TAXES! TAXES! TAXES!

A relatively short post this week.  It is the “end run” of tax season.

I managed to finish the last two returns for clients on Monday - out in the mail to then on Tuesday - whew!  One of them was a 2015 return for a friend of mine.  If she does not have it in the mail by Monday she will lose her refund.  Just a reminder - if you have been procrastinating and haven’t filed your 2015 return yet - you will lose your refund if you don’t file it by Monday (April 10, 2019).  If you owe taxes though - the various governments will keep trying to collect it - so file your return also.  Filing your late 2016 or 2017 returns is a good idea too!  Also it always best to file the current return - 2018 on time!  If you can’t finish it in time apply for an extension of time to file - Form 4868 from IRS, state forms vary by state.  This does not give you extra time to pay your taxes -so if you will owe taxes, try to estimate how much and send the payment along with the extension.

I have the two hardest returns left to do - ours and our little corporation.  I more or less finished ours today.  I will wait to clear to my head and check it over tomorrow and then print it out. 

Now that our return is done I can do our corporation return - some items are paid from our personal accounts for the corporation - and I have to figure out the cost of the use of our van for the corporation (which is why I have to do ours first).  Barring some strange occurrence -which if you read my posts regularly you will know we have had a lot of lately - I should have both returns finished, printed and ready to be signed and mailed in plenty of time.

Only one problem remains.  As mentioned we pay for some items from our personal accounts - particularly since the corporation does not have a credit card or have much money (I never said it was a successful business).  I have to keep track of what we paid for the corporation and sometimes what the corporation paid for us (it has an online payment account and we don’t so for rare online payments we sometimes use the corporation’s account). 

The amounts paid out by us for the corporation and paid out by the corporation for us should be the same (in reverse) on both sets of “books”.  They are not.  I spent all of last night looking for the error(s) and could not find them.  So as soon as I post this I will be back to trying to figure out what is wrong.   It is more than one error as I searched the books on both ends for the amount I am out and it does not exist.





And while writing this and working on our taxes - I am also doing the laundry!

THOUGHT FOR THE WEEK -
Remember get your income taxes done - now - don’t procrastinate.  You will be glad you did whether you get a refund or you owe you money and won’t have to pay late fees and interest if you file on time.

COMING TO THE END OF TAX SEASON - HOW DO I KEEP IT ALL ORGANIZED AND GET IT ALL DONE?

Last weekend I suddenly realized - I have 2 weeks to the end of tax season - and none of the returns which are due by April 15 are done, most not even started - and only 1 was almost finished. Panic was about to set in - then I looked at my list.  I have a dying accounting practice - literally, my clients were from my dad or from my boss and are older than me with a couple of exceptions. 

It is an extremely small practice, but I have clients in 4 (US) states - well, I did, but that is another story - I now have in clients, that I know of, in 3 states.  My dad was an accountant for an  avant garde art gallery at one time and he had many clients who were “modern” artists.  My boss had a couple of clients who were writers.  Between the two groups I have had clients in 7 states other than my home state and clients in Paris, France and in Auckland, New Zealand.  (At one time I had a client in Hawaii and the clients in Paris - one was 6 hours ahead of me and one was 6 hours behind and I would confused as to which was which.  The solution?  I telephone (pre-Internet days) all of them at 3:00.  Which 3:00?  It did not matter - it would either be 9 am or 9 pm - not too early to call and not too late to call.  Just when I thought that I had the time difference dealt with - a client moved to New Zealand - 16 hours off and a different day!

I do the returns in the order I receive the information.  If, though, I have returns that have to go out of state and others that are local, when it gets down to the end - as it is now - I have to get the out of state returns done first so they can be mailed to the client in time for the client to look over the returns, come up with any money they need to pay and get the return out timely on their end.  Local clients I can always hand deliver the return.  (My dad used to hand deliver returns - he and I (long before I was old enough to work) would go out at night and drop off returns at his clients.  I loved doing that with him.)

