How Your Accountant Can Help You Get Tax Exempt Status as a Non-Profit

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Tax Exempt Status for Non-Profits

Many not-for-profit companies dream of the day when they can get tax exempt status. Receiving tax exempt status usually requires more effort than one would think, however. To receive this status, non-profits can use all the assistance they can get.

Here are several ways that your accountant can assist you in your quest to reach exempt status:

Develop a Budget & Then Determine How You’ll Store Your Records

Non-profit organizations often find themselves in how water simply because they don’t have a budget. Or, they find themselves in trouble because they don’t know how to accurately keep records. Your accountant can help you with this by providing you with the tools necessary to be able to ensure that you are properly documenting all of your finances, expenses, gains and losses.

Help You Hire a CPA Who Specializes in Non-Profit Organizations

Your accountant may know how to help your business succeed financially, but only an accountant who has specialized in non-profits will truly be able to help you when you seek to receive your tax exempt status. He or she will know exactly what to look for within your business, and best of all he or she will also know what documents are needed in order to help you properly make your case.

Help You File Your Application

Once you have all of your application materials together, your accountant can help you file your application. While you can easily do it without your accountant’s help, it may be helpful to receive that additional assistance to ensure you are not looking over anything.

What other ways have you found that your accountant can help you when you attempt to get your tax exempt status? Leave your comments below.

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Three Mistakes to Avoid When Hiring a CPA

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Hire the Right CPA

Choosing a CPA can be a long, strenuous process. It is a process which can make or break your company, and consequently your business should strive to hire the best CPA possible your company can be placed in an optimal financial position.

When you select a CPA, here are three mistakes you should try to avoid making in order to hire the best candidate:

Mistake #1: Choosing Someone Who Isn’t Fully Devoted to Your Company

While this may seem like a no brainer, many people make this mistake. Some people hire a CPA because they assume that any CPA will be just as invested in your company as you are; unfortunately, that’s not always the case. When hiring an accountant, make sure that your new hire know not only what your expectations are but also what your dreams and aspirations are so that the two of you can reach those goals as a team.

Mistake #2: Making a Selection before Interviewing a Sufficient Number of Candidates

It can be easy to hire a CPA from a quick Google search, but that’s not always the right decision. In order to weed the bad apples out, interview multiple candidates. Get a feel for the prospects and if the first CPA you hire doesn’t work out, you can always go back to your prospects list and hire the second place candidate.

Mistake #3: Making a Decision Purely Based on Rates

Everyone loves a great deal, and everyone loves low prices, so it is expected that one would want to hire the CPA with the lowest hourly rate or fee structure. Again, low prices are great, but low prices can also mean low quality (sometimes low prices also mean CPAs are looking to get more clients, but that’s another story). Do not to allow low prices to be the focal point of your hiring decision.

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Four Ways Your Accountant Can Help You Maximize Your Tax Refund

Maximize Tax Refund Accountant Business

Maximizing Your Refund

It’s tax season, and believe it or not you may not know everything that’s necessary to be able to maximize your tax refund. Hiring a capable accountant could be the first step toward maximizing your tax refund for this present tax season.

Here are four specific ways how an accountant can help you maximize your refund:

Accountants Know Your Deductions & Tax Exemptions

An exemption is referred to as money you earned but aren’t required to pay taxes on; a deduction, however, lowers your taxable income. Both of these things have the potential to reduce the amount of money you owe each year. Knowing your deductions and tax exemptions when you meet with your accountant will let them know exactly how they can best assist you.

Accountants Can Help You Write Off Business Expenses

If you are a business owner, you have probably heard time and time again that you have the opportunity to write off your business expenses. You may not know everything about writing off expenses during tax season, and your accountant can help you get familiarized with the process. Do you go out to business lunches? Do you have a home office? These are potential business write offs your accountant can help you obtain.

Accountants Can Help You Deduct Medical Costs

Not sure how you can deduct medical costs on your own? Your accountant can work with you to help you get a tax deduction for your medical bills in the last year. These bills could include health insurance premiums, dental and eye care, mental health, driving to the doctor, counseling and other medical appointments.

Accountants Can Help You Write Off Charitable Donations

Have you ever cleaned out your closets and donated to the local Goodwill? Donated your used car to an auction? Making these charitable donations can help trim your tax liability with the help of your accountant.

There are several ways your accountant can help you maximize your tax refund but you have to be willing to be open and honest about your financial transactions from the beginning with your accountant. Transparency is how you can best help your accountant maximize your tax refund for your business.

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Why Filing Early Can Be the Best Tax Decision You Make

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Filing Early

It’s that time of year again: it’s time to file your annual taxes, and depending on your particular situation, this could either be the most exciting time of the year (because you know you’ll receive a tax refund) or the most dreary time of the year. Whatever the case may be, accounting professionals all agree on one basic piece of advice: file early.

