Category Archives: Tax Planning and Consulting

Do You Know the Safe Harbor Conditions of the IRC Section 199A Deduction?

The IRS issued a notice on January 18, 2019 about specific conditions under which your rental real estate enterprise may be treated as a trade or business.

This safe harbor is available to taxpayers who want to claim the section 199A deduction with respect to a rental real estate enterprise. If you can meet the safe harbor requirements, your real estate enterprise will be treated as a trade or business.

To qualify for this safe harbor your enterprise must satisfy several requirements, as follows.

Qualifiers for the IRC Section 199A Deduction

1. You must maintain separate books and records showing income and expenses for each rental real estate enterprise.

2. You (or your staff or contractors) must perform at least 250 hours of rental services during the tax year for each rental real estate enterprise. You may not combine commercial and residential rentals within the same real estate enterprise. Rental services that qualify include:

  • Advertising to rent or lease the real estate
  • Verifying information on the tenant applications
  • Negotiating and executing leases
  • Maintenance and repair of the property
  • Collecting rent
  • Daily operation, maintenance and repair of the property, including:
    • Management
    • Purchase of materials for repairs
    • Supervision of employees and independent contractors

As the property owner, you may perform these services yourself or have your employees, agents or independent contractors do so.

3. You must maintain contemporaneous records to document these hours of services, including time reports, logs or a similar description of the services performed, the dates on which they took place and who performed them. This means you must track everything, including your personal time and the time of those you employ. Maintaining a log book and invoice file scrupulously will satisfy these requirements. Your records should be available for inspection at the request of the IRS. The records requirement does not apply to taxable years beginning prior to January 1, 2019.

IRC Section 199A Deduction

See also: Changes to Arizona Department of Revenue’s Electronic Filing and Tax Payment are In Effect as of January 1, 2019

If you cannot satisfy these requirements, your rental real estate enterprise may still be treated as a trade or business for purposes of section 199A if the enterprise otherwise meets the definition of trade or business in § 1.199A-1(b)(14).

The tax experts at Sean Core CPA can help you determine if your enterprise meets the requirements for the safe harbor IRC section 199A deduction. Call us today at 480 626-5043 or contact us online.

Changes to Arizona Department of Revenue’s Electronic Filing and Tax Payment are In Effect as of January 1, 2019

As a business owner in Arizona, you should know that new rules regarding electronic filing and tax payment are in effect as of January 1, 2019.

The Arizona Department of Revenue (ADOR) now requires you to file and pay electronically beginning in February 2019 (for the January reporting period) if your business has an annual transaction privilege tax (TPT) and tax use liability of $10,000 or more during the previous calendar year.

There are several reasons for this change, including:

  • E-filing and payment is more secure and faster
  • It allows ADOR to deliver more customer-focused and enhanced services
  • It will liberate ADOR resources to process tax returns and payments faster, and
  • It supports tax fraud prevention

Electronic filing can also save you money directly because it makes your business eligible to receive a tax reduction of up to $2,000 annually through the enhanced accounting credit. If you file your TPT electronically you can increase your accounting credit from 1% to 1.2% annually, to a maximum of $12,000. Ask the business tax preparation experts at Sean Core CPA about it!

Avoid Tax Penalties for Not Filing and Paying Electronically

You must register your business at www.AZTaxes.gov and use an automated clearing house debit, e-check or credit card for payment to be in compliance with the electronic funds transfer payment requirements. Failure to comply will result in these penalties:

  • If you are required to file an electronic turn but you file a paper return, you will be subject to a penalty of 5% of the tax amount due with a minimum penalty of $25, including filings with zero liability.
  • If you are required to pay electronically but you make your payment by check or cash, you will be subject to a penalty of 5% of the payment made.

Also new this year; all late filing penalties are now a minimum of $25, including filings with zero liability.

Don’t let these business tax e-filing and payment changes cost you money! At Sean Core CPA, we help people and businesses in Chandler, Mesa, Scottsdale, Tempe and across Arizona keep current with state and national taxation changes.

For getting more help with  the transaction privilege tax, including TPT filing and payment requirements, or other tax needs, please give us a call today at 480 626-5043 or contact us online.

Get Ready for Year-end Taxes – What You Need to Know about 2018 Tax Law Changes

The Tax Cuts and Jobs Act (TCJA) was signed into law in late December 2017, and this major tax reform will affect both business and individuals. The tax preparation experts at Sean Core CPA can help you understand these reforms and get ready for the upcoming tax season.

Learn How 2018 Tax Reforms Will Impact Your Taxes

2018 Tax ReformsThe Internal Revenue Service has just published new information about how the TJCA will affect individuals and families, detailing what’s changed in the federal tax return you will be filing in 2019. You can read this IRS publication here.

