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Control the Clutter! 5 Tips to Create a More Organized Life

Author: Jenny Shilling

If compiling all of your tax documentation this year triggered the thought that you really should try to be more organized, then the following tips are for you. Constantly searching for things you have misplaced, missing important dates, and not feeling like you have control over your days can waste your time and increase your stress level.

The following tips will help you take manageable steps toward strengthening your organizational skills, helping you feel less overwhelmed in the process:

1. Modify your mindset. While we often focus on the external tasks associated with becoming more organized, the first step you should take is to shift your mindset so you become committed to making changes that improve the way you function and how you manage your time and resources.
2. Create structure that works for you. Many problems related to disorganization are actually caused by a lack of structure. If the thought of a schedule makes you uncomfortable, think about applying this concept only to those areas of your life that need it most, such as your morning routine and the parts of your workday where you tend to get distracted. Start by breaking down the time you want to manage more effectively into 15- or 30-minute increments for completing specific tasks.
3. Compartmentalize the clutter. If you regularly spend time searching for keys, documents, and other items, it can make you very frustrated. The remedy for this problem is simple, but it does take some effort: A) Create specific places for all of the things you use daily. B) Set up designated places for your phones and chargers, hooks to hang your keys, and baskets to hold kids’ and adults’ miscellaneous items
4. Technology can help. Digital tools can support you in your organization efforts and help you maintain the progress you make. Reducing or eliminating your paper trail by scanning and securely storing documents is just the beginning. For example, our firm offers you a convenient way to organize, exchange, and streamline key financial documents using a secure online portal on our website. There are also many smartphone apps you can use to create task lists and reminders to help you ensure that you know what needs to get done and that it fits into your newly implemented schedule.

The tips above offer a good starting point to become more organized, but it’s up to you to find the motivation and tools that fit your lifestyle and your long-term goals. Instead of trying to tackle all areas of your life at once, start with the areas that you can tackle relatively easily when you begin—such as organizing your desk or creating a place to hang your keys. Taking just a few small steps toward streamlining your routine will go a long way in helping you feel calmer and more in control.

Keep This, Not That—Which Documents Should You File and Which Should You Shred After Tax Season?

 Author: Jenny Shilling

If there’s one time of the year that may inspire you to finally come up with a filing system for all of your bank statements, receipts and other important documents, it’s tax season. Not only will keeping your documents organized make it easier and less stressful for you to find what you need on a daily basis (and when you are getting ready to have your taxes prepared), it will also ensure that if something happens to you, your loved ones will be able to quickly find essential information about your finances and other relevant items.  

 One of the major challenges that many people encounter when they start going through their documents is knowing what they should keep and for how long. The following list from Consumer Reports may help you determine what to keep and what to toss (remember to shred all sensitive documents before you put them in the recycling bin or trash) once tax season is over:

 Documents to keep for a year or less

• Bank records: Keep deposit and ATM receipts until you reconcile them with your monthly statements. File your monthly checking and savings account statements. After you do your taxes, file any statements needed to prove deductions with your tax records; the rest can be shredded.
• Credit-card bills: Shred them after you've checked and paid them, unless you need a bill to support a deduction you'll be taking on your taxes, such as for a charitable donation (in which case you'll need to file the bill with your current-year tax records).
• Current-year tax records: Keeping your records organized can save you headaches and money at tax time. Place documents you'll need for your next return in a file.
• Insurance policies: Keep policies that you renew each year, such as those for your home, apartment, or car, until you get new policies, then shred the old ones.
• Investment statements: You can shred your monthly and quarterly statements from brokerage, 401(k), IRA, Keogh, and other investment accounts as new ones arrive. But hold on to annual statements until you sell the investments.
• Pay stubs: Keep the calendar year's records until you reconcile them with your annual W-2 form, then shred them.
• Receipts: If you're not doing anything with your receipts—like tracking your spending, itemizing tax deductions, or using them to return purchases—you don’t need to keep them.

 Documents to keep for at least a year

• Investment purchase confirmations: You will need these to establish your cost basis and holding period when you sell investments. If this information appears on your annual statements, you can keep those instead of quarterly or monthly statements. Store the records until you sell the investments, at which time you should move the back-up records into that year's tax-return file.
• Personal federal and state tax returns and their supporting records: These documents must be kept for at least seven years. Remember, your returns can be audited by the IRS up to three years after the date you filed the return. If you fail to report more than 25 percent of your gross income, the government has six years to collect the tax or start legal proceedings—and you can be audited at any time if the IRS suspects you of fraud.

