100% U.S. based affordable Finance and Accounting Outsourcing (FAO) Services

ABA Tax Accounting Finance and Accounting Outsourcing Services
ABA Tax Accounting Finance & Accounting Outsourcing provides companies with high performance within finance. Outsourcing finance and accounting presents a series of unique challenges that require expertise and sophisticated technology. The competitive advantage in every industry goes to those financial managers who strategically leverage lower costs and streamline their business processes. Equally, this must be balanced with ensuring compliance with GAAP, IFRS and the Sarbanes-Oxley Act.

The task of the Chief Finance Officer and other finance executives has changed drastically with the constant effort companies are employing, seeking to align company objectives with finances. Aside from fulfilling the tasks expected of CFO’s, controllers and finance executives, they are also being expected to contribute to the enhancement of the company, by driving down costs while improving efficiency.

By outsourcing certain finance and accounting functions your company can gain the necessary room for innovation that you need in order to cut on costs, while improving internal controls, and thus driving a transformation of your finance and accounting operations. ABA Tax Accounting is ready, willing and able to assist you in performing finance and accounting services which include:
• General Accounting and Bookkeeping
• Accounts Payable
• Accounts Receivable
• Tax Return Preparation Service
• Outsourced Staffing Service

You would realize a range of benefits by outsourcing your finance and accounting outsourcing needs with ABA Tax Accounting. We understand that your requirements are unique, and we work with you to ensure our solutions achieve your business objectives.

General Accounting and Bookkeeping Outsourcing
Accurate and timely bookkeeping and maintenance of various day to day accounting books in order to record financial transactions such as sales, purchases, income and payments is essential in running a business. A simple data entry error can have a significant effect on the financial statement. Therefore, decisions made based on wrong numbers will definitely have a negative impact on your company. An effective accounting and bookkeeping process must be able to track and maintain your income and expenses as well as collect the necessary financial information for your various tax returns. We offer accounting and bookkeeping services including Bank Reconciliation services among others.

Accounts Payable Outsourcing
Accounts payable (A/P) or payables is an important function in finance and accounting. Your company’s ability to track and maintain payment obligations for various different transactions can affect your standing as a business as well as your credit rating. Prompt payments to your vendors can ensure prompt delivery of goods or services that you need in order to be able to deliver the best products and services to your clientele. Prompt payment also ensures that you keep costs at a minimum, avoiding costly fees such as late payment fees being deducted from your budget. Thus it is important to have an efficient and reliable accounts payables process in place which ensures that you can keep track of all your transactions and payments that you need to make every single day. ABA Tax Accounting’s accounts payable outsourcing services include but are not limited to:
• Purchase Order Matching and Entry
• Check Preparation
• Travel and Expense Claims Processing
• Credit Card Processing
• Vendor Master Maintenance Service
• Tax Preparation and Filing
• Insurance Claims Processing

Accounts Receivable Outsourcing
Managing accounts receivables (A/R) or receivables efficiently is a requirement for every company. But time constraints and a need of manpower and other resources may place pressure on a company seeking not just an efficient accounts receivable process, but also continuous growth centered on innovation. By outsourcing accounts receivable processing, business managers are able to focus on core business tasks while simultaneously trimming costs of finance and accounting, and boosting the company’s productivity and profitability. With ABA Tax Accounting’s reliable accounts receivable outsourcing services we can assist your company at any point in your accounts receivable process including:
• Sales Order Processing
• Invoice Processing
• Accounts Receivable Collection
• Accounts Receivable Custom Reporting

Outsourced Tax Return Preparation Services
CPAs and Accounting firms find it very difficult to handle the hectic client demand during the tax season. For these reasons they are discovering that outsourcing these back office functions saves payroll and other overhead costs and frees up valuable time. More and more accounting firms are opting for outsourcing tax return preparation to help minimize operating costs, maximize efficiency and gain competitive advantages. ABA will prepare your tax return and provide you with the finished files. Using ABA to outsource the tax return preparation process is simple. Scan and upload, or fax the source documents to ABA. Our outsourced Tax Preparation Services are supervised by EAs or CPAs. All types of tax returns are processed by ABA for businesses and accounting firms including:
• Individual Tax Preparation – Form 1040
• Business Tax Preparation – Form 1065, 1120, 1120s, 1041, 990

Outsourced Staffing Services
ABA Tax Accounting can provide any number of CFOs, Controllers, Staff Accountants or Bookkeepers on demand at the shortest notice, with a minimum of four hours per day, for any number of hours per week or per month. Beyond the high quality professional services rendered there is a vested advantage to your company as these services come devoid of any employment benefits to your company. Outsourcing saves money, eases workload, and gets you the know-how you need when you need it most.

