The IRS Private Debt Collection Program: What You Need To Know

The Internal Revenue Service has initiated a Private Debt Collection program.  They have selected four contractors to implement this program.

What this means to you – if you have an outstanding debt with the IRS and you are selected as part of this program, the IRS WILL ALWAYS notify you regarding the transfer of your account to a private collection agency.

The four groups selected for this program are:

  • CBE Group of Cedar Falls, Iowa,
    P.O. Box 2217
    Waterloo, IA 50704
    1-800-910-5837
  • Conserve of Fairport, NY
    P.O. Box 307
    Fairport, NY 14450-0307
    1-844-853-4875
  • Performant of Livermore, CA
    P.O. Box 9045
    Pleasanton CA 94566-9045
    1-844-807-9367
  • Pioneer of Horseheads, NY
    PO Box 500
    Horseheads, NY 14845
    1-800-448-3531

These four are the ONLY firms authorized to represent the IRS.  Also, the Internal Revenue Service will never assign your account to more than one of these firms.

You can also check your IRS account balance online at IRS.gov/balancedue.

If you have questions about this program feel free to give us a call or fill out our contact form.

Is Credit Card Interest Tax Deductible for a Business?

Is Credit Card Interest Tax Deductible for a Business?

If you are a small business owner, it is likely that you dread tax time. The tax code is highly complex when it comes to your business expenses and the tax deductions that your business can take. It is important that you don’t miss available deductions because out of every $100 in deductions, your business will save an average of $30. A very substantial expense for most small businesses is the credit card interest that they pay each month. There are times when the law allows you to take a deduction for the interest that your business pays and situations in which a deduction is not allowed.

When credit card interest can be deducted

The interest that is business-related is deductible on your taxes. For example, the interest that you pay on credit card debts and business loans can be deducted if the incurred debts are related to the activities of your business. You are even allowed to deduct the interest that you pay for cash advances if the money was then used for your business. You are only allowed to take a deduction for interest in the year in which your business paid it. The interest that might be deductible might include ATM fees, late fees, finance charges, annual fees, foreign transaction fees and others. In order to take advantage of these deductions, you will need to save all of the relevant credit card statements and receipts to make filing your taxes easier.

When can businesses not deduct credit card interest?

Before the Tax Reform Act was passed in 1986, taking a credit card interest deduction was fairly straightforward. All interest that was paid was deductible even if it was associated with non-business expenses and personal credit cards. Since the law was passed, you are no longer able to deduct interest on your personal debts in order to reduce your taxable income. If you use a personal credit card to pay for business expenses, you will need to keep thorough records and to review them carefully to figure out which expenses were business-related and which ones were not. When you do this, you will then need to calculate the percentage of your total interest payments that you can allocate to your business so that you can take the appropriate deductions.

Steps to make the process easier

There are several steps that you can implement to make filing your returns easier. You can start by maintaining a credit card for your business that is separate from your personal credit cards. This will not only make it easier for you to calculate the interest that you spent for your business-related purposes, it will also allow you to have access to the benefits and rewards that are offered by many business cards. A business credit card may also help your business to build an excellent credit history so that you can secure lower interest rates in the future.

Claiming deductions for your business expenses is important for small business owners. If you do not maximize the deductions that you can take, you are simply losing money. To learn more about your business’s taxes and the deductions that you might take, contact us today by leaving your information in our contact form.

What You Need To Know About Tax Planning For Small Business

What You Need To Know About Tax Planning For Small Business

Some small business owners make the mistake of failing to think about their taxes until the time for filing is drawing close. Instead, tax planning should be a continuing process. At Thomas M. Ditullio Accounting, our team of professionals understands the importance of tax planning, and we work closely with our clients to help them to save money when they file.

What is tax planning for small businesses?

When you engage in tax planning, it involves the process of considering your different options in order to inform you about how you should conduct your transactions in such a way that you might be able to reduce or eliminate your tax liability. Reviewing your expenses and income each month and meeting with your tax professional at Thomas M. Ditullio Accounting at least quarterly might help you to analyze how to take advantage of the deductions, credits and tax provisions that are available to you. It is important for you to understand that using the provisions fraudulently in order to reduce your business’s tax liabilities is considered to be illegal tax evasion. Tax planning is instead a legal way to help you to reduce the tax burden that your business might otherwise face.

Factors that the IRS may consider when it is determining fraud

There are four primary areas that the IRS tends to focus on in order to determine whether or not a business has committed fraud, these include:

It is very important that you avoid these improper tax strategies.