• Loan documents: Keep closing documents for mortgage, vehicle, student, and other loans in a safe-deposit box. You can dispose of them after the loan is paid off.

 Documents to archive for seven years

•  Tax records: If they are more than seven years old, tax records can be stored—or even better scanned—for your records.

 Documents to keep indefinitely

• Essential records such as birth and death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers should be kept in a safe-deposit box.

• Permanent life insurance: Policies that have a cash value or investment component—keep documents and a list of the companies that issued them and their phone numbers in your safe-deposit box. If you have a term life policy, hold the documents until the term is over, then toss them.
• Pension-plan: Documents from your current and former employers and estate-planning documents including wills, trusts, and powers of attorney should also be stored in your safe-deposit box.

 If you’ve already instituted a filing system for your key documents, kudos to you. If you haven’t, now is the perfect time to do so. If you have any questions about which financial records you need to keep or which ones you can safely dispose of, please let us know, we are happy to help.

Prove Your Deduction Claim When the IRS Comes Calling.

Author: Jenny Shilling

Keeping good records is critical. Should the IRS come calling, you will have the documentation you need to prove that your deductions are correct.  Keeping proper records will also make your qualified tax professional very happy, as it makes their job a little easier.  Expenses that are "ordinary and necessary" can be deducted if you have the correct documentation.  Here are 4 tips for what constitutes correct documentation:

1. Cancelled Checks - A canceled check can be used as proof of payment if it has the name of the payee and shows the cancellation on the back. The IRS will also accept digital images of your checks if your cancelled checks are not returned to you.
2. Credit Cards, Debit Cards & Electronic Funds Transfers - Your credit card statement must shows the amount of the charge, the transaction date, and the name of the payee to be acceptible proof.
3. Invoices - You must have an invoice or some other form of documentation showing what you purchased. Canceled checks, credit/debit card statements, and records of electronic funds transfers only provide proof that you made a purchase.
4. Cash register receipts. If you receive a receipt with no details of the items purchased, write a description of the items on the slip. To prevent deterioration of cash register receipts, consider using your smart phone and a record keeping app to save proof of those receipts.

When gathering your documentation, be sure to indicate the business reason for your purchase on the invoice or receipt so you’ll be prepared for any questions from the IRS. Keeping your documentation stored in the cloud makes organization easier. With all of the records easily accessible from one location, they can be uploaded or sent to your qualified tax preparer through the use of email or portal access.

The Tax Office, Inc., works with you to compile your records.  If there are any questions we can answer regarding record keeping, storage or taxes, please contact us. Our tax specialists are happy to assist with any tax related matters.

Know Which Records to Keep

Author: Jenny Shilling

Keeping accurate records for your tax purposes is a must.  Every year, taxpayers go through the irritating task of gathering the information needed to file their federal income tax return. Once the information has been gathered together, what happens to it? Do you file it amidst your other years' tax information? Do you keep each year separate? How long do you store your records before disposing of them?

What records do you need to file your federal tax return?

When collecting records for your tax return, the "Must-Haves" include:

• W2 forms from all employers.
• If you received a refund of state or local income taxes you need to file a form 1090G,.
• All 1099 Forms received.
• Receipts for itemized deductions.
• Records and receipts for any other income or expense that might affect your federal income tax liability.

What to Keep to Record Your Expenses?

If you are able to deduct travel, entertainment, transportation, or charitable gifts, proof of your expenses ais required.  Examples of acceptable proof include receipts, canceled checks, bills, or paid invoices that support all claims.

Generally, keeping a complete written record of all expenses to be claimed on an income tax return is helpful, using the following four categories:

• Amount:  the actual cost of the expense
• Time:  a written record of the dates you traveled on business or when clients were entertained.  If local travel is involved, the dates of car rentals, train tickets, or taxi fare.
• Destination:  the name of the city or town traveled to, the address of the restaurant, or the place of entertainment.  In the case of a gift, keep a written description of the gift.
• Business Purpose:  a written log of the purpose of the business expense, as well as the professional relationships of all involved.

When donating to charity, what records do I need?

