Archives for Virginia

It’s Not Too Early to Organize for Your Tax Returns

We are entering the holiday season – Thanksgiving, Christmas, and New Year’s.  Homes will be busy with holiday shopping, entertaining family and friends, and lots of holiday decorations.  Before you know it, it will be time to file your 2017 taxes.

Take a few moments now to collect the tax-related paperwork that reflect the special events that happened in your life this year, and put it safely away for January.

Here are some events to consider, and some items to collect now:

  • Did you buy or sell a home? A copy of your mortgage and closing documents
  • Did you have any casualty, theft or loss? A copy of all paperwork relating to the event
  • Did you get married? Social security cards
  • Did you get divorced or separated? A copy of the divorce decree or separation agreement, showing child support, alimony, and property settlement arrangements
  • Did you have any medical expenses? A copy of ALL unreimbursed receipts from any medical provider, pharmacy, and insurance provider
  • Did you move? Old and new address, and receipts for ALL expenses related to the move
  • Did you have a baby? Date of Birth, and Social Security Number (if you have one)
  • Did you start a new job? Receipts related to a new job search, or anything related to you getting the new job.
  • Did you or someone in your family attend school (beyond high school)? Receipts for all school related expenses including tuition, room and board, books, and other items
  • Did you start a new business? This list is VERY long.  I recommend you visit our website and review the July 2017 Client Newsletter, which lists much of the paperwork needed to record new business expenses.
  • Did you donate to a charity/non-profit/religious organization? A copy of your receipt is needed.
  • Did you pay for daycare? You will need either the name and SSN of the person (if an individual), or the name, address, and EIN or the business or organization
  • Did you pay Personal Property Tax? A copy of the receipt
  • A copy of your 2016 Federal and State tax returns should be kept with your 2017 paperwork.
  • A copy of ANY other paperwork you feel is important, or you have questions about (“I wonder if this is deductible?”). It is far better to have a copy of an item you have a question about, than to later learn you need it but can’t find it.

A simple filing system to keep everything organized is to file:

  • Family (birth/marriage/divorce/daycare)
  • Home (sale/purchase/casualty/theft/loss)
  • Moving or job related
  • Medical
  • Business
  • Other/Miscellaneous

My BEST recommendation is – keep ALL of your receipts.  As you can see from the brief list above, many normal events in your life have a tax implication.  If you have a question about an expense, keep a receipt, and ask us when we prepare your tax returns.rns.

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Virginia Sales Tax Holiday – August 4-6 2017

When is it?

August 4-6, 2017. The 3-day sales tax holiday starts the first Friday in August at 12:01 am and ends the following Sunday at 11:59 pm.

What is it?

During the sales tax holiday, you can buy qualifying school supplies, clothing, footwear, hurricane and emergency preparedness items, and Energy Star™ and WaterSense™ products without paying sales tax.

What items are eligible?
  • School supplies, clothing, and footwear 
    • Qualified school supplies – $20 or less per item
    • Qualified clothing and footwear – $100 or less per item
  • Hurricane and emergency preparedness products  
    • Portable generators – $1,000 or less per item
    • Gas-powered chainsaws – $350 or less per item
    • Chainsaw accessories – $60 or less per item
    • Other specified hurricane preparedness items – $60 or less per item
  • Energy Star™ and WaterSense™​ products 
    • Qualifying Energy Star™ or WaterSense™ products purchased for noncommercial home or personal use – $2,500 or less per item

 

List of School Supplies Eligible for Exemption

“School supply,” means an item that is commonly used by a student in a course of study. For purposes of the sales tax holiday, the term does not include computers and such items may not be purchased exempt of the tax.

The following is an all-inclusive list of items that are included in the term “school supply” and are therefore exempt from tax during the sales tax holiday period, provided their sales price is $20 or less per item. Only the following items are exempt as school supplies. Items need not be intended for use in school or in connection with a school activity to be eligible for the exemption.

