Archives for August 2019

Mixed Messages

If you listen to news about the economy you may be hearing mixed messages. Some reports talk about economic growth. Some talk about an impending recession.

The U.S. Bureau of Economic Analysis, does just that – analyses the U.S. economy and they report that growth has been OK the last two quarters. So, why then the recession worry? Trade wars, basically. If a trade war does escalate with China there could be a recession. And something called an inverted yield curve is concerning the stock market. An inverted yield curve is when investing in a short term (2-3 years) bond has a higher yield than investing in a long term (10 years) bond. That is the opposite of what we normally see. And the stock market can have an influence on the economy.

It’s big companies, big investors in the stock market, and big organizations like governments that have the most to worry about and have the most influence on the economy.

What Do We Do?

A ‘regular’ recession (not like the great recession of 2008 which we went through not too long ago) is only really worrisome of you happen to be one of the workers who loses their job or gets reduced wages or hours. If you are in a recession proof job, like firefighter or teacher, you will probably weather whatever comes just fine. If, however, you are in a more ‘retail’ environment, one which depends on customers, then you might be affected. But you can plan a “just in case” scenario by doing a couple of simple things.

Save and Reduce

Figure out where you might be spending to the limit of your income and back off. Maybe you eat out twice a week, or Starbucks every day. If you reduce that frequency by half and put those funds in a savings account instead, in just a few weeks you may have enough for a couple of bills. Having money in savings for an emergency such as losing a job, can be a great stress reliever if the time comes.

Reduce your interest where you can. I know we don’t tend to regularly look at what we are paying interest rate wise for our credit cards and other consumer loans, but if there is an opportunity to lower your interest rates do it now. Many companies offer 0% interest on credit card transfers which can save you money.

Pare down where you can now, before things get bad. Do you really use all that data each month? Do you really watch all those cable channels? Do the kids really need new colored pencils or can you find a whole set from the ones in the jar and those that slipped behind the sofa?

Don’t forget insurance. While it’s generally not a good idea to reduce coverage, if you think losing a job could be imminent maybe having full coverage on your 8 year old vehicle is not really necessary?

Work More

If you can work more now and put your extra earnings in savings then you might have a couple months of car payments put aside before you know it. Of course, if you just spend that extra money and don’t save any of it you may have fun now but it won’t help you if our economy slumps and you’re directly affected.

What if the worst happens?

If you do lose your job or get your hours reduced then immediately apply for unemployment benefits if they are available to you. You will have to wait a week before benefits kick in (so wouldn’t you be happy if you have saved all that Starbucks money for groceries!). Apply for reduced utility rates so you can begin reaping the benefits right away. Utilities have programs that can reduce your rates up to 20% depending on your household size and income.

Get rid of all that is not necessary. Netflix is not going to ban you for life if you cancel now to save $25 a month. Where else do you have automatic subscriptions or donations coming out of a bank account or credit card? Stopping them all and opting to pay by check at your own timing can save you stress and money. Maybe you won’t really miss that monthly delivery of exotic soaps for a couple months. And you can always start them over once you are back to normal.

Recessions Don’t Last Forever

A recession is a period of temporary economic decline, usually defined as negative growth of the Gross Domestic Product (GDP) for two quarters or more. The thing about a recession is that we are usually a few months into it before we real people actually begin to feel it. And there is a possible upside. If weekly movies are no longer an option, you and your family might find that you love getting Redbox and making homemade popcorn together. You might actually enjoy cooking more than eating out. Finding clever ways of saving and reducing can get your creative juices flowing and making you proud of making the best of what you have. And before you know it, all will be back to growth. It is a normal part of the economy, for it to ebb and flow.

These tax tips can help new business owners find success

Starting a business can be very rewarding. It can also be a little overwhelming. From business plans to market strategies, and even tax responsibilities…there are many things to consider. Here’s what new business owners can do to help get off to a good start.