As evidence of your charitable donation, the following options are available:

• Bank Records:  includes canceled checks, credit card statements, or a  bank or credit union statement showing the name of the charity, date, and amount of donation.  Your credit card statements need to show the transaction posting date as well as the name of the charity.
• Written Communication:  information received from the charity must show the name of the organization, date, and contribution amount.
• Payroll Deductions:  if you wish to deduct a donation made via regular payroll deductions, you will need to retain your pay stub, IRS Form W-2, pledge card, or other documents provided by their employer that shows the charity's name, date, and the amount of the donation.

The IRS requirements for charitable donations no longer allow written logs, diaries, or notes made by the taxpayer at the time of donation. 

Why should I keep accurate tax records?

Your tax records can help identify the exact source of all income. Your tax records can help you keep track of your deductible expenses. Your tax records are also necessary for filing a tax return.  In the case of an audit, your accurate records can help you prove your case.

The kinds of records to maintain include:

• Proof of Income:  include bank and brokerage statements, all Forms W-2, all Forms 1099, and Form K-1 for individuals involved with a partnership and / or a Subchapter S corporation.
• Investment Gains and Losses:  statements received from mutual funds and brokerage houses, all Forms 1099, and Form 2439 (Notice to Shareholder of Undistributed Long-Term Capital Gains).
• Deductible Expenses:  all written documentation received from charities, canceled checks, receipts, and invoices.
• Home / Housing Costs:  keep receipts that can be used to document  improvements made to your home, insurance records, and any closing statements you have regarding the sale or refinancing of your house. 
• Cash, Credit, or Debit Cards:  amounts paid, the payee, as well as the dates of all payments.
• Checks / Electronic Funds:  in addition to the above-mentioned information for cash, you need to record the check numbers and the dates these transactions were posted to bank accounts.

You should also keep records for the following expenses:  alimony paid, casualty and theft losses, child care expenses, charitable contributions, education expenses, un-reimbursed business expenses, gambling winnings or losses, retirement account contributions, mortgage interest paid, moving expenses, pensions / annuity payments, taxes paid, and tips received.

How long should I keep my tax records?

The IRS believes that you need to keep your tax records for as long as necessary to be able to prove a claim on your tax return. As a general rule, you are advised to keep a copy of your records for a minimum of seven (7) years. Although there are a few types here and there that are 1 year or 3 years.  It's better to just keep them all for 7.

How can I simplify my record keeping?

Using your smartphone with record keeping apps and a scanner for receipts and invoices will make keeping and storing your records easier.  A scanned form takes up less space than storing boxes of paper records.  Also, all of the records are easily accessible from one location, and can be uploaded or sent to your qualified tax preparer through the use of email or portal access. This can be especially helpful to paperless companies and you will be in no danger of losing the original copies.

If you have any questions, regarding your taxes, or your documents. The Tax Office, Inc., is here to help. We LOVE keeping accurate records, and so should you!

 

Proactive Protection Can Save You More Than You Think!

Author: Jenny Shilling

Everyone knows you have to store your tax records in a safe place. But how do you keep them? You store them in a box in a back room somewhere, right? What happens if disaster strikes? Fire or flood wipes out your house or storage facility and all of your tax records get wiped out in one fell swoop. And, just to make matters worse, the IRS comes knocking and wants to audit your records...

Luckily, this situation doesn't happen often. For the few that it does happen to, there are ways to repair the situation.  When your records are destroyed or missing, the IRS regulations allow you to "substantiate a deduction by reasonable reconstruction of your expenditures or use." What this means is that you have a chance to reconstruct your records which is a very time consuming and expensive task.  There are very simple and less expensive ways to avoid this:

1. Invest in fire and water-proof filing cabinets to store your tax records.
2. Purchase a scanner or scanning app for your smartphone and store your records in the cloud or offsite. You can keep backup copies of your information this way.

While you probably won't get all of your original deductions with a reconstruction of your tax records it's your only option. 

At the Tax Office, Inc., we are a paperless office and scan all paperwork as it comes in and reccomend that you do the same. If there are any questions we can answer regarding record keeping, storage or taxes, please contact us. Our tax specialists are happy to assist with any tax related matters.

Scanning Your Receipts Can Save Your Deductions!

