Tax Credits: Take Them All

With tax season in full swing you are probably starting to work on your personal return or getting ready to discuss your personal return with your CPA. One thing to keep in mind this year are tax credits; they’re real, they are valuable and you should take all you are entitled to.

Tax credits are great because they subtract, dollar for dollar, the amount you owe. Deductions reduce the income in which the tax is calculated, thus typically making a credit more advantageous. There are two types of credits: 1. nonrefundable and 2. refundable. A refundable credit is one which reduces your tax liability, sometimes below zero, resulting in a refund to you.

Family and Dependent Care Credits:

  • Earned Income Tax Credit
  • Child and Dependent Care Credit
  • Adoption Credit
  • Child Tax Credit
  • Credit for Other Dependents
  • Credit for the Elderly and Disabled

Income and Savings Credits:

  • Earned Income Tax Credit
  • Saver’s Credit
  • Foreign Tax Credit
  • Excess Social Security RRTA Tax Withheld
  • Credit for Tax on Undistributed Capital Gain
  • Non-refundable Credit for Prior Year Minimum Tax

Homeowner Credits:

  • Residential Energy Efficient Property Tax Credit
  • Low-income Housing Credit

Health Care Credits:

  • Premium Tax Credit (Affordable Care Act)
  • Health Coverage Tax Credit

Education Credits:

  • American Opportunity Credit
  • Lifetime Learning Credit

Michigan Credits:

  • Earned Income Tax Credit
  • Homestead Property Tax Credit
  • Home Heating Credit
  • Credit for taxes paid to another state
  • Farmland Preservation Tax Credit

As a firm, we educate our clients of their respective and potential tax credits and qualifications. If you would like to review what strategic tax opportunities exist for your set of circumstances and determine eligibility to the credits above, please reach us HERE or give us a call at 248-934-0550. We are here to help and appreciate hearing from our current and future clients.

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Tax Season

2020 Tax Season: It Begins Today

Tax Season

Tax season officially starts today with the Internal Revenue Service (IRS) now accepting e-files for 2019 tax returns. Let the countdown begin: Days Remaining

Common Documents Needed (please note this is not an exhaustive list and depends on each individuals situation):

  • Income documents W-2(s), 1099(s), K-1(s) etc.
  • Investment income and gain or loss detail
  • Business income and expense detail
  • Rental income and expense detail
  • Other income or loss detail
  • Deductions: Mortgage 1098(s), Charitable Contribution schedule(s), State and Local Tax payment(s), Qualified Medical expenses etc.
  • Summary of estimated tax payments
  • Childcare expenses
  • Educator expenses
  • HSA and IRA contributions

 A Few Notes:

  • All clients we prepared 2018 tax returns for should have received an email alerting them of the tax organizer and engagement letter within the portal for 2019. You can access your portal HERE. Anyone who did not receive their tax organizer or engagement letter please let us know as soon as possible.
  • Refunds usually come within 21 days of e-filed returns or 6 weeks for paper filed return.
  • You can check the status of your refund HERE
  • If you are a new client, we request copies of your last two tax returns with date of birth, along with copies of current year tax documents, to ensure we provide the best service possible.
  • A 6 month extension to file does exist, however it doesn’t extend the time to pay.
  • Anyone having issues logging into their portal due to the multi-factor authentication (MFA) code (establishing MFA onto new devices) will need to contact us with simple procedures to fix.
  • Don’t wait till the last minute. The sooner we receive your information, the easier it is for us to timely prepare your return(s), and the better we are able to serve you.

