Paying Off Debt the Smart Way -

Between mortgages, car loans, credit cards, and student loans, most people are in debt. While being debt-free is a worthwhile goal, most people need to focus on managing their debt first since it's likely to be there for most of their life.

Handled wisely, that debt won't be an albatross around your neck. You don't need to shell out your hard-earned money because of exorbitant interest rates or always feel like you're on the verge of bankruptcy. You can pay off debt the smart way, while at the same time saving money to pay it off faster.

Assess the Situation

First, assess the depth of your debt. Write it down, using pencil and paper, a spreadsheet like Microsoft Excel, or a bookkeeping program like Quicken. Include every financial situation where a company has given you something in advance of payment, including your mortgage, car payment(s), credit cards, tax liens, student loans, and payments on electronics or other household items through a store.

Record the day the debt began and when it will end (if possible), the interest rate you're paying, and what your payments typically are. Add it all up, painful as that might be. Try not to be discouraged! Remember, you're going to break this down into manageable chunks while finding extra money to help pay it down.

Identify High-Cost Debt

Yes, some debts are more expensive than others. Unless you're getting payday loans (which you shouldn't be), the worst offenders are probably your credit cards. Here's how to deal with them.

• Don't use them. Don't cut them up, but put them in a drawer and only access them in an emergency.
• Identify the card with the highest interest and pay off as much as you can every month. Pay minimums on the others. When that one's paid off, work on the card with the next highest rate.
• Don't close existing cards or open any new ones. It won't help your credit rating.
• Pay on time, absolutely every time. One late payment these days can lower your FICO score.
• Go over your credit-card statements with a fine-tooth comb. Are you still being charged for that travel club you've never used? Look for line items you don't need.
• Call your credit card companies and ask them nicely if they would lower your interest rates. It does work sometimes!
  
  
  
  

Save, Save, Save

Do whatever you can to retire debt. Consider taking a second job and using that income only for higher payments on your financial obligations. Substitute free family activities for high-cost ones. Sell high-value items that you can live without.

Do Away with Unnecessary Items to Reduce Debt Load

Do you really need the 800-channel cable option or that dish on your roof? You'll be surprised at what you don't miss. How about magazine subscriptions? They're not terribly expensive, but every penny counts. It's nice to have a library of books, but consider visiting the public library or half-price bookstores until your debt is under control.

Never, Ever Miss a Payment

Not only are you retiring debt, but you're also building a stellar credit rating. If you ever move or buy another car, you'll want to get the lowest rate possible. A blemish-free payment record will help with that. Besides, credit card companies can be quick to raise interest rates because of one late payment. A completely missed one is even more serious.

Pay With Cash

To avoid increasing debt load, make it a habit to pay with cash. If you don't have the cash for it, you probably don't need it. You'll feel better about what you do have if you know it's owned free and clear.

Shop Wisely, and Use the Savings to Pay Down Your Debt

If your family is large enough to warrant it, invest $30 or $40 and join a store like Sam's or Costco--and use it. Shop there first, then at the grocery store. Change brands if you have to and swallow your pride. Use coupons religiously. Calculate the money you're saving and slap it on your debt.

Each of these steps, taken alone, probably doesn't seem like much. But if you adopt as many as you can, you'll watch your debt decrease every month. If you need help managing debt give us a call. We can help.

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

www.securitytaxservices.com

Make Sure Your Social Security Number Isn't In The Wind - (Forbes)

The IRS needs your Social Security number. In fact, it’s probably more important than your name. The IRS keys just about everything to it, including all those critical little Forms 1099 you have to keep track of each year at tax time.

There’s 1099-INT for interest, 1099-DIV for dividends, 1099-G for tax refunds, 1099-R for pensions and 1099-MISC for all sorts of miscellaneous income. All are keyed to your Social Security number. That would make it doubly upsetting to find that the IRS had disclosed it to others.

The IRS warns you about how to protect yourself: Top Tips Every Taxpayer Should Know about Identity Theft. The IRS also has this Taxpayer Guide to Identity Theft. But mistakes happen, and an audit by Public.Resource.org suggests the IRS may have mistakenly posted “tens of thousands” of Social Security numbers on the Internet.

As reported in the National Journal, the identifying numbers were not exposed for long. This isn't exactly Edward Snowden-worthy either. Yet some coverage of the story reported big numbers–IRS dumps up to 100,000 Social Security numbers on the Internet. It makes you wonder who saw them and mined the data. The data-breach concerned nonprofit political groups known as 527 organizations.

