- 2015 Tax Provisions for Individuals: A Review
- 2015 Tax Provisions for Businesses: A Review
- Employee or Independent Contractor – Which Is It?
- MyRA Now Available for Eligible Workers
- Six Tips for Year-End Gifts to Charity
- Take Retirement Plan Distributions by Dec. 31
- Health Flexible Spending Arrangements in 2016
- Retirement Contributions Limits Announced for 2016
2015 Tax Provisions for Individuals: A Review
Many of the tax changes affecting individuals and businesses (see article below) for 2015 were related to the Protecting Americans from Tax Hikes Act of 2015 (PATH) signed into law in late December–legislation that modified, extended or made permanent numerous tax breaks (the so-called “tax extenders”). With that in mind, here’s what individuals and families need to know about tax provisions for 2015.
The personal and dependent exemption for tax year 2015 is $4,000.
The standard deduction for married couples filing a joint return in 2015 is $12,600. For singles and married individuals filing separately, it is $6,300, and for heads of household the deduction is $9,250.
The additional standard deduction for blind people and senior citizens in 2015 is $1,250 for married individuals and $1,550 for singles and heads of household.
Income Tax Rates
In 2015 the top tax rate of 39.6 percent affects individuals whose income exceeds $413,201 ($464,851 for married taxpayers filing a joint return). Marginal tax rates for 2015–10, 15, 25, 28, 33 and 35 percent–remain the same as in prior years.
Due to inflation, tax-bracket thresholds increased for every filing status. For example, the taxable-income threshold separating the 15 percent bracket from the 25 percent bracket is $74,900 for a married couple filing a joint return.
Estate and Gift Taxes
In 2015 there is an exemption of $5.43 million per individual for estate, gift and generation-skipping taxes, with a top tax rate of 40 percent. The annual exclusion for gifts is $14,000.
Alternative Minimum Tax (AMT)
AMT exemption amounts were made permanent and indexed for inflation retroactive to 2012. In addition, non-refundable personal credits can now be used against the AMT.
For 2015, exemption amounts are $53,600 for single and head of household filers, $83,400 for married people filing jointly and for qualifying widows or widowers, and $41,700 for married people filing separately.
Marriage Penalty Relief
The basic standard deduction for a married couple filing jointly in 2015 is $12,600.
Pease and PEP (Personal Exemption Phaseout)
Pease (limitations on itemized deductions) and PEP (personal exemption phase-out) limitations were made permanent by ATRA (indexed for inflation) and affect taxpayers with income at or above $258,250 (single filers) and $309,900 for married filing jointly in tax year 2015.
Flexible Spending Accounts (FSA)
Flexible Spending Accounts are limited to $2,550 per year in 2015 and apply only to salary reduction contributions under a health FSA. The term “taxable year” as it applies to FSAs refers to the plan year of the cafeteria plan, which is typically the period during which salary reduction elections are made.
Specifically, in the case of a plan providing a grace period (which may be up to two months and 15 days), unused salary reduction contributions to the health FSA for plan years beginning in 2012 or later that are carried over into the grace period for that plan year will not count against the $2,500 limit for the subsequent plan year.
Further, employers may allow people to carry over into the next calendar year up to $500 in their accounts, but aren’t required to do so.
Long Term Capital Gains
In 2015 taxpayers in the lower tax brackets (10 and 15 percent) pay zero percent on long-term capital gains. For taxpayers in the middle four tax brackets the rate is 15 percent and for taxpayers whose income is at or above $413,201 ($464,851 married filing jointly), the rate for both capital gains and dividends is capped at 20 percent.
Individuals – Tax Credits
In 2015 a nonrefundable (i.e. only those with a lax liability will benefit) credit of up to $13,400 is available for qualified adoption expenses for each eligible child. Child and Dependent Care Credit
The child and dependent care tax credit was permanently extended for taxable years starting in 2013. If you pay someone to take care of your dependent (defined as being under the age of 13 at the end of the tax year or incapable of self-care) in order to work or look for work, you may qualify for a credit of up to $1,050 or 35 percent of $3,000 of eligible expenses.