Key Dates:

  • February 15, 2020:
    Delayed refunds sent to those who claim the earned income credit
  • March 16, 2020:
    Partnership Income Tax Return due (Form 1065)
    S Corporation Income Tax Return due (Form 1120S)
  • March 31, 2020:
    Last day to submit documents to our firm to ensure returns are filed on time and not extended
  • April 15, 2020:
    Individual Tax Returns due for 2019 (Form 1040)
    Estate and Trust Tax Returns due for 2019 (Form 1041 & 709)
    FBAR: Reports for Foreign Bank Accounts are due
    Last Day to make a 2019 IRA contribution
    Last Day to make a 2019 HSA contribution
    1st Quarter 2020 individual estimated tax payments are due
    Tax Day! Our office will be closing at 5:00 p.m. to celebrate the end of tax season at a local spot with our team and their families.
  • May 15, 2020:
    Tax Exempt Organization Returns due (Form 990)
  • July 31, 2020:
    Employee Benefit Returns due (Form 5500)

We Agree with AT&T: Just OK is not OK – Call us today

As always, we are very appreciative of our clients, friends and supporters. The best compliment we can receive, is a referral or recommendation to your friends, family and colleagues about our service.

A summary of our services can be found: HERE

We look forward to assisting our existing and future clients this 2020 tax season with their tax and accounting needs. If you need us we can always be reached HERE or give us a call at 248-934-0550.

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Workplace Dependent Care Benefits

If you have paid for the care of your dependent(s) in the past and anticipate that dependent care will likely continue through 2020, then you will want to think about a specific work place benefit that may be available through your employer. Dependent Care Benefits, located on your W-2, Box 10, allows you to exclude up to $5,000 ($2,500 married filing separate) of your earned income for qualified care and expenses. Dependent Care Benefits through your employer can save Federal, State (if applicable), Social Security and Medicare tax which could make this a better option than the dependent care deduction on your personal tax return.

Know The Qualifications: 

Hiring assistance through an individual or organization to care for a child or disabled family member is a reality for most working families.  Thankfully, W2 employees may have an option to combat increase in pricing and costs of child care through their employers. Qualifications for dependent care include the following:

  1. A child under the age of 13, of whom you are authorized to claim as a dependent on your tax return
  2. A spouse or family member that is physically or mentally disabled
  3. The care is acquired so that you may be gainfully employed
  4. Dependent regularly spends 8 hours per day in your household, for those services which take place out of the home
  5. Outside organizations hired complies with all applicable state and local laws and regulations
  6. The fair market value of the dependent care expenses are provided for the applicable year
  7. You must report to the IRS on your 1040 tax return the name, address and social security number (or other tax payer identification number) of any dependent care service provider 

Come Tax Time:

Taking advantage of dependent care benefits provided through your employer will allow a significant tax savings over the course of the year for your family. Reach out to your Human Resources Department or employer to determine if  your benefit plan qualifies.

If you have any questions or concerns relative to the most advantageous tax strategy for your family, please contact us HERE or give us a call at 248-934-0550. We would be honored to help.

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Welcome to the Senter, CPA Team – Kylie N. Harig

Hi there! My name is Kylie Harig and I am the new office manager at Senter, CPA. I am so thankful for the opportunity to introduce myself to you and hope that you enjoy learning a little about me and my family. 

I come to you with nearly a decade of experience in the financial industry. Over those years, I worked side by side with financial advisors, CPA’s, estate planning attorneys, and insurance companies to provide excellent service and expertise to our client base. I’ve proudly served as both operation and relationship managers during the course of my professional career, however my passion is the people I’ve met along the way. I’ve always enjoyed the process of establishing a client relationship and deepening it with trust, knowledge, and accountability. Exceeding our clients expectations is my goal everyday. 

Prior to my years in finance, I spent time living in New Orleans, LA, working as a corporate sales consultant for a well known luxury brand. This is really where I started to understand customer service as the core of my professional development and, as a result, dedicated myself to my clients wholeheartedly. 

Before I was a professional and simply had a student status, you could find me at Michigan State University, where I studied business communication. Commencement came after four (and a half) years, in 2007. I don’t get back to East Lansing as often as I would like nowadays, although I do miss game days and walking around campus. I have good reason though, because in 2013, I became a mom to a little girl named, Ellie, and really who has time for much after kids?

