Intuit Acquires Tax Planning Startup GoodApril Before Techstars Demo

If you read this blog you might recall that back in February, in regards to "GoodApril" I said, "I get what GoodApril is aiming at though and we wish them good luck, want to bring them some attention and that's why we are profiling them here and now.  We do a lot of consulting to small business here and if I would have to guess.....I'm thinking "GoodApril" is trying to position themselves to be bought by Intuit or H&R Block." http://exactcpa.blogspot.com/2013/02/goodapril-online-tax-planning-solution.html

Michael Davidson for Xconomy writes:  GoodApril, we hardly knew you.  The founders of the Techstars startup announced Thursday that Intuit has bought their company for an undisclosed price. GoodApril makes tax-planning software intended to help users reduce their annual tax bill, so the company seems like a logical fit with Intuit (NASDAQ: INTU), which makes the TurboTax tax preparation and filing program.

The deal closed Tuesday, according to co-founder and chief operating officer Mitchell Fox. He said the two companies have been negotiating the acquisition for several weeks.

That’s pretty impressive, as the deal closed two days before GoodApril and the rest of the Techstars Boulder startups were to take the stage for Demo Day, the investor showcase that is Techstars’ capstone event.

Like the other startups, GoodApril was practicing its pitch and making preparations for a seed investment round, Fox said. But about halfway through the program it began negotiating with Intuit and relying on Techstars mentors for advice about getting the right value for the company and the technicalities of the contract.

“They helped us make sure it was a deal we were very happy with,” Fox said.

GoodApril’s exit before the end of Techstars appears to be a first, according to Fox.

GoodApril CEO Benny Joseph gave an abbreviated version of GoodApril’s now somewhat redundant investor pitch at Demo Day. From that presentation and prior interviews with Joseph and Fox, it was clear why Intuit would be so interested in GoodApril.

Anyone who has used TurboTax or H&R Block’s similar program knows they go into a lot of detail about possible deductions, but it is all retrospective to the prior tax year. The programs can give you a sense of what you could have done to lower your tax bill, but by then it’s too late to make any changes, and you can only hope that knowledge is applicable for the upcoming year.

GoodApril’s focus was on tax planning and tax minimization strategies. Customers could link GoodApril to their various bank accounts and use the program throughout the year, and GoodApril would identify steps they could take in advance to become eligible for deductions and to lower their bills come April 15.

Joseph said at best it could “bring tax planning to the 99 percent,” and at a minimum it would help users know how much to withhold from a paycheck and eliminate surprises, Joseph said.

“People go into tax filings blind,” he said.

Joseph estimated about $22 billion worth of valid tax deductions go unclaimed each year.

Two of the target markets for GoodApril were the self-employed and freelancers, Fox said. Part of the pitch to freelancers was that it could help them with the quarterly tax filings the IRS requires.

Fox said GoodApril’s plan was to eventually integrate tax preparation and filing capabilities similar to TurboTax into GoodApril as the company built out its platform, but that’s now unnecessary.

Fox, 30, and Joseph, 33, began working on GoodApril in January and had a product worked up by March. They live in the San Francisco area, and at various events had met people from Intuit who seemed interested in their startup.

They assumed any serious interest on Intuit’s part would be well off in the future and went into Techstars thinking they would be spending the next few years getting GoodApril up and running.

“We saw Techstars as being a valuable way for us to rapidly learn how to be better entrepreneurs and get credibility with investors,” Fox said.

A few weeks after starting Techstars, Intuit approached them asking to talk. Fox said it was unexpected, and GoodApril tried to do all the work necessary for a successful launch in case the deal with Intuit fell through.

“We were in a good position to be able to fundraise out of Techstars,” Fox said. “This came as a surprise.”

The future of the GoodApril brand and what Fox and Joseph will be doing at Intuit is yet to be determined, Fox said. The only thing that’s clear is that they’re expected to be on the job Monday.

“We were hoping for a break,” Fox said.

If You Think That You Have a Right To Privacy In Your Tax Returns After a Case is Over, Think Again

Eric S. Solotoff for Fox Rothschild LLP writes:  In the typical divorce case, it is rare that parties are forced to turn their tax returns over to the other party year after year.  An exception to the general rule is when the support is being based upon some type of formula which requires income verification, but even then, the income is often, but not always, verifiable from other documents.  This is not to say that you never have to turn over tax returns post-judgment.  To the contrary, it is common, if not required, to do so when alimony and child support need to be modified, to determine college contributions, etc.