So a return that has to go across the country was mailed out on Monday - plenty of time in advance.  I spent yesterday afternoon preparing extensions for 2 clients who have requested them  - I mailed the extensions out to the tax offices that they have to go today.  I worked up estimated taxes (for 2019) for one client today and they will go out to him tomorrow.  (Estimated taxes are paid by people who do not have taxes withholding on parts of their income due to the type of the income and I have to estimate what their income/taxes will be next year for them.)  Normally one has to have 90% of their tax prepaid when the return is due, by withholding and paid estimates to avoid a penalty - or if one’s tax went up a lot in the year the estimate has to be equal to or greater than 100% of their tax for the prior year - in some cases 110% of same. I have to calculate and guess how much the clients need to pay as estimates for the coming year without them overpaying a lot, but also enough that they will not have a penalty at the end of the coming year.  These will go to the client (again out of state) tomorrow in the mail. 

I have another client who owes taxes for past years.  Her husband had been ill and they were also moving to another state so the past several years’ taxes have been a bit late in being filed. She always gets a refund so there is no penalty for filing late, although I always file extensions for her, but she files long after same is over.  Last year I went after her to give me info so I could do her return for 2014 so she could file it or she would lose her refund - I prepared the return and also her 2017 - so we started to catch up.  I need to do her 2015 return this year so that she does not lose her refund from same.  Big problem - the land near her home broke through a retaining wall and she cannot go home - even just to get the papers needed for her 2015 return.  I filled in a form for her so that IRS will send copies of what they have for her for 2015 - but it is getting close and I have not received the papers from them.  Luckily she had mailed or emailed me the forms she had from their pensions when I made the estimates for 2015 so I have that information.  Her other income is Social Security and a tiny bit of bank account interest.  Today I looked up what percent Social Security went up in 2015 compared to 2014 so I could estimate out what her income would have been (turned out it was the same amount for both years) and then estimated what would have been withheld on it.  I also took her 2014 and her 2017 interest income to figure out what she probably received in 2015.  (2016 also has to be completed so I don’t have the info for same.)  If I don’t receive the information by tomorrow I will do the return with the info I have, which should be a close estimate of everything.  She will have filed timely before she loses her refund.  If it is wrong - well, IRS will compare it to their records and correct the numbers before sending her - her refund. 

How do I keep track of all of this and make sure all the needed information is on the forms and correct?  I have two things that help greatly. 

First, I have a pocket file holder - nice plastic one that sits on the floor next to my desk.  It has sections in it.  A file folder is slightly too large (by maybe half an inch) across to fit in as one is just suppose to use each pocket as a file.  I want to be able to pull out the entire file and know everything is in it.  I cut one end off of some file folders - just enough for them to fit in the holder.  Problem solved.  I used to use removable labels when I had a lot of clients so I could reuse the cut folders during the season.  Now each client has a folder with their name on it. 

When a client mails tax papers to me - whether all of the papers needed or some of them - I put them in the matching folder - in the file holder. I just take out that folder when I am ready to work on their return.  Our information for our personal return and for our business returns go into two of these folders also (one is for our return and one is for the business returns) - in this case the year end forms received go into the folder and I when I move last year’s personal bills into a box (in the office closet) at year end, I put the sections of the bills into the matching tax return information folder also. 

Second, most of my clients have fairly ordinary returns.  So I wrote up a form for myself to fill in the all of the info that might be involved in clients (or our) returns - a section with various types of income listed with lines for the info, a section for taxes paid, estimates and withholding, another section for deductible expenses, and one for adjustments to be made to everything for the state return (if there is one) for the client.  Across the bottom is room to write which returns have to be filed by the client - left side Federal, right side state, so I can check that I have all the needed forms for client to file.  This information form is changed as needed - when the requirement to have medical insurance under ACA came into being - I added a check box at the top to check off that client has medical insurance.  The back of this form is blank so I can list things if there are several of the same item to be totaled.  If there are too many to fit, I add a piece of “columnar paper” (paper with columns to list money amount) and use that.  This system has worked well for well over a decade and I will keep using it to keep clients’ info organized for their taxes.
Then when I am done with the clients’ returns I have to do the hard returns.  Ours and our corporation.  They have to be done together - or at least I have to break out some of the figures between the two before doing the return.  These at least I have until midnight, April 15 to finish and mail.

