I know that during election season I wrote often about politics. I never thought it was my place to take sides, but there were issues being raised that I thought deserved attention for they could affect one’s financial, business, and/or tax situations.

I have been quieter on that front since, for in those couple of months between election and inauguration there were no new measures being passed, and we all largely sat by in wait-and-see mode. Now that President Donald Trump has taken office, though, we are starting to see the ramifications of his actions.

As most have hopefully realized by now, there is a connection between your tax return and the Affordable Care Act/Obamacare (and since I have seen recent data that says many don’t realize it, please know that those are two names for the same thing). Since Trump’s first executive order displayed his intentions to undo any aspects of the ACA that he could as quickly as possible, it is not surprising that us in the tax world are closely watching this.

Unfortunately, we are largely in another wait-and-see area now, though. We have just moved into a further shade of gray (of which I hear there are at least 50, some of them darker) because the executive order doesn’t lay out definite action steps. Instead it states that agencies and authorities, “shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

So how is the IRS handling this and how does it affect your current tax filing?

Well, you should currently not make any changes and not wait to file your taxes. Hopefully, that’s clear enough to move us back toward black and white areas.

There are a couple of other definites we can say, too. First, the IRS was rejecting returns earlier in the season that did not include information related to health coverage. Now, however, lacking that information is no longer resulting in an automatic rejection.

This does not mean that there will not be penalties for those who did not carry health insurance without qualifying for an exemption. And that penalty can be big, $695 per adult and up to $2,085 per family, or 2.5% of the family income, whichever is greater. For as the IRS has warned, new legislation will be required to change those aspects of the ACA.

The debate over the Affordable Care Act is going to continue for the foreseeable future and changes to it seem likely, though I would not hazard a guess just how far they will proceed. No matter how quick they come, though, we are already deep into the 2016 tax season, with returns already being accepted and refunds given, so any legislation that had an effect on those current responsibilities would be stunning.

What this all will mean next year, then … well tune in next year to know that. In the meantime, proceed as you would have before the election and inauguration and know that we will be here along the way to help you with any questions you may have about this confusing situation.

I suppose it is not surprising that this is the time of year when people most think about the potential of a tax audit.  After all, many like to ignore all thoughts of taxes through much of the year, only letting them rise to the forefront when they are forced to file a return.

It also gets avoided, because it is the most frightening aspect of paying taxes. Again, no one gets too overjoyed when they see the amount of money they send to the government on an annual basis, but it is even worse when mysterious agents decide to take extra steps in an attempt to gather even more money from you. This can be especially worrisome, and unexpected, when it comes years after the return in question. I don’t want to be the bearer of bad news, but as the carrier of a little dose of reality, you may want to take note of this recent Forbes article that speaks of how audits can be started on returns that are up to six years old.

The rarity of audits is difficult to determine, for there are so many factors involved, and just what can trigger one is also impossible to nail down. Regardless of the answers, though, the best way to ease the tension of the possibility of coming under one is to work with a professional tax advisor that you trust (wink, wink, nudge, nudge). That way, even if you face this situation, you know that your return was correctly handled, and the only thing the audit should result in is inconvenience.

Tied in with that are common-sense things that can be done with a tax return that decrease the overall chances of an audit, there is another article from Forbes that tackles the idea from that point of view. Essentially, it largely comes down to the idea that you should fully be taking advantage of all that you are entitled to, but if you feel like you’re pushing the limits of what is reasonable (or even legal), then it is much more likely someone else looking at that return will agree with that feeling.

I would like to highlight one piece, though, about watching out for Forms 1099.  These come in many different varieties, some of which may even surprise you when they arrive in your mailbox. But know that if you received one, the government knows about it too, so you can’t hide it.

 I know that a lot of these more vague ideas about what could trigger an audit are not enough for some, and you want to know just what could make one happen, so here is one final article that goes a little more into it, and even has some concrete numbers on the chances of an audit.

For those who don’t want to read the whole article, or for those who just prefer to receive news through my golden words, here is a brief summary. First, your chances of an audit are higher if you’re self-employed. This makes sense as the government has less of a chance to track your income throughout the year. There are also more deductions open to someone in that situation, making more things the IRS may want to check up on.

Second, the IRS knows how many deductions someone in your financial situation claims on average, so if you’re an out liar claiming much more, they may question it. Again, this does not mean that you should not claim anything that is a legitimate deduction (let’s say you’re more charitable than most, you deserve the perks that come with those good deeds), but you will want to be able to back up all that you are claiming.

Finally, those on the extreme ranges of the income spectrum also run higher chances of an audit. These are further things that look out of the ordinary, after all, so the government may want to know why things look strange.

What you most want is for your return to be legitimate and result in you paying as few taxes as you are allowed, so contact us if you have not already so that we can ensure that is done for your latest return.  