Ellie is the best part of everyday. She is smart and kind and full of joy.  Most of Ellie is old soul, sometimes a little too wise for her young age. The other parts of Ellie are curious and patient, with enough confidence to keep me on my toes.  I am so thankful to be her mom. 

In addition to my daughter, I also have a sister, Lila, who is 16 years younger than I am. Lila is a sophomore at MSU studying engineering, earning a 4.0 every semester and making it look easy. I am so proud of her accomplishments every step of the way. Our parents live in Uzbekistan after residing in Clarkston for 20 years. Needless to say, we miss them very much, but look forward to having them home after retirement. 

I’m so thankful for the opportunity to work closely with you at Senter, CPA. Please be sure to call or stop in to say hello- it would make my day! 

If you ever need anything, please contact us HERE or give us a call at 248-934-0550. We are at your service.

 

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New Year

2019 Our Year in Review

New Year

What a Year it’s Been!

2019 has been an incredible year for the entire Senter crew; it’s been nothing short of amazing to grow so much as a firm and family. We’ve had an overwhelming response of encouragement and support from both new and existing clients who have helped us flourish as a firm. It’s certainly been an interesting year, though I wouldn’t expect anything less along the way. Most and best of all, 2019 has been a blast!

The Senter, CPA, P.C. Firm

We continue to strive to exceed expectations and we continue to pride ourselves in the services we offer. Candidly, the best results are achieved through the personal aspect of work, allowing us to serve our clients earnestly and efficiently.

In November, we expanded our practice by adding another rockstar to the Senter, CPA team, Kylie Harig. Please call or swing by our office to give her a warm welcome. However, in the meantime, you can expect that she will introduce herself in the coming days via our BLOG.

As a firm, we commit ourselves to growth and development within our industry. Over the course of 2019, we’ve attended a wide range of seminars, webinars and workshops, researched, and worked with our partners, which allows us to ensure that we are knowledgeable on tax law changes and best practices for our clients. In addition, we were fortunate enough to spend two days at MICPA’s Mangement and Business Information show and two days at the Michigan State University Income Tax school, as well at many other continuing education requirements through the year.

The Senter Family

The kids are growing like weeds; it’s always an interesting time at the Senter house! Cassie and I are alive and well despite all the chaos. No real changes for me, as I try to stay focused and hard at work. Cassie has started working from home to be with the kids more and it’s been a wonderful experience for us all. She is truly AMAZING and definitely the glue that keeps us together.

Boys will be boys and rest assured, they fight like cats and dogs. Ben, now 12, has taken a liking to music and is good at several instruments. Waylon is now 3, wild as ever, and will do anything for a laugh. After meeting him, you’d understand!

The biggest change to our household this year was finding out our daughter, Charlotte, has severe food and environmental allergies. Cassie and I have made big changes within our household, accompanied with several doctor’s visits to combat her allergies. For a gal who is only 1, it’s a big deal.

2019: A Few Highlights

January: The Clarkston Area Chamber of Commerce Ribbon Cutting
January 1st – April 15th: Tax Season – 105+ of continuous working days
April: Completed our first tax season in our new office
May: Attended Clarkston Rotary’s Spring Wine Tasting
June: Kicked off Opening Day with the Independence Township Youth Baseball
July: Started serving as a Clarkston Rotary Board of Director
August: Traveled to Tennessee to spend time with friends, family and clients
September: We started a Newsletter! If you haven’t subscribed, be sure to do so HERE
October: Attended and assisted with Clarkston Rotary’s Annual Beer, Wine, Spirits and Food Tasting
November: Awarded the 2019 Young Professional of the Year by the Clarkston Area Chamber of Commerce
December: Helped with Clarkston Rotary’s “Shoes for Kids” program & Joined Clarkston Area Chamber of Commerce’s YPN Committee

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To Our Clients and Friends

We must say a huge THANK YOU to all those who support us. Without our clients and friends, we wouldn’t be who or where we are. You truly drive our passion to serve.

