Understanding Tax Credits

While tax deductions lower the portion of your income that can be taxed, tax credits reduce the amount of tax you owe. The amount of your tax credits lowers the amount of tax you owe. There are two types of tax credits: non-refundable and refundable.

Non-refundable tax credits can reduce tax owed to as little as zero. Examples of non-refundable tax credits include retirement savings, education, and child care expenses.

Refundable tax credits allow you to get a refund past zero tax liability. Examples of refundable tax credits include:

– The Earned Income Tax Credit – If you are a low or moderate-income working family with children, you may be eligible for up to a $6660 tax credit.

– American Opportunity Tax Credit – If you are paying tuition for an eligible student, you may qualify for up to a $2500 tax credit per student.

– Additional Child Tax Credit – The additional Child Tax Credit allows for $1,400 of the regular Child Tax Credit to be refundable.

Tax credits are also available at the state level. Some examples of Arizona tax credits in 2020 are:

– Contributions to qualifying charitable organizations

– Contributions to qualifying foster care organizations

– Public school tax credit

– Credit for contributions to certified school tuition organization

A to Z Accounting can help you take advantage of all the latest tax credits to maximize your return. Call us at 520-318-4912 for help.

Employee or Independent Contractor?

The success of companies like Uber, Lyft, and Airbnb are driving a “Gig” Economy. This means there is a larger pool of labor available for short-term contract or freelance work. Many employers are gaining a competitive edge by tapping into it.

It is important that employers determine whether their workers are employees or independent contractors. Employers are required to withhold income taxes and pay Social Security, Medicare taxes, and unemployment tax on wages paid to an employee. Employers usually do not have to withhold or pay taxes on payments to independent contractors.

Whether a worker is an employee or an independent contractor depends on many factors such as the worker/employer relationship and the amount of behavioral control the employer exerts over the worker.

The IRS provides a free service to help employers determine the status of their workers. To obtain a free determination letter from the IRS, complete and submit Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, to the IRS. The form is available at https://www.irs.gov/pub/irs-pdf/fss8.pdf.

For payroll support, contact A to Z Accounting at 520-318-4912.

The Top 5 Reasons to Outsource Your Accounting

Identity Theft by Email

Be wary of thieves who may try to obtain your personal financial information via email in order to commit fraud. This criminal activity is called “phishing.”

Phishers target their victims with emails that appear to be from a legitimate business. These emails often ask for highly personal information, such as social security number, bank account number, or credit card information. Phishing emails may also include a clickable link to a fake login screen. This is designed to get victims to share their user id and password information.

Don’t let authentic-looking logos, web addresses, or fake log-in screens fool you. Most financial institutions, including A to Z Accounting, will never ask you to send an email containing your personal financial information. The safest way to log into your online accounts is to type the legitimate website address in the url address bar in your internet browser. Save the url link as a “bookmark,” so you can quickly return to it as often as needed.

You can securely share your financial information with A to Z Accounting by visiting our website at www.AtoZaccounting.net. Click on the blue “Transfer a File” button at the top right of the screen and log in with your user id and password.

If you receive a phishing email, you can file a complaint at the Federal Trade Commission’s website, http://www.ftc.gov/ or call 1-877-FTC-HELP.

Looking to Outsource Some or All of Your Accounting Work?

Our professional team at A to Z Accounting is ready to handle all of your accounting needs. Whatever your business situation, A to Z Accounting has the flexibility and experience to support you. We can help with:

• Accounts Payable
• Accounts Receivable Accounting
• Payroll
• Sales Tax Accounting and Filing
• Bank Reconciliations
• Financial Reporting
• Financial Analysis

Take advantage of our free, one-hour consultation and learn how simple and affordable it is to have A to Z Accounting ease YOUR accounting needs.

Questions? Call A to Z Accounting at 520-318-4912.

Starting a Business? Need Accounting Help?

Professional accounting support can mean the difference between the failure or success of a start-up business.