Filing early is not only important if you want to get it out the way, it is also important for several other reasons. Here are a few of these reasons:

Filing Early Can Help Stop Identity Fraud

One common identity theft crime which often happens during tax season is the wrongful use of the personal information of an individual to file a fraudulent tax form. This is often done early during tax season, and when the actual taxpayer files they’re notified that there is already a duplicate form on file.

Filing Early Can Eliminate Stress

Yes, filing early can eliminate stress, especially if you are someone who usually waits until the last minute of the tax deadline to file their taxes. The earlier you file, the less worry you will have.

You’ll Get Your Refund Faster

If you are one of those people who are fortunate to receive a refund you should be exceptionally motivated and inspired to file your taxes early. This is because filing early guarantees you’ll get your refund that much faster.

You Might Be Eligible For Special Discounts

Several tax softwares offer a special discount if you choose to file early. There are even some restaurants who offer special discounts if you can prove that you filed your taxes early.

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Three Ways You Could Lose Money during Tax Season

Losing Money Tax Season

Losing Money

Tax season is quickly approaching. Now more than ever, Americans are doing everything they possibly can in order to make sure that they are more than prepared for what could be one of the most prosperous times of the year or one of the most financially draining. If you are like many Americans, you may struggle with how to file your taxes or struggle to find a competent professional to do them for you. Regardless of how you choose to file taxes, there are still several ways which one could lose money during tax season. Here are three ways you could end up losing money this season.

Doing Your Taxes Wrong

If you are not a CPA or an accountant you run the risk of possibly doing your taxes wrong. Doing your taxes wrong could give you a bigger refund that you may have to pay back later once the IRS identifies your mistakes.

Falling Prey to Tax Scams

During tax season many scammers begin to prey on innocent IRS tax filers by posing as the IRS and telling individuals they owe money that they may or may not owe. If you are not educated on these scam tactics you run the risk of losing money by falling prey to these predators.

Owing Back Taxes

There is nothing worse than finding out that you owe back taxes to the IRS. Any refund that you may have been guaranteed can easily be eaten away by the IRS in back taxes that you owed from years prior.

While there may be a host of other ways you can lose money during tax season, your best protection is to hire a CPA who can help guide you through tax season to ensure everything is done correctly.

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Taxes, Travel & the Holidays: Tips to Help You Be Merry

Holiday Season Taxes Travel Trip Deductions

Holiday Season

Between friends, family, feasts, and eggnog, for many the holidays are a joyous time of the year. However, between presents, the costs of the aforementioned feasts, and traveling, the holiday season can also be hard on the wallet. While there are no deductions specifically for holiday travel, planning ahead can help you deduct part of your trip to see family and friends.

It’s worth noting that in order to deduct any travel expenses they must be business-related. That being said, any non-business related detours from your business trip become immediately non-deductible.

Here’s an example from the IRS Publication 463:

“You work in Atlanta and take a business trip to New Orleans in May. Your business travel totals 850 miles round trip. On your way, you stop in Mobile to visit your parents. You spend $2,165 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,860. You can deduct $1,860 for your trip, including the cost of round-trip transportation to and from New Orleans.”

Essentially you’re free to extend or alter portions of your trip to incorporate some leisure time, but don’t expect to be able to deduct that portion of your trip.

So what does all of this have to do with the holidays? You might consider combining certain business trips with your holiday travels. Say, for example, you live in Denver, and your family lives in Baltimore. There happens to be a client, business conference, or workshop in nearby Philadelphia. You can deduct the travel to and from Philly, but not the jaunt over to Baltimore for Thanksgiving with the family.

Moderation is essential here, though: too many business/pleasure hybrid trips may draw attention from the IRS.

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Five Things You Didn’t Know You Can Claim as a Tax Write-Off

Tax Deduction Credit Write Off

Tax Deduction

Most of us know that donations to charitable organizations and student loan interest offer tax credit opportunities. But here are a few things you may not know you can write off on your taxes:

  1. State sales tax or state income tax: In 2015 Congress made permanent a previously temporary tax break on state sales and income tax. Taxpayers can choose to deduct either state sales or income taxes paid the previous year– whichever gives the largest deduction.
  1. Out of pocket charitable deductions: it’s common knowledge that financial gifts to charitable organizations can be deductible. But if you volunteer for a charitable organization, you can write off any costs you incur, including travel expenses and goods purchased, among others.
  1. Job hunting costs: need to hit the road to interview for a job? You can write off travel expenses incurred, including food, lodging, transportation, and even the cost of printing resumes, as well as any employment agency fees.
  1. Child care: raising a child is no inexpensive task, but as long as you’re working you can deduct 20-35% of child care costs while you’re at work. It’s worth noting that employers can offer a child care reimbursement account, which allows you to pay for childcare with pretax dollars. If you pay into such an account, you cannot claim the credit simultaneously.
  1. College credit for non-FT students (Lifetime Learning credit): you probably know about the American Opportunity Credit and the Hope Credit, both of which can only be claimed during college. Lifetime Learning credit, however, isn’t for just traditional, full time students. Rather it’s a tax credit that encourages learning beyond high school and college: if you take classes at an accredited educational institution and make less than $65,000 per year as an individual. There is no limit to the number of times the Lifetime Learning credit can be claimed. Keep learning!

