All about Arizona Tax Credit

It is almost tax season once again. That means it is time to call your qualified local tax professional in Chandler, AZ and find out how you can lower your taxes. One great way is with tax credits.

What is a tax credit?

Tax concept

Your tax liability is the total tax amount that you are legally required to pay because of a taxable event. Tax credits reduce these. Taxable events include things like income, and interests from dividends like stocks and bonds.

Hows is it different than a deduction?

While deductions lower the actual amount you owe, credits lower your overall taxable income. It is the difference between getting taxed on an income of 35,000 and deducting an expense of 1,000 compared to reducing the total taxable amount to 34,000.

Top tax credits you need to know

While your tax professional may be able to find you even more tax credits you didn’t know about, there are some important tax credits that everyone should be aware of.

  • Earned Income Tax Credit : This credit is available to married couples who are filing jointly. There are factors that have to be met regarding the amount of income of the couple, and whether or not they are legal guardians for children.
  • American Opportunity Tax Credit : This tax credit is geared towards students who paid their own tuition costs or family members who paid it for them. They must be pursuing a degree and it is only available for the first 4 years of schooling. If tuition was paid with grants, they are not eligible. If it was paid with loans, they are eligible. Their income must be 80,000 or less for a single individual or a 160,000 or less for a married couple filing jointly.
  • Lifetime Learning Tax Credit : This is another credit geared towards continuing education. Unlike the American Opportunity Tax Credit the individual claiming it does not have to be pursuing a degree, and it extends beyond 4 years.
  • Child and Dependent Care Tax Credit : This is geared towards those caring for children under 13 or spouses and family members who are unable to take care of themselves. It covers up to 35% of the cost of care for those who work or are actively looking.
  • Savers Tax Credit : This is great for those with little income who still want to contribute to a retirement fund. The credit allows you to take up to $1000 for single, or $2000 for joint filers off their taxable income.

Now that you know what credits to ask about, call your local tax professional in Chandler, AZ and find out what other credits you may qualify for.

Filing Taxes With Freelance Income

Being self-employed is one of the greatest feelings in the world. You get to set your own hours, be your own boss, work on the projects you want to work on and decide where you work. It takes a great deal of discipline and dedication to be a successful freelance professional, and a great deal of knowledge when it comes to filing your taxes as a freelance professional. Filing your taxes can be almost as demanding as finding clients and projects to keep money rolling in. Give yourself every advantage by reading up on just what it means to be a tax paying freelance professional.

Pay it Back to Pay it Forward

The first thing you’ll want to do when you start freelancing is set back money for your taxes. Since you’re your own boss, you have to do your own deductions, otherwise you’ll find yourself scrambling for money when tax day rolls around. You might want to open up a separate bank account just for your taxes and keep it separate from your savings and checking account. Alternatively, you can set yourself up on a quarterly payment plan where you estimate how much money you’ll owe at the end of the year and make payments four times a year. If you over estimate, you’ll get money back and if you under estimate you’ll have to pay the difference.

Deductions

There are a number of deductions freelancers qualify for, including home office deductions, mileage, work supplies, insurance, advertising and paying rent on buildings you use for your business. Do your research to see what deductions you qualify for and be sure to keep perfect records so that you’ll be prepared in case you’re ever audited. You should know that the IRS keeps an especially close eye on freelance professionals. Keep a record of all of your business-related expenses and update them as much as you have to. This might be time consuming and tedious, but it could save you a lot of time, money and frustration if you’re ever are audited by the IRS.

Hire a Professional

No matter how good your records and your knowledge of taxes is, you should still let an accountant or another tax preparer look over your tax returns and records. The reason for this is that they have knowledge and experience that you don’t. They’ll know what new deductions you might qualify for and what new changes are taking place with taxes that might affect you. Hiring a professional might cost you more money than you’d like to pay, but doing so could save you more money than you realize.