ABA Tax Accounting provides customized, high-quality, cost effective and 100% U.S. based finance and accounting outsourcing solutions for Accountants / CPA firms as well as other small, medium, large businesses, non-profit organizations, and federal, state, local governments who do not want to have a large in-house accounting team. Our aim is to reduce the burden of “behind the scene” functions of businesses so that they can focus on their core revenue generating roles.

By partnering with ABA Tax Accounting, you can focus on growing your business while we take care of the rest. We can help you divest yourself of the headaches associated with managing your financial information. We can make sure that your books are always in order and that you receive the necessary financial reports, thereby improving your profits. At ABA Tax Accounting, we develop Dedicated Operating Teams which act and operate as if they are an internal department of your company without the risks and costs of setting your own office.

Why Outsource?
Do you want to build your revenue, reduce your expenses and expand your capabilities at the same time? Do you want to get access to highly skilled resources and significant cost savings? Do you want to concentrate more on your core business? Do you worry about HR, workplace, or facility issues that commonly derail expansion programs? ABA Tax Accounting outsourcing will give you a competitive advantage and provide numerous outsourcing benefits, including:
• Reduction in expenditures
One of the biggest reasons why businesses seek an outsourcing partner is in order to lower overhead costs and expenses. Immediate savings to the client are derived from the ABA Tax Accounting lower cost in wages, benefits, and operational expenses.
• Ability to refocus on your bottom line
By outsourcing to ABA Tax Accounting the non core activities you are effectively realigning your whole company’s operations towards activities that help grow your business. Whether this would be product development, sales, services and other activities, having an outsourcing partner that will drive non-core activities for you will help you achieve your targets and improve your bottom line.
• Diversification and expansion of your talent pool
ABA Tax Accounting outsourcing affords you with a bigger talent pool from which to build your teams. For start-ups, outsourcing would give you access to skilled and experienced employees who can assist you with building your business. For medium sized companies building an outsourced team to complement an existing team would allow greater flexibility and would increase capabilities in their market.
• Increased control over business outcomes
ABA Tax Accounting outsourcing gives companies the ability to manage and organize business results in a variety of critical areas, including increasing reliability, improving cost variability and allowing effective planning and implementation of ideas.
• Improved adaptability to changing environments
The diversification of a company toward an outsourced vendor helps share risk. It allows companies to apply strategies and modifications at a faster and more controlled rate.

Why Outsource with ABA Tax Accounting?
While the concept of outsourcing is simple, finding an outsourcing partner whom you would actually rely on and trust to help you build and grow your business is another story. By outsourcing with ABA Tax Accounting you not only gain the benefits above, but you also gain a reliable and trusted outsourcing partner who will treat your business like its own. We gain our clients trust by working with them and adapting with them as their business grows and their requirements change.

How it works
Quite simple, really! An accounting system is eventually about various business documents being listed, processed to certain business rules and updated into books of accounts. You get a high speed scanner and get all business documents (purchase orders, supplier invoices, goods arrival reports, sales orders, delivery reports, sales invoices, collections, payments, expense reports, payroll inputs) scanned and stored into our secured and the state of the art CyberCabinet.

Why offshore while you can outsource onshore for about the same amount and create jobs here in the USA! If you want to get started utilizing ABA Tax Accounting Outsourcing Solution, please call us today at toll free 866-936-0430 or email amare@abataxaccounting.com.

