How Do You File an Amended Tax Return?

How Do You File an Amended Tax Return?

It’s easy to make mistakes when you’re doing your own tax preparation. The IRS has a special procedure for fixing them.

That sense of accomplishment you feel after you’ve filed your income taxes can turn quickly to dread if you realize later that you made a mistake. What do you do now?

The IRS knows that this will happen to some taxpayers every year. The tax code is so complex, and if you prepare your taxes manually, you’ve probably been shuffling a lot of papers around.

So, first: Don’t panic. You can fix this. The IRS offers what’s called an amended return, the Form 1040X, for just this type of situation.

If you’ve made a mistake on your income tax return, you’ll be able to file a Form 1040X.

What IRS forms does the 1040X cover?

If your original tax return was filed using a Form 1040, 1040A 1040EZ, 1040NR, or 1040NR-EZ, you should file a Form 1040X to amend that return.

What if I realize I made a math error?

The IRS will make the necessary corrections, so you usually don’t need to file an amended return. However, you should submit one if there was an error related to your filing status, income, deductions, or credits.

I forgot to file my Schedule B. Should I file an amended return?

Usually, no. The IRS will request missing forms and schedules from you.

Can I file a Form 1040X electronically?

No. You must submit a paper return.

How much time do I have to file a Form 1040X?

You can usually file an amended return up to three years after the date of your original income tax return or within two years of actually paying the taxes – whichever date is later. Look at the above image of Form 1040X. You must indicate the year of the return you’re amending by checking a box or entering a year after This return is for the calendar year…

What if my amended return entitles me to an additional refund?

Don’t file a Form 1040X until you’ve received the first refund. Once that’s in hand, you can file the amended return and cash the check. Keep in mind that it can take up to 16 weeks for the IRS to process an amended return. It may not even appear in the system for three weeks after you’ve mailed it.

The IRS Form 1040X uses a three-column approach to help you illustrate where errors have occurred.

I realized that I owed more income tax than I sent, but it’s only March. Can I file a 1040X and include the additional funds?

Yes, as long as it’s received by the April due date for that specific year. You’ll avoid taxes and penalties.

Can I check on the progress of my amended return?

Yes. Go to this IRS page. You’ll need to supply your birthdate, Social Security number, and Zip code. You’ll be able to view the status of your return: received, adjusted (refund, balance due, or no changes), or completed.

Accuracy and Thoroughness Critical

The Form 1040X is not the most complicated of the standard IRS forms, but neither is it the simplest. It’s critical that you complete it absolutely correctly, so you don’t start having to amend your amended returns.

The completion of your Form 1040X can be delayed for a variety of reasons, including the presence of errors. It may take more than 16 weeks to process because it’s:

  • Incomplete.
  • Unsigned.
  • A victim of fraud or identity theft.
  • In need of additional information.

Avoiding Amended Returns

We can help you determine whether you need to file an amended return at all, and if so, how you should fill out the form.

If you don’t want to risk going through this whole thing again, talk to us about getting you started with year-round tax planning. It makes the whole tax preparation process (which we can handle for you, too) much easier and less stressful. We’ve worked hard with other individuals and small business to minimize their tax obligations, and we can do the same for you.

 

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What Is a Vendor Credit, and How Do You Record One?

What Is a Vendor Credit, and How Do You Record One?

Whether you’re getting a vendor credit for a refund or a return, you can record it in QuickBooks Online.

When you’re dealing with your company’s vendors, you’re probably accustomed to money flowing in one direction: theirs. Maybe you send them to purchase orders and they send you invoices. Or they send you bills and you pay them. Or you walk into a store and buy something your business needs.

Sometimes, though, vendors owe you money. Probably the most common scenario is a return of merchandise, products that you’ve sent back to the supplier for any of a variety of reasons. You may be issued a credit of some kind simply because you’ve been a loyal customer, and a vendor wants to reward you. You might also get a rebate for an item you bought.

In these cases, you’ll enter a Vendor Credit in QuickBooks Online, which you can apply the next time you buy something from that supplier. Usually, the process is pretty straightforward, but sometimes situations arise that may make it hard for you to know how to record a vendor credit accurately. We can help if this happens.

Simple Steps

Let’s start with a simple example. Let’s say you received a shipment of pens that you’d planned to use as promotional items for your salespeople. The ink on some of the pens had gotten smudged, so your company email address printed on them was illegible. The supplier issued you a credit of $50.00 for future purchases and sent you a reference number to use.

It’s easy to complete a Vendor Credit form in QuickBooks Online for a simple credit. But other situations are more complicated.

Here’s how it would work. Click the + (plus) sign in the upper right corner of the screen and select Vendors | Vendor Credit. A screen like the partial one pictured above would appear. These are the fields you would need to complete:

Vendor – Click the down arrow in the field in the upper left corner and select the correct vendor, or + Add New.

Payment date – Change the default date if it’s not correct.

Ref no. – Enter a reference number if applicable.

Under Account details, click in the field under Account, and open the drop-down list by clicking the down arrow on the right. Select the account you used when you created the original expense. Enter a Description and the Amount of the credit.