Know what all you’ll be getting into as a freelance professional before you decide to quit your regular job. Ease into the shift and educate yourself before you make the plunge into the freelance pool.

How A Professional Can Help With Your Business Tax Return

Tax returns and tax laws are a constantly evolving and changing business. If you have a business, it can sometimes be confusing for you if you wish to prepare your own taxes. That is why you should hire a professional tax advisor to help you with your business tax return. A professional tax advisor will work directly with you and help you with the entire process to make sure you always file your taxes properly every year. There are many steps to the business tax return process, and a tax professional can make sure you complete every one without any confusion or stress.

Financial Reports

Your business should have daily, weekly, monthly, and yearly financial reports that log all of the necessary data you need. A tax advisor can help you record all of the proper information to make sure you have everything you need for the tax return filing process. They can even perform the bookkeeping and accounting services themselves so you won’t have to worry about any financial miscues when it comes time to file your business tax return. A tax advisor will make sure all of your financial reports check out completely.

Deductions

While running your business, you are sure to have some deductions that you can report on your business tax return. A professional tax advisor can help you understand which items are able to be deducted and then can help you apply those deductions to your business tax return. Your business could show a loss in a specific area, could have made a generous donation to a charity of some sort, or made a large purchase for new business equipment. You can even claim mileage and car expenses if you use your vehicle for business purposes. A tax professional can help you out a lot if you are a new business, as the entire process can be very confusing if you are new to the business tax return field.

Paperwork

Filling out the paperwork for your business tax return can take a lot of time. This time can be better spent by you in the daily operations of your business. Once a tax advisor has all of the information he or she needs to file the business tax return, you can focus on other things while the paperwork is filled out for you. Once the paperwork is complete, you can submit the tax return and go about running your business once again.

Reasons Payroll And Small Business Accountants Support Can Save Your Clients Money

It is no secret that starting a small business is not cheap. Often, a new entrepreneur will be presented with so many large bills and business loans before the business goes live that he or she may be reluctant to spend extra money on almost anything. However, without a solid financial plan and the assistance of an accounting professional, any small business owner might overlook the most important part of their business—they need to make a profit. And, they need to ensure that they do not run out of cash.

Problems With Figuring Out Finances Spontaneously

Whenever a business owner does not have a detailed financial plan, small expenses can start creeping up. Granted that no one can predict the future, no business owner wants to run out of cash. Even if a business is set to make millions in five years, employees tend to quit pretty quickly after they do not receive paychecks as promised. Needless to say, effective and accurate payroll is paramount to success. It is also difficult to pay for necessary materials (e.g. shipping supplies) with IOUs. The bottom line is that failure to anticipate expenses and track finances often results in a failed business.

Spending Money Upfront on Accounting Can Boost Profitability and Viability

As the saying goes, you often have to spend money to earn money. If your clients hire an experienced accounting professional in the beginning, they can boost profits and save money on accounting in the long-run. It is smarter and cheaper to hire an accountant to assist in launching an in-house accounting system and assist in financial planning in the beginning for two reasons. First, a small business owner will know how much he or she will spend on accounting. More important, the business owner will not have to hire an accountant when in crisis. Having a disorganized accounting system which needs to be revamped along with missing documentation can turn into a nightmare. Worse, it will cost much more to hire a quality accountant to get a mess 18 months in the making straightened out by the end of the week. Plus, after that ordeal a business owner will still lack a sufficient accounting system. You can save money by doing things right the first time.

Why All New Business Owners Should Consult An Accountant

Almost all new business owners have one thing in common, they want their businesses to succeed. Whereas some people will obsess over office décor, all people need to find a quality accountant to have a more viable business and avoid a tax season or an empty bank account nightmare.

Tax Deductible Travel Benefits For the Corporate Owner

As an Owner of a Corporation there are ways to take tax deductible travel benefits. Remember you are an employee of the corporation and it is a separate legal entity from you its owner.
Here are two possible scenarios –

If you pay for the travel expenses personally you should submit an expense report and be reimbursed by the business. This added documentation assists in proving that this keeps the separation of the business and the owner.