  • Binder pockets
  • Binders
  • Blackboard chalk
  • Book bags, messenger bags, and totes
  • Calculators
  • Cellophane tape
  • Clay and glazes
  • Compasses
  • Composition books
  • Computer storage media; diskettes; recordable compact discs; and flash drives
  • Crayons
  • Dictionaries and thesauruses
  • Disinfectant wipes
  • Dividers
  • Erasers (including dry erase marker erasers and dry erase marker cleaning solution)
  • Folders: expandable, pocket, plastic, and manila
  • Glue, paste, and paste sticks
  • Hand sanitizer soap
  • Highlighters
  • Index card boxes
  • Index cards
  • Legal pads
  • Lunch boxes and lunch bags (including disposable lunch bags)
  • Markers (including dry erase markers and dry erase marker kits)
  • Musical instruments, musical instrument accessories, and replacement items for musical instruments
  • Notebooks
  • Paintbrushes for artwork
  • Paints (acrylic, tempera, and oil)
  • Paper: loose leaf ruled notebook paper, copy and printer paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper
  • Pencil boxes and other school supply boxes
  • Pencil sharpeners
  • Pencils
  • Pens
  • Protractors
  • Reference books
  • Reference maps and globes
  • Rulers
  • Scissors
  • Sheet music
  • Sketch and drawing pads
  • Textbooks
  • Tissues
  • Watercolors
  • Workbooks; and
  • Writing tablets

For a full, detailed list of items available, visit Virginia Department of Taxation Sales Tax Holiday Page

 

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Nationwide Tax Preparation Rates

How Much Should You Expect To Pay For Tax Return Preparation?

(Note: Fees charged by Hampton Roads Accounting are about HALF the national average!)

Taxpayers looking to hire a professional to complete their tax return can expect to pay an average of $273 for an itemized Form 1040 with Schedule A and a state tax return, according to the National Society of Accountants (NSA). This is a 4.6 percent increase over the average fee last year, which was $261. It is an 11 percent increase from two years ago – the last time the survey was conducted.

The average cost to prepare a Form 1040 and state return without itemized deductions is $159, also a 4.6 percent increase over the average fee last year, which was $152. It is an 11.2 percent increase from two years ago.

“When you consider the time it takes to complete tax returns, this is a very strong value,” says NSA Executive Vice President John Ams. “The tax code continues to become more complex each year, including some new Affordable Care Act reporting requirements. Professional tax preparers may also be able to find tax deductions and credits that may taxpayers might not notice.”

The survey also reported the average fees for preparing additional Internal Revenue Service (IRS) tax forms, including:

  • $174 for a Form 1040 Schedule C (business)
  • $634 for a Form 1065 (partnership)
  • $817 for a Form 1120 (corporation)
  • $778 for a Form 1120S (S corporation)
  • $457 for a Form 1041 (fiduciary)
  • $688 for a Form 990 (tax exempt)
  • $68 for a Form 940 (Federal unemployment)
  • $115 for Schedule D (gains and losses)
  • $126 for Schedule E (rental)
  • $158 for Schedule F (farm)

Save some money, visit our Tax Preparation page today and get started!

 

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Starting Business as a Sole Proprietor? Let’s Talk

Getting started in a business is a challenging and exciting time. Many new businesses are set up as a sole proprietorship.  This basic form of business entity is very easy to start, requires almost no paperwork, and has the simplest records requirements.  It is also the form chosen by many people who have been making money at a hobby, and want to turn their hobby into a real business.

If you are thinking about starting a business as a sole proprietor, take a look at some of the advantages and pitfalls of this business type:

Advantages:

  • Start up costs are very low.
  • Income generated by the business is YOUR income.
  • You control all the functions of your business.
  • You don’t file separate tax returns for the business – the business information is part of your personal tax return.
  • You may or may not have employees.
  • You can sell or close your business at any time.  You can even pass it down to your children.

Disadvantages:

  • Banks are very reluctant to give loans to sole proprietors.  See the list of benefits above.  Since you can close your doors at any time, you are seen as a business risk.
  • YOU are personally liable for any debt incurred by your business.  If your business is sued or someone gets hurt as a result of your business, your home and personal assets are at risk.
  • As your business becomes profitable, your personal tax obligation increases.
  • Health insurance for your employees is not deductible.
  • If you die, your business ceases to exist.  All assets are liquidated and become part of your estate.  Your family could be burdened with large estate or inheritance taxes.
  • Sole proprietors are four times more likely to be audited than other business forms.