Year-End Tax Planning Moves for Individuals

Tax Services – We have compiled a checklist of additional actions based on current tax rules that may help you save tax dollars if you act before year -end . Not all actions will apply in your particular situation, but you (or a family member) will likely benefit from many of them. We can narrow down the specific actions that you can take once we meet with you to tailor a particular plan. In the meantime, please review the following list and contact us at your earliest convenience so that we can advise you on which tax-saving moves to make:
Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later. It may be advisable for us to meet to discuss year-end trades you should consider making.
Postpone income until 2015 and accelerate deductions into 2014 to lower your 2014 tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks for 2014 that are phased out over varying levels of adjusted gross income (AGI). These include child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2014. For example, this may be the case where a person’s marginal tax rate is much lower this year than it will be next year or where lower income in 2015 will result in a higher tax credit for an individual who plans to purchase health insurance on a health exchange and is eligible for a premium assistance credit.
If you believe a Roth IRA is better than a traditional IRA, and want to remain in the market for the long term, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your adjusted gross income for 2014.
If you converted assets in a traditional IRA to a Roth IRA earlier in the year, the assets in the Roth IRA account may have declined in value, and if you leave things as is, you will wind up paying a higher tax than is necessary. You can back out of the transaction by recharacterizing the conversion, that is, by transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA, if doing so proves advantageous.
It may be advantageous to try to arrange with your employer to defer a bonus that may be coming your way until 2015.
Consider using a credit card to pay deductible expenses before the end of the year . Doing so will increase your 2014 deductions even if you don’t pay your credit card bill until after the end of the year .
If you expect to owe state and local income taxes when you file your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year -end to pull the deduction of those taxes into 2014 if doing so won’t create an alternative minimum tax (AMT) problem.
Take an eligible rollover distribution from a qualified retirement plan before the end of 2014 if you are facing a penalty for underpayment of estimated tax and having your employer increase your withholding isn’t viable or won’t sufficiently address the problem. Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2014. You can then timely roll over the gross amount of the distribution, i.e., the net amount you received plus the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2014, but the withheld tax will be applied pro rata over the full 2014 tax year to reduce previous underpayments of estimated tax .
Estimate the effect of any year-end planning moves on the alternative minimum tax (AMT) for 2014, keeping in mind that many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes. These include the deduction for state property taxes on your residence, state income taxes, miscellaneous itemized deductions, and personal exemption deductions. Other deductions, such as for medical expenses, are calculated in a more restrictive way for AMT purposes than for regular tax purposes in the case of a taxpayer who is over age 65 or whose spouse is over age 65 as of the close of the tax year. As a result, in some cases, deductions should not be accelerated.
You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions (i.e., certain deductions that are allowed only to the extent they exceed 2% of adjusted gross income), medical expenses and other itemized deductions.
You may want to pay contested taxes to be able to deduct them this year while continuing to contest them next year.
You may want to settle an insurance or damage claim in order to maximize your casualty loss deduction this year.
Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retired plan) if you have reached age 70-1/2 . Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. If you turned age 70-1/2 in 2014, you can delay the first required distribution to 2015, but if you do, you will have to take a double distribution in 2015—the amount required for 2014 plus the amount required for 2015. Think twice before delaying 2014 distributions to 2015—bunching income into 2015 might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2015 if you will be in a substantially lower bracket that year.
Increase the amount you set aside for next year in your employer’s health flexible spending account (FSA) if you set aside too little for this year.
If you are eligible to make health savings account (HSA) contributions in December of this year, you can make a full year’s worth of deductible HSA contributions for 2014. This is so even if you first became eligible on Dec. 1, 2014.
Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. You can give $14,000 in 2014 to each of an unlimited number of individuals but you can’t carry over unused exclusions from one year to the next. The transfers also may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax .

Also, as always, we’re ready to assist you with other tax and business matters.
AB Tax Accounting

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Corporation Was Not Entitled To Deduct Amount of Shareholder’s Bonus Check

The Tax Court in Vanney Associates Inc., TC Memo 2014-184, held that the corporation could not deduct its sole shareholder/CEO’s yearend bonus as officer compensation because the corporation did not have the funds to cover the check he received. Therefore, the check could not have been paid.

The corporation is a personal service architectural C corporation that uses the cash method of accounting. The corporation’s sole shareholder, an experienced, licensed architect, is also the corporation’s CEO, CFO, vice president of marketing, vice president of operations, and director of human resources. Although the corporation has other employees, the shareholder is primarily responsible for marketing, bringing in new business, and signing construction documents.

The shareholder’s wife is responsible for the corporation’s books and records. She is a CPA with an inactive license, and is also employed as vice president of finance for an unrelated company. She prepares the payroll checks and the shareholder signs and distributes them.

At the end of each tax year, the shareholder and his wife determine the corporation’s remaining profits after paying outstanding bills and employee bonuses. The shareholder’s wife then prepares a check on behalf of the corporation and pays the remaining profit to the shareholder as his yearend bonus. The shareholder and his wife both testified that they did this only to pay out the remaining profit, and they did not intend to zero out the corporation’s tax liability, even if that was the result.

