Overpaying Taxes

A whopping 97% of business owners overpay their taxes. Most business owners do not realize there are many tax strategies that would reduce their taxes…legally! Wonder where you would be if you had all the money you paid the IRS & the state in income taxes for the last 10 years? And check this out….

The IRS says there are hundreds of millionaires who pay $0 taxes every year! If they aren’t paying taxes…why should you? What’s the difference between millionaires who pay $0 tax and you? The millionaires have a tax plan. They know exactly how to handle their finances to maximize deductions and drop their taxes to $0! It’s time to stop letting that money leak out of your pockets. Do you think tax planning means “raising red flags”? Taking advantage of “gray areas”?

Being “aggressive” and hoping not to get audited? In fact, it means nothing of the sort. True tax planning means proactively scouring your business and finances for tax-saving opportunities. Asking questions before you make financial decisions to avoid unpleasant surprises. And taking advantage of every legal deduction, credit, and loophole the law allows. Our tax-planning strategies are all court-tested and IRS-approved. You’ll find that with true tax planning on your side, you don’t need to raise red flags, shade into gray areas, or be aggressive to keep more of what you earn.

Failing To Plan

The first mistake is failing to plan. Planning is the key to beating the IRS, legally. I don’t care how good your accountant is with a stack of receipts on April 15. If you didn’t know you could set up a Section 105 plan and write off your kid’s braces as a business expense, there’s nothing you can do on April 15.

You lose that deduction forever! True tax planning gives you concepts and strategies you need to minimize your taxes. In plain English, not legalese. Without intimidating spreadsheets or endless “projections” that change every time Congress decides to change the law. What should you do? When should you do it? How should you do it? And tax planning gives you two more valuable benefits. First, it’s the key to your financial defenses. As a business owner, you have two ways to put cash in your pocket.

Financial offense is making more. Financial defense is spending less. Taxes are probably your biggest single expense. So it makes sense to focus your financial defense where you spend the most. And second, tax planning guarantees results. You can spend all sorts of time, effort, and money promoting your business. But that can’t guarantee results. Or you can set up a medical expense reimbursement plan, deduct your daughter’s braces, and guarantee savings. We like to start new client relationships with a comprehensive tax plan that lets us start saving you money right away, long before we prepare your first tax return.

Abundant Returns Increased My Refund From $3.00 to $5,256!

“For the last 2 years, including this one, I had been going to an H & R Block that was across the street from my place of employment. Last year I started a business and went to have my taxes done. After a 3-hour wait, I was told I would have a refund of $3.00! Full of disappointment, I decided to call Abundant Returns and made an appointment to come in. After my taxes were done, I received a refund of $5,256!!! I was overjoyed and told Larisa, “I will never go anywhere else ever again.”

~Elizabeth St. John, Sandy Springs, GA

#1 Mistake Business Owners Make

Not Paying Yourself is the biggest Mistake Business Owners Make.

When you run a business, you must deposit ALL business income into your business bank account. (Please don’t stuff it under your mattress!) You should use this money to pay your business expenses. You should not take money out of the business account to use it as you please. You should not pay personal expenses with your business checks, debit cards, or ATM cash withdrawals. You must use the business income for paying business expenses. Since you work in the business, your salary is a valid business expense.

You must pay yourself a salary.

This doesn’t mean just transferring money from your business account to your personal account. Nor does it mean writing a company check to yourself and putting “salary” or “payroll” on the memo line. Doing this will subject you to the same “Self Employment Tax” contractors pay. This is an additional 15.3% tax on the money you paid yourself.

Technically, you do not “own” the business, it is an entity unto itself (like an artificial person). You are an employee of the business and must be paid as such.

The business should hire a payroll service that will issue you a W-2 at the end of the year and make all the Payroll Tax deposits that are required by law.

This is the best way to make sure you are compliant with IRS guidelines.

If Your Refund is Delayed…

If your federal refund doesn’t arrive in your account on the anticipated date, you will need to contact the IRS to find out what happened.

If you filed your return eletronically, your should expect your refund in 10-21 days and you must wait at least

72 hours to contact the IRS for information. If you mailed your return, it takes 4 weeks to receive information about the status.
There could have been a number of reasons for the IRS to delay your refund. It’s important for you to contact the IRS to find out why.

You have two options: Internet or Phone

1. Go to www.irs.gov and click on “Where’s My Refund?”

or

2. Call 1-800-829-1040, Choose Option 1

For both methods you will need to know three (3) key pieces of information.

(a) Your Social Security Number

(b) Your Filing Status (1. .single, 2. married filing joint, 3. married filing separate, 4. head of household or 5. Qualigying Widow

(c) The amount of Your Refund

If you do not get any information on the whereabouts of your refund, you will need to speak personally with an IRS Representative.

Call 1-800-829-1040 and Choose Option 2.

Obamacare – What it means to you

This is not a comprehensive guide. This is meant to be a snapshot of the provisions that will affect you directly. There is still more to learn about Obamacare and more that will be revealed with time. So we’ll keep you abreast about the provisions that will affect you as events unfold.

What it means for You

Insurance companies can’t deny coverage to anyone for pre-existing conditions.

Plans can’t set annual limits on coverage. (The ban on lifetime limits took effect in 2010.)

States can choose (or not choose) to expand Medicaid eligibility to non-elderly, non-pregnant individuals with incomes up to 138% of the federal poverty level ($15,856 for a single individual and $31,322 for a Family of 4 for 2013-2014)1. For 2014-2016, the federal government will pick up 100% of those costs.

The law requires states to establish insurance “exchanges,” or join a federal exchange, where individuals and small businesses can comparison-shop for coverage. Source for residents of the state of Georgia: http://www.healthinsurance.org/georgia-state-health-insurance-exchange/

All health insurance plans must provide coverage for “essential benefits,” in categories such as maternity care, substance abuse services, mental and behavioral health services, and prescription drugs.

