Online Advisor
Timothy W. Tuttle & Associates
 


Volume 15 Edition 01                Please email comments to newsletter@tuttlefirm.com                  Jan 2019


Major Events This Month:

For January 2019      

January 1: New Year's Day

January 15: 4th Quarter Estimated Payments Due

January 21: Martin Luther King Jr. Day

Start tax planning for the new year:

- Adjust withholdings

- Organize filing records

- Schedule tax consultation

- Rebalance investment portfolio

The new year is upon us! As you finish cleaning up the champagne glasses and confetti, now is the time to start thinking about your tax preparation plan. This issue is packed with useful information including tips to receive a faster refund. In addition, there are ideas to manage cash flow for your business, things to consider when living with a smart speaker, and age-appropriate suggestions for teaching your children how to handle financial matters.

Call if you would like to discuss how any of this information relates to you. If you know someone that can benefit from this newsletter, feel free to send it to them.

Tips for a Faster Refund

As the tax filing season approaches, there are steps you can take now to speed up the filing process. The faster your return is filed, the faster you get your refund. Even if you end up owing money to the IRS, knowing the amount due sooner gives you more time to come up with the funds needed to pay your tax bill. Here are things you can do now to get organized:

  1. Look for your tax forms. Forms W-2, 1099, and 1098 will start hitting your mailbox. Look for them and get them organized. Create a checklist of the forms to make sure you aren't missing any.
  2. Don't wait for Form 1095s. Once again, proof of health insurance coverage forms are delayed. The deadline for companies to distribute most Form 1095s to employees is pushed back to March 4. The IRS is OK with filing your return prior to receiving the proof of insurance form as long as you can provide other forms of proof. Remember, 2018 is the last year of penalties if you do not have adequate insurance coverage.
  3. Finalize name changes. If you were recently married or had a name change, file your taxes using the correct name. File your name change with the Social Security Administration as soon as possible, but be aware of the timing with a potential name conflict with the IRS.
  4. Collect your statements and sort them. Using last year's tax return, gather and sort your necessary tax records. Sort your tax records to match the items on your tax return. Here is a list of the more common tax records:

If you are not sure whether something is important for tax purposes, retain the documentation. It is better to save unnecessary documentation than to later wish you had the document to support your deduction.

  1. Clean up your auto log. You should have the necessary logs to support your qualified business miles, moving miles, medical miles and charitable miles driven by you. Gather the logs and make a quick review to ensure they are up to date and totaled.
  2. Coordinate your deductions. If you and someone else may share a dependent, confirm you are both on the same page as to who will claim the dependent. This is true for single taxpayers, divorced taxpayers, taxpayers with elderly parents/grandparents, and parents with older children.

While you are organizing your records, ride the momentum to start your filing system for the new year. Doing so will make this process a breeze this time next year!

Every Business Needs Cash!

5 keys to better cash management

Focusing solely on sales and profits can create a surprise for any business when there is not enough cash to pay the bills. Here are five key principals to improve your cash management.

  1. Create a cash flow statement and analyze it monthly. The primary objective of a cash flow statement is to help you budget for future periods and identify potential financial problems before they get out of hand. This doesn't have to be a complicated procedure. Simply prepare a schedule that shows the cash balance at the beginning of the month and add cash you receive (from things like cash sales, collections on receivables, and asset dispositions). Then subtract cash you spend to calculate the ending cash balance. If your cash balance is decreasing month to month, you have negative cash flow and you may need to make adjustments to your operations. If it's climbing, your cash flow is positive.

Bonus tip: Once you have a cash flow statement that works for you, try to automate the report in your accounting system. Or even better, create a more traditional cash flow statement that begins with your net income, then make adjustments for non-cash items and changes in your balance sheet accounts.

  1. Create a history of your cash flow. Build a cash flow history by using historical financial records over the course of the past couple of years. This will help you understand which months need more attention.
  2. Forecast your cash flow needs. Use your historic cash flow and project the next 12 to 24 months. This process will help identify how much excess cash is required in the good months to cover payroll costs and other expenses during the low-cash months. To smooth out cash flow, you might consider establishing a line of credit that can be paid back as cash becomes available.
  3. Implement ideas to improve cash flow. Now that you know your cash needs, consider ideas to help improve your cash position. Some ideas include:
  4. Manage your growth. Take care when expanding into new markets, developing new product lines, hiring employees, or ramping up your marketing budget. All require cash. Don't travel too far down that road before generating accurate cash forecasts. And always ask for help when needed.

Understanding your cash flow needs is one of the key success factors in all businesses. If your business is in need of tighter cash management practices, now is the perfect time to get your cash flow plan in order.

Hey Alexa. Are you Making Me Dumb?