For some businesses, being a sole proprietor makes perfect sense.  Bookkeepers, small housekeeping services, tutors and freelance writers come to mind as businesses perfect for the sole proprietor model.  For many businesses, other forms could be a better choice.

For new (and existing) business owners in our area, Hampton Roads Accounting meets with prospective clients to discuss their business plans and needs.  Together, we can take a look at your business idea, discuss which business form would be best for your situation, and plan your next steps to make your business dream a reality.

There is no cost or obligation for this initial consultation, so give us a call, send us an email, or complete the form on our website to get started.  We’ll be in touch right away.

Hampton Roads Accounting focuses on helping small business owners in the following cities: Chesapeake, Virginia Beach, Norfolk, Portsmouth, Suffolk, and the surrounding area.

 

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Consumer Alert: New Tax Return Scams

Consumer Alert: Tax Return / Identity Theft scammers are changing tactics again.

In a previous post, I talked about how some Virginia tax refunds are being delayed because of extra precautions being taken due to identity theft.  These same criminals have targeted individuals for both federal and state returns.

Both the IRS and state tax departments are taking extra steps to verify information on tax returns to protect your identity and your refund.  Many people have heard about this through the news, but are not sure exactly what that means for them.

Criminals are taking advantage of this confusion by calling individuals, pretending to be IRS agents, and asking to verify information on their return so the return can be processed.

This January, the Treasury Inspector General for Tax Administration (TIGTA) announced they have received reports of roughly 896,000 phone scam contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam. Just this year, the IRS has seen a 400 percent increase in phishing schemes.

The IRS will never:

  • Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you several bills.
  • Call or email you to verify your identity by asking for personal and financial information.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone or email.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money or to verify your identity, here’s what you should do:

If you don’t owe taxes, or have no reason to think that you do:

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe tax:

  • Do not give out any information. Hang up immediately.
  • Contact Hampton Roads Accounting.  We can help you get your taxes filed.
    (even if you haven’t filed for years)

 

Here is a short YouTube video from the IRS that discusses this problem:

 

As always, if you have any questions about your taxes, please contact Hampton Roads Accounting.  We are here to help you.

 

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Virginia Tax Refunds May Be Delayed

Have you received a “Review of Tax Return” letter from the Virginia Department of Taxation?

The Virginia Department of Taxation is sending “Review of Tax Return” letters (AUIN073A RAP Additional Review) to some taxpayers to verify withholding information. Because of the increase in identity theft and refund fraud, Virginia is taking extra precautions this year to validate the refund returns it processes.

Processing of tax returns could take longer as Virginia works to protect taxpayer information and ensure that taxpayers receive the state income tax refunds to which they are entitled.

You might be concerned if you receive a Review of Tax Return letter. Receiving the letter does not mean you are a victim of identity theft or that your return contain errors or missing data.  It just means that your return was stopped for review.

If you receive this letter, you should read it carefully to determine what action you might need to take.

Please note the following:

If you DID NOT submit an individual income tax return, you should check where indicated in the first paragraph of the letter and return it using the fax number or address provided.

If you DID file a return, you should follow the instructions in the letter and submit all requested documents as soon as possible by fax or mail.  Virginia will continue processing returns once it receives all requested documents and confirms that the returns are correct.  Once you send in the requested documents, please allow 7 business days for Virginia to receive them.

If you filed a return and already received your refund, or receive one before sending Virginia the requested information, Virginia was able to verify your returns through other means.  They no longer need documentation from you, and you may disregard the letter.

Getting a letter from the state about your tax return can be stressful, but we are here to help.  If you received a Review of Tax Return Letter, please contact Hampton Roads Accounting today for assistance or to answer any questions you may have.

Hampton Roads Accounting is happy to help you, whether we prepared your return or not.

 

Just go to our ‘Contact Us’ page to get started.  We will be in touch right away.

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