BHB Advisors LLC, CPAs and Consultants

 

Based in Minnesota, BHB Advisors, LLC is a full service tax and accounting practice, offering the following services:

  1. Tax – planning and compliance work for individuals, corporations and partnerships
  2. Accounting Services and Financial Statements
  3. Consulting and Management Advisory Services

Our mission is to communicate, collaborate and cooperate with our clients to help get them where they want to be financially.

Our specialty is working with individuals and small to midsize companies in the Minneapolis and St. Paul area.

We hope that our website will offer you a glimpse of our expertise and help answer tax and accounting questions you may have.

Deductible Miles

In 2015 the mileage rate for business miles is 57.5 cents per mile.

Taking a mileage deduction is a great opportunity to offset business income. However it is important to keep good records of your miles for substantiation.  It's also important to know which miles are deductible and which are not.

This is a basic chart for employees and business owners whose main office is not the person's home:

deductible miles

As shown, commuting from home to work is never deductible, but travel from your main office or home to a temporary work location is deductible.  Make sure you substantiate your deductible miles by keeping a log of the miles traveled using either the total miles or the beginning and ending odometer readings before and after making the trip.  You should also state the date, location, and reason you made the trip on your log.  Without a substantiating log, your mileage deduction may be disallowed by the IRS upon audit.  Click for an example mileage log.

Taxable Fringe Benefits

If you have considered offering your employees fringe benefits, you should be aware of which benefits are taxable and which are not. The IRS has a helpful published guide with all the details, but here is a quick note…

Typically, any fringe benefit is taxable and should be included in the recipient's compensation unless specifically excluded.

Here is an example of an easy guide summarizing excludable fringe benefits from the publication:

Taxable benefits

It is important to understand this information and report it correctly on the recipient's W-2 or 1099.  It can be costly to have your payroll company issue corrected reports so make sure to track this information and reported to your payroll company in a timely manner.

Just Married?

Wedding

Not surprisingly, the last thing two people think of when saying "I Do" is taxes.  However, to reduce stress at tax time, there are a few important steps to consider.

  1. Notify the Social Security Office:  Make sure to report any name changes to the Social Security Administration by filling out Form SS-5.  This will make sure that your new name will match your social security number when you file your tax return.
  2. Update your address:  You should fill out Form 8822 to notify the IRS of your new address.  You should also update your address with the US Postal Service at https://moversguide.usps.com/icoa/icoa-main-flow.do?execution=e1s1.
  3. Notify your employer: Make sure to update any name or address changes with your employer to make sure you receive a correct W-2 after the end of the year.
  4. Check your withholding: The combination of you and your spouse's income could place you into a higher tax bracket.  To make sure that the proper amount of tax is withheld from your wages you can take advantage of the IRS Withholding Calculator.  Using the information from the withholding calculator make sure to fill out a new Form W-4 to give to your employer so they can start withholding the correct amount from your pay.
  5. Selecting the correct tax form and filing status:  Newly married taxpayers might have enough deductions to itemize on their tax return.  Be aware that itemized deductions can only be taken on Form 1040, not 1040A or 1040EZ.  A person's marital status is determined by whether or not they are married on the last day of the year.  However the IRS allows a married couple to file separately, if desired.  Calculating your return with each status will allow you to see which gives the better benefit, however filing jointly is usually the better choice.

Lastly, Congratulations from BHB Advisors, LLC on your new marriage, and please contact us with any questions you may have on these tips.

Had a baby this year? Learn what that means to your taxes….

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There are certain tax advantages to adding a little one to your family.

  1.  Taxpayers may receive an exemption for each child or qualifying dependant beginning in the year they were born up to the age of 19 (the limit is 24 if they are a full-time student).
  2.   Taxpayers may be eligible for a child tax credit for children under the age of 17.
  3.  A child and dependent care credit may be claimed for child care expenses incurred for children under the age of 13, if the expenses are incurred so that the taxpayer may work, or look for work.
  4. An earned income tax credit may be available for working parents.
  5.   An adoption credit is available for qualifying expenses paid to adopt and eligible child.

For more information on how your children affect your taxes, please contact your tax professional, or us at BHB Advisors, LLC at 651-332-5101.

Note: Credits and deductions may be subject to dependent qualifications and income limitations.

Good Recordkeeping

A new year has started and tax season is over, and maybe it was a little more difficult to gather all your information than you would have liked.  Before we get too far into the year, read these tips to make sure you are practicing good record keeping habits so that next year will be a piece of cake!

  1. Keep records in one location- One of the struggles come tax time is that records get filed in many different locations and taxpayers spend lots of unnecessary time searching all the places they could have put that one piece of paper. Instead, when you receive a receipt or record that is commonly used for your taxes, make a copy and keep it in a tax file. Doing this will ensure that all your tax records are together and you can just hand the whole file over to your preparer. Common records to keep will include, but are not limited to, medical and charitable receipts, property tax and interest statements, or any statements with the words “Tax Document” printed on the envelope.
  2. Use Excel Worksheets- When taxpayers begin to gather lots of receipts or data for the year, a good practice is to begin to record these receipts on an Excel spreadsheet.  This way you will be able to make sure that every expense has been recorded without searching through hundreds of individual receipts.  This will also enable you to compute quick totals instead of adding each expense individually with a calculator, which could take a lot of time and mistakes are easily made.  A good example of an expense to record with Excel would be business miles.
  3. Take advantage of Personal or Business Financial Software- Many different types of software such as Quicken, NeatDesk, QuickBooks, and Mint.com are available to help with personal financial needs in a range of prices from $0 to hundreds of dollars.  These kinds of software help to track and locate your finances using search features and other kinds of tracking options. Then come tax time, you can figure out exactly what you paid for deductable items such as vehicle registration fees.  They are also handy tools for budgeting and other personal finance needs.
  4. Create a System- Every person is different, some people prefer a fancy high tech computer to track everything, some love label makers and cubby holes, and some prefer a shoe box above all else.  Figure out what works for you and your lifestyle.
  5. Be Diligent- Good recordkeeping will save you money and stress in the long run.