When the IRS told Public.Resource.org’s founder, Carl Malamud, to disregard Forms 990-T included in the agency’s January release, he discovered that it revealed Social Security numbers. Malamud wrote the IRS pointing out instances where a Social Security number was accidentally revealed.

Of over 3,000 tax returns contained in the January update, 319 contained sensitive data the agency should have scrubbed, Malamud wrote in the July 1 report filed with the inspector general’s office. He claims about 2,319 Social Security numbers—perhaps more—were revealed. Public.Resource.org called the IRS’s efforts at data security “unprofessional and amateur,” and requested the IRS shut down the 527 database.

Congressman Tom Latham (R-Iowa) has authored a letter to acting IRS Commissioner Daniel Werfel seeking explanation for the unauthorized public disclosure of as many as 100,000 Social Security numbers, and the agency’s procedures for handling such data. 

The IRS suggest care with this key number. Show your Social Security card to your employer when you start a job, the IRS says. Also show it to your financial institution for tax reporting purposes.

But in general, the IRS says you shouldn't carry your Social Security card with you. For that matter, don’t carry other documents that display your number either. If your Social Security number is stolen, the IRS warns that someone else may use it to get a job. The unwitting employer may report the income to the IRS under your purloined Social Security number.

Caution: Identity theft is a serious threat in today's world, and it is important to take every precaution to avoid it. After it is no longer necessary to retain your tax records, financial statements, or any other documents with your personal information, you must dispose of these records by shredding them and not disposing of them by merely throwing them away in the trash.

The IRS will assume when it sees that income reported to your number that you failed to report all your income on your tax return. Trouble will ensue. If you end up in this pickle, you can explain the fraud to the IRS and get your record updated. But you don’t want to go through this if you can help it, and you definitely don't want to go through it alone. Be careful out there.

Article originally published on Forbes by Robert W. Wood

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

www.securitytaxservices.com

Tips for Safeguarding Financial Records -

With the 2013 hurricane season now under way and memories of tornadoes and other natural disasters fresh in our collective minds, now is the time for individuals and businesses to safeguard their tax records by taking a few simple steps.

Take Inventory. Gather all of your documents and make an inventory list. You may find everything in a single location, but more likely than not, you'll have to hunt around to find all of your documents. Don't forget to check computer files, storage boxes, file cabinets, old and new computers and laptops, thumb drives, and external hard drives and backup disks.

Depending on how complex your finances are, you may opt for a single list or choose to make two separate lists. The first list might include items such as insurance policies, mortgages and deeds, car titles, wills, pension and retirement-plan documents, powers of attorney, medical directives, and so on. The second list might contain a list of less essential documents such as brokerage accounts, loans that have been paid off, end-of-year bank statements, and copies of old tax returns and supporting documentation.

Create a Backup Set of Records and Store Them Electronically. Keeping a backup set of records -- including, for example, bank statements, tax returns, insurance policies, etc. -- is easier than ever now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet.

Even if the original records are provided only on paper, they can be scanned and converted to a digital format. Once the documents are in electronic form, taxpayers can download them to a backup storage device, such as an external hard drive, or burn them onto a CD or DVD (don't forget to label it).

You might also consider online backup, which is the only way to ensure that data is fully protected. With online backup, files are stored in another region of the country, so that if a hurricane or other natural disaster occurs, documents remain safe. Contact us if you need assistance with this.

Visually Document Valuables. Another step you can take to prepare for disaster is to photograph or videotape the contents of your home, especially items of higher value. Call us for more help compiling a room-by-room list of belongings.

A photographic or video record can help prove the fair market value of items for insurance and casualty loss claims. Store the photos or video with a friend or family member who lives outside the area, or as part of your online document backup.

Update Emergency Plans. Emergency plans should be reviewed annually. Personal and business situations change over time, as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

Check on Fiduciary Bonds. Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

If disaster strikes, call us right away. We can help you get back copies of tax returns and all attachments, including your Form W-2. We're here to help.

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

www.securitytaxservices.com

Travel & Entertainment: Maximizing Tax Benefits -

Tax law allows you to deduct two types of travel expenses related to your business, local and what the IRS calls "away from home".

1. First, local travel expenses. You can deduct local transportation expenses incurred for business purposes, for example the cost of getting from one location to another via public transportation, rental car, or your own automobile. Meals and incidentals are not deductible as travel expenses, although as you will read later in this guide, you can deduct meals as an entertainment expense as long as certain conditions are met.
   