The unreported (non-precedential) case of Burkett v. Mejia decided on August 7, 2013 highlights another time when tax returns may be ordered.  In this case, the ex-husband twice defaulted on on his agreed upon alimony and equitable distribution obligations and owed more than seven figures to the ex-wife.  Because the this, the former wife requested and the court ordered him to provide his tax returns each year until his obligations were paid in full.  The ex-husband appealed, creatively arguing that the requirement violated his "legitimate expectation of privacy."   Because the husband claimed that he could not pay, this provision was granted because the trial judge found that the ex-wife should not have to wait longer than necessary for payments due her if defendant's ability to pay what he owed is enhanced.  The ex-husband appealed.

In affirming, the Appellate Division noted that the law is clear that income tax documents are not privileged and may be required to be produced, for good cause.  In this case, the defendant's complex finances coupled with his prior defaults were sufficient to support the trial court's decision.

So what is the take away from this case,  If you don't want to be forced to turn over your tax returns, you better meet your obligations.  In fact, one wonders whether, given the history of this case (a seven figure income during one of the years when payments were not being made), whether more frequent reporting requirements, if not a receiver or special fiscal agent, might have been appropriate under all of the circumstances.

Tax-Free Accounts for Homes

LISA PREVOST for the NY Times writes: Tax-free savings accounts help Americans stow away money for health care and college tuition. Why not a tax-exempt account for yet another major expense: the down payment on a mortgage?

A coalition that includes real estate developers and investors has been floating the idea as part of a package of reforms intended to overhaul federally funded real estate programs. Home loan programs, direct grants and tax credits add up to some $450 billion a year in federal spending that the group says mostly benefits a small proportion of households.

“These programs have an enormous impact across the country,” said Ilana Preuss, the vice president and chief of staff for Smart Growth America of Washington, the group leading the coalition. “Communities have long benefited from these programs, but they could be doing a lot more.”

In addition to proposals to halve the $1 million cap on the mortgage interest tax deduction and beef up support for affordable rental housing, the group suggests that Congress authorize individual mortgage savings accounts to make it easier for would-be buyers to save for a down payment. The program would be limited to first-time buyers who could make pretax contributions to such an account for up to 10 years. Funds put toward the purchase of a home would not be taxed.

“It would encourage individuals to start saving earlier for down payment and closing costs,” Ms. Preuss said, “and it would really make their dollar go further.”

The idea is modeled on a home-buyer savings-account program that has been in place inMontana since 1998. Open to any first-time buyer, regardless of income, the program allows people to deduct deposits of up to $3,000 a year from their state taxable income (not their federal income); married couples may deduct up to $6,000 a year. Interest earnings are not taxed.

At least in Montana, however, the incentive has not done much to step up the savings rate. According to the state’s revenue department, no more than 225 people, and as few as 125, have participated annually since the program’s inception. Their annual deposits have averaged around $400,000.

In 2011, the program cost the state just $24,000 in lost revenue.

“What you’ve got to understand is, this is people trying to get into their first home,” said Edmund Caplis, the department’s director of tax policy and research. “For most working families, trying to pull together an extra buck is a stretch.”

Other factors limiting participation of late have been low interest rates on savings accounts and a lack of publicity about the program, said Maureen Rude, the statewide director of operations for NeighborWorks Montana, a nonprofit housing organization.

What tends to resonate more with first-time buyers trying to scrape together a down payment are programs that offer matching funds for dollars saved, Ms. Rude said. Still, she added, “the more tools that are out there to help people save money, the better, in my opinion.”

The Federal Home Loan Bank of New York operates its own variation on a mortgage savings account program for New York and New Jersey residents. Restricted to first-time buyers earning no more than 80 percent of area median income, the so-called First Home Club provides $4 in matching funds for every $1 saved, up to a maximum grant of $7,500.

In order to qualify for a match, participants must make deposits for at least 10 months and attend financial counseling.

Established in 1995, the First Home Club is administered by more than 70 area lenders, and is regularly fully subscribed, according to Eric Amig, a spokesman for the Federal Home Loan. So far, it has assisted more than 6,800 households.

Filer Beware - The Growth Of Fraudulent Tax Returns

Edward Brown for Burr & Forman writes:  The filing of fraudulent tax returns resulting from identity theft is a growing business in America. If it wasn't bad enough that the criminals would try to get money out of your bank or use the information to purchase goods on your account, they now want your tax refund! Treasury tells us that for the 2011 filing season, there were approximately 109 million returns filed claiming refunds and that of those approximately 1.5 million were filed under a stolen identity. The total amount of claimed refunds under those identity theft returns is estimated at over $5.2 billion. While historically a problem with individual income tax returns, the incidence of stolen identity business and charity returns is also on the rise. In addition to simply feeling violated, affected taxpayers then have the joy of working with the IRS to correct the problem and having to spend many hours to eventually receive the refund to which they were entitled.