 

For additional information check out this video from the IRS titled “Good Recordkeeping helps avoid headaches at tax time

Note: BHB Advisors is not affiliated with nor endorse any of the aforementioned software companies.

2014 Tax Season Resources

Welcome to another tax season!  To make this busy time a little easier, you can download all the necessary documents right here.

We ask all of our clients to fill out and return a signed Engagement Letter, and Questionnaire. We also have an Organizer that you can fill out to help gather your tax information.

Engagement Letter

Questionnaire  – This is a “fill in” PDF form, but will need to be either printed to .pdf or paper to record your answers.

Organizer

If we did your return in 2013, you will receive an Organizer with your prior year information.  If you need a new Organizer, please contact Carrie to have one sent to you.

 

If you are a new client, please download and complete the blank Organizer that pertains to your situation.

 

  • Basic – For taxpayers without Schedule C business income or rental property.
  • Business Income – For taxpayers with self-employment income. Please make sure to fill out this Organizer AND the Basic Organizer.
  • Rental Income – For taxpayers with rental properties. Please make sure to fill out this Organizer AND the Basic Organizer.
  • Complete – This is the complete version for taxpayers with multiple activities such as business, rental, or farm income.

If you have Adobe Acrobat see our instructions  for filling out your organizer in Adobe.

Reminders!

2014 4th Quarter Estimates – Due on January 15th, 2015.

2014 1099 Forms – Regarding anyone required to distribute 1099 forms for interest paid to an individual, payments to contractors totaling over $600, rents, etc. The due date for sending these forms is February 2nd, 2015.  If you need help or have any questions about the requirements please consult your tax accountant or see our article “1099 Filing Requirements.”

2014 Sales and Use Tax – If you signed up with the Minnesota Department of Revenue as an annual filer for sales and use tax, the due date for this return is February 5th, 2015.  If you signed up for sales and use tax you are required to file even if you did not incur a sales or use tax liability.  In this case, it is perfectly acceptable to file a zero return.  If you have questions please contact your tax accountant or see our article “Do you have a Use Tax liability?

2014 Trust Distributions – Fiduciaries of estates and some trusts have the option to treat certain distributions as made in the previous year.  If a distribution is made in the first 65 days of a year, an election can be made to treat that distribution as if it was made in the prior year.  The last day to make a 2014 distribution from a trust is March 6th, 2015.

2014 IRA Contributions – You have until April 15, 2015 to make your Traditional and Roth IRA contributions.

2014 HSA Contributions – April 15, 2015 is the last day you can make a contribution to your HSA for 2014.  The contribution limits are $3,300 for self-only or $6,550 for family coverage. Add an additional $1,000 if you were 55 or older at the end of 2014.

UPDATES

2015 Standard Mileage Rates

Business: 57.5 cents per mile (56 cents per mile in 2014)

Medical and Moving: 23 cents per mile (23.5 cents per mile in 2014)

Charitable: 14 cents per mile (same in 2014)

 

Expiring deductions

The extender package was passed on December 16th that extends over fifty expiring provisions through 2014.  Since this was a one year extension, Congress will have to vote on the expiring provisions again next year.

 

179 Deduction

The amount of allowable federal 179 expense was decided upon with the extender package that was passed on December 16th.  The allowable deduction is maxed out at $500,000 and decreases dollar for dollar once a business has placed in service more than $2 million dollars of qualifying assets.

 

Minnesota Refund

Because of mid-year law changes, many taxpayers received different refunds than what was originally reported on their tax return.  It is possible for taxpayers to look up and print a copy of Form 1099-G stating what they received as a refund.  The MN DOR states however that information about refunds paid in 2014 won't be available until January 31st 2015.  You can look up your refund here.

Congress Passes “Tax Extenders” for 2014

Congress has passed the “tax extenders” to extend many tax provisions for 2014 that had expired at the beginning of the year.  A few of the more common provisions are listed below.

Small Business highlights:

  • The small business (Section 179) depreciation deduction limit on purchases of assets remains at $500,000 limit instead of dropping to $25,000
  • 50% bonus depreciation on new property has also been extended

Personal Tax highlights:

  • Tax free IRA charitable contributions can be made for those over 70 ½
  • The sales tax deduction will continue to be allowed in lieu of the state tax deduction on Schedule A, itemized deductions.
  • The higher education tuition and fees deduction will remain the same
  • Mortgage insurance premiums will continue to be deductible as an itemized deduction

We expect these provisions to be extended for 2015 as well but that will require additional legislative action.