If you do not get reimbursed by the business and want to take a tax deduction for the travel you are required to file form 2106 which limits the amount you can claim as a deduction.

The final option is to have the business pay for all the travel expenses on a corporate credit card or debit. I prefer this method of cash as cash is harder to document during an audit with the IRS.

The Business Travel Documentation –
Business travel needs to answer the following questions to be substantiated:
1 Where – Your travel destination city.
2 Date – Your dates of departure, return and days on business.
3 Amount- The amount of each expenditure for travel by category.
4 Business purpose – The business purpose or the benefit (expected) derived.
We have available on our forms page a business travel worksheet.

Business Consultation Service

Recently Married? Congratulations, now it is time to file taxes together or not

There are choices you need to make about filing this year. We normally recommend that you file as Married Filing Jointly. This is often the best option in either getting the largest refund or the small tax due. But we recommend that you look at it both ways to see married filing separately is the best for you.

Be aware that if you file as Married Filing Separately there are credits and deductions that effect how you both file. There are limits on the credits as a way to control possible abuse of the credits. Also, if one of you itemizes the other one may have to even if it is not in your favor.

We recommend that you always consult with a Enrolled or Licensed Tax Professional as tax law changes regularly.

Facts About Arizona’s Transaction Privilege Tax

Sales and Use tax laws are complex in the state of Arizona. They are very different from other states and do not affect every business in the same way. Residents starting new businesses and those new to Chandler often have problems navigating local tax laws. If you have found it difficult to understand the Transaction Privilege Tax (TPT), you are not alone. Many business owners have found themselves with a tax problem in Chandler, AZ due to the TPT. Here are a few important facts about the TPT that can help you get a basic understanding of the law.

What is the TPT?

The Arizona Transaction Privilege Tax is often called a sales tax, but technically it is not determined by sales. This can be confusing for people interested in starting a business or business owners who are moving to the area. The tax is usually passed on to the consumers who purchase goods and service of a business, which is why it is commonly confused for a sales tax. However, it is the responsibility of the company to pay the tax, whether they pass it on to the consumer or not.

Important Facts About the TPT

There are some important things business owners need to understand about the TPT when applying for a tax license in Arizona. Here is a quick look at the TPT:

NOT a sales tax, instead it is classified as a tax for the privilege of doing business in Arizona
Affects businesses with retail sales at the state and possibly county and city level
Counties and cities that collect the tax independently are called “non-program cities”
The state and non-program cities differ in the types of businesses affected by the TPT
The last point often causes issues for businesses in Chandler. Even established residents need help understanding the TPT differences between the state and local municipality.

Most business owners find a knowledgeable tax service company that can navigate Arizona tax laws. Your business can get back on track by understanding a few basic facts about the TPT and getting expert help with tax resolution in Chandler, AZ.

Reasons To Hire An Accountant For Bookkeeping

Many small business owners opt to keep their own books. It can keep expenses down and allows the owner to stay on top of the financial situation of the business. However, bookkeeping can sometimes be intimidating and challenging, and if that is the case, hiring an expert is the right course of action to take. An accountant in Chandler AZ can help you with many different aspects of bookkeeping, and make sure your books stay accurate and up to date.

They Know The Jargon

Bookkeeping, like many occupations, keeps its own language. An expert knows all of the bookkeeping terms and can help you understand how they apply to your business. For example, “cash flow” refers to money coming into the company and money going out of the company. An experienced bookkeeper, knowing the jargon associated with the profession, can straighten up your books quickly without having to take time to learn terms and rules.

They Know The Appropriate Bookkeeping Method

Depending on how your small business operates, you may need single-entry bookkeeping or double-entry bookkeeping. An accountant can aide you in determining which type will work for your business. Single-entry bookkeeping is similar to keeping a personal checkbook, while double-entry bookkeeping uses two books, one for expenses and one for profits. Knowing which method will work best for you can help ensure accurate and adequate records.