In 2008, the corporation paid the shareholder a yearend bonus of $815,000. After making appropriate withholdings, the shareholder received a check for approximately $464,000. He signed the check on behalf of the corporation, and then endorsed it in his own name and made it payable to the corporation. He never attempted to cash the check, his wife recorded the payment on the books as a loan from the shareholder to the corporation, and the corporation repaid the shareholder in March 2009.

The total balance of the corporation’s bank accounts on 12/31/08 was approximately $389,000. After adjusting for outstanding deposits and checks, the balance was approximately $283,000. The shareholder testified that he believed the corporation did not have the funds to honor the check. However, he claimed the corporation could have received a loan to cover it. His wife testified that the corporation was strong and had considerable receivables. Further, she testified that although they considered taking out a loan for the corporation, they decided not to because they personally did not need the money and wanted to avoid the expenses of taking out a loan.

The corporation timely filed its income tax return for 2008, reporting no taxable income and claiming a deduction for officer compensation. The IRS disallowed the $815,000 of the deduction that represented the shareholder’s yearend bonus check.

The court noted that payment by check is a conditional payment because it is subject to the condition subsequent that the check be paid on presentation to the drawee. When the condition subsequent is fulfilled, it is generally reasonable to conclude that the payment relates back to the time the check was given. Therefore, the allowance of a deduction is dependent on proper payment of the check. The court has previously disallowed a deduction when a check was not paid due to insufficient funds. Further, it has held that the relation-back doctrine is inapplicable when the payee knows the payor has insufficient funds and so refrains from cashing the check.

Also, transactions between related entities are subject to special scrutiny. The economic reality of a transaction will prevail over its form, and a finding of economic reality depends on whether the transaction would have followed the same form if the parties were unrelated. The court has disallowed deductions when there was no actual economic outlay and the payments were “wholly circular.”

The corporation argued that the bonus check to the shareholder was unconditional and the payment occurred when the shareholder took possession of the check. It relied on O’Connor, TC Memo 1954-90, PH TCM ¶54195, 13 CCH TCM 623 , in which the court held that the essential element was that the control of property distributed by way of a dividend must have passed absolutely and irrevocably. The court in O’Connor also relied on the fact that the payee had unrestricted use of the money and the amount was unqualifiedly his to do with as he wished.

The court pointed out that this was distinguishable from the situation here. The shareholder’s wife knew or should have known that the corporation did not have the funds to cover the bonus check, and the shareholder testified that he had at least some idea of the same. Further, the shareholder had only a restricted use of the check. He could not cash it at the bank, use it to pay a debt, or use it to make a loan to someone other than the corporation. The shareholder’s only option to make use of the money was to lend it back to the corporation because the check could not be honored.

Additionally, the court stated that it had previously held that although a taxpayer maintains possession of a check, the amount of the check may not be treated as a distribution or may not be included in gross income when the account has insufficient funds to honor the check. Therefore, the IRS’s disallowance of the portion of the deduction for officer compensation relating to the shareholder’s bonus check was upheld.

Also, as always, we’re ready to assist you with other tax and business matters.
AB Tax Accounting

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Who’s managing your company’s financial affairs? 

Whether you’re just starting up, dealing with the loss of your top accountant or not quite ready for a full-time CFO, one thing is certain: Your business’s financial report issues won’t resolve themselves.

That’s where AB Tax Accounting can help.

If you require seasonal or temporary assistance, our part-time or interim CFO services will provide you with the highest levels of skill at a fraction of what you’d pay to hire someone in-house.

On the other hand, you might be ready for a full-time financial controller (CFO) to handle your company’s financial needs but currently unable to put someone on your payroll. This is where our virtual CFO services make such good sense. AB Tax Accounting will do it all for you behind the scenes. You won’t need to carve out a corner office or set up an extra cubicle.

Never leave your finances to fend for themselves. Let CFO services from AB Tax Accounting organize and crunch the numbers. You’ve got a business to grow.

Published in: on November 19, 2014 at 8:34 pm  Leave a Comment  

AB Tax Accounting Empowers Affordable Affiliate Startups


AB Tax Accounting Empowers Affordable Affiliate Startups

ST. PAUL, Minn. (October 18, 2014)

AB Tax Accounting, a professional tax accounting and business consulting firm, is offering an affiliate program designed to help interested persons get started in the field of tax preparation. With just a minimal cash outlay, all can take advantage of this unique and painless means of going into business for themselves.