   
2. Second, you can deduct away from home travel expenses-including meals and incidentals; however, if your employer reimburses your travel expenses, your deductions are limited.
   
   
   
   

Local Transportation Costs

The cost of local business transportation includes rail fare and bus fare, as well as the costs of using and maintaining an automobile used for business purposes. For those whose main place of business is their personal residence, business trips from the home office and back are considered deductible transportation and not non-deductible commuting.

You generally cannot deduct lodging and meals unless you stay away overnight. Meals may be partially deductible as an entertainment expense.

Away From-Home Travel Expenses

You can deduct one-half of the cost of meals (50%) and all of the expenses of lodging incurred while traveling away from home. The IRS also allows you to deduct 100% of your transportation expenses--as long as business is the primary reason for your trip.

Here's a list of some deductible away-from-home travel expenses:

• Meals (limited to 50%) and lodging while traveling or once you get to your away-from-home business destination.
• The cost of having your clothes cleaned and pressed away from home.
• Costs for telephone, fax or modem usage.
• Costs for secretarial services away-from-home.
• The costs of transportation between job sites or to and from hotels and terminals.
• Airfare, bus fare, rail fare, and charges related to shipping baggage or taking it with you.
• The cost of bringing or sending samples or displays, and of renting sample display rooms.
• The costs of keeping and operating a car, including garaging costs.
• The cost of keeping and operating an airplane, including hangar costs.
• Transportation costs between "temporary" job sites and hotels and restaurants.
• Incidentals, including computer rentals, stenographers' fees.
• Tips related to the above.
  
  

Entertainment Expenses

There are limits and restrictions on deducting meal and entertainment expenses. Most are deductible at 50%, but there are a few exceptions. Meals and entertainment must be "ordinary and necessary" and not "lavish or extravagant" and directly related to or associated with your business. They must also be substantiated (see below).

Your home is considered a place conducive to business. As such, entertaining at home may be deductible providing there was business intent and business was discussed. The amount of time that business was discussed does not matter.

Reasonable costs for food and refreshments for year-end parties for employees, as well as sales seminars and presentations held at your home are 100% deductible.

If you rent a skybox or other private luxury box for more than one event, say for the season, at the same sports arena, you generally cannot deduct more than the price of a non-luxury box seat ticket. Count each game or other performance as one event. Deduction for those seats is then subject to the 50% entertainment expense limit.

If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. The amounts separately stated for food and beverages must be reasonable.

Deductions are disallowed for depreciation and upkeep of "entertainment facilities" such as yachts, hunting lodges, fishing camps, swimming pools, and tennis courts. Costs of entertainment provided at such facilities are deductible subject to entertainment expense limitations.

Dues paid to country clubs or to social or golf and athletic clubs however, are not deductible. Dues that you pay to professional and civic organizations are deductible as long as your membership has a business purpose. Such organizations include business leagues, trade associations, chambers of commerce, boards of trade, and real estate boards.

Tip: To avoid problems qualifying for a deduction for dues paid to professional or civic organizations, document the business reasons for the membership, the contacts you make and any income generated from the membership.

Entertainment costs, taxes, tips, cover charges, room rentals, maids and waiters are all subject to the 50% limit on entertainment deductions.

How Do You Prove Expenses Are "Directly Related"?

Expenses are directly related if you can show:

• There was more than a general expectation of gaining some business benefit other than goodwill.
• You conducted business during the entertainment.
• Active conduct of business was your main purpose.
  
  

Record-keeping and Substantiation Requirements

Tax law requires you to keep records that will prove the business purpose and amounts of your

business travel, entertainment, and local transportation costs. For example, each expense for lodging away from home that is $75 or more must be supported by receipts. The receipt must show the amount, date, place, and type of the expense.

The most frequent reason that the IRS disallows travel and entertainment expenses is failure to show the place and business purpose of an item. Therefore, pay special attention to these aspects of your record-keeping.

Keeping a diary or log book--and recording your business-related activities at or close to the time the expense is incurred--is one of the best ways to document your business expenses.

If you need help documenting business travel and entertainment expenses, don't hesitate to call us. We'll help you set up a system that works for you--and satisfies IRS record-keeping requirements.