Strategies for small business tax planning

There are numerous tax strategies that you may have available to you. Your tax planning strategy should be based on its structure in order to accomplish some of the following goals:

  • Getting a lower tax rate
  • Reducing your taxable income
  • Claiming the available credits and deductions
  • Controlling when taxes have to be paid
  • Minimizing the effect of the alternative minimum tax
  • Avoiding tax errors

It can be very difficult to come up with exact estimates, but you are likely already projecting your revenues, cash flow and income for your general planning purposes. The more accurate that your estimates are, the likelier that your tax planning efforts will be successful.

Business entertainment expenses

One legitimate type of deduction that may be available to your business is a deduction for business entertainment expenses. As long as you follow the specific guidelines, these expenses may help you to lower your tax bill. To qualify, the expense must have been incurred either after, during or before a business discussion. The location must be one that is reasonably conducive for business. For example, while a quiet restaurant may pass muster, it is unlikely that a dance club will. Locations that are generally considered to be too distracting include sporting events, hunting trips, skiing trips and theaters. You may take up to 50 percent of your entertainment expenses as a deduction, but you must have good records to support them. The purpose of the meeting must have been arranged for business purposes.

Automobile deductions for businesses

Certain deductions for maintenance and operating costs for your vehicle may be deductible as business expenses if you use it to conduct business. You may be able to deduct the mileage expenses that are allowed by the IRS. The amounts change from year to year, so you will want to talk about the amounts with your tax professional at Tom Ditullio Accounting.

You might be able to maximize your available vehicle deductions if you own two vehicles by including both in your deductions. Your business miles that are driven are determined by your business use. To figure that out, you divide the business miles that were driven by the total miles for each vehicle. This can result in substantial deductions. It is very important that you keep good records, including mileage logs and receipts.

Time spent working at home

Understanding the home office deduction is important, but it is also complicated. If you have a home office, you will need to understand how to conduct business at home in a manner that will allow you to take the deduction. In order to deduct home office space, it must be located in a room that is not used for other purposes. You should also make its purpose stand out by displaying your business phone number and business address on business cards, having your business visitors sign a guest book when they visit and keeping a time and work activity log. You should also keep copies of all of your paid invoice and your receipts. This helps by making it significantly easier to figure out the percentages that should be allocated to your business use of your home.

Under Section 179 of the tax code, you can take immediate deductions for qualified business property that you purchase up to a certain limit. The equipment may be used or new, and it includes some software expenses. Even if you do not qualify for the home office deduction, there may be some deductions that you can still take. Meeting with your tax professional can help you to figure out what deductions might be available to you. To learn more about tax planning, contact Thomas M. Ditullio Accounting today by calling us at 856.228.2205.

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How To Amend Your Tax Return To Fix A Filing Mistake

How To Amend Your Tax Return To Fix A Filing Mistake

If you discover that you made an error on a tax return after you have already filed it, you may be very worried about what will happen. The Internal Revenue Service recognizes that people sometimes make mistakes on their tax returns, and the agency provides a form that you can use to amend your return in order to make corrections. It is important for you to understand when you should use 1040X to amend your return and when it is unnecessary. Not all mistakes need to be corrected.

Situations when you should file a 1040X

There are several types of errors that should lead you to amend your tax return. If you purposely reported incorrect information in order to try to avoid paying taxes, it is important for you to amend your return in order to correct it. The IRS is unlikely to prosecute you for the original error so long as you amend your return with the correct information. You should also do so as soon as possible to limit the penalties and interest that you might otherwise have to pay.

Other situations which should prompt you to file an amended return include such things as correcting the dependents that you claimed if you were confused about whether or not another person qualified as your dependent or changing your filing status. For instance, if you filed as single after getting a divorce but should have filed as single, head-of-household, that should prompt an amended return because you may have been owed a larger refund than what you received. If you receive a 1099 form after you have filed your return, you should amend it to add the information from the 1099 that you innocently left out.

Deadlines are important

You can only file a 1040X within three years of when you originally filed your return. You also are not able to change your status from married filing separately to a joint return after you have filed your taxes. It is important that you file your amended return as soon as possible so that penalties and interest do not continue to accrue and so that you can receive any refunds that you might be owed.

It is a good idea to get help with your small business tax returns from a professional at Thomas M. Ditullio Accounting. With our help, you can avoid the common mistakes that can lead to problems. Call us today to schedule an appointment and to learn about how we can help you.

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