The tax reforms are quite substantial, requiring the creation or revision of over 400 tax forms, instructions and publications for the upcoming tax season, which is more than twice the number of forms usually needing attention. It may be difficult for you to absorb these many changes, but our tax team can help!

Will You Pay Less Tax in 2018?

The TJCA was designed to create new jobs and boost the economy and should mean a lower tax bill and easier filing for many. In fact, you may have already seen an increase in your paycheck as the IRS has recommended that companies adjust their withholding to reflect the new tax rates. With the doubling of the standard deduction (the preset amount you can take off your taxable income) and the increased child tax credit you may be looking at a substantially lower rate of taxation.

If you are self-employed the picture may be even rosier, with a new benefit that can cut your tax bill by up to 20% and other tax adjustments for small business owners. Ask our tax professionals about 2018 tax law changes affecting the self-employed.

The unprecedented number of tax law changes may make it difficult for you to file this year, or at least to file your return on time while incorporating this slew of updates. It just makes sense to get professional help – our tax experts have been helping people and businesses in Mesa, Chandler, Tempe, across Arizona and further since 2005. Our team has collectively over 45 years’ experience providing top quality accounting, bookkeeping and tax work.

If you are looking for a Phoenix area CPA who understands how these 2018 tax reforms will affect both individuals and small-to-medium sized businesses in Arizona, please contact Sean Core CPA.

Read More: How Will Tax Law Changes Affect the Self-Employed in 2018?

3 Tips for Filing Your Tax Extensions

 

Reminder: if you requested an extension earlier this year, your new filing deadline, October 15th, is fast approaching!. If you haven’t taken care of your 2017 taxes yet it’s time to get that task back on your radar.

In light of the looming deadline, we wanted to take a moment to share these tips for extension filers.

Just get something filed.

Many of our clients file extensions because they can’t get the paperwork they need quickly enough to file an accurate return by April 15th. If this is the boat you’re in wanting to wait seems intuitive, but you can’t always do it and meet the deadline as well. When you don’t file on time, you open yourself up to failure-to-file penalties.

When this happens, file a return, even if it’s not going to be 100% accurate. A new clock will start ticking. You’ll have 3 years to file amended returns, which will give you plenty of time to get the rest of the paperwork you need. Of course, we don’t recommend waiting all three years to get the amended returns handled.

Consider a last-minute SEP-IRA contribution.

Tax Deadlines2018 for Business TaxesSelf-employed? The good news about filing an extension is you get another chance to make a last-minute deduction. You have until October 15th to contribute just a little more to your SEP-IRA, the retirement savings account type designed just for freelancers and contractors.

Consult with us about the amount which will give you the biggest benefit, then get it done. Be sure to use a check so you can write the year the contribution should be credited under on the check, and keep a copy for your records.

See also: 7 Common Tax Problems the Self-Employed Business Owner Should Avoid.

Get our help now…not in October.

When you file for an extension you can take care of your taxes any time between April 15th and October 15th. In fact, we recommend it. The point is getting some additional time, not giving yourself another stressful day to scramble over. Waiting until the last minute makes it easy to make mistakes, too.

In fact, if you’re using our accounting services to get your returns filed (and, if you’re the type of taxpayer who needs an extension, you really should be using us)… the time is right now to do so!

Some of our clients have even tighter deadline to deal with, and/or hire us for bookkeeping and payroll, so by mid-September we’ll be up to our elbows in returns. If you’re a new client we might not even be able to squeeze you in if you wait too long. And if you’re an existing client, wouldn’t it feel better to know your taxes are taken care of?

7 Common Tax Problems the Self Employed Business Owner Should Avoid

It’s summer; our minds are on vacations and weekends with friends and family. Many businesses are slower, including accountants providing CPA (certified public accounting) services.

One of the most costly tax-time mistakes small business owners make is not knowing the right thing to do. So, when do you think is the best time to get your taxes in order? Now, while the pace is slow and you’re not pressured to meet filing deadlines.

Tax Changes for 2018

Individuals

  • The write-off for state and local tax (SALT deduction) has been capped at $10,000.
  • You can still write off 100% of property and sales tax on a business schedule if you have rentals or are self-employed.
  • Moving expenses are no longer deductible.

Businesses

  • S Corporations continue to be watched by the IRS.  Revenue agents will be conducting audits at shareholder level to ensure basis is tracked properly.
  • Since many individual are not contributing to retirement plans, small businesses will get a $500 tax credit for establishing automatic enrollment in 401k or IRA retirement plans for employees.