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Three Ways to Avoid Having Your Tax Refund Delayed

Tax refunds can be delayed for dozens of reasons. The most common reason is incorrect information, requiring the IRS to reject a return and request changes to be made. The upcoming tax season may pose an issue for those claiming the Child Tax Credit or Additional Child Tax Credit, which is discussed below.taxrefundcheckaheadsign

Ensure Accuracy

The smallest type of inaccuracy, such as transposing two numbers or forgetting to sign your return, may cause it to be rejected, which will delay your refund. It is important to make sure that your numbers are transferred correctly. When transferring numbers to tax documents, use a pencil to mark the numbers you’ve inputted to keep your place in long number sequences.

Select Direct Deposit

Direct deposit often gets you your refund within about 21 days of your return being accepted. If you choose to have a check mailed, you could wait up to two months, or more if the refund happens to be lost in the mail. To ensure delivery of your mailed refund check, make sure your correct address is on your tax paperwork.

View Child Tax Credit Delays

Those claiming the Child Tax Credit resulting in an Additional Child Tax Credit may have their refunds delayed until February 15, 2017. This is because the IRS has to verify every piece of information of your return and verify 100 percent that you are eligible for the Additional Child Tax Credit that may result in a refund.

Closing Thoughts

To avoid delays, file early and triple check your information to make sure it is correct. It does help to have someone other than yourself check over your figures to help catch mistakes. Even returns completed by licensed tax preparers should be reviewed for mistakes before submittal.

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Four Fun Ways to Spend Your Tax Refund

Using your tax refund to pay toward big bills like a mortgage or car loan is a fantastic way to spend your refund. On the other hand, using your refund to have fun is also a great path to take. If you can’t spend your entire refund on having fun, however, set a portion of your refund aside so that you can detach from the stresses of life for a bit. It is okay to have a little fun once-in-a-while.taxrefundcloseup

Exotic Vacation

If you have wanted to visit an exotic destination, such as Figi or Anguilla as examples, use your tax refund to do so. You will need a passport, so your refund could assist in paying for passports and necessary travel documents too.

Speed Adventure

If you have a need for speed, there are events across the U.S. which allow you to ride in fast cars, drive fast cars, and take classes to become a racecar driver. These thrill vacations can become a popular adventure idea for you.

Visit Your Favorite Sports Stadiums in the U.S.

Sports fans may enjoy seeing all of the stadiums in which their favorite teams play throughout the country. Make it a point to use some of your tax refund to visit every stadium for your favorite sport in the U.S.

Closing Thoughts

Try to make it a tradition to do something fun with your tax refund each year. You can make it a game with yourself to use the funds to complete your personal bucket list. There are once-in-a-lifetime opportunities and your tax refund is a great way to capitalize on those opportunities.

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Three Money Saving Tax Tips for Parents

Most parents are aware of the Earned Income Tax Credit, Child Tax Credit, and Additional Child Tax Credit. What many parents fail to realize is that there are additional deductions and credits which can be claimed. The IRS has worksheets available on the IRS.gov website to help you determine credit or deduction eligibility.piggybanksaving

Child and Dependent Care Credit

If you have paid out-of-pocket for childcare expenses, or a physically dependent adult, you may be able to claim a portion of it on your taxes as a deduction. Expenses for children under age 13 can be deducted. The childcare has to allow you to work or find employment.

Higher Education Tax Credits

Two types of tax credits exist for parents with qualifying children still in college. You can qualify for and claim one of the following – The American Opportunity Tax Credit or The Lifetime Learning Credit. A four-year claim limit is in place with the American Opportunity Tax Credit.

Student Loan Interest Deductions

If you are a parent with student loan debt, you may be able to deduct the interest on your student loan payments. The stipulation to this deduction is that the debt must be from a qualified lending institution. It cannot be a branch of, relative of, or in association with a financial institution.

Closing Thoughts

Tax credits and deductions change, and new options are made available frequently. It is important to review the available tax credits annually to uncover additional credits or deductions that your family can take to save on taxes and receive a bigger refund.

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  • Huddleston Tax Accountants / Huddleston Tax CPAs – Redmond, WA
    Certified Public Accountants Focused on Small Business
    8201 164th Ave NE Suite 200 / Redmond WA 98052
    425-483-6600

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve Tukwila, Auburn, Federal Way. We have a few meeting locations. If you are looking for a Redmond CPA firm, get in touch with us! Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.