Some people find all of this overwhelming when I talk about it.  I grew up in a house with both parents who were accountants - although most of the time only dad was working when I was growing up - mom was a stay at home mom until I was in college.  (They did have to come up with tuition - after scholarships and loans were subtracted - to pay tuition for the 3 of us.)  Husband did not understand this at first - everything was secondary to “tax season”.  My parents anniversary is during tax season (when they married it was ending a month earlier than it does now).  My mom’s birthday is during tax season (she just turned 90!).  Even husband’s birthday falls during tax season - but his I cannot ignore. 

So at this point unless something odd happens, I should be done in time - even with time off to write this post and next week’s post and do something for husband’s birthday (and having gone to a birthday party for mom given by my sister).  Then - payroll taxes are due by the end of the month!

THOUGHT OF THE WEEK -                               

If you have a repetitive task - daily, weekly, monthly, quarterly or annually - figure out how you can make it more automatic to do.  This is true whether it is a task around the house such as cleaning or laundry or changing towels - I change the sponges and scrub pad in the kitchen every month at the change of the month to remind to do so.  I change all the towels on Mondays (new start to the work week).  I then change the bathroom towels (in both bathrooms) on Thursdays also - why Thursday? It is about the middle of the week - and we have garbage pickup on Thursdays - so the kitchen towels are changed on the same days as the garbage is picked up.  I change the kitchen towels again on Wednesday and Friday - why not Thursday?  Well, I like to change the kitchen towels more often as I am working with food that is raw and may have microbes in it and then touching the towels.  Why Wednesday and Friday? - Well Monday, Wednesday, and Friday which are every other day.  

You have to decide for yourself when to do what and figure out how to remind yourself what to do.  It helps a lot to have a schedule and check off lists.

INCOME TAXES ARE DUE IN A MONTH

Here in the US it is that time of year again - tax season.  This year there is even more pressure due to the changes in the tax law and the resulting changes in tax forms.  (If you are here in the US and you have not seen the new forms - they are small, at least for the 2 main pages.)   Some of you may find that your taxes are lower - others will find that they are higher - and I don’t mean your refund, I mean your actual taxes.  Don’t forget, you have an actual tax amount that is calculated by filling in your tax form, then subtracting from that amount the amount you prepaid during the year - through withholding and/or payment of estimated.  So if one’s withholding, say from one’s paycheck - the common thing from which most people have withholding taken - is more than it has been, one will either be overpaid more than usual and get a refund or owe less than usual and pay in less - but one’s actual tax - the total of the amounts withheld, paid as estimates and any amount due (or less any amount withheld) is your actual tax amount.  Does that make sense?  Due to the changes many people will have had less withheld from their paycheck  - so if their tax is the same as last year’s - they will either owe more or receive less as a refund, even though their tax is the same.

Supposedly most people will be paying less in actual tax (the total mentioned above), but many will not.  A client of mine is retired and in the past paid no income tax due to high itemized deductions.  This year due to the changes I estimate that his poor man will be paying around $600 in taxes.  IRS has an online calculator to check one’s withholding and I had used it during 2018 to check all of my clients (and my) taxes with it, and this calculation is done using same. 

He is retired.  His income is almost entirely Social Security.  His deductions should be the same as last year.  How come his taxes are higher than before?  Well, the information about the changes left out some things - one of them is that is in past years each person was entitled to a personal exemption of (in recent years) just over $4000.  They were eliminated in the changes.

What does this mean?  If one has always filed using standard deduction then one was entitled the standard deduction plus a personal exemption for themselves plus same for each person they were taking as dependants, plus their spouse (on the same return filing jointly or their own return if filing married separately).  So a couple was entitled to exemptions totaling $8000, a family of 4 was entitled to exemption totaling $16,000 and those exemptions no longer exist.  If one is taking the new standard deduction and one is single with no dependants than their new standard deduction is more than last year’s standard deduction plus exemption , but if they have any dependants - such as a single mom with a child, it is less than same was.  Similarly, a couple with no dependants will find that the new standard deduction for same is more than the old standard deduction plus their 2 personal exemptions totaled, but if they have additional dependants - children and/or elderly parent for example - the new standard deduction will be less than the old one plus their personal exemptions were.