So, what can we all do to avoid the problem? Several ideas:

1. The IRS isn't going to send you an email. Do NOT answer any emails that say they're from the IRS. Trust me, the chances that the IRS will send you (and I don't care who you are) an email is somewhere between slim and non-existent. If you receive an email from the IRS and for some reason think it might be real (it isn't), then call the 800 number and follow up. The email is a scam looking for information.
2. Your laptop or tablet is the target. Protect your computer at all costs if it has personal information on it. Change passwords frequently, and if you can, try to avoid keeping tax information or banking information on any computer you use for travel or that you often connect to a public or unprotected network.
3. A little common sense always helps. Use good passwords, check your credit report annually, don't throw bank statements, old tax returns or receipts in the trash (shred them), be careful of phishing on your computer, and don't clink on every link that some friend posts on Facebook.
4. File early. The IRS processes returns as they are filed. The crooks have to file before you do, but they have lots of returns to file - try to beat them to the refund door.
5. Check your tax withholding amount. You do NOT need to be lending the government money interest free. A smaller refund means (1) you had less withheld during the year (and more to spend), and (2) there is less money at risk from a stolen identity return.

Unfortunately, the "bad guys" have figured out another reason to try to obtain personal information from you and your business. This problem will not go away, and while the IRS is aware of it and would like to stop it, they simply don't seem to be able to do much about it.

Five strategies for efficiency in tax investing

Ken Weise for the Community Voice writes: After factoring in federal income and capital gains taxes, the alternative minimum tax, and potential state and local taxes, your investments' returns in any given year may be reduced by 40% or more. 

Here are five ways to potentially lower your tax bill.

Invest in tax-deferred and tax-free accounts

Tax-deferred accounts include employer-sponsored retirement accounts such as traditional 401(k)s and 403(b) plans, individual retirement accounts (IRAs) and annuities. In some cases, contributions may be made on a pretax basis or may be tax deductible. More importantly, investment earnings compound tax deferred until withdrawal, typically in retirement, when you may be in a lower tax bracket. Contributions to nonqualified annuities, Roth IRAs and Roth-style employer-sponsored savings plans are not deductible. Earnings that accumulate in Roth accounts can be withdrawn tax free if you have had the account for at least five years and meet the requirements for a qualified distribution.

Withdrawals prior to age 59½ from a qualified retirement plan, IRA, Roth IRA or annuity may be subject to a 10 percent federal penalty. 

In addition, early withdrawals from annuities may be subject to additional penalties charged by the issuing insurance company.

Consider government and municipal bonds

Interest on U.S. government issues is subject to federal taxes but is exempt from state taxes. Municipal bond income is generally exempt from federal taxes, and municipal bonds issued in-state may be free of state and local taxes as well. Sold prior to maturity, government and municipal bonds are subject to market fluctuations and may be worth less than the original cost upon redemption.

Look for tax-efficient investment opportunities

Tax-managed or tax-efficient investment accounts are managed in ways that can help reduce their taxable distributions. Investment managers can potentially minimize portfolio turnover, invest in stocks that do not pay dividends and selectively sell stocks at a loss to counterbalance taxable gains elsewhere in the portfolio.

Put losses to work

You may be able to use losses within your investment portfolio to help offset realized gains. If your losses exceed your gains, you can offset up to $3,000 per year of the difference against ordinary income. Any remainder can be carried forward to offset capital gains or income in future years.

Keep good records

Maintain records of purchases, sales, distributions, and dividend reinvestments so that you can properly calculate how much you paid for the shares you own and choose the most preferential tax treatment for shares you sell. Keeping an eye on how taxes can affect your investments is one of the easiest ways you can enhance your returns over time.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. 

Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply. 

This information is general in nature and is not meant as tax advice. Always consult a qualified tax advisor for information as to how taxes may affect your particular situation.

The Tax Break You’re Missing Out On

Emily Brandon for US News World Report writes: Most workers are eligible to contribute up to $5,500 to an IRA in 2013 and get a tax deduction on the amount they save. A worker in the 25 percent tax bracket who contributes $5,500 to a traditional IRA this year would pay $1,375 less on his 2013 tax bill. But few people save enough to maximize this tax break.

