How Intuit Could Outgrow ADP and H&R Block

Dan Caplinger for Fool writes: (NASDAQ: INTU  ) will release its quarterly report on Thursday, and investors have watched with glee as the stock has soared to all-time highs throughout the past several years. Once seen as a niche software provider, Intuit has sought to expand its business to pose a stronger competitive threat not just to tax-preparation specialist H&R Block (NYSE: HRB  ) but also human-resources and payroll services rival Automatic Data Processing (NASDAQ:ADP  ) .

Intuit makes the popular TurboTax tax preparation software package, as well as the QuickBooks accounting software that many small and medium-sized businesses use to manage their finances. But Intuit isn't content to stay in that lucrative niche and has been looking for ways to use its customer base as a launching pad to provide a wider array of business-support services. As the economy recovers, Intuit has the potential to capture customers that had given up their payroll and other HR services in order to cut costs. But ADP and fellow HR processor Paychex (NASDAQ: PAYX  ) aren't likely to let Intuit grab up their business without a fight. Let's take an early look at what's been happening with Intuit over the past quarter and what we're likely to see in its report.

Stats on Intuit

Analyst EPS Estimate	($0.10)
Year-Ago EPS	($0.03)
Revenue Estimate	$603 million
Change From Year-Ago Revenue	(6.8%)
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

Will Intuit earnings recover this quarter?In recent months, analysts have dropped their views on Intuit earnings very slightly, cutting estimates for the quarter ended in October and full-year 2014 by a penny per share. The stock has nevertheless climbed sharply, gaining 16% since mid-August.

Intuit reported solid results in its quarter ended in July, with break-even adjusted earnings on a better-than-expected 12% jump in revenue. The company saw online subscription volume to its QuickBooks software rise by 28%, and Intuit's international expansion efforts really paid off with an 80% jump in its foreign subscriber base. With so much of Intuit's business coming from its tax-prep software, its earnings patterns mimic those of H&R Block, with most profit coming in the quarter that contains April.

But where Intuit really sees growth is in its small-business group segment, where it competes more directly with Paychex and ADP. ADP was the most resilient of the HR and payroll-processing companies during the recession, as it tends to work with larger customers that aren't as vulnerable to swings in the economy. Paychex faces a much more direct threat from Intuit, as Paychex has a wider base of small-business customers that are natural targets for Intuit to poach for its own services.

The nice thing about the combination of Intuit's businesses is that it gives the company flexibility to pursue new initiatives. Intuit's attempts to move more toward software-as-a-service offerings mimic what ADP, Paychex, and many other providers generally are doing to ensure streams of recurring revenue. Yet Intuit's dominance in tax software gives it the ability to seek out competitive opportunities against H&R Block as well, especially if Intuit can target for tax-prep work the clients that are most likely to need other services from the company.

In the Intuit earnings report, watch to see how its subscription efforts are going. As long as Intuit stays on track, investors should ignore short-term revenue disruptions and instead focus on the company's long-term prospects against its competitors.

2014 Tax Tips - Overview of Changes to Credits and Deductions

Isaac O'Bannon for CPA Practice Advisor writes: The IRS defense company TaxAudit.com has released its annual end-of-year tax tips for U.S. taxpayers. The company represents about 20,000 taxpayers each year during income tax audits.

Reminders for fourth quarter tax planning:

• Know your tax rate: While ordinary federal income tax rates for 2013 will remain the same, the fiscal cliff legislation passed earlier this year affects higher-income individuals and puts them in the 39.6% tax bracket (up from 35%).
• Consider leveraging itemized deductions by bunching deductible expenditures every other year, while taking the standard deduction in intervening years.
• Consider deferring income if you expect to be in the same or lower tax bracket for 2014.
• Consider the tax impact of selling appreciated securities by timing your investment gains and losses. Selling some loser securities before year end may also be a smart tax strategy.
• Take advantage of the special tax breaks available to you if you make charitable contributions directly from your IRA; special rules apply.
• Remember that significant lifestyle changes like divorce, a job change, retirement or becoming a home buyer affect your taxes.
• Spend down flexible spending accounts before those balances expire.
• Go green: Purchasing energy-efficient appliances can mean big tax credits.
• Changes to IRS tax laws effective for 2013 - know which changes affect you:

Rules for home office deductions have also changed. New this year is a simplified option for a maximum standard $1,500 deduction. Also, rules for depreciation have changed, many refundable credits are disappearing, and a new 3.8% Medicare Investment Tax and a 0.9% Medicare Health Insurance Tax will affect many higher-income individuals due to recently enacted health care legislation.