We very much hope you had a fantastic 2019 and wish 2020 to be the best for us all. We look forward to continuing to grow and serve our clients and community in 2020!

If you ever need anything, please contact us HERE or give us a call at 248-934-0550. We are at your service.

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Comprehensive Financial Planning: Building a Dream Team of Professionals

Building a network of well-connected financial professionals is a crucial means of personal wealth management. A dream team of experts will provide service and support towards working for and achieving your financial goals, while monitoring progress along the way. These collaborative relationships ultimately ensure that your financial future and legacy are well-protected, even in catastrophic circumstances.

Admittedly, the framework can be daunting when assembling your network. Where should you start? Who should you meet with? How do you establish a relationship between industry professionals? We are here to simplify the process. Below are the four most impactful players to recruit on your dream team.

Certified Public Accountant (CPA)

Accountants provide an overall view of your tax situation and are capable of running projections creating a deeper understanding of tax liability and tax opportunity now and in the future. Consider searching for an advisor who is a licensed Certified Public Accountant (CPA), as this designation is one of the most trusted, respected, and recognized in the financial industry. CPA’s carefully study tax laws, regulations, and monitor changes in existing tax code, which will strategically optimize your tax opportunity.

Your tax accountant will work closely with your financial advisor in a collaborative effort to manage your financial affairs. These two professionals are the core and powerhouse to your dream team.

Financial Advisor (FA)

Financial advisors and their investors build a relationship through comprehensive financial analysis. FA’s will help you properly plan for retirement and manage your investments. If you have children or grandchildren, these advisors can also establish college savings plans, such as a 529, yielding both tax and financial aid benefits. When searching for a FA, search preferably for someone with a Certified Financial Planner (CFP) designation. With this esteemed accreditation, you can feel secure your advisor is providing financial advice and recommendations, based upon what is in your best interest and will encompass a wealth of knowledge and commitment toward personal financial planning. Through a variety of investment vehicles, you can expect your advisor to build your portfolio around your needs and risk tolerance.

Estate Attorney

When searching for an estate planning attorney, you should feel comfortable to utilize the resourcefulness of your previous two key players: your tax accountant and financial advisor. Often times, generating referrals from other professionals on your team facilitate the lines of communication between industries. Mutual clients or shared clients allow for financial transparency and accountability, while working as a whole to move your financial goals forward.

Recruiting an estate attorney will allow you to plan for life’s unexpected and difficult transitions. Documents such as power of attorney, trusts and wills are prepared to distribute your property and protect your legacy against liability or conflict. Finalizing a plan for your assets at death is the best way to ensure proper estate planning for your heirs and, if applicable, a business.

Insurance Agent

Enlisting an agent to evaluate your financial risks is a significant means of managing and safeguarding your wealth. These agents are able to help you plan for potential damages, elder care and cash flow down the road. While most of us appreciate the importance of health insurance and asset coverage (think: home and vehicle) depending on your set of circumstances life insurance, term insurance and/or long-term care may equally be as important.

Collaborating with an tax accountant, financial advisor, estate attorney and insurance agent will bring you and your family peace of mind that your finances are in strategic, advantageous order, while also being protected.

One last crucial bit of advice: be selective. Properly vet each professional and ensure compatibility with your personality and investment style.

Consulting with your Dream Team of professionals is key to financial and legacy planning. If you have any questions or concerns relative to your personal situation and potential strategy, please contact us HERE or give us a call at 248-934-0550. We would be honored to help.

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Tax Help

IRS Penalties: Abatement & Resolution

Tax Help

Have you ever paid an IRS penalty or feel like you’ve accumulated too many penalty notices from the IRS? If so, it’s possible we can help alleviate the pain. Let’s review a couple of ways to reduce, remove or abate some of those penalties.

There are many forms of penalties, such as failure-to-file (FTF), failure-to-pay (FTP) and failure-to-deposit (FTD). The good news is that there are remedies to minimize penalties, such as reasonable cause, first-time penalty abatement and statutory exemptions.