Now, if one has been itemizing deductions they were also entitled to the personal exemptions, and are no longer entitled to same, but since they listed their actual deductible expenses they do not pick up anything additional to replace their lost personal exemptions.  In addition a variety of items which were deductible in the past in a category of “other deductions” if the category was more than 2% of their income are no longer deductible.  Depending on where they live they may also be losing part of their state income tax/real estate deduction.  Now, it is possible that the new standard deductions might be higher than their itemized deductions and they can take same as deduction, but chances are that even if this is the case, it will still be less than they were able to deduct last year as itemized deductions plus personal exemptions  - whether they have other dependants or not. 

So, this year make sure to gather your related tax papers - W2 forms, assorted 1099 forms, forms from any other income you have - such as K1s and records of other any other income you have to list.  Then make sure that you have all of your deductions - medical (insurance premiums, copayments, deductible payments, doctors, prescriptions, etc. ), taxes - real estate, state & local income taxes (still allowed up to $10,000), interest on your mortgage, and charitable contributions.  (Medical is still limited to same in excess of a certain amount).  Make sure that you check carefully with your tax preparer as to what else you should include this year.  Don’t wait until the time to file is about to approach (only just over a month left) in case you have any questions or find that you need to come up with money to pay income taxes that you did not anticipate paying.  If you due your own returns - leave extra time to figure out the new forms.  There are some programs that will help one prepare their taxes (free) if you need help including one called VITA from IRS that uses volunteers to help people.

Your state income tax forms may have been changed also as a result of the Federal changes.  The state I live in has traditionally used the Federal return information as a start and one then made changes to it.  This year those changes include allowing some of the items no longer allowed on the Federal return (such as real estate taxes in excess of $10,000) and will have extra forms to fill in for same also. 

And this is a good time to decide to do better to have your paperwork organized for next year when tax season comes again.


Past posts on income taxes that may be of interest to you -
http://wheredidileavethat.blogspot.com/2016/03/gathering-papers-for-income-taxes-part-1.html
http://wheredidileavethat.blogspot.com/2016/03/gathering-papers-for-income-taxes-part-2.html
http://wheredidileavethat.blogspot.com/2017/04/holidays-and-taxes-unrelated-subjects.html
http://wheredidileavethat.blogspot.com/2018/02/income-taxes-are-here-again.html

THOUGHT OF THE WEEK -

Take the time to put together your tax papers properly and completely now, while there is time to find missing information or get it replaced.  If you have someone do your income taxes - contact them soon about having your taxes done.  If you do your own - leave extra time this year to figure the changes that have been made and how they affect you. 

As you put together the paperwork - think about what you can do to make next year’s taxes either
 to do.

Again, this is general information and not tax preparation information related to you.  Check with your tax preparer about your specific information needed. 

EVEN WHEN ONE USE A PROCESS TO DO THINGS - THINGS CAN GO AWRY

Do you use processes to help you get or stay organized?  If you are not sure what I mean - I mean doing things the same way or on the same day or at the time every time you do them?  I try to.  Lately though, as part of this craziness going on here, things slip through the process and go awry or go missing.

Sometime around December my desk scissors went missing.  I keep them in the drawer over the leg hole of my desk, right in the front.  Husband and I both looked high and low for them over the ensuing couple of months.  He thought he found them in our studio in the “small tool drawer”, where our scissors for the studio are, but that was the duplicate pair I keep there.  I really like these scissors.  He started suggesting that I get new ones.  I am a stubborn person and refused.  Well, last Friday I opened my desk drawer for something and - the scissors were back.  Neither of us has any idea how this happened, I am just glad they are back and I no longer have to use a small knife for things I should be using scissors for.

I have a definite process for credit card receipts.  I collect them in a pocket in my wallet.  I empty the pocket Friday night and Sunday night (we do a lot of our shopping over the weekend). When I take them out of my wallet they go into a basket hanging at the foot of the stairs - the mail and similar go here also - and my next trip upstairs they go upstairs.  I then sort them at my desk and put them into the corresponding pockets in a small loose leaf book.  They then wait snugly there until they are matched with the statement and then will be attached to same when I pay the statement.  So how do they go missing?  One night in January when husband had a cold we stopped between Saturday night dinner and Saturday night movie to buy a box of cold pills for him.  On arriving home we found out we already had a started box of the same medicine.  (Ever happen to you - I am sure it has.)  I put the box and the receipt into a section of the holder for files on my desk to wait until I knew he did not need a second box.  He took the medicine once from the started box and decided it did not work. 