A recent Fidelity Investments analysis of nearly 7 million IRAs found that the average IRA contribution was $3,920 for tax year 2012, down $10 from $3,930 in 2011. Average traditional IRA contributions ranged from $3,170 among 20-somethings to $4,840 for people in their 60s.

An Employee Benefit Research Institute analysis of just over 1.6 million IRA accounts found that the average amount contributed in 2011 was $3,723. An IRA contribution of $3,723 will save you $930.75 if you are in the 25 percent tax bracket or $558.45 if you pay a 15 percent income tax rate. Taxes won’t be due on these traditional IRA contributions until you withdraw the money from the account.

People age 50 and older are eligible to contribute $1,000 more to IRAs than younger people, up to $6,500 in 2013. And the average IRA contribution does jump from $4,090 for 40-somethings to $4,780 among people in their 50s, Fidelity found. Once you turn age 70 1/2 you can no longer make traditional IRA contributions, but you can still save in a Roth IRA.

To completely max out an IRA, you would need to save about $458 per month, or $542 monthly if you are age 50 or older. Alternatively, you could also contribute the money as a lump sum or other installments of your choosing throughout the year. But less than half (47 percent) of people who participated in 2011 contributed the maximum amount, EBRI found.

The ability to claim a tax deduction for your traditional IRA contributions is limited if you are also eligible for a 401(k) or similar type of retirement account at work. The IRA tax deduction is phased out for couples with a modified adjusted gross income over $95,000 ($59,000 for singles) in 2013. And couples who earn $115,000 or more ($69,000 for singles) are not eligible for this tax deduction if they also have a retirement account at work. If you are not covered by a retirement plan but your spouse is, the deduction begins to be phased out once your joint modified AGI exceeds $178,000 and is eliminated when your AGI hits $188,000.

You can additionally claim a tax credit for your 2013 IRA contribution if your AGI is below $59,000 for couples, $44,250 for heads of household or $29,500 for singles and you are not a full-time student or dependent on someone else’s tax return. The amount of the credit ranges from 10 to 50 percent of the amount you contribute to a retirement account up to $2,000 for individuals and $4,000 for couples. The maximum possible credit is $1,000 for individuals and $2,000 for couples.

IRA contributions for 2013 must be made by April 15, 2014. If you wait until April to deposit money in an IRA you can get nearly immediate tax savings, but you also miss out on a year’s worth of tax-deferred investment growth.

Here Are Some Tax Reminders For August

Joseph S. Reisman  writes: Make sure to put these helpful summer reminders on your financial “to do” list.

Reminder #1: Due Diligence

Having a BBQ? Party? Take precautions. Use common sense. How many people can your deck support? BBQ’ing away from people? Fire extinguisher and first-aid kit nearby? Monitoring drinking? Watching the children? Tools and ladders away? You might want to check out ‘host liability’ insurance with your carrier.

Reminder #2: Have You Updated Your Will?

No? A foster home for your children might include friends he never would have met and English as a second language — skills learned for a lifetime, including lock-picking and car-jacking. It can be a whole new world. Have you updated your will?

What happens when a person doesn’t have a will in the State of New York. It’s worth checking outMyStateWill.

Reminder #3: Will Your Pet End Up in a Shelter? Is Your Pet A Part Of Your Family?

Only 17 percent of you have taken steps to provide for their care in an emergency, or after your death. Many pets end up in shelters. An inexpensive way is a Pet Protection Agreement through LegalZoom.com, for just $80. This serves as a contract between you and a designated guardian.

Reminder #4: Big Refund Or Payment in April?

Adjust your withholdings now. The IRS does not pay interest on your refund, but you are subject to interest (and/or penalty) if you owe too much in April. Not sure what to do? Call me. If you received a big refund, and your work and tax circumstances are about the same, adjust your withholding at work so you have use of your money now.

Reminder #5: Organize

Set up folders now for your tax and business receipts. Remember, a journey of a thousand deduction$, begins with one folder (or two). Start now to track your medical, workplace, and other expenses. Don’t lose your money by trying to remember just before your tax appointment.

Reminder #6: Charity

Your gift is just as important now as it is at year end. Remember though, the IRS is very strict, so get that detailed receipt, and file it in that new folder.

Reminder #7: Do You Have An Emergency Fund?

If so, add to it. If not, consider setting up an automatic transfer into your savings account each pay period. Not only are you saving, but you’ll have money in case of an unexpected expense, or to pay bills if you lose your job. Suggestion: Once you pay off a loan or similar obligation, have that amount now transferred to your emergency fund as you are already use to that deduction. An emergency fund can help you avoid relying on credit, or withdrawing from a retirement fund.