What this means for your Healthcare

Young adults can stay on their parents’ plans until age 26
There is a Penalty Tax of Health Savings Account withdrawals not used for health care expenses that doubled from 10% to 20%
If you participate in a healthcare flexible spending account at work, your contributions will be capped at $2,500/year, with no contributions for over-the counter medications
What it means for your Business

Small businesses with up to 25 employees, each earning $50,000/year or less, qualified for a new tax credit of up to 35% of the cost of providing health benefits to their employees.

To qualify for the credit, you have to pay at least 50% of the “employee-only” premium amount for your employees’ coverage. You can’t have more than 24 “full-time equivalent” employees, or FTEs. Your average wage can’t be more than $50,000 per year. Oh, and you can’t claim the credit for any premium you pay on your own behalf.

Employers with 250 or more employees must report the aggregate value of the health coverage they provide their employees on Form W2. This reporting is for informational purposes only and does not add anything to anyone’s taxable income

Still to come

Starting in 2014, the maximum credit goes up to 50% of premiums paid. If the credit is more than the business owes, you can carry it back against previous taxes you paid, or carry it forward to offset future taxes

Employers with more than 50 employees must offer health benefits or pay a penalty of up to $2,000 per employee. If they offer coverage that doesn’t meet minimum standards, the penalty could jump to $3,000. (The Obama administration has since postponed this requirement to 2015.)

What it means for your Taxes

If your earned income is above $200,000 – or $250,000 if you file jointly – you’ll pay an extra 0.9% Medicare tax on earned income above those amounts. Given the new marginal tax rates in 2013 “fiscal cliff” legislation, that extra Medicare tax could help push your actual marginal rate well above 40%.

Finally, you’ll pay a 3.8% “Unearned Income Medicare Contribution” on investment income if your AGI is above those same thresholds. “Investment income” is defined as interest, dividends, capital gains, rents, royalties, and annuities. This is the first time investment income has ever been subject to Medicare Tax.

Medical and Dental expenses must exceed 10% of your AGI, unless you or your spouse are 65 or older and not subject to AMT, in which case it stays at 7.5% of AGI until 2016.

Still to come:

2014 brings the most controversial changes. Specifically, this is the year when the “individual mandate” and “employer mandate” were both scheduled to begin:

Most individuals who aren’t covered through their employer will have to maintain “minimum essential coverage” or pay individual penalties. This is the so-called “individual mandate” you’ve heard so much about.
The law says that by 2014, all Americans have to maintain “minimum essential coverage” or face a penalty.
The penalty starts at $95 per adult or $47.50 per child, up to a maximum of $285 per family or 1% of income in 2014. It rises to $695 per adult or $347.50 per child, up to a maximum of $2,085 per family or 2.5% of income in 2016. After 2016, those dollar amounts are indexed for inflation. That’s it.

Now, there are lots of ways you can get that essential coverage.
You can get it from your employer. You can get it from your spouse’s employer. You can buy it on your own in the individual marketplace or on your state’s exchange. You can get it through Medicare, Medicaid, or your state’s Children’s Health Insurance program (CHIP). You can get it through Tricare (active-duty military personnel and veterans). The law doesn’t really care where your coverage comes from as long as you have it.

Every year, your Insurance Company will send you and the IRS a form confirming you have coverage. You’ll have to attach your copy of the form to your Income-Tax Return.

How to Create a Mileage Log

Protecting Your Mileage Deduction

If you are going to claim a deduction for mileage, you must keep track of the number of miles you drive for business. Most people don’t do this and try to figure it out at the end of the year. This is not a good idea. It’s inaccurate and ineffective. Please keep track of your mileage on a regular basis. Daily is best, but you will probably be ok if you do it weekly.

EASIEST WAY: Get a phone app that records the miles you drive and gives you a report at the end of the year. (There are many available.)

I recommend “Track My Trip”. All you do is tap at the start of your trip & tap when you return. You will also need to type in your business purpose.

OLD FASHIONED WAY: Either use pen & paper, or an Excel spreadsheet is ideal because it will calculate your results for you.

Record the following information about each of your trips:

1. Date
2. Where You Went
3. Who You met With, If anyone or business purpose of the trip
4. Number of miles traveled

Larisa’s Story

I started Abundant Returns Tax Service back in 1991 after seeing on TV that Ross Perot, then presidential candidate and CEO of a multi-billion dollar corporation, paid less than $2000 in Personal Income Taxes! I just couldn’t believe it because…I made $35,000 that year & paid more than $4000 in Federal Taxes alone!!!

I paid MORE THAN DOUBLE the taxes a Billionaire paid!!! I was flabbergasted to say the least.

“He’s a billionaire,” I kept saying to myself. “How is it legal for me to pay more taxes than a billionaire?”

I kept tossing it around in my head. I just couldn’t believe it. I worried about how I was going to pay the rent. I struggled to buy a bus pass every week. I had to make “arrangements” every month to pay my utility bills.

My grocery budget was $15/week and I was paying more income taxes than a billionaire? It made absolutely no sense to me. It still makes no sense to me…more than 20 years later!
(If I think about it long enough, I still get mad.)

This was an “a-ha” moment for me—a life lesson that shattered my very sheltered view of reality. I learned two very valuable lessons—
• Life is not fair and
• People can live tax free!

So I got busy.

I took several income tax preparation courses. I read hundreds of books on taxes. I’ve prepared thousands of Tax Returns. I worked for the IRS and a local tax office. I learned about taxes and how to use the tax law to my advantage. I learned how to live “tax free” like billionaires do.

Now I’m ready to share that knowledge with you so you can
“Keep More Money In Your Pocket” too.