Author: Keith Huggett

Throughout the year, we wine and dine our customers in the hope of building our businesses.  We take trips to conferences to further educate ourselves, to learn of upcoming expansions in software, laws, or simply the field in which we work.  During this time we collect receipts. TONS of receipts. In the US alone, we use 640,000 tons of thermal receipt paper per year. What do we do with those receipts? We put them in our purse or wallet. File them in a box or folder. Hopefully, we scan them so that they remain in pristine condition. But, what happens to the actual receipt? It fades...and fades, until it no longer exits, and is only a blank scrap of paper. When it gets to this stage, it is of no use to you.  It can no longer be used to substantiate the business dinner with your client, or the conference you went to in New York.  Travel and Entertainment deductions are some of the most difficult deductions to substantiate.

To help prove your case, should your return be audited, scanning your receipts is your best option. As most people carry a cell phone with them, there are several apps available that can help you by using the camera portion of the phone. Here are just a few choices:

Iphone:  Scanner Pro
             Genius Scan

Android: CamScanner
             Genius Scan

Information that you should include with your receipts:

1. Who you entertained
2. Why you entertained this person or people

The receipt should include this information:

1. The date of the engagement.
2. The location of the engagement.
3. The amount spent.
4. What was involved in the engagement - i.e., dinner, golf, etc.

While keeping the original receipt is necessary, it is always in your best interest to keep a backup copy.  In your business, you backup your computer for those "just in case" emergencies that you never want to happen.  Keeping a digital copy of your receipts is the same thing. It also makes things much easier for your accountant, come tax time.  If you would like advice on digitizing your receipts, the tax specialists at The Tax Office, Inc., would be happy to assist you.  If you are not tech savvy, The Tax Office, Inc., can take the scanning off your hands with one of our bookkeeping packages.  Contact us today if you would like to discuss either receipt maintenance, bookkeeping, or if you have any tax related questions.

 

Let the Cloud Protect You

Author: Keith Huggett

Nothing strikes fear in a business owner’s heart more than the thought of permanently losing critical data. What a disaster! Whether it’s a power outage, a flood or a fire, if your business isn’t properly protected, disaster recovery could be challenging, to say the least.

For every kind of business, core information integrity is key, and ineffective data recovery could be truly devastating. Many companies are turning to the cloud for protection.

The traditional way

The unthinkable happens, and you’ve lost all of your data. You can only hope someone remembered to perform the latest backup, but when was that? Within the last minute, last night, last week? Hopefully it’s current, and your information is housed someplace safe.

Now begins the lengthy and cumbersome restoration task of reloading programs as well as files. It will take many hours – time and money you’ll never recover. Not to mention the lost confidence of your clients. You may never recover from that, either.

Worst case? It could literally mean the end of your company.

Disaster recovery in the cloud

With web-based accounting, information systems, software and documents are all safe, ensuring business continuity even if disaster does strike.

Cloud-based computing uses virtual servers that store your software and data and back it up more than once, in more than one location. Yet it’s always available for immediate retrieval.

There are many benefits, including:

• Real-time data backup and encryption
• Negligible system downtime, important for daily operations as well as disaster recovery
• No time wasted on performing backups
• No space needed for physical backup equipment or off-site storage
• Affordability, allowing small and mid-sized firms to achieve a level of protection that they couldn’t manage on their own
• Scalability – the cloud always fits perfectly regardless of your company's size

Cloud-based computing also gives your business the secure infrastructure and control you need to meet compliance requirements.  

Why take chances? The latest technology can turn disaster recovery into a workflow “glitch,” rather than a serious threat to your company's entire future. Interested in exploring it? Contact us at The Tax Office, Inc. today.

Keeping Your Corporation Records Correctly

Author: Keith Huggett

What is a Corporate Record book? To maintain your legal corporate status, as a corporation you are required to compile a Corporate Record Book, a book of organizational and other documents which need to be stored at your primary place of business.  The book is made up of five sections, with each one containing specific information. Think back to your school days when you put together notebooks with dividers. It is really much the same. Or, if your happen to be more into scrapbooking, you could go that way, but it's a little over the top

Section One

1. Make sure the original filing of the corporation, date of filing, and payment have all been recorded. These are first few pages in your Corporation Record Book (CRB).
2. Request a Certificate in Good Standing from the state. Include this, along with your Articles of Incorporation and any amendments in your CRB.
3. Write your Bylaws and place a copy of these in your book. Formally write out every action you take as a corporation. Document every act the corporation takes and record it in your CRB.