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

www.securitytaxservices.com

Best Filing Status for Married Couples -

Summer is wedding season. After you say, "I do" you'll have two filing status options to choose from when filing your 2013 tax returns: married filing jointly, or married filing separately.

Married Filing Jointly

You can choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions.

If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.

Joint Responsibility. Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

Married Filing Separately

If you are married, you can also choose married filing separately as your filing status. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return.

We Can Help

Give us a call if you're not sure which status to file under. If you and your spouse each have income, we will figure your tax both ways and let you know which filing status gives you the lowest combined tax.

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

www.securitytaxservices.com

Happy Independence Day! -

From The Security Tax Services Family to yours,
We hope you all have a safe and happy 4th of July, celebrating our country's independence & freedom.

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

www.securitytaxservices.com

STS QuickBooks Tip - How to Create a Progress Invoice from an Estimate -

The U.S. economy may be picking up, but your customers are probably still being very careful with expenditures. If your company's finances will allow it, you can help them out on sizable jobs by using progress invoicing, also known as partial billing or progress billing.

You could, of course, simply create invoices for smaller chunks of the job as they come. A smarter way is to build estimates for the entire job or sequential phases so your customer can see the big picture. You can still use progress invoicing to start collecting funds one segment at a time.

How to Proceed

First, be sure you have progress invoicing turned on. Go to Edit | Preferences | Jobs & Estimates | Company Preferences and make sure the Yes button is filled in next to the questions about estimates and progress invoicing.

Now create your estimate (these instructions are for QuickBooks Premier 2013; your steps may vary slightly). Go to Customers | Create Estimates. When you've entered all of the items you want to include in this phase of your project, click the Create Invoice button. This window will open:

Figure 1: You can decide how many of your estimate items will be included on your progress invoice. 

By clicking one of these buttons, you can bill the customer 100 percent of what's due on the invoice or just a percentage. But let's say you and your customer have agreed that payment will be due in pre-defined stages, so click the third button and select one or more of the line items. Click OK. QuickBooks will display a new window that lets you select items and/or percentages of amounts due.

In our example here, we're going to invoice the customer for two items, the blueprints and floor plans. So we selected the button next to Show Quantity and Rate and entered the full estimated quantity for each item in the QTY columns (if you chose Show Percentage, new columns would appear). It would look like this:

Figure 2: You can select specific items or percentages for your progress invoice. 

Click OK. QuickBooks will return to your progress invoice, which you can save and print or email to your customer. Your original estimate will remain unchanged.

Tip: If you don't want any of the zero amounts to appear on the progress invoice, go to Edit | Preferences | Jobs & Estimates | Company Preferences and make sure there's a check mark in the box next to Don't print items that have zero amounts.

Following Up

When you want to bill for another set of items on this estimate, simply repeat these steps.

Here's an easy way to determine how much (if any) of the estimate has been invoiced. Go to the Customer Center and select the customer. Click the arrow next to the Show field and select Estimates. Any estimate that has a zero in the OPEN BALANCE column has been completely billed.

QuickBooks provides a report that tells you where you are with all of your progress invoices. Go to Reports | Jobs, Time & Mileage | Job Progress Invoices vs. Estimates. Your report will include the progress invoice you just created:

Figure 3: You can see what percentage of each estimate has been included on a progress invoice in this report. 

More Options

What if you determine that you won't have one or more of the items on the estimate? QuickBooks lets you quickly generate a purchase order. With your estimate open, click Create Purchase Order to select the item(s) needed and generate the form. You can also click Create Sales Order if one is necessary.

Estimates provide a useful way to fine-tune your bookkeeping and inform your customers about impending costs. They can also be confusing if you don't keep up with them. We can help you determine when they're a good idea and how to keep them organized. QuickBooks provides good tools here, but they do require some administrative control.

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

www.securitytaxservices.com

Tax Due Dates for July 2013 -

July 10	Employees Who Work for Tips - If you received $20 or more in tips during June, report them to your employer. You can use Form 4070.
July 15	Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in June. Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in June.
July 31	Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the second quarter of 2013. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until August 12 to file the return. Employers - Federal unemployment tax. Deposit the tax owed through June if more than $500. Employers - If you maintain an employee benefit plan, such as a pension, profit sharing, or stock bonus plan, file Form 5500 or 5500-EZ for calendar year 2012. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends. Certain Small Employers - Deposit any undeposited tax if your tax liability is $2,500 or more for 2013 but less than $2,500 for the second quarter.

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

www.securitytaxservices.com