Common Mistakes

common tax problemsIf you’re a small business owner, you may think DIY (do-it-yourself) taxes save money, but…probably not. In fact, DIY taxes can cost you hundreds or even thousands of dollars every year. Here are some common tax-time mistakes business owners make:

1. DIY filing – You should have an accountant/CPA for taxes if only to keep you compliant with ever-changing tax regulations. No matter how small your business, you’ll kick yourself when you wing it a few years with DIY taxes, then seek an accountant and hear, “I could have saved you some money when you started…” A recent survey revealed 89% of small businesses realize additional financial gain and/or savings with an accountant.

2. Software illiterate – Accounting and business software comes in all shapes and sizes. Find out what others use and speak with your accountant about software that could better-organize your business. Most CPAs prefer Quickbooks desktop version, but there are other types of software which work well for freelancers, solopreneurs, or smaller businesses.

3- Tax filing extensions – It’s better to file and pay something than to file for extensions. You can avoid penalties and lower the amount that, eventually, you must pay.

4. Ignoring 1099s and not sending them out by required date – If you don’t have the tax identification and addresses of your service providers/vendors, you may be losing some deductions and also flagging yourself for an audit. A 1099 Misc is  a form you file with the IRS to report expenses paid to vendors during the year. All 1099s should be delivered by January 31. The filing threshold is $600 in aggregate.

5. Missing out on important tax saving deductions. For information about the most missed deductions (personal and business), read here:

6. December/January tax focus – You should think about taxes all year. “Every single transaction in business has tax consequences,” says Sean Core, CPA. Mid-year during our slow summer season, is one of the best times to get your books up-to-date because you have more time.  Additionally, accountants are less busy and have more time to spend with you. Why not begin organizing for tax-time now?

7. Disorganization – Receipts in shoeboxes does not constitute “due diligence.” Try scanning those receipts and filing them electronically. (Don’t forget to backup.)

Today Isn’t Too Soon

We understand this market and the area-specific challenges of our local Arizona businesses.  Contact Sean Core CPA for more information.

Better yet, call 480.626.5043 to schedule an appointment. Our conveniently located office is at 565 W Chandler Blvd, Suite 112, Chandler. (We are conveniently located “on the border” of Chandler, Gilbert, Mesa, and Tempe).

Sean Core CPA PLLC specializes in small- to mid-size Arizona companies.

We want to work for you.

Important Business Tax Dates to Know for 2018

Tax Due Dates for AZ Businesses

Tax Deadlines2018 for Business TaxesThe 2018 tax year will bring with it several changes to the tax code. With the alterations, it is important to plan ahead for your business filings and individual taxes. This way, you can prepare yourself for different filing dates while ensuring you have the necessary monetary amounts covered (if you need to pay in). As a business owner in Arizona, here are important tax dates for 2018 each of you need to know.

January 16, 2018

Coming up quickly is your 2017 fourth quarter estimated tax payments. Whether you own a business or are self-employed, it is necessary to pay this quarterly amount. Make sure to have it postmarked no later than the 15th of January.

March 15th, 2018

Partnership and S Corp Business Tax Returns are due.  You may file an extension which allows an additional 6 months to file.

April 17, 2018

Individual Taxes Due. So for business owners who are filing personal tax returns, this is the day their return is do. All tax returns must be postmarked by midnight on April 18, unless an extension has been submitted.

Business-Tax Deadlines 2018If you are applying for an extension for your individual return, it is also due on this day. Applying for an extension will extend the filing of your return until October 15 of 2018. However any taxes owed must be paid with the extensions.

C Corporation Business tax returns and taxes are due.  An extension may be submitted to extend the filing of your business return until October 15 of 2018.

Additionally, your second quarter 2018 business estimates are due on this day.

June 15, 2018

Your second quarter business estimates are due on June 15, so make sure you have your paperwork and payments postmarked by June 15.

September 17, 2018

Your third quarter business estimates are due on September 17. Have everything postmarked by the end of the 17th.

Your Partnership and S Corp Business tax returns are due.

October 15, 2018

If you filed for an extension back in April for your personal tax returns, today is the day your extension is due. You need to make sure you have everything postmarked by the 15th.

 January 15,  2019

This is the day your final fourth quarter business estimate payments are due.

Tax Deadlines for 2018 Dont be LateStaying on top of your business tax returns is so important. As a business owner filing is a bit different, as you likely need to file quarterly. Plus, with the recent changes to the tax codes going into 2018, it is a good idea to give yourself a bit more time to file. This way, you can understand what is going on with your personal and business tax returns. Just make sure to stay on op on these dates as it will help you stay on top of both your IRS and your Arizona Department of Revenue tax returns.

 

Just remember, if you need help with your tax returns, have questions or would like to know more about the changes in the tax code, feel free to contact our office to help you with your business taxes or individual taxes, or send us an email at your earliest convenience.

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