope from us with some tax documents in it. You will find four documents: a tax letter, brochure with "Tax News & Tips", and 2 surveys. One survey is the same one we send out every year (with updated tax questions) that just serves as a check list for you. This survey helps you go through your year and jog your memory of any changes or purchases you may have made that will affect your tax return. The other survey we included is brand new and very important. This survey is about your health care and must be filled out before Compton Accounting can complete your tax return. Please don't let this survey intimidate you. There are even examples on there to help you through it. However if you have any questions please don't hesitate to call and we will be happy to do what we can to help you. There are also many tools on our website that may be helpful to you as well. So please take a look around and see if any of them are beneficial to you. I hope everybody has a safe and wonderful Holiday Season!
October 27th 2014
We have another new service that is offered at Compton Accounting. Recently we have started doing corporate meeting minutes for businesses. You may ask, "Why does my company need these?" Well the answer to that is simple. Minutes protect the corporation by legally documenting all the decisions made by the corporation and the shareholders that it is...
Corporate Meeting Minutes
We have another new service that is offered at Compton Accounting. Recently we have started doing corporate meeting minutes for businesses. You may ask, "Why does my company need these?" Well the answer to that is simple. Minutes protect the corporation by legally documenting all the decisions made by the corporation and the shareholders that it is made up of. If the corporation were to ever get audited by the IRS, you have every major decision made in the corporation in writing with signautres of each shareholder stating that it was done. You may be wondering when you should do your corporate minutes. Corporate minutes need to be done at the year/end of the corporation. If the minutes are done at the year/end, no major decisions get missed or overlooked and will be included in the document. Here are some general requirements for all corporations:
- Meetings need to be held at least annually.
- Give notice of date, time, place of meeting (or retain signed waiver of notice) to all shareholders.
- Prepare minutes of the meeting including the following:
- The name of the corporation
- The date, time, and place where the meeting was held
- That notice of the meeting had been properly given or waived in the accordance with the bylaws.
- Any importatnt changes to the business that happened during the year
- Election of officers (by action of the board of directors) and directions (by vote of the shareholders) according to the corporation's bylaws and articles of incorporation, if specified that elections should occur annually.
- Any Other Basic information covered and decisions made.
We here at Compton Accounting are always researching and trying to find new ways to make your life just a little easier. If you are interested in having us do your corporate meeting minutes, please feel free to contact us. Or if you have any questions about corporate meeting minutes, please give us a call and we will be happy to help you in any way that we can.
October 3rd 2014
Good morning, I hope everybody is having a wonderful day on this lovely Fall morning. We here at Compton Accounting have been very busy updating our systems, and cleaning up some old clutter we had lying around. So we can get things in tip top shape for tax season which is just around the...
Fall into Portals
Good morning, I hope everybody is having a wonderful day on this lovely Fall morning. We here at Compton Accounting have been very busy updating our systems, and cleaning up some old clutter we had lying around. So we can get things in tip top shape for tax season which is just around the corner.
We are still continuing our training for the Portals which we fully intend on using this coming tax season. We already started using it with some clients, and everything seems to be running smoothly. We have also been using Temporary Portals for our bankers and lawyers that need information as well, only with your permission. The Portals are really convenient and easy to use. The clients really seem to like them.
We have had some concerns about security from certain clients because they don't want their identities stolen, which we fully understand. At Compton's we know how hard everybody works for their paycheck and we understand that you don't want anybody to have access to ANY of your financial records. I assure you that this system is 100% secure. We wouldn't use this system if we had any doubts about it. We have been working really hard with another compnay who has been using the portals for years to ensure that your records are safe.
Thomson Reuters is a Forbes 2000 Company. They have been hosting online applications for more than a decade. The NetClient CS applications are hosted at some of the largest, most secure data centers in the world. It uses the industry's most advanced security and reliability measures to keep your data safe, including:
* Built-in redundancy: Multiple data locations, internet connections, and power sources keep your portal up and running at all times.
* Secure password protection: A comprehensive password system provides you with worry-free access.
*256-bit encryption: This protects your data as it travels between the data center and your computer or mobile device. And, with numerous 3rd party audits, including a Type 1SSAE16 SOC2 audit, you can be confident your data is secure.
Here at Compton Accounting we are working our best to serve you and protect your records from any financial fraud.
August 13th 2014
Good Morning, it's a beautiful day at Compton Accounting! We are eager to announce that we are trying to keep up with the times and the continuously changing technology. We are in the process of creating new portals for all of our clients to access their records more securely and efficiently. These portals will give each client access to any document requested and you can access it at any...
Keeping Up with the Times
Good Morning, it's a beautiful day at Compton Accounting! We are eager to announce that we are trying to keep up with the times and the continuously changing technology. We are in the process of creating new portals for all of our clients to access their records more securely and efficiently. These portals will give each client access to any document requested and you can access it at any time. So no more lost tax returns, misplaced 1099's missing W-2's, and so on and so forth. All of that information will be right there at your finger tips for you to do as you please. All you will have to is log in using your user name and password that we provide to you and you're in! If your banker needs your financial information, no problem all you have to do is print it off for them. No more having to call Compton Accounting for a written release of your information. The best part about the portals is that they are 100% SECURE. Only you can access it with your user name and password. We hope that this is a bit more convenient to make your life easier.
We ask that you please be patient with us while we get the portals set up. Our goal is to have the portals accessible by tax season. So that way we can provide all of our clients with the necessary tools needed to log into the Compton Accounting website. We are working closely with another company who are experts on the portals to ensure that we got the necessary training needed to make our vision a successful reality. If you have any questions please feel free to call Compton Accounting and ask for Laura. Thank you and have a wonderful day!
March 24th 2014
It's a New Brand Day at Compton Accounting! We are excited to announce the recent launch of our firm’s new brand. We’ve been working very hard to enhance our website, develop helpful new client communications, and give our firm a facelift. We’ve also continued to research and identify the latest and greatest technologies to improve the services we provide and ensure we...
It's a New Brand Day
It's a New Brand Day at Compton Accounting! We are excited to announce the recent launch of our firm’s new brand. We’ve been working very hard to enhance our website, develop helpful new client communications, and give our firm a facelift. We’ve also continued to research and identify the latest and greatest technologies to improve the services we provide and ensure we continue to meet your needs.
Take a moment to look around our new website and review some of our advanced features, like our Client Center. The Client Center is designed to provide you with a highly secure and convenient web-based tool to access your financial documents, data, and collaborate with our firm in real time.
We hope you like what you see. It’s the same great service, just with a new look and feel. We look forward to hearing your feedback.