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Whether you're a long time technophile or newly computer literate, your use of technology can affect your income tax return. Here are virtual transactions that can have taxable consequences.
* Proceeds from sales of goods and services on Internet marketplaces can be taxable. That's true whether you're a hobbyist or running a business online. Depending on your level of activity, tax rules may limit your deductions. * Receipts from crowdfunding - where you raise money from others to fund a project - may be taxable income. You probably think of the money as a gift. But when the people providing the funds get something in exchange, such as a reward for participating, the amounts you receive can be considered income from a sale. Keep track of expenses related to the project and document how you spend the money.
* Payments you receive in the form of virtual currency for goods and services are includible in your gross income at fair market value. Other transactions involving virtual currency, such as the sale or exchange of the currency, can result in taxable gains or losses. Under guidance issued in 2014, the IRS treats virtual currency as property. * Money received from listing your home with sites offering temporary or short-term lodging is generally reportable as rental income. The tax impact can vary based on the length and frequency of the rental activity.
Give me a call. I'll help you sort out the real-world consequences of virtual transactions. |
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Final IRS rules known as the "repair regulations" are effective for your 2014 tax return. The rules clarify which costs should be capitalized and which can be expensed when your business buys, makes, maintains, or improves assets.
Here are three ways your business can be affected. 1. Accounting policies. You'll need to update your accounting policies to reflect how you treat expenses for repairs, materials, and supplies, and the acquisition of assets. Having a written policy in place will help keep you in compliance with the rules. 2. Elections. The final regulations include six elections. You'll want to review them to learn if they are beneficial to you. For example, by choosing the "de minimis safe harbor election," you can opt to expense the cost of property below a specific dollar amount.
3. Form 3115. You may want to file Form 3115, Application for Change in Accounting Method, with your 2014 federal income tax return to revise certain decisions you made regarding the treatment of tangible property in prior years. Alternatively, under simplified rules recently issued by the IRS, certain small businesses have the option of applying the repair regulations to 2014 and future years without filing Form 3115. The final repair regulations will affect almost every business. Please schedule an appointment so I can help you determine how to apply the rules.
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One form of tax identity theft involves someone stealing your social security number and filing a false return in order to get your tax refund. The problem is huge and growing worse each year. According to the annual report issued by the National Taxpayer Advocate in January, the IRS received approximately 730,000 cases of identity theft in 2014.
How can you protect yourself? * Shred extraneous or no-longer-needed documents that show your personal financial information. * Monitor credit activity by requesting a free report from the three main credit agencies for everyone in your household, including your children. Even if your kids are too young to access credit, they're required to have a social security number for tax purposes. You want to keep that number safe.
* Protect copies of prior year tax returns. Use passwords for electronic files and secure locked cabinets for hard copy paper forms. |
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Tax Tip of the Week: Are you up to date on the "repair" regulation that went into effect in Janary of 2014? If you need help in how these changes effect your business, give me a call - after tax season!
Business Tip of the Month: Will getting a business loan put you on track to taking your business to the next level? Be prepared when applying for a business loan. Check out this article for some good tips Financial Tip of the Month: Do you need to consolidate your debt and get it paid off as soon as possible? Are you enticed by those "no fee for transfer" credit card deals? Check out other options before committing to a deal that may have hidden costs. And think about changing your spending habits!
Fraud Alert: Choosing a nursing home is stressful enough but when you have to consider the different ways your loved one can be scammed, it's an added stress. Check out this article for things to be aware of when checking out nursing homes. |
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Let me know if I can help you with any Quickbooks problems.
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https://www.facebook.com/pages/Linda-L-Heineman-CPA/266124360085715?ref=tn_tnmn
Sincerely,
Linda Heineman
Linda L. Heineman, CPA
email:
linda@llhcpa.com
phone:
626-577-0979
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