Reasonable Cause

Reasonable cause typically exists for valid reasons such as fire, casualty, natural disaster or other disturbances. Also included is the inability to obtain records, death, serious illness, incapacitation or unavoidable absence.

Other reasons may exist that establish ordinary business care and prudence to meet Federal tax obligations, but you were somehow unable to meet those obligations.

The Facts Required to Substantiate Reasonable Cause:

  • What disturbance occurred?
  • When did it happen?
  • Facts and circumstance to support your request
  • How the facts and circumstances effected non-compliance
  • Actions taken to correct issues moving forward

Any documents or records available to support the request would aide in a favorable result.

IRS First-Time Penalty Abatement (FTA)

The FTA is an administrative waiver provided by the IRS available to both individuals and businesses to relieve taxpayers from the FTF, FTP and FTD penalties. This waiver is an effort by the IRS to reward those with a clean record.

To qualify for the FTA you MUST have:

  • Filed or extended all required returns and no outstanding request from the IRS
  • Paid or made arrangements to pay any tax due and
  • Have no prior penalties for the proceeding three years

Statutory Exemption

A statutory exemption can be requested when you relied on erroneous written advice provided by the IRS.

Other Considerations

Abatment requests can be made by phone or mailed correspondence; the details of the penalty can be found on the letter issued to you by the IRS. Make sure you have the taxpayer name, tax identification number, tax year, tax form and type of penalty, as well as any other relevant information accessible when speaking with the IRS.

In the event you are requesting a refund for previously paid penalties, use Form 843.

Interest relief is available only on the interest charged on the penalty reduced or removed. Any interest on late payment or unpaid amounts will stand or continue to accrue.

If the IRS rejected a previous request to remove penalties, you may be able to request an appeals conference or hearing, additional information can be found HERE.

If you need assistance with penalty notices, please reach out to us HERE or give us a call 248-934-0550. We’d be glad to help!

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2019 Yearend Checklist

5 Things to Put on Your Year End Checklist

2019 Yearend Checklist

It’s important to keep a checklist of items on your financial radar as we approach the close of 2019. Below are 5 simple tax savings strategies, which will protect your financial health and ensure future success as you move into 2020.

The Top 5 Year End Items:

  • Speak with your CPA – Consult with your CPA for an annual year end tax projection or planning opportunities. Discussing changes that may have occurred in the calendar year, like marriage and a birth of a child or divorce, allows you to revisit tax withholding and prepare tax calculations accordingly. Your CPA can help you plan for a potential and unexpected tax burden and will give you the opportunity to take advantage of tax deductions before the end of the year.
  • Meet with your Financial Advisor (FA) – Having a year end discussion with your investment professional is a crucial means of preparation at the close of the year. Year end tax strategies exist if you are eligible, inclusive of Roth conversions and realization of capital gains and losses. Required Minimum Distribution’s (RMD) must be taken prior to the end of the year, every year, in IRA accounts (Traditional, Inherited, SEP or SIMPLE) and 401(k)’s for those who are aged 70.5 and older. Beneficiary IRA RMD’s are to be taken based upon the original owners date of birth and death, even if the beneficiary is not 70.5 years old. Penalties are steep if RMD’s are not taken. Ideally, your CPA and FA will work closely to monitor your financial situation as a whole.
  • Charitable Contributions or Planned Giving – Gifting cash or itemizing donations to individual(s) or a charity could allow tax deductions, decreasing your overall taxable income. RMD’s can be donated to a charity or multiple charities of your choice, if cash flow is not a concern of yours moving into the new year. Planned giving should be discussed with your CPA and FA to determine the most advantageous means of tax deduction, based upon your unique set of circumstances.
  • Establish a 529 or Fund a College Saving Plan – A 529 investment plan allows you to save for your child’s college education. The growth in 529 plans are tax-free and qualified withdrawals will not face federal income tax either. The sooner you invest in a 529 for your child or grandchild, the greater the potential for the funds to grow, often times overlapping the cost of inflation.
  • Maximize 401(k) Contributions – Ensure that you are putting the most amount of your earnings into your 401(k) plan as possible. The more you contribute to your plan, the greater the tax break or deferral of income. Frequently, employers will match their employees contributions, up until a specific percentage. Not utilizing the employer match is essentially leaving free cash on the table. Speak to your Human Resources Department to make any plan specific changes prior to the new year.

