Reporting Tax Scams

The Internal Revenue Service has kept taxpayers updated on new scams throughout the year that could possibly affect taxpayers. They also have a page on their website that lets taxpayers know how and where to report tax scams. Schemes to avoid paying taxes are illegal, and could result in imprisonment and fines, as well as having to pay back the unpaid taxes plus possible interest. If you are aware of any tax scams, it is important to report them to the correct Internal Revenue Service department. To access the Internal Revenue Service’s website, click here.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

10 Retirement Tips to Practice in Your 20s

Although retirement can seem like a long way off when you are in your 20s, it is actually the perfect time to start taking steps towards saving for retirement. Bok Financial lists 10 retirement moves that you should make in your 20s:

1.      Get a grip on compound interest: The earlier you save, the more interest that will be added to your retirement account.

2.      Pay yourself first: Have money sent straight to a savings account when you receive income. Your savings will be guaranteed, and you will not even miss the funds that are transferred.

3.      Control your spending: Every dollar you spend could be a dollar saved. Try to spend less than you earn every month, and save what you can.

4.      Stay educated: Research all retirement options you have at your disposal now and you will be prepared for decision you have to make in the future.

5.      Kick debt to the curb: Try to avoid going into debt, and if you are already in debt, try to get out as soon as possible. Debt is one of the biggest obstacles Americans have when it comes to planning for retirement. Pay down loans and credit cards as soon as you are able.

6.      Meet smaller financial goals: Set small savings goals for yourself that will encourage you to stay on track for major savings goals, i.e. retirement.

7.      Max out employer-match benefits: If your employer offers matching retirement savings benefits, take advantage and set back as much as you can afford.

8.      Boost your contributions each year: Increase retirement contributions as you are able, such as when you receive a bonus or a raise. Boosting contributions is an easy way to grow your account.

9.      Diversify early: Your 20s are a perfect time to diversify your retirement portfolio and take some risks; just don’t invest 100% of your retirement savings in stocks.

10.  Make a habit of financial organization: Organize all financial documentation (paycheck stubs, tax returns, etc.) and keep track of all of your expenses. Being financially organized is the simplest way to always know where your money is going.

If you have any questions about preparing for retirement, please contact us!

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Government Shutdown in January Possibly Avoided

The impending government shutdown in January might not occur after all. Congress has reached a bipartisan budget deal that will avoid some of the sequestration’s spending cuts, and possibly prevent another government shutdown. This budget deal was announced on Tuesday, December 10^th. The proposed bill will set overall discretionary spending at $1.012 trillion, which will increase to $1.14 trillion in 2015. This spending amount is a compromise, as the House of Representatives proposed a budget of $967 billion and the Senate proposed a budget of $1.058 trillion. This agreement would reduce federal deficits by roughly $22 billion, and eliminate budget cuts to educations, medical research, and the military, among other groups. The proposed budget deal is controversial as it does not include extending unemployment benefits for those who have been long-term unemployed. Congress has approved the bill, and the House and Senate are set to vote on the bill in the next coming weeks.

http://www.bizjournals.com/bizjournals/washingtonbureau/2013/12/10/budget-deal-avoids-government.html?ana=twt

http://www.politico.com/story/2013/12/paul-ryan-budget-deal-101011.html

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Social Security: When to Cash In

Collecting hard-earned Social Security benefits as soon as they are available is a tempting option, but waiting just a few extra years can increase the benefits you would receive. The longer you hold out on dipping into your Social Security payments, the better. CNN Money points out that “The rough math: If instead of getting 100% at 66 you start collecting 132% at 70, it takes 12½ years for that 32% difference to equal the four years of benefits you would have collected starting at 66”.

 But there is a downside to not cashing in early: if you pass away before you start receiving your benefits, you and your survivors will receive nothing. This situation is what insurance companies call mortality risk. Experts recommend following a middle path, where you withdraw your benefits, but not necessarily right at the age of 62. Below is a chart that CNN Money provided to show benefits that people born through 1954 would receive:

Age:     Percentage:
62         75%
63         80%
64         86.6667%
65         93.3333%
66         100%
67         108%
68         116%
69         124%
70         132%

Tell us in the comments: do you plan on withdrawing benefits at age 62 or waiting?

