RedGearTech Blog

Top 5 Strategies to Survive Tax Season

If you’re a CPA or tax preparer, the months from January to April are undoubtedly the longest of the year.  Twelve hour days, impatient clients, and crazy workloads can really take their toll. With that in mind, whether it’s your first tax season or your twenty-first, here are a few strategies that can help you survive the demands on your time and talents:

1. Have a plan, but be flexible – You can take some of the stress off your plate by making a plan for each workday. Set achievable goals for yourself for what you’d like to accomplish during the course of the day and then work on the most important items first. Be sure to leave room in your plan for dealing with the unexpected, like an urgent request from a client.
2. Get tax software that works with you – Getting the right tax software can really make your job a lot easier. Look for tax software that allows you to work quickly and efficiently and takes the stress out of some of the tedious tasks that you are faced with.
3. Schedule time for communication – Answering phone calls, emails, and text messages can eat into a large portion of your day. To keep things under control, it’s best to set up certain limits on your communication time. Schedule one or several times in the day to respond to correspondence and then put your phone on silent or tell your receptionist that you do not wish to be disturbed.
4. Get a jump on the day – If you’re working for more than 10 hours a day, you may be missing out on family time in the evenings. Try getting to the office earlier to have more time after work to visit with your children or participate in recreational activities. The morning is a great time to work, too, since there is little likelihood of your being disturbed.
5. Maintain a healthy lifestyle outside the office – Being in an office for long periods of time can eventually wreak havoc on both your mind and body. Keep yourself healthy by exercising regularly, eating right, and drinking plenty of water in order to keep your mind sharp and focused. Habits like these will help you feel better outside of your tax preparation duties and be able to concentrate more when you are working.

While the workload during tax season is challenging, it is doable. The most important thing to remember about this time of year is that you will get through it.

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CASH ADVANCE—THE BEST ALTERNATIVE FOR IRS DELAYS

Due to recent notices from the IRS related to the delay in IRS funding, NOW is the perfect time to offer your clients the Cash Advance product. Even though we can’t speculate when IRS will fund the money, taxpayers could still receive a Cash Advance in as little as 15 minutes.

Offer your client’s the best alternative in the market today – Cash Advance!

NOTE: Cash Advance is no longer accepting enrollment. Check out this product and be sure to enroll next year.

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TAXWORKS & ARKWORKS PAPERLESS INTEGRATION

Are you wondering what to do with all the client documents now that tax season has begun? Well if you purchased a TaxWorks Gold or Platinum package you received at least one copy of ArkWorks which integrates directly with TaxWorks.  Did you know the CPA Technology Advisor gave ArkWorks a 5 star rating for a third year in a row?  ArkWorks received 5 Stars for the Core Product Functions and Features as well as Integration. It was awarded 4.5 Stars for Advanced Functionality, and received a 5.0 Star Overall rating.

Integration is vitally important to tax professionals as you process clients and create reference documents for future tax returns.  Importing client documents from TaxWorks into ArkWorks is an easy process and makes archiving and searching efficient and paperless.   With ArkWorks store all client data in one place for easy access. Just set up a Tax Integration cabinet. Simple step by step instructions are outlined in ArkWorks’ Knowledge Base.

No need to change the organization of your office filing system, just change where it is stored.  Instead of filing paper in a cabinet, store an image in ArkWorks and reproduce your existing file structure using ArkWorks’ customizable cabinet templates.  You may have several documents already in an electronic format; these may be converted to a PDF or stored in their native format.  A simple drag and drop of multiple files into ArkWorks is quick and easy or you may also save each file individually.

Additional ArkWorks features include: 

•     Add notes to files
•   Check in/Check out to edit documents
•   Customizable filing system
•   Document search engine
•   Extensive audit trails
•   Full security – four predefined levels and an Administrator group.
•   PDF document annotations and highlights
•   Retention management

For detailed instructions on ArkWorks features, visit the ArkWorks Knowledge Base.

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GOT A QUESTION? CHECK OUT SOME TOOLS IN YOUR SOFTWARE

Did you know you can find quick answers to many of your questions by using simple buttons within the program?

Answers to many of your questions reside in government publications and instructions which are easily accessed through a self-help tool included in the tax software.  Press the F1 key,  or from the ‘Help’ menu select ‘Government Instructions’, to view or search federal and state instructions; including IRS Package X and State booklets.

