Category Archives: Tips

IRS California Wildfires Tax Relief

I feel like almost all of my posts over the past few months have been regarding IRS disaster relief. Here’s one more, from today’s IRS E-News for Tax Professionals.

Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.

Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Oct. 8, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes originally due during this period.

This includes the Jan. 16, 2018 deadline for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected, including the Oct. 31 deadline for quarterly payroll and excise tax returns. Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017 also qualify for the extra time.

In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due after Oct. 8 and before Oct. 23, if the deposits are made by Oct. 23, 2017. Details on available relief can be found on the disaster relief page on IRS.gov.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes firefighters and workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year) or the return for the prior year (2016). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Source: IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File | Internal Revenue Service

Small Business Requirements for the Affordable Care Act

Many small businesses are confused about their requirements under the Affordable Care Act (ACA), popularly known as “Obamacare”. The short answer is, if you have fewer than 50 “full-time equivalent” (FTE) employees, and you don’t offer a health insurance plan, all you have to do is make sure each employee gets a copy of this 2-page letter, written by the Department of Labor.

It’s super-easy — it’s just a template from the Department of Labor that informs employees that:

1) there’s this thing called the Marketplace online where they can buy health insurance;
2) they might be eligible for credits at the Marketplace;
3) if they receive health insurance from their employer, those credits may be reduced; and,
4) they are not currently eligible for health insurance through you as an employer.
The employer needs to fill out page 2 with their company info and double-side print it, making sure all employees get a copy, including each time they bring on someone new.

Kim Buckey, vice president of client services at DirectPath, a Birmingham, Ala.-based employee engagement and health care compliance firm, has noted the following:

“There is no fine or penalty under law for failing to provide the notice, so if an employer simply stopped providing the form, there would be little consequence.”

She explained that the notices are models provided for employers to use, but employers are free to provide the information in another format. Here is technical guidance that explains the content of the health insurance marketplace notice, in case employers want to write their own notice. “Many employers distribute their own version or a highly condensed version of the boilerplate, sometimes as part of an annual legal notices package or brochure.”

Employers, as I mentioned, are not required to offer health insurance to employees until they have 50 FTEs (good calculation worksheet here), but of course they can choose to offer it, voluntarily. There are some guidelines that are essential once an employer decides to do so, and additional information can be found at Healthcare.gov: How the Affordable Care Act affects small businesses.

IRS – Hurricane Maria Puerto Rico Relief

The IRS has announced Tax Relief for Victims of Hurricane Maria in Puerto Rico, similar to the announcements previously made for Texas and Florida hurricane disasters.

From this week’s National Association of Tax Professionals e-newsletter:

The IRS is offering a recap of key tax relief provisions affecting taxpayers who suffered losses resulting from Hurricanes Harvey, Irma and Maria.

In general, the IRS is now providing relief to individuals and businesses anywhere in Florida, Georgia, Puerto Rico and the Virgin Islands, as well as parts of Texas. Because this relief postpones various tax deadlines, individuals and businesses will have until January 31, 2018, to file any returns and pay any taxes due. Those eligible for the extra time include:

  • Individual filers whose tax-filing extension runs out on October 16, 2017. Because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.
  • Business filers, such as calendar-year partnerships, whose extensions ran out on September 15, 2017.
  • Quarterly estimated tax payments due on September 15, 2017, and Jan. 16, 2018.
  • Quarterly payroll and excise tax returns due on October 31, 2017.
  • Calendar-year tax-exempt organizations whose 2016 extensions run out on November 15, 2017.

A variety of other returns, payments and tax-related actions also qualify for additional time. See the disaster relief page on IRS.gov for details on these and other relief provisions the IRS has offered since these hurricanes began hitting in August.

Troubleshooting: Is QuickBooks Online Down?

