How well do you know your customers? Which ones are the most profitable? Which ones take most of your time? It's worth taking the time to find out. If your business is like most, the 80-20 rule applies. That is, 80% of your profits come from 20% of your customers.
If you can identify that top 20%, you can work hard to make sure this group remains satisfied customers.
If you do volunteer work for a charitable organization and have not kept track of your out-of-pocket expenses, you might be passing up an excellent opportunity to lower your tax bill. To qualify, your unreimbursed expenses must relate directly to the charity, and you must itemize your deductions on your tax return. Here is a brief rundown of some possible deductions.
Lifestyle Audits. A thing of the past?
The word “audit” is enough to raise anyone’s blood pressure. If the IRS agent then tells you they want to see bank accounts and personal records you may need a heart monitor. Should this happen to you, you could be in a process known as a lifestyle audit.
The lifestyle audit was a tool used by auditor’s to ascertain if the income you claim on your tax return can support how you live.
Kids Summer Jobs... Good for IRA / Roth IRA
If your children have earnings from summer or after-school jobs, encourage them to open IRA accounts.
Many mutual fund companies allow you to switch funds without a penalty or commission, as long as you stay within their family of funds. There's a catch though.
Sitting on a piece of investment property that you would like to sell? By structuring the transaction as a tax-deferred exchange, you can delay paying taxes on the full amount of the gain realized.
Also known as a "like-kind exchange" or a "1031 exchange," these transactions are only available for investment or business assets.
Understanding Tax Terms: Depreciation Recapture
One of the more unpleasant surprises that can hit a taxpayer occurs when you sell personal property, rental property or assets from your small business. This tax surprise is often associated with depreciation recapture rules.
Depreciation recapture refers to reducing the cost of an asset sold by prior period’s depreciation expense to determine whether taxes are owed on the sale of an asset and to determine the type of tax that must be paid on the sale of the asset.
In this issue:
The Month of May:
School bells are ringing once again as summer draws to a close. This month's newsletter covers an array of topics from the recent warning of increased telephone scams by the IRS to helping identify when it is time to help parents with their financial management. Also included are circumstances when you need to make changes to your Healthcare Marketplace account and how to use the creation of lists to save money.
As always, should you know of someone who may benefit from this information please feel free to forward this newsletter to them.
IRS Takes Steps to Reduce Fraud
In its ongoing effort to tackle the increase in fraud and identity theft at the IRS, there are a number of security enhancements announced to deal with the problem.
The problem: Would be thieves set up a deposit account at a local bank. They then file numerous tax returns claiming refunds early in the tax filing season. The tax returns request the refunds be sent to this single bank account. The account is then electronically drained of the stolen funds and the thieves are long gone.
2014 Capital Gain Refresher
As you investigate opportunities for managing your investment portfolio in 2014, remember to pause and plan for the effect of tax laws. Here are some important rules to consider.
Capital gain tax rates. For 2014, the tax rate you'll pay on gains from sales of assets depends on your taxable income and how long you've owned the investment. Gains on assets owned a year or less are taxed at the same rate as your ordinary income.
Should you incorporate your business?
One of the first decisions you face as a new business owner is whether or not to incorporate the business. The biggest advantage of incorporating is limitation of your liability. Your responsibility for debts and other liabilities incurred by a corporation is generally limited to the assets of the business. Your personal assets are not usually at risk, although there can be exceptions to this general rule. The trade-off is that there is a cost to incorporate and, in some cases, tax consequences.
A vital business document: the buy/sell agreement
Every business should give serious consideration to how the company would deal with the death, disability, or departure of one of the owners.
Like a will, a buy/sell agreement (also known as a business continuity contract) spells out how assets and other business interests will be distributed should an owner quit, become disabled, or die.
Thought Provoking Shorts - August 2014
Non-taxable Income for Those in the Armed Services
One of the benefits available to the men and women of our Armed Services and, in many cases, staff supporting them is the ability to exclude items from taxable income. Here is a list of the most common items that may often be omitted from income tax.
August, 2014 - Michael DiSabatino was nominated for the San Fernando Valley Business Journal's Valley's Trusted Advisors 2014. The business journal announced the 2014 Trusted Advisors Awards, where the Journal honors the important work of accountants, bankers, attorneys, insurance professionals and wealth managers in the greater San Fernando Valley region. There were a total of 80 professionals nominated for the top 20 awards. Michael DiSabatino, nominee, was proud to be nominated amongst the top advisors in the area, and wishes to thank all those whose continued confidence in our firm made this nomination possible.
How to go into business with your spouse and succeed...
Starting and running a business is rarely a safe or simple process, and doing so with one's spouse creates an additional layer of complexity. Whether that complexity will have a positive or negative effect depends on several factors. Here are some of the questions you need to discuss before going into business with your spouse.
* How well do you work together at home? If you cooperate and collaborate for domestic chores, you'll probably carry that pattern into your workplace. If you bicker constantly over how to do the laundry or maintain the yard, working together in business might be a risky option.
Avoid five common mistakes in your 401(k) plan
Participating in a 401(k) or similar retirement plan is a tax-advantaged way to save for retirement. If you have the option of participating in a 401(k) plan, avoid these five common mistakes.
* Failing to participate fully. Too many employees opt out of the plan or don't contribute as much as they can afford. At a minimum, try to set aside enough to receive the full employer-matching contribution. For example, your employer might offer to match 30% of the first 3% of payroll. That match is equivalent to a 30% first-year return on the amount you contribute.
With the start of school just around the corner, it is hard to ignore the high cost of funding a college education. Thankfully, there is some help within the tax code. Outlined here are three of the more popular ways to reduce your taxes in 2014 as a result of this educational expense burden.
Typically you, your spouse, or a dependent who can be claimed as an exemption on your individual tax return
Tuition and fees, course-related books, supplies and equipment
The death of a spouse can be a devastating experience, both emotionally and financially. As the survivor, you'll have to make important decisions while you're in what could be the most vulnerable and distracted stage of your life. The suggestions that follow might at least help ease your financial stress.
Whew! The rush is over once your personal income tax return is done for another year - or so you thought, right up until the moment you discover information you forgot to include.
Now what?
The action you take depends on the type of information you forgot. For instance, say you reported all your income on the return you mailed to the IRS. But now you realize you neglected to attach a copy of your wage statement.