For other issues, you may want to try our online knowledge base at support.redgeartech.com or from the ‘Help’ menu select ‘Online Knowledge Base’. You’ll find answers to depreciation questions, EIC, and an array of items related to federal and state forms.

Also, for system specific questions refer to our new FAQs which can be accessed at the bottom of every input screen.

We think you’ll find these tips to be a great time saver.

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Tax Law Changes for 2011 Federal Tax Returns

The IRS has published some 2011 Federal Tax Law Changes. View the article here: http://www.irs.gov/newsroom/article/0,,id=254023,00.html

We have organized this information in a pdf chart that you can download and print. Access the chart here: http://www.taxworks.com/cmsdocuments/2011_tax_chart.pdf

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IRS UNVEILS NEW SMARTPHONE APP

WASHINGTON — The Internal Revenue Service announced the availability of IRS2Go 2.0, an expanded version of its smartphone application designed to provide taxpayers easier access to practical tools and information.

The new app, available on the Apple and Android platforms, adds a new YouTube feature, news feed and tax transcript service in addition to existing tools, such as checking on the status of a tax refund.

“The new smartphone app provides an easy way for people to get helpful information about their taxes,” said IRS Commissioner Doug Shulman. “IRS2Go reflects a wider commitment at the IRS to find innovative ways to serve taxpayers in a rapidly changing world.”

The IRS released the first version of IRS2Go in 2011, and had more than 350,000 downloads. The phone app offers taxpayers a number of safe and secure ways to access information and keep current on practical tax information. The 2.0 version of the phone app includes three new tools:

• Watch Us. People can view IRS YouTube videos on their smartphones. The videos provide short, informative features on a variety of tax topics. The channel ranks as the fourth most viewed channel among more than 125 federal government YouTube channels. IRS also has YouTube channels available in multilingual and American Sign Language.
• Get the Latest News. With this tool, users can have the latest IRS news releases delivered to their phones as it becomes available.
• Get My Tax Record. Taxpayers can now order their tax return transcript from the IRS2Go app. The transcript will be delivered via the U.S. Postal Service to their address of record.

The free IRS2Go app will continue giving taxpayers access to the tools offered last year:

• Get Your Refund Status. Taxpayers can check the status of their federal tax refund through the phone app with a few basic pieces of information. An updated refund status is available about three days after the IRS acknowledges receipt of an e-filed return, or four weeks after mailing a paper return.
• Get Tax Updates. Phone app users enter their e-mail address to automatically receive simple, straightforward tips and reminders to help with tax planning and preparation. Tax Tips are issued daily during the filing season and periodically throughout the rest of the year.
• Follow the IRS. Taxpayers can sign up to follow the IRS Twitter newsfeed, @IRSnews, which provides easy-to-use information, including updates on tax law changes and important IRS programs.

Apple users can update or download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app.

For more information on IRS2Go visit http://www.irs.gov/newsroom/article/0,,id=254080,00.html?portlet=108. Find information on other products and social media channels by visiting www.IRS.gov.

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FIRST-TIME HOME-BUYER LOOK-UP TOOL

There is a new Account Look-Up tool on the IRS website that taxpayers can use to determine their annual First-Time Homebuyer Credit repayment amount to ensure the total amount has been repaid. Taxpayers must enter either their SSN or ITIN, birth date, and address to access the tool. We have also included a handy link within the tax software on the Form 5405 page 1 input screen.

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FEDERAL FORM 3800 REVAMPED

The federal Form 3800, General Business Credit, has changed significantly for the 2011 filing season.

The General Business Credit is comprised of several specific business credits, including the Low-Income Housing Credit, the Biodiesel and Renewable Diesel Fuels Credit, the Indian Employment Credit, and the Energy Efficient Home Credit to name a few. The specific credit amounts are combined into one general business credit to determine the specific credit’s limitation for the current tax year. Form 3800 is used to report carryforward credit amounts from prior years as well as any current year credit totals. The general credit is subtracted directly from the tax, and may typically be carried back one year and forward twenty years.

In prior years, Form 3800 consisted of two parts, with Part I, lines 1a through 1bb detailing the specific business credits included on the general form. The 2011 version is comprised of three parts with the specific business credits summarized on lines 1a through 1bb of Part III. Additionally, Part I has been renamed to Current Year Credit for Credits Not Allowed Against Tentative Minimum Tax (TMT).