Choose a business structure. The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are:
- Sole proprietorship: An unincorporated business owned by an individual. There’s no distinction between the taxpayer and their business.
- Partnership: An unincorporated business with ownership shared between two or more people.
- Corporation: Also known as a C corporation. It’s a separate entity owned by shareholders.
- S Corporation: A corporation that elects to pass corporate income, losses, deductions, and credits through to the shareholders.
- Limited Liability Company: A business structure allowed by state statute.
Choose a tax year. A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:
- Calendar year: 12 consecutive months beginning January 1 and ending December 31.
- Fiscal year: 12 consecutive months ending on the last day of any month except December.
Apply for an employer identification number. An EIN is also called a federal tax identification number. It’s used to identify a business. Most businesses need an EIN.
Have all employees complete these forms:
- Form I-9, Employment Eligibility Verification
- Form W-4, Employee’s Withholding Allowance Certificate
Pay business taxes. The form of business determines what taxes must be paid and how to pay them.

Taxpayers interested in starting a business can find information for some industries on the Industries/Professions Tax Centers webpage. Each state has additional requirements for starting and operating a business. Prospective business owners should visit their state’s website for info about state requirements.

More information: Small Business Admiration’s 10 steps to start your business

Tax pros: Follow the “Security Six” steps to help protect taxpayer data

Tax professionals should review security steps to make sure they are fully protecting sensitive taxpayer data. All tax pros should give their data safeguards a thorough review. Part of this review is following the “Security Six” protections.

Here is more info about these basic protections that everyone – especially tax professionals handling sensitive data – should use:

Anti-virus software
• This software scans computer files or memory for certain patterns that may indicate there’s malicious software – also called malware – on the device.
• Anti-virus vendors find new issues and update malware daily. This is why it’s important for users to install the latest updates of the software.
Firewalls
• Firewalls provide protection against outside attackers. The firewall shields computers and networks from malicious or unnecessary web traffic. This helps prevents malicious software from accessing the user’s system.
Two-factor authentication
• Two-factor authentication adds an extra layer of protection beyond a password.
• The returning user enters credentials like a username and password. Then, there’s another step, such as entering a security code.
Backup software or services
• Users should routinely back up critical files on their computers and hard drives to external sources.
Drive encryption
• Because tax professionals keep sensitive client data on their computers, users should consider drive encryption software.
• Drive encryption is also known as disk encryption. It transforms data on the computer into unreadable files. This means only people who are authorized to access the data can do so.
Virtual private network
• Many tax firms’ employees must occasionally connect to unknown networks or work from home. So, the office should establish an encrypted virtual private network. This allows for a more secure connection.
• A VPN provides a secure, encrypted tunnel to transmit data between a remote user over the internet and the company network.

More information:

Publication 4557, Safeguarding Taxpayer Data
Small Business Information Security: The Fundamentals by the National Institute of Standards and Technology
Publication 5293, Data Security Resource Guide for Tax Professionals

New IRS impersonation email scam

Security Summit warns of new IRS impersonation email scam; reminds taxpayers the IRS does not send unsolicited emails

WASHINGTON — The Internal Revenue Service and its Security Summit partners today warned taxpayers and tax professionals about a new IRS impersonation scam campaign spreading nationally on email. Remember: the IRS does not send unsolicited emails and never emails taxpayers about the status of refunds.

The IRS this week detected this new scam as taxpayers began notifying phishing@irs.gov about unsolicited emails from IRS imposters. The email subject line may vary, but recent examples use the phrase “Automatic Income Tax Reminder” or “Electronic Tax Return Reminder.”

The emails have links that show an IRS.gov-like website with details pretending to be about the taxpayer’s refund, electronic return or tax account. The emails contain a “temporary password” or “one-time password” to “access” the files to submit the refund. But when taxpayers try to access these, it turns out to be a malicious file.

“The IRS does not send emails about your tax refund or sensitive financial information,” said IRS Commissioner Chuck Rettig. “This latest scheme is yet another reminder that tax scams are a year-round business for thieves. We urge you to be on-guard at all times.”