For two or more qualifying dependents, you can claim up to 35 percent of $6,000 (or $2,100) of eligible expenses. For higher income earners the credit percentage is reduced, but not below 20 percent, regardless of the amount of adjusted gross income.
Child Tax Credit
For tax year 2015, the child tax credit is $1,000. A portion of the credit may be refundable, which means that you can claim the amount you are owed, even if you have no tax liability for the year. The credit is phased out for those with higher incomes.
Earned Income Tax Credit (EITC)
For tax year 2015, the maximum earned income tax credit (EITC) for low and moderate income workers and working families increased to $6,242 (up from $6,143 in 2014). The maximum income limit for the EITC increased to $53,267 (up from $52, 427 in 2014) for married filing jointly. The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children.
Individuals – Education Expenses
Coverdell Education Savings Account
You can contribute up to $2,000 a year to Coverdell savings accounts in 2015. These accounts can be used to offset the cost of elementary and secondary education, as well as post-secondary education.
American Opportunity Tax Credit
For 2015, the maximum American Opportunity Tax Credit that can be used to offset certain higher education expenses is $2,500 per student, although it is phased out beginning at $160,000 adjusted gross income for joint filers and $80,000 for other filers.
Employer-Provided Educational Assistance
In 2015, as an employee, you can exclude up to $5,250 of qualifying post-secondary and graduate education expenses that are reimbursed by your employer.
Lifetime Learning Credit
A credit of up to $2,000 is available for an unlimited number of years for certain costs of post-secondary or graduate courses or courses to acquire or improve your job skills. For 2015, the modified adjusted gross income threshold at which the lifetime learning credit begins to phase out is $108,000 for joint filers and $54,000 for singles and heads of household.
Student Loan Interest
In 2015 you can deduct up to $2,500 in student-loan interest as long as your modified adjusted gross income is less than $65,000 (single) or $130,000 (married filing jointly). The deduction is phased out at higher income levels. In addition, the deduction is claimed as an adjustment to income so you do not need to itemize your deductions.
Individuals – Retirement
For 2015, the elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is $18,000. For persons age 50 or older in 2015, the limit is $24,000 ($6,000 catch-up contribution). Contribution limits for SIMPLE plans remain at $12,500 for persons under age 50 and $15,500 for persons age 50 or older in 2015. The maximum compensation used to determine contributions increased to $265,000.
In 2015, the AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and-moderate-income workers is $61,000 for married couples filing jointly, $45,750 for heads of household, and $30,500 for married individuals filing separately and for singles.
Please call if you need help understanding which deductions and tax credits you are entitled to.
2015 Tax Provisions for Businesses: A Review
Whether you file as a corporation or sole proprietor here’s what business owners need to know about tax changes for 2015.
Standard Mileage Rates
The standard mileage rates in 2015 are as follows: 57.5 cents per business mile driven, 23 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.
Health Care Tax Credit for Small Businesses
Small business employers who pay at least half the premiums for single health insurance coverage for their employees may be eligible for the Small Business Health Care Tax Credit as long as they employ fewer than the equivalent of 25 full-time workers and average annual wages do not exceed $51,600 (adjusted for inflation).
In 2015 (as in 2014), the tax credit is worth up to 50 percent of your contribution toward employees’ premium costs (up to 35 percent for tax-exempt employers). For tax years 2010 through 2013, the maximum credit was 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities.
Section 179 Expensing
The Section 179 expense deduction was made permanent at $500,000 by the Protecting Americans from Tax Hikes Act of 2015 (PATH). For equipment purchases, the maximum deduction is $500,000 of the first $2 million of qualifying equipment placed in service during the current tax year. The deduction is phased out dollar for dollar on amounts exceeding the $2 million threshold amount and eliminated above amounts exceeding $2.5 million. In addition, Section 179 is now indexed to inflation in increments of $10,000 for future tax years.
The 50 percent bonus depreciation has been extended through 2019. Businesses are able to depreciate 50 percent of the cost of equipment acquired and placed in service during 2015, 2016 and 2017. However, the bonus depreciation is reduced to 40 percent in 2018 and 30 percent in 2019. Please call if you have any questions about Section 179 expensing and the bonus depreciation.