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Unemployment Lowest Since 2008

Unemployment rates for 2013 are lower than they have been since 2008. With the addition of 203,000 jobs in November, unemployment fell to only 7%, the lowest it has been in five years.  This job growth suggests strong economic expansion, especially considering that the sectors where jobs were created are not all low-paying.  “The sectors that saw the strongest jobs gains in November were transportation and warehousing, which added 31,000 jobs; health care, which saw 28,000 additional jobs; and manufacturing, which added 27,000 jobs. The labor force grew by 455,000 in November, following a 720,000 decline in October that was partly caused by the government shutdown” (Politico). This job growth comes as a surprise to many economists who assumed that the government shutdown would negatively affect the economy and employment rate. Tell us in the comments: Has your company increased hiring in late 2013?

For more information, click on the links below:

http://www.cbsnews.com/news/unemployment-rate-dips-to-7-percent/

http://www.politico.com/story/2013/12/november-2013-unemployment-numbers-100780.html#ixzz2mjLDW2eH

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Standard Mileage Rates Decline Slightly for 2014

The Internal Revenue Service has announced that optional standard mileage rates for company use of a vehicle will decrease by one-half of a cent per mile in 2014. The optional mileage rates allow taxpayers to calculate the deductible costs of operating a vehicle. The rate for business use of a car, van, or pickup/panel truck in 2014 will be 56 cents per mile, and driving for medical or moving purposes is rated at 23.5 cents per mile. These rates are both one-half cent lower than in 2013. The IRS notes that “taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates”. If you have any questions about mileage rates, please contact us.

http://www.irs.gov/2014-Standard-Mileage-Rates-for-Business,-Medical-and-Moving-Announced

http://www.journalofaccountancy.com/News/20139210.htm

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Keeping Finances Separate Could Create Problems

Couples and spouses who live together but keep their finances separate could potentially run into problems further down the road. Keeping finances separate can be smart, considering the estate-planning advantages that occur when couples own separate properties, but there are also downfalls. The Wall Street Journal listed the following potential pitfalls of keeping finances separate:

1.      Assets owned separately might be distributed differently than the owner would like, should the owner pass away without making an estate plan. Experts suggest consulting with a professional to make an estate plan to avoid the confusion.

2.      Separate accounts may cause couples to lose communication with each other, especially in regards to finances. Communication about finances, especially retirement accounts, is very important. Just because accounts are separate does not mean that finances do not affect the other spouse or partner.

3.      Separately owned property holds a greater risk when it comes to bankruptcy or lawsuits. Property that is owned jointly is more secure, as only half of the property will be gained by a bankruptcy claim or lawsuit.

4.      Separate accounts can be problematic, especially when it comes to a partner or spouse passing away. When an account is not in your name, you cannot simply withdraw money or change the account.

There are pros and cons to keeping accounts separate. If you have questions or would like advice on managing your finances, please contact us.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

IRS Warns of New Phone Scam

The Internal Revenue Service has issued a warning about a new phone scam that targets taxpayers, including recent immigrants. This phone scam involves scammers impersonating IRS agents to coax taxpayers to submit payments through pre-loaded debit cards or wire transfers. If the victims of the scam do not cooperate and submit payment, the scammers will threaten the victim with arrest, deportation and/or suspension of business or driver’s licenses. These scams are often hard to detect, as scammers will create fake badge numbers, call on toll-free numbers, and create background noise so the call sounds as if it’s coming from a call center. These scammers may even have your Social Security number and other personal information about you.

If you receive a call from someone claiming to be from the IRS, it is best to contact the IRS directly. The IRS will NOT ask for PINs, passwords, or financial information over the phone. Report any suspicious phone calls you may receive to the IRS at the phone numbers listed on the website here.

Tell us in the comments: Have you had scammers call you claiming to be from the IRS?

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Myths about Credit Scores

If you are like most Americans, you are probably confused about your credit score. A good credit score can save you money in the long run, so it’s important to understand some basic facts about credit scores. The Huffington Post recently posted an article debunking the top 3 myths about credit reports and scores. Listed below are the top 3 myths, along with actual facts about credit scores.

1.      Myth: You have just one credit score.

Fact: You actually have many credit scores, from a dozen to a hundred. Different credit scores are given for different things. An auto lender will receive a different credit score than your mortgage lender. Although the scores can differ, they will all be in the same range. If you have a good credit score from one model, all scores are probably good.
 

2.      Myth: Checking your own credit hurts you score.

Fact: When you request copies of your credit score from an accredited organization, this is called a soft inquiry. When your credit score is requested for making lending decisions, this is called a hard inquiry. A soft inquiry will not hurt your credit, unlike a hard inquiry. You are also entitled to three free credit reports each year, so it’s easy stay informed about what your credit score is. The three major national credit bureaus that offer these reports are Equifax, Experian, and TransUnion.