This new scam uses dozens of compromised websites and web addresses that pose as IRS.gov, making it a challenge to shut down. By infecting computers with malware, these imposters may gain control of the taxpayer’s computer or secretly download software that tracks every keystroke, eventually giving them passwords to sensitive accounts, such as financial accounts.

The IRS, state tax agencies and the tax industry, which work together in the Security Summit effort, have made progress in their efforts to fight stolen identity refund fraud. But people remain vulnerable to scams by IRS imposters sending fake emails or harrassing phone calls.

The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts. The IRS also doesn’t call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. See Report Phishing and Online Scams for more details.

Employers who provide leave might qualify to claim valuable credit

Employers who provide paid family and medical leave to their employees might qualify for a credit that can reduce the taxes they owe. It’s called the employer credit for family and medical leave.

Here are some facts about the credit to help employers find out if they might be able to claim it.

To be eligible, an employer must:

Have a written policy that meets several requirements.
Provide:
- At least two weeks of paid family and medical leave to full-time employees.
- A prorated amount of paid leave for part-time employees.
- Pay for leave that’s at least 50 percent of the wages normally paid to employees.

Applicable dates:

It’s available for wages paid in taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2020.

The amount of the credit:

The credit is generally equal to 12.5 to 25 percent of paid family and medical leave for qualifying employees. The percentage is based on how much employers pay each employee for family and medical leave.

Qualifying leave:

The leave can be for any or all the reasons specified in the Family and Medical Leave Act:

Birth of an employee’s child.
Care for the child.
Placement of a child with the employee for adoption or foster care.
To care for the employee’s spouse, child, or parent who has a serious health condition.
A serious health condition that makes the employee unable to perform the functions of their job.
Any qualifying emergency due to an employee’s spouse, child, or parent being on covered active duty in the Armed Forces. This includes the taxpayer being notified of an impending order to covered active duty.
To care for a service member who is the employee’s spouse, child, parent, or next of kin.

Claiming the credit:

To claim the credit, employers will file two forms with their tax return. These are Form 8994, Credit for Paid Family and Medical Leave, and Form 3800, General Business Credit.

Good Credit

We all try to use our credit wisely. But American’s credit card debit has been inching up along with the cost of living. Since the late 70s have essentially been keeping up with the increasing costs of daily life with debt. If you are one of the lucky (or frugal) and do not carry debt month over month then why not find one that is the most useful to you?

Once a Year

It pops up, that Annual Fee on your credit card. And you probably, for a moment, say to yourself “What the heck is that!” until you read further. A fee on top of paying interest may seem like insult to injury. But it may be a way to offset those rewards consumers want as well as separating the wheat from the chaff – the chaff being frugal consumers. Credit card companies want ‘good’ borrowers (yes, that is essentially what we are when we use credit) i.e. wealthy, to ensure that they keep paying them back.

You can expect an annual fee to be between $25 and $500 depending on the card. If the rewards surpass the amount of the fee then you have found yourself a good deal. If, however, you fail to use the perk – such as a free hotel room – in a year you have come out in the red.

Points Matter-The Fewer the Better

If you carry a balance on your credit cards and that annual fee comes with a lower APR (annual percentage rate) it might well be worth it. Or if you travel often and want to rack up mileage points you might find a card with great rewards but also possibly a higher fee.

There are always deals available for 0% interest. But read carefully, those deals are for a finite amount of time. It is important to know what the interest rate will go to once the offer time has elapsed. And beware, not all 0% interest offers cover balance transfers. And if there is a deal on a balance transfer, you can bet there is a fee (usually a small percentage of the amount transferred) tacked on.

Calculate

If you are using a credit card for travel rewards for instance, calculate how much the reward will save you. If your savings are more than you would pay, say a hotel stay valued at $120 and the annual fee is $85 you have just saved yourself $35. But if you don’t plan on travelling often and let those rewards expire unused, then you have just cost yourself $85.