Consulting with your financial professionals is absolutely key to tax advantageous strategies and planning. If you have any questions or concerns relative to your personal situation and potential tax strategy, please contact us HERE or give us a call at 248-934-0550. We would be happy to help.

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FBAR

Foreign Bank and Financial Accounts: Understanding the FBAR

FBAR

Did you know that a taxpayer must report certain foreign financial accounts, such as bank accounts, brokerage accounts and mutual funds each year, as part of the Bank Secrecy Act?

By filing a Report of Foreign Bank and Financial Accounts, otherwise known as FBAR (on FinCEN Form 114), to the IRS, you are ensuring that delinquencies are kept to a minimum while maximizing the accuracy of your annual reporting to the U.S. Federal Government.

Does This Apply to Me?

If you are a United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and/or estate, then you must file an FBAR.

The FBAR will report the following to the IRS:

  1. A financial interest in or signature or other authority over at least one financial account located outside the United States if
  2. The aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

Accounts that are held at a financial institution, located outside the United States, are foreign financial accounts.

What Account Types are Excluded from the FBAR?

Foreign financial accounts that are correspondent, owned by a government entity, owned by an international financial institution, U.S. Military banking facility, held in a retirement account (including an IRA) or a trust in which you are the beneficiary do not need to be reported annually to the IRS.

What is the Deadline to file an FBAR?

The FBAR is due April 15 following of each calendar year.  However, you don’t need to request an extension to file, as you are allowed a free automatic extension until October 15, if you miss the April 15 deadline.

How do I File the FBAR?

You must file the FBAR electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System.

FBAR Record Keeping 101:

The IRS requires you to keep records for five years from the due date of the filing.

Unsure what to archive? Maintaining records for each account required to be reported to the IRS is mandatory. Documentation that provides account specific information such as names on the account, account number, name/address of the financial institution, type of account and the maximum value for the year in each account is crucial.

What Penalties Exist for Delinquency?

Filing an FBAR late or not at all is a violation with the IRS and may subject you to penalties, including civil monetary penalties and/or criminal penalties. 

Current maximums, per the IRS, are as follows:

You may file late FBARs if you have not been contacted by the IRS about delinquency and are not under civil or criminal investigation by IRS.

Resources (click the links below)

If you have any questions in regards to your situation, applicability or delinquent filing, please contact us HERE or give us a call at 248-934-0550.

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Tax Scams: Be Careful, They Exist

As year-end approaches, we want to remind our friends and clients of potential tax scams that exist. Cyber criminals use these scams to obtain names, social security numbers, addresses and other personally identifiable information to file bogus tax returns or defraud you into sending them cash directly.

Below is a list of the most common scams, as provided by the IRS.

The 2019 ‘Dirty Dozen’ Tax Scams:

  • Phishing
  • Phone Scams
  • Identity Theft
  • Return Preparer Fraud
  • Inflated Refund Claims
  • Falsifying Income to Claim Credits
  • Falsely Padding Deductions on Returns
  • Fake Charities
  • Excessive Claims for Business Credits
  • Offshore Tax Avoidance
  • Frivolous Tax Arguments
  • Abusive Tax Shelter

For additional details regarding the IRS’s “Dirty Dozen” tax scams, click the link above or watch the video  HERE.

Keep in mind, the IRS will never call or email without prior notice requesting payment. If you are suspicious of any fraudulent activity, please discuss with a friend, family member, contact us HERE or give us a call 248-934-0550 for support.

Should you become aware of any scams please report them HERE.

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