Work Opportunity Tax Credit (WOTC)
Extended through 2019, the Work Opportunity Tax Credit has been modified and enhanced for employers who hire long-term unemployed individuals (unemployed for 27 weeks or more), and is generally equal to 40 percent of the first $6,000 of wages paid to a new hire. Please call if you have any questions about the Work Opportunity Tax Credit.
SIMPLE IRA Plan Contributions
Contribution limits for SIMPLE IRA plans increased to $12,500 for persons under age 50 and $15,500 for persons age 50 or older in 2015. The maximum compensation used to determine contributions increases to $265,000.
Please contact the office if you need help understanding which deductions and tax credits you are entitled to.
Employee or Independent Contractor – Which Is It?
If you hire someone for a long-term, full-time project or a series of projects that are likely to last for an extended period, you must pay special attention to the difference between independent contractors and employees.
Why It Matters
The Internal Revenue Service and state regulators scrutinize the distinction between employees and independent contractors because many business owners try to categorize as many of their workers as possible as independent contractors rather than as employees. They do this because independent contractors are not covered by unemployment and workers’ compensation, or by federal and state wage, hour, anti-discrimination, and labor laws. In addition, businesses do not have to pay federal payroll taxes on amounts paid to independent contractors.
Caution: If you incorrectly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker, plus a penalty.
The Difference Between Employees and Independent Contractors
Independent Contractors are individuals who contract with a business to perform a specific project or set of projects. You, the payer, have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result.
Example: Sam Smith, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. He is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if he works more or less than 400 hours to complete the work, Sam will receive $6,400. He also performs additional electrical installations under contracts with other companies that he obtained through advertisements. Sam Smith is an independent contractor.
Employees provide work in an ongoing, structured basis. In general, anyone who performs services for you is your employee if you can control what will be done and how it will be done. A worker is still considered an employee even when you give them freedom of action. What matters is that you have the right to control the details of how the services are performed.
Example: Sally Jones is a salesperson employed on a full-time basis by Rob Robinson, an auto dealer. She works 6 days a week and is on duty in Rob’s showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager’s approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Rob. Rob also pays the cost of health insurance and group term life insurance for Sally. Sally Jones is an employee of Rob Robinson.
Independent Contractor Qualification Checklist
The IRS, workers’ compensation boards, unemployment compensation boards, federal agencies, and even courts all have slightly different definitions of what an independent contractor is though their means of categorizing workers as independent contractors are similar.
One of the most prevalent approaches used to categorize a worker as either an employee or independent contractor is the analysis created by the IRS, which considers the following:
- What instructions the employer gives the worker about when, where, and how to work. The more specific the instructions and the more control exercised, the more likely the worker will be considered an employee.
- What training the employer gives the worker. Independent contractors generally do not receive training from an employer.
- The extent to which the worker has business expenses that are not reimbursed. Independent contractors are more likely to have unreimbursed expenses.
- The extent of the worker’s investment in the worker’s own business. Independent contractors typically invest their own money in equipment or facilities.
- The extent to which the worker makes services available to other employers. Independent contractors are more likely to make their services available to other employers.
- How the business pays the worker. An employee is generally paid by the hour, week, or month. An independent contractor is usually paid by the job.
- The extent to which the worker can make a profit or incur a loss. An independent contractor can make a profit or loss, but an employee does not.
- Whether there are written contracts describing the relationship the parties intended to create. Independent contractors generally sign written contracts stating that they are independent contractors and setting forth the terms of their employment.
- Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
- The terms of the working relationship. An employee generally is employed at will (meaning the relationship can be terminated by either party at any time). An independent contractor is usually hired for a set period.
- Whether the worker’s services are a key aspect of the company’s regular business. If the services are necessary for regular business activity, it is more likely that the employer has the right to direct and control the worker’s activities. The more control an employer exerts over a worker, the more likely it is that the worker will be considered an employee.
Minimize the Risk of Misclassification
If you misclassify an employee as an independent contractor, you may end up before a state taxing authority or the IRS.
Sometimes the issue comes up when a terminated worker files for unemployment benefits and it’s unclear whether the worker was an independent contractor or employee. The filing can trigger state or federal investigations that can cost many thousands of dollars to defend, even if you successfully fight the challenge.