So a couple of weeks later I went to take the medicine back.  The box was there, the receipt was not.  I went crazy looking for it.  I climbed all over the floor in the office.  I disassembled the folder holder so I could look under it (too big, heavy and unwieldy to move as one piece).  I checked where the receipt should be.  Not found.  I finally tried to return it without the receipt - not for medications, so we have a spare box of a medication we don’t really take.  My fault - if the receipt had gone where it belonged in the interim, it would have been there when needed.

Now the latest thing gone astray - and the worst.  I am the treasurer and the membership chair of our reenactment unit.  In mid January I mailed out the renewal forms to members.  It is sort of an odd setup.  Members join in family groups which can be from 1 person to any amount, generally 4 is the largest group.  Members can also just join our unit or also join a national reenactment group that our unit is part of.  I need to keep careful records of which group rejoined, who in the family rejoined, who in the family rejoined or joined the national group also.  I have a spread sheet that I copy over year to year to keep track - I remove anyone who was not in “last year” and add anyone who joined “last year”.  It is all set up to keep track of and total what each group paid and the totals of everyone.  I am suppose to send the renewals and dues of members of the national group by the beginning of March to the national group’s membership chair.  I also list all checks - for this or any other reason - in a notebook.

So last week I emailed out to those members not listed on the spreadsheet a reminder to renew.  I heard back from one member.  Her husband had mailed us the renewal form and check for them and their 2 sons and they had gotten the “if you are receiving this you did not renew yet” email.  I remembered receiving their renewal.  I also remembered, as she mentioned in her email, that her husband had taken care of it and had filled in and paid for the national group also.  Since they were not members of same in the past - and her husband had done the paperwork - I decided to check with them about the renewal and set it aside to contact them.

And that is where the problem comes in. I can’t find their paperwork or check.  I emailed her back right away and told her I remembered receiving it and would get back to her.  I am pretty sure I know which day I received their renewal - it was the day in January I went to my client in Manhattan, husband could not go out food shopping for the upcoming storm due to the van having no brakes, when I came home we ran out food shopping, then back home as I forgotten the items I needed to mail out for us and the client, and while at the post office I picked up the mail.  The date fits and then we did not go out for several days.  I also remember it was the first renewal I received and that my husband was not in the post office when I found it in our box - and he almost always comes in with me - except that day.  I have been thorough all of my briefcases and computer bags - even the ones that were in the closet straight through.  Any folder I could think of.  The desk and file drawers. Under the desks. The car and its hatch.  I cannot find it.  My husband cannot find it.  I have been getting lectures from husband (who cannot find anything without me) about being more careful. 

Today I gave up and humbled myself and sent an email to the member apologizing, explaining, apologizing again... I told her I marked them as renewed.  I suggested that she send a replacement check as the first one was the wrong amount (paid too much) anyway.  I told her when I find the other check, I will return it to her. 

I am kicking myself about what went wrong.  It bothers the heck out of me.  Generally paperwork is the one area that I keep well organized.  I am not suppose to loose things - and not be able to find them - and 3 items in a couple of months is 3 items too many.  I realize that all I can do is keep looking until I find the item or it becomes moot.  I am hoping whichever “fairy” gave me back my scissors will smile on me again and return the missing renewal to me and the missing receipt - but the missing return is more important.

THOUGHT OF THE WEEK -

Set up processes to help yourself get organized.  Keep at them and follow what you set up and it should help.  Whether it is keeping track of papers, doing the laundry on the same day each week, changing towels and bed linens on a weekly schedule, or cleaning the house.  I keep the daily (make dinner), weekly, monthly, annual and other odd repeating items in my organizer and Palm - they could also be in a smart phone or paper calendar/appointment book.  This helps to remind to do things at the same time.  On Wednesdays I start doing the laundry (usually takes 2 to 3 evenings between washing, drying, folding, and putting away) at night.  I also write my post to all of you if I have not done so on Tuesday.  (Last week I got it done on Tuesday and then forgot it was Tuesday and posted a day early.)  I also go and “visit” an embroidery group online if I have time.

What can you set up in your calendar to remind you to do every day, week, month, etc.?  Try it, it works well.  A reminder alarm can even be set to remind you. 

Hoping you have a nice Valentine’s Day tomorrow.