A to Z Accounting can help you manage many aspects of your business finances, so you can concentrate on growth. We can provide invaluable accounting advice, handle your accounts receivable and payables, spare you the headaches of complicated payroll tax withholding and reporting, and manage your local, state, and federal tax returns.

Questions? Call A to Z Accounting at 520-318-4912.

Need Employee Payroll Help?

Looking for a way to streamline your payroll and reporting processes for your Tucson-area business? A to Z Accounting proudly provides expert, hassle-free payroll services for companies of all sizes. We can help you:

• Save on costly payroll mistakes
• Save time and effort
• Save the expense of extra in-house staff to handle your payroll needs
• Meet regulatory payroll and tax requirements

Our team removes the burden of tedious payroll tasks from your staff and ensures that even the smallest of details are attended to. Our dedication to your company’s success means you can count on us for error-free paychecks and reports.

From setup to taking care of withholdings for income tax, Social Security, and Medicare and filing required reports, such as IRS form 941, we can handle every aspect of paying your employees and managing payroll taxes. This leaves you free to do what you do best: run your business effectively. A to Z Accounting will provide:

• A designated point of contact
• Customized payroll services to suit your business needs
• Direct Depositing, if desired
• Access to your payroll and tax information when you need it
• Knowledgeable payroll expertise

Delegate your cumbersome payroll tasks to A to Z Accounting today.

Questions? Call A to Z Accounting at 520-318-4912.

Behind on Business Taxes? Let us Help!

Perhaps nothing is more stressful for a business owner than being financially upside down and owing more tax than you can afford to pay. A to Z Accounting can ease your worries and help you get back on track. Our free, one-hour consultation is a no-obligation way to find a path forward.

Questions? Call A to Z Accounting at 520-318-4912.

Carry Your Health Care Tax Credit Forward

A healthcare tax credit is available to small businesses based on a sliding scale. Businesses that benefit the most are those that employ fewer than 10 full-time equivalent employees with average wages under $25,000 per person. Use form 8941 to calculate eligibility and credit. This credit may be carried back or forward if your business did not owe taxes in a qualifying year.

Questions? Call A to Z Accounting at 520-318-4912.

What’s in the Senate Tax Bill and What’s Next?

The Senate recently passed a tax reform bill. Here are some of the key provisions it contains:

For Individuals

The Senate bill changes the rates on taxable income to:

10% (income up to $9,525 for individuals; up to $19,050 for married couples filing jointly)
12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
22% (over $38,700 to $70,000; over $77,400 to $140,000 for couples)
24% (over $70,000 to $160,000; over $140,000 to $320,000 for couples)
32% (over $160,000 to $200,000; over $320,000 to $400,000 for couples)
35% (over $200,000 to $500,000; over $400,000 to $1 million for couples)
38.5% (over $500,000; over $1 million for couples)

Eliminates the personal tax exemption of $4,050.

Nearly doubles the standard deduction to $12,000 for single filers and $24,000 for married couples filing jointly.

Eliminates state and income tax deduction.

Caps property tax deduction at $10,000.

Retains mortgage interest as deductible up to a debt cap of $1 million.

Doubles the child tax credit from $1,000 per child to $2,000, but the additional $1,000 is not refundable.

Retains the Alternative Minimum Tax, but it will apply to higher earners.

Allows teachers to deduct $500 of self-purchased supplies rather than $250.

Allows itemizers to deduct medical and dental expenses if they exceed 7.5% of adjusted gross income in 2017 and 2018 (lowered from 10%).

Removes the mandate to buy individual health insurance.

For Businesses

The Senate bill cuts the corporate tax rate to 20% beginning in 2019.

Companies would be required to pay a one-time tax on existing overseas profits (14.5% on cash assets and 7.5% on non-cash assets).

What’s next for the tax reform bill?

The House and the Senate each passed their own version of a tax reform bill. They must both pass an identical version before it can be presented to President Trump for his signature.

Need help with tax preparation? Call A to Z Accounting at 520-318-4912 or click here for more information.