You can add a Memo in the box at the bottom of the screen if you’d like, and select any Attachments to include from your file directories. Otherwise, click Save and close or Save and new.

Additional Input

There’s much more to the Vendor Credit screen that you didn’t need to consider for this example. The row where you entered Account, Description, and Amount contains several additional fields that you may need to complete in some cases. They are Billable, Markup %, Tax, Customer, and Class. If you’re not sure when these fields are required, ask us to go over these concepts with you.

There’s also another section under Account Details you may need to address: Item Details (click the arrow to open if necessary). You would only enter information here if you’re returning items to a vendor. Fields displayed there include Product/Service, Qty (quantity), Rate, and Sales Amt (amount). We don’t recommend that you do this the first time on your own; let us help.

Using Your Credit

How do you redeem this credit? QuickBooks Online reminds you to use it.

QuickBooks Online records your Vendor Credits and reminds you that they’re there when you go to pay that vendor again.

The next time you enter a transaction that involves—or will involve—sending that vendor some money, you’ll see a record of that credit to the right of the Check or Expense screen, for example. In the image above, a small box has opened as soon as the vendor’s name was selected. You can Add that credit to the current transaction or Open it if you want to see the original screen.

Not everyone uses Vendor Credits. Some businesses find workarounds. But we recommend you at least understand when and how they’re used so your bookkeeping is accurate and precise. We’d be happy to spend some time with you going over your financial relationship with vendors, and how QuickBooks Online helps you document it.

 


Looking for a QuickBooks Expert?

QuickBooks ProAdvisor Houston TxWorking with a QuickBooks ProAdvisor is the best way to learn how to use QuickBooks to help your business grow and flourish. You won’t find a better way to get the support you need anywhere else.

As a small business owner, we realize that you may not have the budget to hire a QuickBooks expert. If you’re looking for a more economical way to get set up on QuickBooks, we provide cloud bookkeeping programs to match any business requirement. Here are our Quickbooks ServicesQuickBooks Setup, QuickBooks Training, and Quickbooks Review.

You can feel confident in knowing that our STAC Bizness Solutions team are Certified QuickBooks ProAdvisors. Meet Our Team.

If you would like to learn about all the benefits that STAC offers, just give us a call and we’ll provide you all the details. Call us at (844) 424-9637.

Taking Your Company Paperless

Going paperless has been the way of the future in business over the past decade. People might have scoffed at the idea a few generations ago, but millennials and those who conduct business with them demand innovative solutions not only for the environment but also to cut down on the mundane drudgery of work place repetition.

And with the way things have been moving, people no longer feel like cogs in a wheel but rather integral team players with technological know how. So if your business has not moved completely digital yet, the following are just a few of the many reasons why you should be going paperless.

Boost in Efficiency

People don’t want to be doing the same task at work all day. With paper processes, the middle man is always the employee, who faithfully sits by the phone filling out papers for a client. Or the employee is busy digging in the company store room for files.

Logging onto the computer, whether for cloud accounting or client information, is leaps and bounds easier than putting people on hold or telling them that you will phone them back. You can be on the same page as the client in minutes rather than days by having their digital information at one’s fingertips on CRM. The same goes for talking between departments. It is much more efficient to send emails back and forth delineating the various degrees of urgency than to try to play telephone tag with employees in varied departments. Time is at a premium, so when a person can log on or fire off an email, time is saved from chasing down files and individuals that may not be easy to find.

Disaster Recovery

There’s no telling when a disaster might strike; maybe a flood, theft or a fire breakout could easily cripple your company. What will happen to the documents that are paper-based? Most probably, you will lose them because you don’t have a backup, or if you do have copies, wouldn’t they be likely stored in the same premises too? Going paperless can help avoid this problem. Once you store everything on the cloud, you will not have to worry about the data that you lost in the paper forms because they will all be available on the cloud and you can access them at any time.

Creative Solutions

Digital apps and programs like QuickBooks are often designed to integrate together. This is a virtual dream, literally, when it comes to helping the departments to coordinate. Without such products, people are stuck doing the same processes with paper over and over. The rewriting and photocopying of such pages can really only go so far.

To go digital, one needs to be savvy with employing people in the know-how. These teams can help to train others on processes as well as put them in place. But once paperless systems have been implemented, very few employers will regret the transition. It shows up on the bottom line quite apparently over the years as well.

Need help getting your company to paperless?  Contact STAC Bizness because we can help with establishing your company’s accounting, payroll, and human resource operations in a paperless world.  Join our newsletter for more free tips for running your business.

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Preparing for 2017 Taxes: 5 Things You Can Do Now

Preparing for 2017 Taxes: 5 Things You Can Do Now

Your income tax obligation needs to be on your mind year-round. Here are some ways you can get a jump on your 2017 taxes.

Summer’s over. The kids are back in school. And soon, there’ll be only three months left in 2017. If you haven’t started thinking about how to minimize your income tax obligation for this year, there’s still time.