Tax provisions expiring after 2013:

For individuals:

• Above-the-line deduction for certain expenses of elementary and secondary school teachers.
• Deduction for state and local sales taxes.
• Above-the-line deduction for qualified tuition and related expenses.
• Deduction for mortgage insurance as qualified interest.

For businesses:

• Research and experimentation tax credit.
• Work opportunity tax credit.
• Increase in expensing to $500k/$2M and expansion of definition of $179 property.
• 15-year straight-line cost recovery for qualified leasehold, restaurant and retail improvements.

Top Picks for a Tax-Efficient Portfolio / Low turnover is among the factors that help these funds keep the tax bite in check for shareholders.

Adam Zoll for Morningstar writes: Many investors focus solely on total return when assessing fund performance, which is understandable given that what drives them to invest in the first place is the potential for a fund to help their assets grow. However, looking at total return alone won't tell investors the whole story in terms of how much money the fund has made (or lost) them. That's because total-return statistics don't reflect how much of a fund's gains and income is lost to taxes.

All investments held in taxable accounts are, well, taxable. This means that when a fund held in a taxable account sells holdings that have appreciated in price (gains) or receives dividends or interest from its holdings (income) those gains and income are passed on to shareholders, who must then pay taxes on them. (This is not an issue for investments held in tax-advantaged accounts such as IRAs and 401(k)s.) That's in addition to any gains the shareholder must pay taxes on for selling his own shares of the fund.

What makes a fund tax-efficient? One way to answer this is to consider what sorts of activities can lead to big tax bills for shareholders. One of these is buying and selling securities frequently. Each time a security is bought and sold at a profit it triggers a capital gain, which is passed on to shareholders, who pay the taxes on that gain. Likewise, funds that focus on dividend-paying stocks or bonds that pay interest produce income on which shareholders end up paying taxes. Therefore, funds that are tax-efficient tend to have low turnover rates and low yields.

One of the most tax-efficient ways to invest is through index mutual funds and index exchange-traded funds. Because they track indexes rather than placing bets on specific stocks or bonds, these investment types tend to be particularly tax-efficient because they don't do much trading. There also are tax-managed funds that pursue strategies designed to keep tax costs low for their shareholders.

Although no one likes to lose part of their investment return to taxes, tax-efficiency tends to be of greater concern to those in higher tax brackets, who therefore stand to lose a higher percentage of their investment gains and income to taxes than those in lower tax brackets.

To offer some suggestions for quality funds that don't run up shareholders' tax bills, we offer the following portfolio building blocks. Each of these funds carries a Gold or Silver Morningstar Analyst Rating, meaning it is among the best of its kind, and has a tax-cost ratio that is below its category average (tax-cost ratio reflects the percentage of a fund's return lost to taxes and is calculated using the top tax rate in place at the time; some funds have had lower tax-cost ratios than normal in recent years because of capital losses carried over from the 2008-09 bear market).Funds are arranged based on their role in an investor's portfolio, and the list includes no-load funds only.

Core Domestic Fidelity Spartan Total Market Index (FSTMX) 
10-year tax-cost ratio: 0.60
As its name implies, this fund covers virtually the entire U.S. stock market, holding more than 3,000 securities. In addition to being used as a stand-alone allocation to U.S. equities, this fund could be appropriately paired with individual stocks or with active mutual funds, and a complete portfolio could be built by pairing it with bond funds and international-stock funds. Also consider:  Selected American Shares(SLASX),  Vanguard Dividend Growth (VDIGX),  Vanguard 500 Index (VFINX),Weitz Partners Value (WPVLX)

Core International Dodge & Cox International Stock (DODFX) 
10-year tax-cost ratio: 0.74
The managers of this foreign-large blend fund look for companies they consider undervalued versus the companies' true long-range worth. That often leads the managers to very unpopular stocks, such as major pharmaceutical firms when concerns about the effects of health-care reform legislation and lackluster drug pipelines were rampant, or more recently, European banks. They then tend to stick with their holdings for years, as shown by the fund's recent 10% turnover rate.
Also consider:  Vanguard Total International Stock Index (VGTSX)

Core Fixed Income
 Vanguard Intermediate-Term Tax-Exempt (VWITX) 
10-year tax-cost ratio: 0
This fund follows Vanguard's classic municipal-bond strategy, offering investors exposure to a broad but relatively conservative sample of the muni-bond universe at an affordable price. The fund's management team aims for the middle of the road with a high-quality portfolio, relying on the fund's cost advantage (expenses are just 0.20%) to beat the competition.Also consider:   T. Rowe Price Summit Municipal Intermediate (PRSMX),  Vanguard Limited-Term Tax-Exempt (VMLTX)

Supporting Players Vanguard Tax-Managed Small-Cap (VTMSX) 
10-year tax-cost ratio: 0.14
Manager Michael Buek uses a sampling technique to match the key characteristics of the S&P SmallCap 600 Index while being mindful of the tax consequences of trades. The index has less turnover than other small-cap indexes, which helps improve tax efficiency. To minimize capital gains distributions, the fund may sell stocks at a loss to offset gains, and it liquidates highest-cost shares first.

