We are very excited to announce that Pronto Income Tax of California, Inc. will be giving a presentation called "Tax Advice for Entreprenuers," at the LAX Coastal Area Chamber of Commerce on March 10 at 8am.
The presentation will offer:
Three Tax Tips for Entrepreneurs / Business Owners
1. Know Your Way Around a Schedule C
2. Keep Receipts for Business Expenses
3. Get Professional Tax Help But Don't Overpay
Three Tax Tricks for Entrepreneurs / Business Owners
1. The Home Office Deduction
2. Business Meals
3. Business Travel, With a Vacation on the Side
Three Tax Traps for Entreprenuers / Business Owners
1. Not Filing Taxes
2. Persistently Underreporting Income
3. Not Planning to Pay Income Taxes
This presentation will be given by Andy Frye, with help from Emilio Canedo and Cynthia Fuentes -- the West L.A. crew!
Are you running your own business or thinking about getting a business going? Do you have tax questions?
Attend this FREE SEMINAR on March 10. Email if you want a ticket and we will hook you up. This is a FREE SEMINAR that can SAVE YOU BIG MONEY if you are an entrepreneur / business owner. Email Andy for details.
PRONTO BLOG LIVE FOR FEBRUARY 18, 2011
We had a client come into our new Culver City area/Marina Del Rey area/Westside Pronto location the other day, he was a worker, he worked for a trendy, influential grocery chain, he had children with his girlfriend and both the children and the girlfriend and the worker lived in the same home.
At first, we did his taxes filing single, he made about $32,000 and he was getting about $1,100 back, much of that refund due to the Making Work Pay Credit. He came out oweing about $250 to the State of California.
I (Andy) heard him complaining about how many bills he paid and how he always got screwed on the taxes because his girlfriend claims the kids, even though she works only about one or two days per week. Obviously the girlfriend, as the mother of the children, wants the Earned Income Credit and the Child Tax Credit.
But what about Head of Household, for the worker, for the father of the children who lives in the home and pays more than 50 percent of the bills of the house such as rent, utilities, and food. In fact this gentleman averred that he paid all the bills.
We then made the decision to switch the filing status to Head of Household--but using the child only for the purposes of claiming the Head of Household filing status, not claiming the child as a dependent nor for the Earned Income Credit.
This way, the mother would still get her maximum refund and would be in no way affected by the father being able to claim Head of Household.
We then proceeded to save this man approximately $1,200 in income taxes, between federal and state, by filing him as Head of Household for 2010.
Just make sure whenever you are claiming Head of Household, your claim passes the so-called "smell test." For example, it is always a GLARING RED FLAG when multiple people claim Head of Household using the same address.
One of the more troubling aspects of tax season is the outrageous number of trees that are killed in the process of U.S. taxpayers complying with their tax reporting obligations. As a tax preparation company, there is a certain amount of guilt that comes with printing so many thousands upon thousands of documents per year.
Not only that, all that paper, all those printers, the ink, the toner--stuff is expensive!
That's why this year we at Pronto have been making a concerted effort to "go green" in a way that does not lessen the quality of service we offer to our clients.
Here are a few of the ways we are going green at Pronto:
-- Scanning and emailing documents instead of faxing
-- Emailing PDF files of client copies when the client does not need a paper hard copy
-- Recyclying shredded paper instead of throwing it in the regular trash
These are small steps but they are a start.
It is not easy to go green as a tax company because there are security concerns that we must be aware of and there are steps that we must take in order to protect client privacy. For example, one should never email a client copy without verifying that the client wants to be emailed a copy--many clients do not want their documents "floating around in cyberspace," even if the document is going directly to their email inbox, many clients do not want that.
Nevertheless, there is a clear trend among many younger tax clients towards less paper-intensive ways of handling tax documents.
Over the next few years, we are planning to focus and invest heavily into "digitizing" many of the tax documents that clients need. This way, for instance if you need a copy of your W-2 during the year, we will have a digital copy that we can send your way.
Does it matter to you that Pronto is making efforts to go green, or it's not important to you either way?
If being environmentally-conscious is important to you, what else can we do to go green? We are always open to ideas!
One potentially huge change in the income tax code that has gone relatively unnoticed (because it affects a relatively small number of Americans) is the change in the Adoption Credit from a non-refundable credit to a refundable credit. This is a big deal for those who qualify because the Adoption Credit is large at a max of $13,170 for tax year 2010.
A non-refundable tax credit, remember, means that the credit can only reduce your income tax to zero. Since 49 percent of Americans paid no federal income tax in 2009 according to IRS statistics, non-refundable credits often don't result in tax benefit, because the taxpayer's income tax is already at zero.
A refundable tax credit, by contrast, can actually be "paid out" in the taxpayer's tax refund--even if the taxpayer's tax paid amount is zero. For example, the Earned Income Tax Credit is a fully refundable tax credit, which means that the credit will be paid regardless of the taxpayer's tax liability.
This difference between a non-refundable tax credit and a refundable tax credit may seem "purely academic"...until you experience it first hand, then it is very real and you may become very upset if your tax is already at zero, so you don't receive the full benefit of a tax credit you were anticipating.
People who adopt children have been in this position for years. They think, when they are going through the adoption process, that the various costs they are incurring will be refunded when they do their taxes, through the Adoption Credit, filed on Form 8839.
But then when the time came to claim the credit, the credit was often limited due to the limited tax liability of the taxpayer. In other words, if your tax was only $545, your Adoption Credit was only $545--and you thought you were going to get the full $10,000 that you spent on the adoption process!
But now, thanks to the new health care law, the Adoption Credit is fully refundable.
We saw this recently with a taxpayer who adopted a special needs child in 2010. This woman received a $13,170 Adoption Credit in her 2010 refund.
This tax change to the Adoption Credit is exciting news for anyone who has adopted or is thinking about adopting a child.
And not only that, you are doing something great for a child by adopting!