3.      Myth: Closing your oldest credit card hurts your score.

Fact: Closing an old credit card account will not hurt your score, unless it’s your credit card with the highest limit. All accounts in your name, whether open or closed, will show up on your credit score for ten years. After ten years, credit bureaus will remove them from your credit report. Before you close a credit card, just be sure that all other credit card balances are low and not maxed out.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

New Form NC-4 EZs or NC-4s

A new law was recently enacted by the North Carolina General Assembly, and will go into effect January 1, 2014. Under House Bill 998, taxpayers can no longer claim a personal exemption for themselves, their children, their spouse, or any other qualifying dependents. Also, many tax credits and deductions that have an impact on North Carolina Withholding tax are no longer available, effective January 1^st. Because of this new law, employers must have employees submit new Employee’s Withholding Allowance Certificate (Form NC-4 EZ or Form NC-4). Recipients of pension or annuity payments must complete and provide to their payer a new Withholding Certificate for Pension or Annuity Payments (Form NC-4P).  The North Carolina Department of Revenue will notify employers and pension payers of the new law requirements by mail.

If you have any questions, please contact us. You can also contact the North Carolina Department of Revenue directly through a help number: 1-877-252-4487 (this phone number will only be available until February 28, 2014).

 

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

How to Avoid Fraud in the Workplace

International Fraud Awareness Week (November 3-9) relayed the importance of awareness, detection and prevention in regards to fraud. For International Fraud Awareness Week, the CPA Practice Advisor recently posted an article regarding how to avoid fraud in the workplace. In that article, the Association of Certified Fraud Examiners listed the top 5 tips that will help employers detect and prevent fraud:

1. Be proactive: Adopt a code of ethics for employees and management that must be followed, and make it known that unethical behavior will not be tolerated.
2. Establish hiring procedures: Every company should have formal employment guidelines that are strictly followed. Conduct thorough background checks and take ethical compliance into consideration during performance reviews.
3. Train employees: All employees should be trained in fraud prevention. Employees should know how to report suspicious activity and understand the warning signs of fraud.
4. Conduct regular audits: Surprise audits are the most effective and should be done routinely, especially in financial and inventory departments.
5. Call an expert: If fraud examination is not practiced by your business, hire an expert to conduct regular examinations.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

The New Minimum Wage

 

The current federal minimum wage is $7.25 an hour, but that number could be increasing soon. Last Thursday, the President announced his support of legislation that would increase the federal minimum wage from $7.25 to $10.10. According to the Huffington Post, the “federal minimum wage is actually worth $2 less today than it was in 1968”. As the cost of living goes up, minimum wage follows suit. The last minimum wage increase occurred on July 24, 2009, when minimum wage was increased from $6.55 to $7.25 an hour.

Some states have already begun the process of increasing minimum wage.  New York and Connecticut have approved measures that would increase the minimum wage to $9 an hour and organizers in South Dakota, Massachusetts and Idaho are working to get the same wage increase on their ballots for voting in 2014. California lawmakers have approved an increase of minimum wage to $10, which will take effect by 2016, and New Jersey residents have voted to raise minimum wage to $8.25 an hour. The CNN Money website reports that “as of January, New Jersey will join 19 other states and Washington, D.C., in having minimum wages that exceed the federal level”.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Fewer Americans Expecting to Retire

USA Today recently posted an article regarding a study that shows 37% of people do not expect to ever retire. These findings come from a survey done by Wells Fargo. Survey respondents said that “paying monthly bills is their highest priority, and saving for retirement is a distant second”. On a good note, half of the survey respondents reported that they will have enough money to retire, which relays the importance of developing a retirement account as early as possible. But experts say it is never too late to start saving for retirement. To get a jumpstart on planning for retirement, open a savings account immediately and start depositing funds routinely. Try to cut your current expenses and utilize as many tax efficient retirement plans as possible (401k, Roth IRA’s, Traditional IRA’s). When it comes to planning for retirement, earlier is better, but it is never too late. If you have questions about planning for retirement, contact us!