A common thread pops up on a few of the QB ProAdvisor groups when QBO is having issues and none of us can log in. Sometimes it happens to everyone, sometimes just to some of us, sometimes it’s an isolated incident. Knowing whether or not it’s happening to others can be handy in troubleshooting, so I wanted to share some default “what to do” advice —

  1. clear your cache and cookies — do this for each browser user you have (it’s common especially in Chrome to have multiple “users”);
  2. make sure not to use a bookmarked link to sign in, but rather type qbo.intuit.com in the URL line;
  3. if it still doesn’t work, check out this link to see if others are reporting the same issues: Quickbooks Online down? Current problems and outages

Yesterday the system pretty much went down for everyone for the whole day, but clearing the cache and cookies and typing out the address got most folks back in… by 3 pm the engineers had resolved whatever was wrong and it looks like everyone’s going strong today.

Reconstructing Records After a Natural Disaster

In the wake of recent hurricanes, the IRS has issued a new Fact Sheet — FS-2017-11. It walks through the process of how to calculate Casualty and Disaster Tax Losses, as well as how to reconstruct records after a natural disaster, such as:

  • Tax records
  • Homes and other real estate
  • Vehicles
  • Personal property
  • Business records

AccountingWeb wrote up a nice summary of the fact sheet, but for the details, see the original at the IRS website: Reconstructing Records After a Natural Disaster or Casualty Loss; IRS Provides Tips to Help Taxpayers | Internal Revenue Service.

IRS Finally Offers Secure Messaging

This. Is. Amazing. In a Herculean effort to drag itself into the 21st Century, the IRS has finally implemented a “secure messaging” service. This means that instead of calling to discuss matters and playing phone tag — or snail mailing and faxing files to them — we can finally send messages and files via a new secure IRS e-mail system!

Now, lest you get too excited — from what I can tell so far, there are some serious limitations:

  • You must be INVITED to participate. Your IRS representative must invite you (the client) and you must register. As long as the accountant has a Power of Attorney on-file for that client, he/she (me!) may use it as well. Under “Tax Preparer Options” there is a “Request Access” button.
  • It will be down for maintenance every Friday from 8-11 pm EST.
  • It does not seem to be an actual portal or shared “space”, so we still have what is my biggest issue: I like to submit audit files in an organized format, whereby there is a folder that corresponds to each of the listed requests on the IRS letter — with documents in each folder that provide the various types of support being requested. (For example, a folder for “Revenue” that has copies of sales receipts, POS end-of-day scans, invoices, etc.; and a folder for “Fixed Assets” that has copies of packing slips, vendor invoices, depreciation schedules, etc.) It doesn’t look like this system will allow you to upload an entire folder structure, the way a portal or document-sharing system does. But I haven’t confirmed this yet.

Check it out for yourselves! This is real!
Welcome to Secure Messaging | Internal Revenue Service

IRS – Hurricane Irma Relief

From today’s National Association of Tax Professionals TaxPro e-newsletter, and Accounting Today‘s Tax Practice e-newsletter, some important announcements from the IRS:

NATP – Tax Relief for Victims of Hurricane Irma
Extended filing and payment deadlines

Hurricane Irma victims in parts of Florida have until January 31, 2018, to file certain individual and business tax returns and make certain tax payments, the IRS announced in IR-2017-150.

This includes an additional filing extension for taxpayers with valid extensions to October 16, and businesses with extensions to September 15. This includes the September 15, 2017, and January 16, 2018, deadlines for making quarterly estimated tax payments. The IRS noted, however, that because individual tax payments related to 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected including the October 31deadline for quarterly payroll and excise tax returns. Businesses with extensions also have the additional time including, among others, calendar-year partnerships whose 2016 extensions run out on September 15, 2017 and calendar-year tax-exempt organizations whose 2016 extensions run out on November 15, 2017. The disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866.562.5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016). See Publication 547 for details.

IRS – Hurricane Harvey Relief

From today’s National Association of Tax Professionals TaxPro e-newsletter, and Accounting Today‘s Tax Practice e-newsletter, some important announcements from the IRS:

NATP – Tax Relief for Victims of Hurricane Harvey
Extended filing and payment deadlines

Hurricane Harvey victims in parts of Texas have until January 31, 2018, to file certain individual and business tax returns and make certain tax payments, the IRS announced in IR-2017-135.

This includes an additional filing extension for taxpayers with valid extensions that run out on October 16, and businesses with extensions that run out on September 15. This includes the September 15, 2017 and January 16, 2018deadlines for making quarterly estimated tax payments. The IRS noted, however, that because individual tax payments related to 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866.562.5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016). See Publication 547 for details.