They Are Very Detail-Oriented

An experienced accountant knows that accuracy is the number one priority when bookkeeping. If this is a concern of yours, hiring an expert is most likely in your best interests. Always remember to enter the exact amount of any transaction. Rounding up or down can throw off the books and make life difficult if a tax audit occurs.

They Do The Stressful Work For You

Every business, small or large, must file taxes at the end of the year. If the IRS chooses to audit your business, accurate records are needed to ensure a smooth outcome. By hiring an experienced bookkeeper, you can take all the stress of the accounting portion of your business out of the equation. You can rest easy knowing that your records are accurate and that your finances are balanced to the exact amount.

Documents Small Business Owners Need When Filing Taxes

Even though it takes a lot of work, owning a small business can be a rather rewarding and fulfilling venture. While you’re getting your small business up and running, be sure to take out some time to research the tax side of being a small business owner. Having help with tax preparation in Chandler AZ for small business owners and individuals is always the easiest way to make sure you have your ducks in a row. When tax season rolls around, there are specific documents that you’ll want to make sure you include with your tax return.

LLC and Sole Proprietorship

You’ll need to be sure that you fill out a Form 1040 if your business is a limited liability corporation, LLC, or a sole proprietorship. You’ll also need to complete Form 1040 Schedule C and Form 1040 Schedule SE in order to document all of your business profit and loss and calculate your self-employment taxes.

Partnership

You and all business partners involved in your business will need to fill out individual Form 1040s and Schedule SEs. All business partners will also need to complete a Form 1065, which is also known as Schedule K, in order to note partnership profits and losses.

S Corporation

You’ll need to complete a Form 1120, also referred to as a Schedule K-1, if your business is set up as an S Corporation. This specific form is also used to note your profits and losses. Make sure that each shareholder fills out an individual form so that they can properly file their personal income tax return. If your business sends periodic payments to the IRS throughout the year, you’ll need to fill out Form 8109 in order to show which tax payments you’ve already made. One good thing about submitting a Form 8109 is that is can potentially lower the amount of taxes that you owe.

Don’t hesitate to reach out to a tax preparer in Chandler AZ if you ever find yourself confused while filing taxes for your small business. We offer our professional services year round to businesses of all sizes.

When is the Best Time to Begin Tax Preparation?

A lot of people procrastinate doing their taxes. When they do this, they risk making errors and getting fined. Some people even miss the deadlines and receive an additional fee. If you want to avoid these hassles, it might be a good idea to use tax preparation Chandler. Since taxes can be time consuming, it is important to make preparations to ensure you get them done correctly and one time. Here are some suggests to help minimize the stress involved with getting taxes done too late.

You Should Always Be Preparing

Wouldn’t it be ideal if you knew that you could get your taxes done if you started working on them two months before they were due? Of course! However, taxes do not always work like this. Everyone has different needs. Some people’s taxes require a lot of attention. Others have minimal needs before they file. For this reason, it is best to try to continually prepare. You should have a system for keeping track of relevant records and reports that will make the filling process easier. Have a file for receipts and other tax related forms that you update on a weekly basis.

Get Tax Preparation Help

Since individual tax needs vary, it is a good idea to seek a tax accountant in Chandler at the beginning of a new tax year. This way you can have a heads-up on what kind of information you should track throughout the year. Having a go-to person for tax-related questions as they pop up is a great way to stay on track. Building that relationship will also decrease the time needed when it comes time to file. Your tax accountant will have become familiar with the specifics of your situation and will, therefore, have less information to gather at filing time.

Know When You File

Make sure you know when you need to file your taxes. This will ultimately influence when you begin the majority of your tax work. Most people file in April; however, some businesses file their taxes at on a fiscal year system. Some independent contractors and self-employed people need to file quarterly. Whatever your filing date(s), it is important to stay on track and be prepared when the time comes.