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Flexible Spending Accounts Rules Changing

Workers who have health flexible spending accounts will be getting some good news! The United States Treasury Department has announced that it will be relaxing the rule that says account holders must use up their funds by the end of the year, or the funds will be lost. Employers now have the option to allow employees who participate in these health flexible spending accounts to carry over up to $500 to the next year. Health flexible spending accounts, commonly known as FSAs or HSAs, are accounts that hold pre-tax dollars to pay for out-of-pocket medical expenses. Roughly 14 million families use flexible spending accounts already, and these changes may encourage even more workers to sign up for these plans. Employers may implement these changes in their company as early as the 2013 plan year.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

IRS to Delay Start of Tax Season

The Internal Revenue Service has announced that the beginning of tax season could be delayed by up to two weeks, due to the government shutdown. Accounting Today notes that the "16-day government shutdown came during the peak period for preparing IRS systems for the upcoming tax season, which involves programming, testing and deployment of more than 50 systems" (Accounting Today). Considering that the government shutdown closed about 90% of the Internal Revenue Service's operations for 16 days, the delay is not a surprise. The Internal Revenue Service will announce the official start of the preparation for the upcoming tax season in December. This delay will not affect when tax returns are due. Taxpayers will still be required to file their returns by April 15th, and companies will still be required to send W-2 and other tax forms by January 31st.

If you have any questions, please contact us.

 

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

2013 Payroll Adjustments Required for Noncash Fringe Benefits

 It is now time to calculate noncash fringe benefits and other amounts which must be added to 2013 payroll prior to year end. This can be done now; you need not wait until the end of the year. We are available to help you with the computations, and can also assist you in getting the information into your payroll system or correctly reporting it to your third party payroll processing service.

 

Generally, noncash fringe benefits paid during the calendar year are added to the last payroll of the year. We understand how busy December is, and the difficulty of accumulating information through the end of the year in time to have us do the calculations and then get it into your last payroll run.  To alleviate this pressure, IRS rules allow you to cut off your calculation as early as October 31st. By acting now, you can gather the information, get it to us, have your computations back, and then decide in which of the remaining payrolls of the year you want to include noncash fringe benefits.

 

If you have questions or would like assistance with calculations or payroll processing related to fringe benefits, please call us now. At the latest, we must calculate your fringe benefits before your last payroll in December.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

You May Be Richer Than You Think!

The North Carolina Cash Program, a service of the North Carolina Department of State Treasurer, reports that there is roughly $334 million in the unclaimed property fund! Property that hasn't been claimed can be bank accounts, policy proceeds, stocks, bonds, safety deposit contents, etc. When companies lose track of their consumer, due to incorrect addresses or other missing information, the funds become unclaimed. There is no time limit for making a claim to your property, meaning unclaimed property from years ago could be sitting in the fund. If you are one of the North Carolinians who is owed money, it’s time to claim your cash! To find out if you have unclaimed property, check the North Carolina Treasurer website, and search your name in the database. Let us know if you find anything!

 

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

Furloughed Workers to Pay State Back for Unemployment

 

If furloughed employees received unemployment benefits during the government shutdown, they will have to pay the state back what they received. The Labor Department reports that 70,000 federal employees who were furloughed during the government shutdown filed for unemployment benefits the first week of the shutdown. But since the shutdown has come to an end, the states want those workers to pay back the benefits they received. CNN Money reports that "those who already used the benefits will have 60 days to repay the Department of Employment Services, without interest”. If the workers who received benefits are struggling financially, they may apply to be a part of a repayment plan. The article from CNN Money is linked here.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

Government Shutdown Comes to a Close

The government shutdown, which began on October 1st, has come to an end. The President and Congress ended the 16-day shutdown on Thursday, October 17th. By coming to an agreement and authorizing more borrowing just before the deadline, Congress was able to avoid a disastrous default on the United States’ debts.  The plan that Congress and President Obama agreed upon will keep the government open until January 15th, with the new deadline for a default being extended to February 7th. The White House directed all federally-funded agencies to open back up Thursday, which allowed thousands of furloughed employees to return to work. National parks, federal agencies and museums will now resume business as usual, and funding for educational and supplemental programs will continue.

Linked below are websites with further information regarding the end of the government shutdown.

http://www.cbsnews.com/8301-250_162-57607769/senate-announces-deal-to-end-government-shutdown-lift-debt-ceiling/

http://metro.co.uk/2013/10/17/us-government-shutdown-thousands-return-to-work-after-budget-deal-4150949/

 

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

How Your Credit Affects Your Company

Securing investors or loans can be a struggle for small businesses, especially if they are relying on their personal credit rather than relying on their business credit profile. Using a personal bank account as the funding for a business is risky. If your business struggles financially, then your personal finances will be tied up in the struggle, and you risk lowering your personal credit score. For this reason, experts tend to advise to keep business and personal accounts separate, and to focus on building up your business' credit profile on its own. Business and personal credit is different, but repairing a credit score tends to work the same way. Focus on keeping your business and personal credit strong, and keeping accounts separate. If you have any questions about credit, please contact us!