 Weitz Hickory (WEHIX) 
10-year tax-cost ratio: 0.12
This mid-blend fund's lead manager, Wally Weitz, oversees a concentrated portfolio using a contrarian investing philosophy while demonstrating strong stock-picking skills. The fund isn't managed for year-to-year consistency; the team is happy to ride out the lumpy returns common to contrarian strategies. They also are unafraid to hold cash, which made up about 30% of the portfolio as of Sept. 30. This fund has become a bit tamer since the credit crisis.
Also consider:  Conestoga Small Cap (CCASX),  Vanguard Small Cap Growth Index(VISGX)

Tax-cost ratios as of Oct. 31

A good year to get your year-end tax moves right / There are 41 tax-planning days before the books close on 2013.

Linda Stern for Reuters writes: Taxpayers, check your calendars: There are 41 tax-planning days before the books close on 2013. With new tax provisions in place and several benefits expiring at the end of the year, now is the time to plot your year-end financial strategy.

Here are year-end moves that will make that April tax deadline less painful.

- First, check your income and your expected marginal tax rate for the year, so you can avoid surprises. If you're a high earner - or have special income coming this year - that's especially important because a variety of new taxes kick in this year at various income levels. Single taxpayers earning more than $200,000 and joint filers earning more than $250,000 will have a new 0.9 percent Medicare tax on wages exceeding that amount.

Even higher earners will face higher rates on income and capital gains, as well as limitations on the amount of tax deductions they can take.

Remember that a one-time event like a home sale or a retirement distribution can bump you into a much higher bracket for a year. If you're approaching these brackets, you can work now to defer income to next year or make strategic decisions about your investments.

-- Adjust your at-work tax withholding to avoid penalties for low-balling estimated taxes. You may discover that you will owe more in taxes than you thought you would, because ofbusiness or investment income. If you didn't fully account for that by making adequate quarterly estimated tax payments to the Internal Revenue Service, you can face penalties in April.

Overcompensate now, suggests TurboTax's Bob Meighan, who calls it a "favorite" year-end strategy. He tells taxpayers to arrange to have extra money withheld from now until the end of the year so they don't face penalties in April for sending in too little in quarterly estimated taxes.

-- Give away shares of stock. If you own investments outside of a tax-deferred retirement plan, you've had a very good year - the Standard & Poor's 500 stock index is up more than 25 percent for the year. Sell your shares and you'll have to pay sizeable taxes of as much as 20 percent on your gains. But give away your shares and there are benefits to spare. If you make your year-end charitable donation in the form of a gift of appreciated shares, neither you nor the receiving charity will have to pay taxes on those gains.

You can also give shares away to your adult children and possibly avoid gains taxes. Here are the rules: If your child is over 18 and not a student, or a full-time student age 24 or older, they are considered independent of you for tax purposes. If your child earns less than $36,250 as a single and $72,500 as a couple filing jointly, they are in a zero percent capital gains tax bracket for 2013. That means you can give them your shares, they can sell them, reap the gains, and owe no taxes on that income, says Meighan. That's a super way to help out a graduate student or young person just starting on their career. (Gift tax rules kick in once you hand over more than $14,000 per person.)

-- Front load your commuter benefits. For 2013, you can have your employer tuck away as much as $245 per month in pre-tax money to cover your commuting costs for public transportation. For 2014, that will revert to $130 a month. It's possible Congress will come in retroactively and change that for 2014, but there are no guarantees. So? Max out your bus fare card for December, if there is still time.

-- Finish your short sale. If you're trying to complete the short sale of a home that is worth less than you owe on it, do as much as you can to push your lender and your buyer to complete the whole transaction before the end of the year. Any interest they forgive will be taxable in 2014, tax-free if they do it before the end of the year.

-- If you live in Florida or Texas, consider buying that car or boat now. One of the biggest tax breaks scheduled to go away at year-end is the provision that allows taxpayers to deduct their state sales taxes instead of their state property taxes. Folks who live in states that don't have income taxes can save sizeable amounts by making their big-ticket purchases in 2013.