3 concerns to consider while living with a smart speaker

Smart speakers like the Amazon Echo and Google Home are popping up everywhere. According to a Nielsen study from last September, nearly one of every four U.S. households has a smart speaker - 40 percent of those homes have more than one. For some, the speaker is an easy way to play music, for others it's a unique way to easily access the Internet for information and control other Wi-Fi enabled products. However, there are some questions regarding whether or not it's a good idea to own one. Here are three concerns to consider if you own or are thinking of purchasing a smart speaker:

While there is no shortage of opinions regarding the use of smart speakers in the home, it's up to you to decide if it fits with your lifestyle. If you are torn, Amazon and Google have smaller versions (Echo Dot and Google Home Mini) that are relatively inexpensive. You can try it out for a while and see how you like it. If it goes well, you can spring for the larger model and move the smaller version to another room in the house. If it goes poorly, you can sell it or give it to someone else.

How to Raise a Financially Savvy Child

If you have children (or grandchildren) you have an opportunity to give them a jump-start on their journey to becoming financially responsible adults. While teaching your child about money and finances is easier when you start early, it's never too late to impart your wisdom. Here are some age-relevant suggestions to help develop a financially savvy young adult:

Knowing about money - how to earn it, use it, invest it and share it - is a valuable life skill. Simply talking with your children about its importance is often not enough. Find simple, age specific ways to build their financial IQ. A financially savvy child will hopefully lead to a financially wise adult.

Taking a Home Office Deduction

A great tax reduction idea, if done right!

Cloud-based applications, extensive communication channels, and other new technologies make it easier to run your business out of your home. If you qualify, many home business expenses are deductible. Think you might qualify? You must first pass these tests.

  1. Trade or business use test. To qualify for business use of your home you must use part of your home for a qualified trade or business. This profit seeking activity must not be a hobby in the eyes of the IRS.
  2. Exclusive use test. You must use part of your home exclusively for your business activity. Blending personal use within the same space as your business activity can disallow the business use of home deductions, however, there does not need to be a permanent barrier between this space and the rest of the house.
  3. Regular use test. In addition to having a qualified business activity in an exclusive area of your home, you must also use it "regularly" for your business activity. The IRS applies judgment in this area to determine the facts and circumstances around what it deems to be regular use.
  4. Principal place of business test. To deduct your home office expenses, the home location must also be your principal place of business. That does not mean there cannot be other business locations, just that your home office must be your primary location. You might also have multiple business activities. In this case, you could meet the test for one of your businesses to qualify to take the deductions. With multiple locations, the considering factors are:

Types of deductible expenses

This chart from the IRS gives some direction on the types of expenses that are deductible. As always, proper substantiation is required to take the deduction, so keep all receipts and statements in an organized fashion.

Expense

Description

Deductibility

Direct Expenses only for the business part of your home.

Examples:
Painting or repairs only in the area used for business.

Deductible in full. *

Exception:
May be only partially deductible in a daycare facility.

Indirect Expenses for keeping up and running your entire home.

Examples:
Insurance, utilities, and general repairs.

Deductible based on the percentage of your home used for business. *
Unrelated Expenses only for the parts of your home not used for business.

Examples:
Lawn care or painting a room not used for business.

Not deductible.
Source: IRS Publication 587

* Subject to the deduction limit

Sound confusing? Perhaps. If the additional work of tracking specific expenses is too much to handle, a simplified home office deduction calculation is also available to small businesses to lower their tax bill. Please call should you need help in navigating this part of the tax code.

IRS Announces 2019 Mileage Rates

Mileage rates for travel are now set for 2019. The standard business mileage rate increases by 3.5 cents to 58 cents per mile. The medical and moving mileage rates also increase by 2 cents to 20 cents per mile. Charitable mileage rates remain unchanged at 14 cents per mile.

2019 Standard Mileage Rates

Standard Mileage Rates

Mileage

Rate/Mile

Business Travel

58 cents

Medical/Moving

20 cents

Charitable Work

14 cents

Here are 2018 rates for your reference, as well.

2018 Standard Mileage Rates

Standard Mileage Rates

Mileage

Rate/Mile

Business Travel

54.5 cents

Medical/Moving

18 cents

Charitable Work

14 cents

Remember to properly document your mileage to receive full credit for your miles driven.

As always, should you have any questions or concerns regarding your situation please feel free to call.

This publication provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten or redistributed without permission, except as noted here. This publication includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this newsletter. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does TIMOTHY W TUTTLE & ASSOCIATES have any control over, or responsibility for, the content of any such Websites. All rights reserved.


You are receiving this eNewsletter because you have a business relationship with The Tuttle Firm, or have expressed an interest in our services.  If this is not the case, and you wish to be deleted from our newsletter email list, please send an email to newsletter@tuttlefirm.com and state "Remove Me" in the subject line.

The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.

Timothy W. Tuttle & Associates
www.tuttlefirm.com