 

http://buildmybiz.com/business-credit-affects-company/

518 Arbor Hill Rd.

Kernersville, NC 27284

Ph: 336-996-3338

www.cpamcdaniel.com

 

Extension Deadline-October 15th

 

If you filed an extension for your return, the deadline to file is next week!

 

The deadline to file an Individual Income Tax Return with a 6-month extension is October 15th. The IRS estimates that there are about 12 million taxpayers who requested an automatic 6-month extension in 2013. Even though the government is currently shut down, these extended tax returns and any taxes owed are still due.

 

 If you have any questions about your extension or payments, please contact us!

 

http://www.irs.gov/uac/Newsroom/Tax-filing-and-Payment-Extensions-Expire-Oct.-15;-Check-Eligibility-for-Overlooked-Tax-Benefits;-Choose-efile;-Payment-Options-Available 

 

http://www.cpapracticeadvisor.com/news/11188789/oct-15-tax-extension-deadline-stands-despite-government-shutdown

 



                                                               

 

518 Arbor Hill Rd.

Kernersville, NC 27284

Ph: 336-996-3338

www.cpamcdaniel.com 

North Carolina Department of Revenue Issues Warning of Phone Scams

The North Carolina Department of Revenue (NCDOR) recently issued a warning that there has been an increase in telephone scams from criminals posing as representatives from federal agencies. Criminals will call taxpayers requesting payment for delinquent tax bills, and urge taxpayers to transfer money as quickly as possible from a specific financial institution. The North Carolina Department of Revenue will never ask for electronic payments or immediate transfers from a specific financial institution. The Department of Revenue will also send up to 5 notices by mail before any phone calls are made requesting payment on an overdue tax bill. The North Carolina Department of Revenue recommends that if you feel that you received a questionable phone call, it is best to contact the Department of Revenue directly and speak to a representative. If you have any questions, please contact us.

For further information, the North Carolina Department of Revenue’s website is www.dornc.com and their phone number is (877) 252-3052.

 

 

518 Arbor Hill Rd.

Kernersville, NC 27284

Ph: 336-996-3338

www.cpamcdaniel.com

Government Shutdown-Who's Affected

Due to a lapse in funding, the  government shutdown went into effect on October 1^st, 2013. The USA government website lists the government services and operations that will be affected by the shutdown. These include call centers that handle veteran’s benefits, all national parks and monuments, new applications for small business loans, and hundreds of thousands of federal employees being furloughed without pay. Also, gun permits, passports, and patents will be delayed.

Some of the services that will not be affected by the shutdown are active military, air traffic controllers, prison guards, border patrol agents, and the U.S. Postal services. Social Security beneficiaries will continue to receive their benefits, and Medicare and Medicaid will continue, depending on the length of the shutdown. For a full list of governmental agencies that will be affected, the USA government website is linked below.

http://www.usa.gov/shutdown.shtml

We have also linked other websites that have further information about the government shutdown and what it affects below.

http://www.buzzfeed.com/hunterschwarz/this-is-what-the-government-shutdown-means-for-you

http://www.usatoday.com/story/news/politics/2013/10/02/government-shutdown-five-things-wednesday/2904929/

 

518 Arbor Hill Rd.

Kernersville, NC 27284

Ph: 336-996-3338

www.cpamcdaniel.com 

Small Businesses Still Failing on Security Measures

An article from the CPA Practice Advisor reports that although the risk of financial fraud is higher than ever, small businesses still do not take security seriously enough. Most small businesses do not put security measures in place until they have already become victims of fraud.  The CPA Practice Advisor reports that “small businesses are the most common victims in fraud instances, with the highest rate of fraud (31.8%) of any business size category and the largest median loss”. This means that it is of utmost importance to have security measures in place to prevent fraud. Some of these measures can include, but are not limited to: securing documents properly, conducting employee background checks, using online browsing protection, and conducting regular checks of the business’ finances.

 

Small businesses should take precautions towards protecting their financial security before financial fraud becomes a problem. The article from the CPA Practice Advisor is linked below. If you have questions about how to keep your small business financially safe, contact us!

 

http://www.cpapracticeadvisor.com/news/11151496/despite-threat-of-fraud-most-smb-owners-fail-on-security

518 Arbor Hill Rd.

Kernersville, NC 27284

Ph: 336-996-3338

www.cpamcdaniel.com