According to representatives of AB Tax Accounting, any new affiliate will find the opening of a tax accounting firm to be surprisingly affordable. “A minimum investment will get you started,” they state, “with no revenue splits involved.”

All affiliates of AB Tax Accounting will receive personal training and year-round support as well as the necessary tax preparation software, banking products and proven marketing plan to ensure an auspicious start. During the startup phase, the company will also serve as a back office, checking each affiliate-produced tax return for correctness and IRS compliance.

Representatives of AB Tax Accounting stress that tax preparation is not a seasonal proposition. Since all small businesses must file on a quarterly basis, a properly marketed tax accounting concern is sure to keep busy all year long.

About AB Tax Accounting

Since 1989, AB Tax Accounting has operated as one of the leading firms of its kind in and around the St. Paul area. In addition to providing accounting, bookkeeping, tax, payroll and CFO services, it also specializes in tax problem resolution and U.S.-based outsourced solutions.

Contact Information:

AB Tax Accounting
10670 Hawthorn Trail
St. Paul, MN. 55129
Phone: (651) 621-5777
Fax: (651) 621-5755
Email: info@abataxaccounting.com

Published in: on October 21, 2014 at 4:53 am  Leave a Comment  
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The Child Tax Credit May Cut Your Tax

Income Tax Service For Individuals – If you have a child under age 17, the Child Tax Credit may save you money at tax time. Here are some key facts the IRS wants you to know about the credit.
• Amount. The non-refundable Child Tax Credit may help cut your federal income tax by up to $1,000 for each qualifying child you claim on your tax return.
• Qualifications. A child must pass seven tests to qualify for this credit:
1. Age test. The child was under age 17 at the end of 2013.
2. Relationship test. The child is your son, daughter, stepchild, foster child, brother, sister, stepbrother, or stepsister. A child can also be a descendant of any of these persons. For example, your grandchild, niece or nephew will meet this test. Adopted children also qualify. An adopted child includes a child lawfully placed with you for legal adoption.
3. Support test. The child did not provide more than half of his or her own support for 2013.
4. Dependent test. You claim the child as a dependent on your 2013 federal income tax return.
5. Joint return test. A married child can’t file a joint return with their spouse they are filing jointly only to claim a tax refund.
6. Citizenship test. The child must be a U.S. citizen, U.S. national or U.S. resident alien.
7. Residence test. In most cases, the child must have lived with you for more than half of 2013.
• Limitations. Your filing status and income may reduce or eliminate the credit.
• Additional Child Tax Credit. If you get less than the full Child Tax Credit, you may qualify for the refundable Additional Child Tax Credit. This means you could get a refund even if you owe no tax.

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Identity Theft and Tax Returns: Tips for Taxpayers

Federal, State, Local and International Taxes – Refund fraud caused by identity theft is one of the fastest growing crimes nationwide.

Stopping refund fraud related to identity theft is a top priority for the IRS. With more than 3,000 employees working on identity theft cases, the IRS is focused on preventing, detecting and resolving identity theft cases as soon as possible and has trained more than 35,000 employees to work with taxpayers to recognize and provide assistance when identity theft occurs.

Taxpayers might encounter identity theft involving their tax returns in several ways. One possible scenario is where identity thieves try filing fraudulent refund claims using another person’s identifying information, which has been stolen.

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Tax Planning For Small Business Owners

Amare Berhie, Enrolled Agent – Tax planning is the process of looking at various tax options in order to determine when, whether, and how to conduct business and personal transactions to reduce or eliminate tax liability.

Many small business owners ignore tax planning. They don’t even think about their taxes until it’s time to meet with their accountants, but tax planning is an ongoing process and good tax advice is a valuable commodity. It is to your benefit to review your income and expenses monthly and meet with your EA/CPA or tax advisor quarterly to analyze how you can take full advantage of the provisions, credits and deductions that are legally available to you.