If you are taking advantage of a 0% balance transfer option, make sure you don’t transfer more than you can comfortably pay in the offer period. Otherwise you may be just where you started.

A cash back rewards card can sound great, unless you don’t charge the certain items allocated for reward with your particular credit card. Or if you find that you don’t charge at all but incur an annual fee, it may not be such a great deal either.

A quick search for “best credit card offers” can reap good results. Or head to an established site like, www.NerdWallet.com but do research what you may qualify for. And of course, every time you apply for credit the credit reporting agencies will be notified. There can be adverse effects of applying for multiple cards at the same time, so pick wisely and apply only one or two at a time.

So, you want to open up a Cannabis Retail Store, The Beginner’s Guide

Perhaps you’re a shopkeeper at cute boutique store or a convenience store, drawn to a unprecedented vivid spot in a retail landscape mired in doom-and-gloom. Maybe you ignored out on the primary segment of the green gold rush and also you’re seeking to make your mark in this (literal) boom industry, understanding it’s a area in which customers have indicated a desire for purchasing in-man or woman in place of on-line. Or maybe you’ve just heard that the industry has sold $hundreds of millions of dollars’ worth of cannabis in May of this year and want your own piece of that inexperienced market.

Whatever your motivation, entering into Marijuana retail is a chunk extra concerned than renting a storefront and finding out exactly which pot pun to apply in your enterprise name. From developing to selling to shopping for, it’s an surroundings that’s without delay surprisingly regulated and unpredictably fluid, a emblem-new industry in an infinite beta check as governments refine the guidelines, parameters and approaches of accommodating the demand for a product that turned into unlawful much less than a 12 months ago. There’s a reason “get a legal professional” is the first piece of advice most people in this enterprise dispense.

And that’s why we’re no longer claiming that this is a complete guide to beginning a Cannabis Retail Store. Rather, it’s a roadmap to pursuing your dream of proudly owning a legalized “Marijuana store”…and a signposting of the pitfalls to look out for, lest your dream “could” vanish in a gasp of smoke.

Seek professional help from someone seasoned in the industry

One of the earliest and best investments in your new vision will be consulting with a Cannabis lawyer and Accounting/Tax Firm or another Cannabis store and sticking close to them for the duration of the long haul of launching your cannabis retail dream. The complexity lies in compliance, and the myriad ways in which a Cannabis store has to adhere to a strict set of suggestions that govern the whole lot from advertising and marketing to record preserving, store place to how the cannabis is secured in your premises. There are even regulations for a way far off the floor your license desires to be displayed.

It’s no longer always interpreted from the formal writing issued by license issuers, but from revel in running with a regulators, you’re most in risk of losing your license over matters that are willful or intentional, like bringing in product from the black market, or promoting to minors. Something like one of your safety cameras going out and you not notifying someone right away, however, may be only a warning or a write up. The price of this compliance is something that might-be commercial enterprise owners want to issue into their marketing strategy. It isn’t loose to be preserving all of your security, to properly educate your staff and to keep up with stock control.

Get the inexperienced prematurely

And whilst we’re on the subject of money: Its warned that most banks aren’t entertaining enterprise loans for cannabis shops (deeming it too high hazard), and funding is getting more tough to come back by way of because the industry matures. This may be a chief snag for some investors, for potential permit holders. If you don’t have that form of exchange below the sofa cushions, a few applicable state banks and credit unions that are open to working with cannabis businesses. Consider asking family and friends to make investments (thank you Grandma!).

Expect to pay a top rate

The Cannabis Tax is often referred to as the “Green Tax,” This “special industry seedling” plants up in each issue of a cannabis enterprise, from insurance to banks and landlords who outright refused to do business with them. You just need to navigate through it and locate the right groups who will take to your enterprise.

Obtain a license

Precisely the way you get the permit to legally promote cannabis varies from city to city and state to state. In many cities/states, it’s a lottery device, the second one spherical of which is presently underway; in the meantime, different municipalities have a rolling application device without a cap, even though there’s a restriction on what number of shops a unmarried entity can personal.