 

Accounting Today – IRS loosens rules for retirement plans to lend money to Hurricane Harvey victims

The Internal Revenue Service granted additional relief to victims of Hurricane Harvey on Wednesday by allowing 401(k)s and other employer-sponsored retirement plans to give loans and hardship distributions to aid them without incurring penalties.

The IRS said 401(k) plan participants, along with employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans, can be eligible for the streamlined loan procedures and liberalized hardship distribution rules. While IRA participants are barred from taking out loans, they’re also eligible to receive distributions under the looser procedures.

Retirement plans can provide relief to employees and some members of their families who live or work in disaster area localities affected by Hurricane Harvey and designated for individual assistance by the Federal Emergency Management Agency. Currently, parts of Texas qualify for individual assistance, but the storm is spreading Wednesday to parts of Louisiana as well, and those areas may also eventually qualify. For a complete list of eligible counties, visit https://www.fema.gov/disasters. To qualify for this relief, hardship withdrawals must be made by Jan. 31, 2018.

Under the IRS relief, a retirement plan can allow a victim of Hurricane Harvey to take a hardship distribution or borrow up to the specified statutory limits from a storm victim’s retirement plan. Someone who lives outside the disaster area can also take out a retirement plan loan or hardship distribution if they want to use the money to help a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.

More details are available in Announcement 2017-11 on the relief to victims of Hurricane Harvey, which caused damage to parts of Texas. It permits easier access to victims’ funds held in workplace retirement plans and in IRAs, for the period beginning Aug. 23, 2017, and ending Jan. 31, 2018. Additional information about other tax relief related to Hurricane Harvey can be found on the IRS disaster relief page.

Import from QuickBooks Desktop to Online — Items That Do Not Convert

Hector Garcia, one of my favorite QuickBooks trainers and a real guru when it comes to both Desktop and Online versions, recently posted a link to this fantastic list of the items that do not import when you convert a file from QBDT to QBO.

A short list of the most common items is here, but there are many more that can mess up an otherwise perfectly good transfer, creating headaches and wasted time for all involved — so I recommend using the master list as a sort of checklist when 1) deciding whether the client may be a good match for conversion (because there are still a lot of features QBO doesn’t yet have that QBDT does); and then, 2) preparing for the conversion itself.

In my opinion, there are a lot of important items on the comprehensive list that are not listed on the “most common” items list, such as:

  • The bank account number and notes are not converted.
  • For accounts where the “detail type” is obvious (for example, Undeposited Funds), the conversion process assigns that detail type. For accounts where it isn’t clear what the detail type should be (the majority of accounts are like this), the conversion process assigns a generic detail type within the type, such as Other Miscellaneous Income which must be edited later. Run the Account Listing report (Reports/All Reports/Accountant Reports) post-conversion to review the Detail Types assigned. Drilling into the report brings you to the edit account window, where you can update the Detail type.
  • The audit trail in QuickBooks Desktop is not converted to QuickBooks Online. This has been an issue for clients of mine before, so make sure not to get rid of the old file, just in case.
  • All the vendors in the QuickBooks Desktop data file are converted to QuickBooks Online but not all of their detail/information converts. The address on the bill payment check is replaced by Vendor address in Vendor list; again, clients have had problems with this — if they’re not expecting it, then all-of-a-sudden, checks are going to the wrong place.
  • Only Profit & Loss budget types convert to QuickBooks Online — no Balance Sheet budgets, which can put you out of compliance with some grants and agencies that require it.
  • Your QuickBooks Desktop closing date is converted, but the password is not. This is a big one.
  • After conversion, the Exceptions to Closing Date report in QuickBooks Online will no longer show the exceptions that you had accumulated — only new exceptions will be tracked.
  • QuickBooks Online does not support custom fields on customers, vendors, employees, or items.
  • Not all of the customer detail and job information for costing purposes is converted.
  • Attachments on transactions are not converted. Another big one for some clients — make sure you keep the final Desktop file for future reference.
  • QuickBooks Online currently doesn’t have group items.  If you have group items in your Desktop data file, they are not converted to the products & services list.
  • If you have accounts, customers or vendors marked as inactive in your QuickBooks Desktop data file that have an open balance, they are converted to QuickBooks Online Plus as regular, “active” elements.
  • You can’t export inventory from QuickBooks for Mac. Only QuickBooks Desktop for Windows can export inventory to QuickBooks Online.
  • QuickBooks Online Plus tracks inventory using the First-in-First-out (FIFO) method in accrual only. When you select the option to import inventory it will ask you to choose a date, which we will use to recalculate your inventory based on FIFO calculations (Desktop uses average cost). Again, this can be a huge adjustment for some (even though it’s a more acceptable method of costing from an accounting perspective).
  • You can’t make a journal entry billable in QuickBooks Online.
  • None of the memorized reports are converted.
  • You have to un-link and re-link your existing QuickBooks Merchant Service account to QuickBooks Online.
  • User names and passwords from Quickbooks Desktop do not convert.  Existing users do not automatically have access to QuickBooks Online, instead they will need to be re-invited from QuickBooks Online to gain access. Furthermore, QuickBooks Online has access permissions that limit the user’s ability to see and use different parts of the application but they don’t allow you to control access at the level of transactions like Desktop can.
  • Imported Purchase Orders that are closed will not be linked to their corresponding Bill.
  • Past reconciliation reports are not converted to QuickBooks Online — yet another reason to keep a final copy of the old Desktop file.
  • If you import to anything other than a Plus account you will not be able to see your recurring transactions; they’re there… but you can’t see them unless you upgrade to “Plus”. (Though for some reason, if you’re importing to QBO Simple Start, you actually have to delete all recurring transactions and templates from within Quickbooks Desktop before importing to avoid errors after importing.)
  • Reminders do not convert to QuickBooks Online.
  • Although your Accrual Basis reports will match in both products, your Cash Basis reports may not match (search the article for this phrase for examples) — it’s best practice to run an “all dates” accrual report in Desktop before converting and then the same report in QBO afterwards to make sure things are all good.
  • After the conversion, there will be at least two sales tax payable accounts on the Chart of Accounts: one for each old Sales Tax Payable account from QuickBooks Desktop and one for each Sales Tax Agency Payable account in the new QuickBooks Online (set up automatically for each jurisdiction during the conversion). Moving forward, QuickBooks Online will only use the new Sales Tax Agency Payable account, and all sales tax will be managed from the Sales Tax Center.

There’s more, but those are the ones I’ve found can cause issues most often. Make sure to read the whole list — What doesn’t come over during an import from QuickBooks Desktop … – QuickBooks Learn & Support — and consider using it as a checklist before and after conversion.

IDES IL Unemployment “TaxNet” Switches to IDOR MyTaxIllinois

Happy news! If you have ever gone through the tiring process of registering a new business with both the Illinois Department of Revenue and the Illinois Department of Employment Security, then you know what this fabulous step toward modernization means. Starting September 11, IDES processes (registering, filing returns and paying taxes and fees) will all be available as part of the IDOR MyTaxIllinois website instead of the old IDES “TaxNet”.

The old IDES process was long and cumbersome, involving many steps, whereas some years ago IDOR simplified their processes using this excellent website. It allows you to see all your tax correspondence and account balances online, you receive confirmation that reports and payments have been received/processed, and you can access copies of tax letters and correspondence. (It’s especially excellent for accountant relationships with clients who may have challenges opening or losing mail.)

Soon, IDES will also offer these features on the MyTaxIllinois website:

  • Request refunds online
  • Submit tax appeals electronically
  • Request penalty/interest waivers
  • Set up a deferred payment plan
  • Submit Power of Attorney relationships
  • Report zero quarterly wages
  • View your rates

For those of you who have struggled with their system before, and for those who know how well the MyTaxIllinois system is organized by comparison — then you’re aware of what a treat this is. For the rest of you… trust me.

If you already have a MyTax Illinois account, starting in September 2017, you will have access to your unemployment insurance account to begin your third quarter processing. If you have any questions, please contact the IDES Employer Hotline at 1-800-247-4984.

Source: IDES – Unemployment_Taxes_and_Reporting