Reminder #8: Laptop Security

Thousands of laptops are lost at U.S. airports every week, with most not being returned; more than half contained confidential information, and most had no security.

• Keep a record of the serial number and model of the laptop and immediately report to the authorities if yours is missing
• Use encryption (hardware or software solutions)
• Track your laptop (use a tracking device)
• Be protected through a service plan for damage from breakage, spills, or other events.

Reminder #9: IRS Or State Correspondence

NEVER ignore a notice or correspondence from the Internal Revenue Service (IRS) or a state tax agency. If you receive a notice from the IRS, email, fax, or mail it to me or your tax preparer immediately. If you prepared your own return and do not understand the notice, consult a tax professional.

Emails from the IRS: NEVER respond to an unsolicited email from the IRS. If the IRS sends you a notice via email, the IRS did not send it. The IRS does not send notices via email. If you receive an email allegedly from the IRS, delete it unopened. Don’t click any of the links – the link will either try to collect your bank information or it will dump malware on your computer.

Reminder #10: Never Assume

Never assume that a notice or billing from the IRS or a state tax agency is correct. Do not automatically pay it. More often than not the notice is wrong. To repeat: If you receive a notice, e-mail, fax, or mail it to me (or your tax preparer) immediately. If you prepared your own return and do not understand the notice consult a tax professional.

Reminder #11: Child Starting College?

For New York State residents:

1. Open a New York State 529 plan today. You are allowed a contribution of up to $5,000 from each parent for the year.
2. As soon as your check clears, make a withdrawal from the plan.
3. Get an extra $800 to $1,000 refund on your 2013 tax return.
4. Repeat every year your child is in college.

Reminder #12: College Just Completed?

If you don’t already have credit, apply — but don’t be a kid in the candy store. Applying for too much credit at once can send the wrong signal to a lender. Also too many inquiries can have a negative impact on your credit score. Start slowly, but steadily.

Reminder #13: Estimated Taxes Due Next Month

Call by the end of this month. Don’t be penalized!

Quip

“There is more selfishness and less principle among members of Congress than I had any conception of, before I became President of the U.S.” – James K Polk (11th President, 1845-1849)

I guess not much has changed over the years.

Shoeboxed Announces Account Sharing, Now Allows Users to Instantly Share Expenses with Accountants, Business Partners and Spouses

Shoeboxed, the industry leader in cloud-based receipt scanning, announced Tuesday that users will now have the ability to create additional logins for their accountants, bookkeepers, business partners and spouses.

The account sharing feature enables users to share all of their documented expenses with trusted individuals. Convenient for business co-founders, accountants and even soon-to-be bride and grooms who need to track wedding expenses, the account sharing feature makes it easy for all parties to stay on the same page when it comes to managing finances.

Shoeboxed allows users to send in receipts through free mobile apps, prepaid envelopes, email or their online web clipper. They then scan, digitize and categorize everything into a secure online account. The company is integrated with accounting services like Quickbooks and this account sharing feature promises to expand the service's bookkeeping functionality.

My bookkeeper was floored, said Cindy Bak, a small business owner from Anchorage, Alaska. After I gave her access to my account so she could download data from Shoeboxed directly into my QuickBooks account, she could not stop talking about how easy it was and what a great investment Shoeboxed was for my business.

The number of users which can be added to an account varies by plan level. The basic, Lite Plan allows for one user and 50 scans per month while the Classic Plan allows for up to two users and 150 scans. For larger accounts, Shoeboxed offers a Business Plan that permits three users and 500 scans. Their highest plan level, the Executive Plan, allows for 1000 scans per month and up to 10 users.

All Shoeboxed users start out on a 30-day Free Trial and are allowed to share account access starting on day one. Users simply enter the names and email addresses of the individual(s) whom they wish to share their account with and the additional users will then be able to create their own login information. The creator of the account will be able to grant and revoke account access at any time.

About Shoeboxed

Since 2007 Shoeboxed has been the preferred small business expense tracking solution for over 500,000 users worldwide. The pioneers of cloud-based receipt scanning, Shoeboxed saves people time, money and hassle by turning receipts into an organized, categorized, IRS-accepted archive of secure data.

Shoeboxed offers a fully functional free plan, as well as premium plans that include a prepaid mail-in service for physical receipts. Shoeboxed is based in Durham, North Carolina, and has growing offices in both San Francisco, California, and Sydney, Australia.