It could be that I’m still a bit out of sorts after Super Bowl Weekend’s milieu of an historic game, Lady Gaga performance and sexy Mr. Clean, but my thoughts seem to be all over the place this week. So possibly because of that, welcome to a quick hits article, where I’ll highlight a few things that have come up in the tax world over the last week or so.

Amended Returns

This topic is something I find many people know about, but few ever take advantage of. Let me take this chance then to make you aware that many tax preparers are always willing to take a look at your past returns and see if we can turn it to your advantage (hint, hint). What better way could there be to prove our worth, right?

To that point, I found it odd that this article from the Journal of Accountancy begins by saying that many amended returns come about because of human error. Although I cannot deny this, I do not like how the wording seems to imply there may be some future mechanized way to make sure that everything turns out alright. After all, not a tax season passes when I don’t see people who have not been taking advantage of all the options legally open to them because a software program did not know the right questions to ask.

If you think you may be in that position, and a human touch could benefit you, well, you know where to turn.

Accountants are Cool

Well not cool like Born in the USA-era Springsteen cool, but pretty sweet nevertheless.  Or at least that is the conclusion that I am taking from another recent article.

It is a short piece, but mentions a few things business owners may want to think about (finding new revenue opportunities, future-proofing the business, and gaining an extra lookout) that are services their accountant could provide that they are not taking advantage of.

Not utilizing that potential is very much in line with those who don’t file amended returns in that they are both caused by inaction. It is not that one never thinks about the benefits and potential of these acts, it just never gets pushed forward enough in the mind (or you tell yourself it’s not the right time) to reach completion.

Then consider this a push, if there are some financial services you wished you had and are not receiving, you know where to turn.

Refund Repartee

One thing that people do always want to talk to a tax preparer about, though, is when they will get their refund. I certainly can’t fault people for this, I mean we can finish a tax prep meeting with me saying you’re going to be a receiving (a possibly unexpected) couple thousand dollars. If someone were to say that to me, I’d also be quite curious about the timeframe.

Essentially, though, the answer is that it arrives when it arrives. There are some rules that will cover when the money arrives, but it’s pretty set and standard and there isn’t anything you can do to speed it up.

Still, I suppose I shouldn’t have been surprised that an entire article was put together on the top tax refund myths.  So yes, unfortunately this is an area where we can’t help things move along faster for you, but if you need help anywhere else, please feel free to contact us!

Now as the calendar turns to February, you may be starting to feel the pressure of tax time a little more. We are here, too, but are really only amped up and excited for the season. Much of this excitement, though, comes from watching our schedule fill up, so to get the best choice of slots that work for you, do not put off making your appointment.

Having a better choice of appointment time isn’t the only reason to think about making an appointment, though. The earlier you start preparing your return, the more chance you will have to get things together that can help you receive more deductions. This happens more than one may suspect. Taxes often seem that they turn out the same every year, but there are always changes to the tax code, and even some changes in your own life that may open up new tax avenues of which you were unaware.

Some of those roads are not large ones, but anything is better than nothing, right? And if you get enough of those smaller things together, it can really add up.

An interesting look at that is spotlighted by a recent article in Accounting Today. Away from accounting concerns, one may be surprised and/or impresses at the rise of Uber (company politics aside), and this article definitely highlights its emergence at the expense of the rental car and traditional taxi industry. But the fact that those Uber rides are such a corporate expense (and then likely a tax deduction) may seem wilder.

The surprise one feels in that area is probably because it seems like such a small-scale transaction. An Uber ride may only cost a few dollars, so can that really be such a grand expense? The biggest corporate expenses and deductions must come from different, more mysterious spots, no?

Well, no.

Look at some of other names in that article - Dunkin Donuts, McDonald’s, Starbucks, Subway - all of those are largely transactions that are under $10, but the fact that there are so many of them makes them very important. Essentially, this comes down to economies of scale.  Yes, one big purchase is important because of how much it costs. If 150 smaller transactions add up to the same amount at the end of the year, however, the importance is roughly equal.

This is something to keep in mind whether you’re an individual or a business. I find often that when a family breaks down its budget, they are not so much surprised at how much their bills and larger purchases cost, but at how much the purchases they do not give a second thought to eat into their finances.

To use ultra-simple math, if you buy one $5 coffee every day for a month, you’re looking at $150. Each of those individual Lincolns is easy to pass across the counter and not feel like a big deal, but would you cut a check for $150 at the beginning of the month to pay for your coffee intake? A double-take is much more likely in that scenario. Keeping this type of math in mind is always a good idea to help you keep track of where your money is going and if it is going to the destinations you want.

The amassing of these seemingly minor transactions is just as important for those with legitimate business expenses to keep in mind, for when tax time arrives, you want to be able to get all to which you are entitled. So make an appointment now and help us help you get there!