Although tax avoidance planning is legal, tax evasion – the reduction of tax through deceit, subterfuge, or concealment – is not. Frequently what sets tax evasion apart from tax avoidance is the IRS’s finding that there was fraudulent intent on the part of the business owner. The following are four of the areas most commonly focused on by IRS examiners as pointing to possible fraud:
• Failure to report substantial amounts of income such as a shareholder’s failure to report dividends or a store owner’s failure to report a portion of the daily business receipts.
• Claims for fictitious or improper deductions on a return such as a sales representative’s substantial overstatement of travel expenses or a taxpayer’s claim of a large deduction for charitable contributions when no verification exists.
• Accounting irregularities such as a business’s failure to keep adequate records or a discrepancy between amounts reported on a corporation’s return and amounts reported on its financial statements.
• Improper allocation of income to a related taxpayer who is in a lower tax bracket such as where a corporation makes distributions to the controlling shareholder’s children.

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
(651) 621-5777, (612) 224-2476

Choosing the Right Filing Status

Federal, State, Local and International Taxes – Using the correct filing status is very important when you file your tax return. You need to use the right status because it affects how much you pay in taxes. It may even affect whether you must file a tax return.

When choosing a filing status, keep in mind that your marital status on Dec. 31 is your status for the whole year. If more than one filing status applies to you, choose the one that will result in the lowest tax.

Note for same-sex married couples. New rules apply to you if you were legally married in a state or foreign country that recognizes same-sex marriage. You and your spouse generally must use a married filing status on your 2013 federal tax return. This is true even if you and your spouse now live in a state or foreign country that does not recognize same-sex marriage.

Here is a list of the five filing statuses to help you choose:
1. Single. This status normally applies if you aren’t married or are divorced or legally separated under state law.
2. Married Filing Jointly. A married couple can file one tax return together. If your spouse died in 2013, you usually can still file a joint return for that year.
3. Married Filing Separately. A married couple can choose to file two separate tax returns instead of one joint return. This status may be to your benefit if it results in less tax. You can also use it if you want to be responsible only for your own tax. Head of Household. This status normally applies if you are not married. You also must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Some people choose this status by mistake. Be sure to check all the rules before you file.
4. Qualifying Widow(er) with Dependent Child. If your spouse died during 2011 or 2012 and you have a dependent child, this status may apply. Certain other conditions also apply.
We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Tips about Taxable and Nontaxable Income

Income Tax Service For Individuals – Are you looking for a hard and fast rule about what income is taxable and what income is not taxable? The fact is that all income is taxable unless the law specifically excludes it.

Taxable income includes money you receive, such as wages and tips. It can also include noncash income from property or services. For example, both parties in a barter exchange must include the fair market value of goods or services received as income on their tax return.

Some types of income are not taxable except under certain conditions, including:
• Life insurance proceeds paid to you are usually not taxable. But if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.
• Income from a qualified scholarship is normally not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. However, amounts you use for room and board are taxable.
• If you got a state or local income tax refund, the amount may be taxable. You should have received a 2013 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.
Here are some types of income that are usually not taxable:
• Gifts and inheritances
• Child support payments
• Welfare benefits
• Damage awards for physical injury or sickness
• Cash rebates from a dealer or manufacturer for an item you buy
• Reimbursements for qualified adoption expenses

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Which Tax Form Should You File?

Individual Tax Preparation – Which form should you use to file your federal income taxes? These days, most people use a computer to prepare and e-file their tax forms. It’s easy, because tax software selects the right form for you. If you file on paper, you’ll need to pick the right form to use.

Before you decide, check out IRS Free File on IRS.gov. It has free tax software or a Fillable Forms option that allows you to fill in your tax forms using a computer. You can e-file the completed forms for free!

If you still prefer paper and pen, here are some tips on how to choose the best form for your situation.

You can generally use the 1040EZ if:
• Your taxable income is below $100,000;
• Your filing status is single or married filing jointly;
• You are not claiming any dependents; and
• Your interest income is $1,500 or less.

The 1040A may be best for you if:
• Your taxable income is below $100,000;
• You have capital gain distributions;
• You claim certain tax credits; and
• You claim adjustments to income for IRA contributions and student loan interest.

However, reasons you must use the 1040 include:
• Your taxable income is $100,000 or more;
• You claim itemized deductions;
• You are reporting self-employment income; or
• You are reporting income from sale of a property.

We’re here to help! For no obligation free consultation contact us today!
ABA Tax Accounting
(952) 583-9108, (651) 621-5777, (612) 224-2476, (763) 269-5396, (818) 627-7315, (773) 599-7182, (404) 884-6903

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