There are ways to reduce the risk of an investigation or challenge by a state or federal authority. At a minimum, you should:
- Familiarize yourself with the rules. Ignorance of the rules is not a legitimate defense. Knowledge of the rules will allow you to structure and carefully manage your relationships with your workers to minimize risk.
- Document relationships with your workers and vendors. Although it won’t always save you, it helps to have a written contract stating the terms of employment.
If you have any questions about how to classify workers, please call.
MyRA Now Available for Eligible Workers
The myRA program, which launched nationwide in November, is intended for taxpayers with taxable income who lack access to retirement savings plan at work.
The program was developed in response to the finding that millions of Americans lack adequate retirement savings–many because their employers do not offer a retirement savings plan at work.
According to a 2015 Federal Reserve Report, 31 percent of non-retired people said they have no retirement savings or pension whatsoever. Additionally, a 2013 report by the National Institute on Retirement Savings found that the average near-retirement household had only $12,000 in retirement savings. Among workers who do not participate in a 401(k) or other defined contribution plan, 42 percent said it’s because their employer does not offer one. Furthermore, among part-time workers, a BLS Economic Release (2015) found that 62 percent of workers do not have access to a retirement plan at work.
In 2014, the Treasury Department developed the framework for the program, which included creating a new Treasury savings bond to serve as the underlying investment for these accounts, as well as designating a financial agent to help Treasury administer the accounts and set up a simple way for savers to fund their accounts through their employers.
In 2015, the Treasury Department worked with a small, diverse group of employers as part of the initial pilot phase of myRA to get feedback and ensure that the user experience is as simple and straightforward as possible.
How it Works
myRA is a government sponsored Roth IRA with no fees and is guaranteed by the government to never lose value. Contributions may be made in one of three ways:
- Paycheck. Set up automatic direct deposit contributions to myRA through an employer.
- Checking or savings account. Savers can fund a myRA account directly by setting up recurring or one-time contributions from a checking or savings account.
- Federal tax refund. At tax time, direct all or a portion of a federal tax refund to myRA.
myRA is designed as a starter retirement account to help bridge the savings gap for workers whose employers do not offer a retirement savings plan. It is optimized to appeal to first-time savers, for whom a no-risk, principal-protected investment is more appealing than a higher-risk investment option. As myRA account holders grow their savings, they have the option to transfer to a private-sector Roth IRA with diverse investment options at any time, or transfer to a private-sector Roth IRA once they reach the maximum myRA balance of $15,000.
myRA is a Roth IRA and follows the same eligibility requirements. To participate in the myRA, savers (or their spouses, if married filing jointly) must have taxable compensation to be eligible to contribute to a myRA account and be within the Roth IRA income guidelines. The savings bond interest is not taxed while in the account and won’t be taxed at all if you leave it in the account until after age 59 1/2. Savers who earn less than $131,000 for individuals and $193,000 for couples are eligible to contribute.
Savers can contribute to their myRA accounts as little as a few dollars up to $5,500 per year (or $6,500 per year for individuals who will be 50 years of age or older at the end of the year). Savers can also withdraw money they put into their myRA accounts tax-free and without penalty at any time. Roth IRA requirements apply to the tax-free withdrawal of any earnings.
For more information about myRA please call the office.
Six Tips for Year-End Gifts to Charity
If you’re thinking about making a charitable donation during the holiday season this year and want to claim a tax deduction for your gifts, you must itemize your deductions. This is just one of several tax rules that you should know about before you give. Here’s what else you need to know:
1. Qualified charities. You can only deduct gifts you give to qualified charities. Call the office if you’re not sure if the group you give to is a qualified organization. Remember that you can deduct donations you give to churches, synagogues, temples, mosques and government agencies.
2. Monetary donations. Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union, and credit card statements.
If you donate through payroll deductions, you should retain a pay stub, a Form W-2 wage statement or another document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.
3. Household goods. Household items include furniture, furnishings, electronics, appliances and linens. If you donate clothing and household items to charity they generally must be in at least good used condition to claim a tax deduction. If you claim a deduction of over $500 for an item it doesn’t have to meet this standard if you include a qualified appraisal of the item with your tax return.