Whether you’re a small business or an individual taxpayer, year-round tax planning is more than just a way to make tax preparation an easier, faster process. By keeping taxes in mind as you go through every 12-month period, you’ll be able to see where you might take specific actions early that will have an impact on what you end up owing. Make it a habit, and you’ll find that it just comes naturally to consider the tax implications of purchase and sales decisions.

Create a System

Effective tax planning requires more than just saving receipts and organizing tax-related documents in physical or digital file folders – though that’s a good start. Create a system in early January that you can maintain throughout the year (of course, a lot of your information will be stored in your accounting or personal finance application, if you use one). But you should be saving statements, receipts, sales forms – anything related to your income and expenses that will eventually feed into IRS forms or schedules.

Evaluate Your Expense-Tracking

Businesses: How do you—and your employees, if you have them—keep track of daily expenses? You may have forms like purchase orders and bills for the big ones, but you probably buy things on occasion that are just documented by paper receipts. How do you categorize and organize these so you won’t miss any when it’s time to complete a Schedule C? Is there a better way?

Do any of your employees make trips on behalf of your business? You really should consider subscribing to an online service that automates the process of creating and approving expense reports. If you’re not aware of these options, ask us.

Know Your Tax Forms

Individuals and businesses file some of the same forms and schedules, but some, of course, are different. Your previous years’ tax returns can be good resources for you. Refer to them occasionally as you go through the year and do some comparing, especially if you must pay quarterly estimated taxes. You may not remember from year to year what’s deductible and what’s not. Revisiting your returns will jog your memory and remind you.

 

Consider Generosity

Are you having a good year? You’ll have an idea of how your financial health is if you’re keeping up with income and expenses. You don’t have to wait until the end of the year to do any charitable giving that you’re going to do (although it’s usually best to hold off until the fourth quarter).

Learn How Changes Will Affect Your Taxes

This is so important for individual taxpayers. Did you get married or divorced, or have a child? Did you move? Buy or sell a home? Get a raise or, conversely, lose regular income for some reason? Did you have educational expenses? All these life events—and more—can change your income tax obligation.

Businesses often experience major changes, too, and your financial state at the end of the year is way harder to predict than it is for an individual with W-2 income. Stay on top of the impact of deviations in income and expenses created by events like the introduction of new products (or the loss of existing ones), personnel fluctuations, and major acquisitions.

Comprehensive Planning

Tax planning should be an element of your overall financial planning. If you have a business or household budget, you’re way ahead of the game. You can compare your actual income and expenses every month to those you built into your budget. A budget can be a tremendous tool as you plan for the current year’s taxes. If you’ve never created one, or if you’ve never stuck to one successfully, we can help you with this.

We’d also be happy to work with you periodically throughout the year on taxes. We can get you set up with financial software if you’re not already using it and advise you on ways to work toward minimizing your 2017 obligation now.

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Decision-Ready Financial Reporting for Your Salon

Decision-Ready Financial Reporting for Your Salon

Decision-Ready Financial Reporting for Your Salon or Spa

Financial reporting is a crucial element for any business as it helps in making decisions. Reports such as Profit and Loss, Balance Sheet, and Cash Flow Statements are helpful with the growth analysis of small businesses, but they are typically prepared monthly.  So let’s look into how this helps with making intelligent business decisions this month?

When your virtual bookkeeper sends your business customized, decision-ready, financial reports for your Salon & Spa at your fingertips it can help your business become more profitable.  Here are five areas where STAC Bizness Solutions can assist with your business growth:

1. Providing Gross Margin Analysis

Gross margin is an indicator of a company’s financial health. It will tell you how much profit the company is earning before operating expenses.  Here is a question to ask yourself.  Are your margins lower than the industry average? Here at STAC Bizness Solutions, we have extensive knowledge in the salon and spa industry and can provide gross margin insights.

2. Establishing Key Performance Indicators

Key Performance Indicators (KPIs) measures how effectively a business is reaching their targets. Successful salons and spas set their goals within a given period and monitor them each week.

Would you like to increase your new clients or increase the number of retail product sales? Our services provide you with customized reports for salons and spa to track the KPIs required for your business.  Ask one of our team members to show you the benefits of having your small business managed by STAC Bizness Solutions.  We would be happy to give you a free consultation.

3. Delivering Industry Benchmarks

Industry benchmarks help in assessing your Salon and Spa business performance by comparing it with your competition. These industry benchmarks help with identifying the gaps in your business and give you valuable insights about where you are successful or where you can make an improvement.  Your STAC Bizness consultant will assist in helping you get these reports to make the best decision for your Salon or Spa business.

4. Preparing a Twelve-Month Forecast

A 12-month forecast is integral for any business to thrive. It is a prediction of future developments such as sale, expenses, and profits. The twelve-month forecast that we will prepare for your Salon and Spa business will assist with making goal-oriented decisions.

5. Providing Management Reports

Management reports give you a deeper understanding of your success. We will identify the data that your business needs and our management reports will help make predictions about the future growth and profitability of your company.

At STAC Bizness Solutions, we go beyond just bookkeeping. We will provide your Salon and Spa with customized, decision-ready, financial intelligence reports to help your business become more profitable and reach your goals.

Hire a QuickBooks ProAdvisor

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