The carryover amounts and passive activity limit for all general business credits are to be reported on Form 3800. Part III was added to encapsulate all the general business and eligible small business credits that are reported on Form 3800. For 2011, the carryover amounts must be tied to a specific business credit from Part III. The employer identification number (EIN) of the pass-through entity must also be included in Part III if the reported credit is from a pass-through entity. If more than one pass-through entity provided the same credit, multiple Forms 3800, page 3 will generate because only one EIN is allowed per credit per form.

In addition to the aesthetic changes, the way the form works has also been redesigned. For 2011, Part III must be completed before Parts I and II. In TaxWorks, there are no longer specific entry fields on the Form 3800 input screen. All entries must be made on each specific credit screen. After the entries have been made for a specific business credit, entries should be made in the allocation grid. This grid is for assigning the current year credit that originates on the specific business form as well as for allocating pass-through amounts (from Schedules K-1) and prior year carryovers. Once these amounts have been entered, they carry to Form 3800, Part III, and are displayed on the corresponding credit line. If the credits are not allocated in the grid, the credit type will generate as Box A, General Business Credit from a Non-Passive Activity.

For more information on Form 3800, refer to the form instructions at http://www.irs.gov/pub/irs-pdf/i3800.pdf.

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NEW TOOL AVAILABLE TO HELP TAXPAYERS WHO HAVE TO REPAY THEIR FIRST-TIME HOMEBUYER CREDIT

The IRS has a tool to help people who have to repay their First-Time Homebuyer Credit. Reminder letters will no longer be mailed to taxpayers who have to repay the credit but you can now use an online lookup tool on the IRS website to check your repayment obligation. The following four tips will help you look up information on your First-Time Homebuyer Credit:

1. Who needs to repay the credit? If you bought a home in 2008 and claimed the First-Time Homebuyer Credit, the credit is similar to a no-interest loan and must be repaid in 15 equal annual installments that began with your 2010 return. Also, anyone who sold their home, or stopped using it as their main home, may have to repay the entire credit whether their home was purchased in 2008, 2009 or 2010.

2. Information needed to access the tool The First-Time Homebuyer Credit Tool will provide critical account information to help you report your repayment obligation on your tax return. To access the tool you will need: your Social Security number, date of birth and complete address. If you file a joint return, you’ll only be able to access your portion of the First-Time Homebuyer Credit account information.

3. What the tool provides The tool will show the original amount of the credit, annual repayment amounts, total amount paid and the total balance left to be paid. You will be able to print your account page to share with your tax preparer and keep for your records.

4. How to repay the credit To repay the First-Time Homebuyer Credit, add the amount you have to repay to any other tax you owe on your federal tax return. This could result in an additional tax owed or a reduced refund. To repay the credit, you report the repayment on line 59b on Form 1040, U.S. Individual Income Tax Return. If you make an installment payment, you do not need to attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, to your tax return. However, if you are repaying the credit because the home stopped being your main home, you must attach Form 5405.

You can access the First-Time Homebuyer Credit Lookup Tool, 24 hours a day, seven days a week, visit the IRS.gov website.

Links:
• First Time Homebuyer Credit Account Look-up
• Form 5405, First-Time Homebuyer Credit and Repayment of the Credit and instructions

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TAX TIPS FOR THE SELF-EMPLOYED

There are many benefits that come from being your own boss. If you work for yourself, as an independent contractor, or you carry on a trade or business as a sole proprietor, you are generally considered to be self-employed.

Here are six key points the IRS would like you to know about self-employment and self- employment taxes:

1. Self-employment can include work in addition to your regular full-time business activities, such as part-time work you do at home or in addition to your regular job.

2. If you are self-employed you generally have to pay self-employment tax as well as income tax. Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. You figure self-employment tax using a Form 1040 Schedule SE. Also, you can deduct half of your self-employment tax in figuring your adjusted gross income.

3. You file an IRS Schedule C, Profit or Loss from Business, or C-EZ, Net Profit from Business, with your Form 1040.

4. If you are self-employed you may have to make estimated tax payments. This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages. Estimated tax is the method used to pay tax on income that is not subject to withholding. If you fail to make quarterly payments you may be penalized for underpayment at the end of the tax year.

5. You can deduct the costs of running your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year.

6. To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary.

For more information see the Self-employment Tax Center, IRS Publication 334, Tax Guide for Small Business, IRS Publication 535, Business Expenses and Publication 505, Tax Withholding and Estimated Tax, available at www.irs.gov or call the IRS forms and publications order line at 800-TAX-FORM (800-829-3676).

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