It’s also important to word that not every person is eligible to hold a license. While many offenses (like getting stuck with a gram when you have been 20) aren’t deal breakers, any involvement in organized crime or drug trafficking is a no-no, as is bankruptcy in sure areas.

Tax planning should include a Paycheck Checkup

Year-round tax planning is important for everyone. Just because a taxpayer already filed their tax return doesn’t mean they don’t need to think about taxes for the rest of the year. In fact, what they do now may affect any tax they might owe next year. It could also affect the refund they expect.

Since federal taxes operate on a pay-as-you-go basis, taxpayers need to pay most of their tax during the year as they earn the income. Taxpayers should make sure they’re having the correct amount of tax withheld from their paychecks. It’s a good idea for taxpayers to do a Paycheck Checkup for these reasons:

Having too little withheld could lead to a smaller than expected refund.
Having too little withheld could even lead to an unexpected tax bill.
Employees who have too much tax withheld will see less money in each paycheck. Having more money in each paycheck may be more helpful than getting a large refund when they file.

Taxpayers can use the IRS Tax Withholding Estimator to check their withholding. All taxpayers should use this tool to do a Paycheck Checkup ASAP if they haven’t already done so in 2019. Some taxpayers should do another Paycheck Checkup even if they already did one this year. This includes anyone whose personal or financial information changes due to a life event. Some life events that can affect withholding are:

Marriage
Having a baby
Getting a new job
Getting a raise at work

Taxpayers who want to change how much tax is withheld from their paycheck simply need to submit an updated Form W-4 to their employer.

The IRS has several digital tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting the IRS.gov website, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

Here’s what taxpayers should know about the new IRS Tax Withholding Estimator

Taxpayers who haven’t yet checked their withholding this year should do so ASAP. All taxpayers can do this by using the new mobile-friendly Tax Withholding Estimator. This new tool can be used by workers, as well as retirees, self-employed individuals and other taxpayers. It’s a user-friendly step-by-step tool to help taxpayers effectively adjust the amount of income tax they have withheld from wages and pension payments. This helps them make sure that they are paying the right amount of tax as they earn it throughout the year.

Here are some things people should know about the new tool:

Using the tool to do a Paycheck Checkup can help taxpayers avoid an unexpected year-end tax bill and possibly a penalty when they file their 2019 tax return next year.
The new tool allows taxpayers to separately enter pensions and other sources of income. Taxpayers who receive pension income can use the results from the estimator to complete a Form W-4P. They then give this form to their payer.
It’s important for anyone who had an unexpected tax bill or a penalty when they filed this year to do a checkup.
It’s also an important step for those who made withholding adjustments in 2018 or had a major life change.
The new Tax Withholding Estimator makes it easier to enter wages and withholding for each job held by the taxpayer and their spouse.
At the end of the process, the tool makes specific withholding recommendations for each job and spouse. It also clearly explains what the taxpayer should do next.
Those most likely to owe tax because they’ve had too little tax withheld include:
- Those who itemized in the past but now take the increased standard deduction.
- Two-wage-earner households.
- Employees with nonwage sources of income.
- Those with complex tax situations.

CDTFA, IMPORTANT TAX DUE DATE REMINDER

The California Department of Tax and Fee Administration (CDTFA) is sending you an important due date reminder:

If you have a Sales and Use Tax or Use Tax quarterly prepayment to pay, your prepayment is due no later than the 24^th of the month.

If the due date falls on a weekend or state holiday, the due date is extended to the next business day.

If you have not done so already, please visit our website and Login to make your prepayment prior to the due date shown above.

If you have any questions, please call our Customer Service Center at 1‑800‑400‑7115 (TTY:711). Customer service representatives are available Monday through Friday from 8:00 a.m. to 5:00 p.m. (Pacific time), except state holidays.

To set up a username and password, visit CDTFA’s Online Services page at Sign Up Now.