There is no certainty about the Death of Taxes

The income tax celebrated its 100^th birthday last year.  After two failed attempts, Congress enacted the income tax through the passage of the 16th Amendment in 1913.  

While often associated with the growth in government spending, its biggest effect has been to shift the balance of power toward the federal government and away from the states, many of which already had enacted state income taxes. In the area of military power and international affairs, the effect of the 16th Amendment is so great that it is difficult to imagine how things would be today without it.

One thing is for sure, the income tax has changed dramatically over the years.  The top marginal tax rates have been anywhere and everywhere between a low of 7% in 1913 to a high of 94% just three decades later in 1944.   We sifted through 100 years of tax tables to create charts like the following.

Like many things that have been around for 100 years, it is full of stories and changes and “fun facts”.   We explore the rise and fall of the Income Tax and its Rates in this week’s blog post.

Mid-Year Tax Planning Checklist

All too often, taxpayers wait until after the close of the tax year to worry about their taxes, missing opportunities that could reduce their tax liability or help them financially. Now is a great time for tax planning. The following are some events that can affect your tax return; you may need to take steps to mitigate their impact and thus avoid unpleasant surprises after it is too late to address them.

 Did you get married, divorced, or become widowed?
 Did you change jobs or has your spouse started working?
 Did you have a substantial increase or decrease in income?
 Did you have a substantial gain from the sale of stocks or bonds?
 Did you refinance your home or take out a second home mortgage this year?
 Are you prepared for the new 3.8% surtax on net investment income?
 Are you taking advantage of tax-advantaged retirement savings?
 Have you made any significant equipment purchases for your business?
 Did you make any unplanned withdrawals from an IRA or pension plan?

3 Technologies to Simplify Your Financial Life and Reduce Identity Theft

Most people today use their smartphones and/or tablets to keep up with emails, maintain calendars, and maybe even play a game or two. But did you know you can use these devices to help protect your personal and financial information? Experts recommend monitoring your account balances and getting statements online as one of the best ways to prevent identity theft.

Most financial institutions offer websites and mobile apps that make this easy to do. This, however, is only the tip of what technology can do to simplify and secure your financial life. We recommend the following 3 sites or apps to enhance your financial security. These tools seamlessly integrate your desktop, smartphone and tablet. They are all user-friendly and will make you wish you had known about them sooner!

1. LastPass - password management
2. Mint - account aggregation
3. ShareFile - secure document storage

How well do you know the Client Document Vault?

What is the Client Document Vault?

The Client Document Vault powered by ShareFile is a cloud-based service that Baker Sullivan Hoover uses to share and store your files. The technology is both convenient and confidential.

Easy to Use

• It is an easy way to share big business files with people
• To send a file, just click on the “Send a File” link on the navigation bar, enter an email address and click to upload your file
• Large individual files can be uploaded
• The service is compatible with both Mac and PC

Secure

• Audited data centers ensure privacy and security of confidential information
• Files are encrypted in transfer and storage
• You have access to customizable security settings

Multiple Ways to Access Your Client Document Vault:

• Via the Baker Sullivan Hoover Website
• Via the Free Phone and Tablet App*
• Via the Desktop Widget

BSH’s goal through the Client Document Vault is to make exchanging information both simple and safe. There are several ways to utilize this service and hopefully one of them is a convenient way for you to connect with us. If you have any questions about using your Client Document Vault please give us a call.

October 2012 Due Dates

Individual Due Dates

October 10

·         Report Tips to Employer

October 15

·         Extended Individual Tax Returns

·         SEP IRA & Keogh Contributions

Business Due Dates

October 15 

·         Electing Large Partnerships (1065-B)

·         Social Security, Medicare and withheld income tax

·         Nonpayroll Withholding

October 31

·         Social Security, Medicare and Withheld Income Tax

·         Certain Small Employers – Deposit 3^rd Quarter Tax Liability

·         Federal Unemployment Tax

August 2012 Due Dates

Individual Due Dates

August 10 - Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during July, you are required to report them to your employer on IRS Form 4070 no later than August 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

Business Due Dates

August 10 - Social Security, Medicare and Withheld Income Tax

File Form 941 for the second quarter of 2012. This due date applies only if you deposited the tax for the quarter in full and on time.

August 15 - Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in July.

August 15 - Non-Payroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in July.

August 31 – TN Gross Receipts Tax Returns

Personalize Your QuickBooks Desktop

Everyone uses QuickBooks just a little differently. You can create a desktop that meets your specific needs, while maintaining the program’s inherent usability. Every desktop version of QuickBooks (except for Simple Start) offers several tools to accommodate your preferences.

Some of these preferences are:

• Default Windows for Startup
• Customizing Your Icon Bar
• Tracking Open Windows
• Customizing the Home Page
• Finding Favorites

Teach Yourself Better Reporting

Are you really making full use of the program’s reporting tools?

In this article you will find information and instructions on how to utilize reports more effecently in QuickBooks.

Some of the ways you can make your reports work for you are

1. Reworking the report using the Extensive Customization to make the report look the way you need it to look.
2. Use Sophisticated Modifications to get the data that you need.
3. Memorize the reports for use later, or save them in groups to run multiple reports with one click.

Are You Recording Information for 1099s?

If you use independent contractors to perform services for your business or rental and you pay them $600 or more for the year, you are required to issue them a Form 1099 after the end of the year to avoid facing the loss of the deduction for their labor and expenses.  (This requirement generally does not apply for payments made to a corporation.)

IRS Form W-9, “Request for Taxpayer Identification Number and Certification” is provided by the government as a means for you to obtain the data required from your vendors in order to file the 1099s. We highly recommend that you have a potential vendor or independent contractor complete the Form W-9 prior to engaging in business with him or her.

The penalty for not filing a 1099 is as high as $250 PER 1099 and possibly the loss of the tax deduction!