4. Records required. You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.
5. Year-end gifts. You can deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2015. This is true even if you don’t pay the credit card bill until 2016. Also, a check will count for 2015 as long as you mail it in 2015.
6. Special rules. Special rules apply if you give a car, boat or airplane to charity. For more information about this and other questions about charitable giving, please contact the office.
Take Retirement Plan Distributions by Dec. 31
Taxpayers born before July 1, 1945, generally must receive payments from their individual retirement arrangements (IRAs) and workplace retirement plans by Dec. 31.
Known as required minimum distributions (RMDs), typically these distributions must be made by the end of the tax year, in this case, 2015. The required distribution rules apply to owners of traditional, Simplified Employee Pension (SEP) and Savings Incentive Match Plans for Employees (SIMPLE) IRAs but not Roth IRAs while the original owner is alive. They also apply to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.
An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount on Form 5498 in Box 12b. For a 2015 RMD, this amount is on the 2014 Form 5498 normally issued to the owner during January 2015.
A special rule allows first-year recipients of these payments, those who reached age 70 1/2 during 2015, to wait until as late as April 1, 2016, to receive their first RMDs. What this means that those born after June 30, 1944, and before July 1, 1945, are eligible. The advantage of this special rule is that although payments made to these taxpayers in early 2016 can be counted toward their 2015 RMD, they are taxable in 2016.
The special April 1 deadline only applies to the RMD for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, for example, a taxpayer who turned 70 1/2 in 2014 (born after June 30, 1943, and before July 1, 1944) and received the first RMD (for 2014) on April 1, 2015, must still receive a second RMD (for 2015) by Dec. 31, 2015.
The RMD for 2015 is based on the taxpayer’s life expectancy on Dec. 31, 2015, and their account balance on Dec. 31, 2014. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. For most taxpayers, the RMD is based on Table III (Uniform Lifetime Table) in IRS Publication 590-B. For a taxpayer who turned 72 in 2015, the required distribution would be based on a life expectancy of 25.6 years. A separate table, Table II, applies to a taxpayer whose spouse is more than ten years younger and is the taxpayer’s only beneficiary. If you need assistance with this, don’t hesitate to call.
Though the RMD rules are mandatory for all owners of traditional, SEP and SIMPLE IRAs and participants in workplace retirement plans, some people in workplace plans can wait longer to receive their RMDs. Usually, employees who are still working can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions; however, there may be a tax on excess accumulations. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.
For more information on RMDs, please call.
Health Flexible Spending Arrangements in 2016
Eligible employees should begin planning now to take full advantage of their employer’s health flexible spending arrangement (FSA) during 2016.
FSAs provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Because eligible employees need to decide how much to contribute through payroll deductions before the plan year begins, many employers this fall are offering their employees the option to participate during the 2016 plan year.
Interested employees wishing to contribute during the new year must make this choice again for 2016, even if they contributed in 2015. Self-employed individuals are not eligible. Also, employers are not required to offer FSAs. Accordingly, interested employees should check with their employer to see if they offer an FSA.
An employee who chooses to participate can contribute up to $2,550 during the 2016 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee’s FSA.
Throughout the year, employees can then use funds to pay qualified medical expenses not covered by their health plan, including co-pays, deductibles and a variety of medical products and services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures.
Under the use or lose provision, participating employees often must incur eligible expenses by the end of the plan year, or forfeit any unspent amounts. But under a special rule, employers may, if they choose, offer participating employees more time through either the carryover option or the grace period option.Under the carryover option, an employee can carry over up to $500 of unused funds to the following plan year–for example, an employee with $500 of unspent funds at the end of 2016 would still have those funds available to use in 2017. Under the grace period option, an employee has until 2 1/2 months after the end of the plan year to incur eligible expenses–for example, March 15, 2017, for a plan year ending on Dec. 31, 2016. Employers can offer either option, but not both, or none at all.
For more information about FSAs please call.
Retirement Contributions Limits Announced for 2016
The Internal Revenue Service has announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2016.