Section Two

1. Write out the minutes of the initial meeting to form the corporation. Also include the election of officers and Board of Directors.
2. Write out the initial resolutions to form the corporation. Also include any initial agreements between the corporation, lawyers, and accountants for services.
3. Keep this section open to hold all documentation of meeting and minutes while the corporation is functioning. Keep any future elections or resignations here as well.

Section Three

1. Place all stock certificates issued in this section. Ownership of each certificate must be recorded with the sate of issue, who received it, and their personal information (age, residence, individual or corporate entity).
2. Write out shareholder rights and voting agreement and include  the resolution which approves these documents. These are also included in this section.
3. Keep any shareholder or stock transactions of the corporation here as well. Also record here the amount of shares each person or entity has in the corporation. Any changes in shares will go here.

Section Four

1. Include any loans or grants made by members, officers, or directors to the corporation. This applies especially to money first given to the corporation startup. Resolutions and contracts for loans and their acceptance must be recorded here.
2. Write out the location of the corporation accountants, legal representation, insurance agents, and other professional people which the corporation uses to carry out business.
3. Include the location of legal and insurance documents as well as their date of purchase and receipt of payment for retainers and binders.

Section Five

1. Make sure you write out any decisions as resolutions. Write out any agreements or discussions of resolutions as well. Include all documentation of these here. Any major purchase, sale, policy creation or change, expansion or termination must be written out as a resolution of the corporation officers and included in this section.
2. Use your corporate seal or a notary to formalize any agreements between the corporation and other persons or entities.
3. Include any documents with these seals in this section as well.

Keep this record book at your main place of business. Once you have these records put together, you will use them in many ways. You can refer to them to determine your company goals, your company direction and mission.

The specialists at The Tax Office, Inc. can answer any questions you may have on entity selection, corporate compliance, corporate tax, or new business start-ups. We're here to provide you with the answers you need. Please, contact us, should you have any questions.

What To Bring to Your Tax Appointment

Author: Jenny Shilling 

If you've already had your appointment with your CPA, you might have received an email requesting missing information. This email simply means you did not bring everything you needed with you to your appointment. To help you prepare for the future, or if you haven't yet met with your accountant, here is a helpful list of things you should bring when you have your meeting:

Personal Information

• Your social security number
• Your spouse's full name and social security number
• If you are divorced, your alimony information, and your ex-spouse's full name and social security number.
• Your tax returns for the past 3 years so that they may be checked over for errors - unless you are using the same accountant as they will have that information already.

Dependent's Information

• Birthdates and social security numbers
• Childcare records
• Income of other adults in your home (not your spouse if you are filing jointly)
• Copies of your divorce decree, or any other documents from your ex-spouse releasing their right to claim a child to you

Employment Information

• Form W-2
• 1099-Misc, Schedule K-1, income records to verify 1099s
• Expense records - check registers, credit card statements, & receipts
• Home office information

IRA & Retirement Information

• Amount contributed for 2012
• Traditional IRA basis
• Value of IRAs on December 31, 2012
• Social Security Information
• Pension & Annuity Income

Rental Information

• Records of income and expenses
• Rental asset information for depreciation.

Other Income

• Unemployment 
• State tax refund
• Gambling income
• Alimony
• Jury duty records
• Hobby income and expenses
• Prizes and awards
• Other 1099 income

Education Payments

• Scholarships and fellowships

Vehicle Information

• Mileage
• Parking & tolls

Savings & Investments

• Investment & dividend information
• Income from sales of stock or other property

Itemized Deductions

• Mortgage statements
• State and local income tax
• Real estate and personal property tax records
• Vehicle sales tax records
• HUD statements if purchasing/refinancing home
• Charitable donations
• Healthcare payments
• Expenses related to your investments
• Tax preparation costs
• Employment related costs
• Job hunting expenses

While the list is extensive, not everything will apply to you. Each tax return is unique to each person.  If you are still uncertain about what you need to bring, contact your accountant and ask. We are here to prepare your taxes and offer you a service. Answering your tax questions is part of that service.

Should you gather up everything you need prior to your appointment and still forget something, rest assured we will send you a missing information email.  At that point, all you will need to do is send in the information we are missing and your return will be filed for you. The tax specialists at the Tax Office Inc., look forward to seeing you at your tax appointments.  If you need an appointment, please contact us today!