In general, the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment. However, other limitations will change because the increase in the index did meet the statutory thresholds. Here are the highlights:
- The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
- The catch-up contribution limit for employees age 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
- The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
- Contribution limits for SIMPLE retirement accounts remains unchanged at $12,500.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for those who have modified adjusted gross incomes (AGI) within a certain range. For singles and heads of household who are covered by a workplace retirement plan, the income phase-out range remains unchanged at $61,000 to $71,000. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range remains unchanged at $98,000 to $118,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The AGI phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,500 for married couples filing jointly, up from $61,000; $46,125 for heads of household, up from $45,750; and $30,750 for married individuals filing separately and for singles, up from $30,500.
Questions? Help is just a phone call away.
QuickBooks Reminders Prevent Problems
How many calendars do you maintain? Many businesspeople have more than one. Maybe you use a web-based or desktop application like Google Calendar or Outlook for meetings, task deadlines, travel dates, etc. Your Customer Relationship Manager (CRM) might have another. Perhaps you still have a paper calendar as back-up.
But where do you keep track of bills that need to be paid, invoices that have to be sent, inventory items that must be ordered, etc.? Do you include that information in your general business calendar(s) and hope they don’t get lost in the shuffle?
QuickBooks has a better solution. The software contains a dedicated set of tools that automates the process of setting up and displaying reminders. Once you’ve created them, they can be the first thing you see when you open QuickBooks in the morning.
Warning: If you do not launch QuickBooks frequently, consider tracking your critical accounting tasks using a different method.
Getting a Head Start
QuickBooks lets you specify exactly when you want to receive reminders of upcoming activities. To set this up, open the Edit menu, click Preferences, and then click Reminders | Company Preferences.
Note: If you want QuickBooks to display your reminders every time you launch the software, click on the My Preferences tab and make sure that the box in front of Show Reminders List when opening a Company file is checked. If it isn’t, click in the box.
Figure 1: QuickBooks provides personalization tools for your reminders.
As you can see, QuickBooks offers three options for every activity type. It can either display a summary of the tasks that need to be completed, or it can actually list all of them in the Reminders window. And you’ll be able to tell QuickBooks how many days prior to the deadline your reminders should appear. You can also opt not to be reminded.
Making modifications in this window is easy; just click in the appropriate circle next to each task to indicate your preference, and change any numbers in the Remind Me column to tell QuickBooks when it should start showing the reminder.
If you didn’t indicate that you wanted the Reminders window to open every time you launch QuickBooks, you can always access it by opening the Company menu and selecting Reminders.
Using the List
Figure 2: Reminders in the left column are current, and those on the right are upcoming tasks.
The Reminders list displays items in two columns. Tasks that need to be done on the current day appear on the left (overdue tasks appear in red). The list in the right column consists of upcoming transactions that will need to be processed soon. Each type of activity has a number in parentheses after it; this tells you how many individual tasks are pending. Click on the arrow to see the list, and double-click on any entry to open the actual transaction form.
You can add generic to-do items to either column by clicking on the plus sign in the upper right. These will appear along with your other reminders. If you want to modify anything related to your reminders, click on the gear icon in the upper right. This opens the Preferences window again.
Transactions that repeat on a regular basis (bills, invoices, etc.) can be memorized. If the amount is always the same, create the transaction and enter the amount; if not, just leave that field blank. Click Memorize to open the Memorize Transaction window and click on the button in front of Add to my Reminders List. Open the drop-down list to the right of How Often and select the desired frequency. Make sure that the Next Date is correct, and then click OK.
Figure 3: QuickBooks can add memorized transactions to your reminders list.
Reminders can help prevent serious accounting problems such as cash flow irregularities. Let us know if you’re experiencing these. We can help you determine whether poor task management is contributing to your shortfall, or if there are deeper issues that we can work with you to resolve.
Tax Due Dates for December 2015
Employees who work for tips – If you received $20 or more in tips during November, report them to your employer. You can use Form 4070.
Corporations – Deposit the fourth installment of estimated income tax for 2015. A worksheet, Form 1120-W, is available to help you estimate your tax for the year.
Employers Social Security, Medicare, and withheld income tax – If the monthly deposit rule applies, deposit the tax for payments in November.