-- Check your miscellaneous deductions. Items like work-related expenses and tax-advice fees are only deductible once they exceed 2 percent of your adjusted gross income. For that reason, many people bunch these deductions into every other year; paying trade magazine subscriptions every other year and the like. See where you stand for 2013. If you've already amassed a lot of miscellaneous deductions and think you'll top the 2 percent limit, start paying for things that you'd otherwise wait until next year to cover. For a list of everything you can deduct, check out the IRS's publication no. 529 (here).

-- Set up a solo 401(k). If you are self-employed and want to create a 401(k) for yourself and feed it for 2013, you have only until December 31, 2013 to do that. You have until the day your taxes are due (typically April 15, or October 15, with extensions) to set up and feed other types of retirement accounts.

Intuit To Acquire Workers' Compensation Payment Solutions Provider Prestwick Services Transaction Extends Intuit's Open Platform Offerings Available to Small Businesses and Frees Cash Flow for Employers

Intuit has signed a definitive agreement to acquire privately held Prestwick Services  (workers' compensation payment solutions provider), a subsidiary of Prestwick Holdings.  
services, a subsidiary of prestwick holdings * Transaction expected to close Q2 of fiscal year 2014, which ends January 31.  When the transaction closes, Prestwick Services’ will become part of Intuit’s Employee Management Solutions Division. The transaction is expected to close during the second quarter of Intuit’s fiscal year 2014, which ends Jan. 31, and is subject to customary closing conditions.   Learn about Prestwick here.   Intuit's Press Release Below:

 Intuit Inc. INTU -0.03% has signed a definitive agreement to acquire privately held Prestwick Services, a subsidiary of Prestwick Holdings a Sudbury, Mass. based leader in payroll based billing and payment solutions for the workers' compensation industry.

Traditional workers' compensation plans involve large pre-payments based on estimates, with the potential for substantial extra payments at year-end audits. With the acquisition of Prestwick Services and its TRUPAY(TM) technology, Intuit will open the platform that enables workers' compensation insurance premiums to be calculated in real-time, based on actual payroll, and will not require small business owners to switch insurance carriers or agents.

For a small business owner, pay-as-you-go workers' compensation has several benefits, including:

-- Stronger Accuracy - Premiums are calculated every pay period instead of estimated at the beginning of the year, so payments are adjusted as employee changes occur, virtually eliminating surprise payments at year end audits.

-- Available Cash flow - No more hefty lump sum pre-payments means more flexibility in cash flow and paying only for changes as needed.

-- Convenience - Automatic collection of premiums means no extra legwork, fewer late payments and one less thing on the to-do list.

"This transaction furthers our commitment to helping small businesses manage every aspect of their business, so they can be free to focus on doing what they really love," said Ginny Lee, senior vice president and general manager of Intuit's Employee Management Solutions division. "We are very pleased to be adding a team that brings deep insurance industry experience as well as their robust TRUPAY technology platform. Together, we look forward to providing more benefits to our small businesses customers as we work to bring even more insurance carrier partners onto the platform."

The integration of Prestwick Services means more than one million Intuit payroll customers will have access to flexible payment options from 15 top insurance carriers, without requiring a change to their existing agent-client relationships.

When the transaction closes, Prestwick Services' will become part of Intuit's Employee Management Solutions Division.

"Our drive has always been to make running a business simpler. Intuit's expertise in doing just that, coupled with our TRUPAY technology, will enable workers' compensation insurance carriers to better serve their small business clients with flexible payment options while retaining the benefits of existing client-agent relationships," said Adam Black, founder of Prestwick. "As part of Intuit, we'll be able to benefit millions of payroll customers by putting our technology into the hands of a trusted brand that has a long history of innovation and delighting customers."

The transaction is expected to close during the second quarter of Intuit's fiscal year 2014, which ends Jan. 31, and is subject to customary closing conditions.

Intuit continues M&A spree, buys workers comp. tech provider

• Intuit (INTU +0.1%) is acquiring Prestwick Services, provider of a workers compensation platform for small businesses that, according to Intuit, provides more accurate insurance premium calculations and eliminates large up-front prepayments.
• Whereas traditional workers comp. solutions rely on prepayments based on estimates, Prestwick's Trupay offering calculates payments in real-team, and adjusts them as employee changes take place.
• Intuit plans to offer Prestick's solution to its 1M Payroll service customers. The company will be added to Intuit's Employee Management Solutions unit.
• Recent Intuit acquisitions: GoodApril, Level Up Analytics, Payvment

Xero first-half loss more than doubles, losses to grow with new customers

Paul McBeth for Yahoo Finance writes:   Xero, the cloud-based accounting software company that's now the second-biggest listed company more than doubled its first-half loss as it continues its drive for global domination

Unprofitable by design as it grabs market share,Xero says it sees faster sales growth and more red ink for the rest of the year.

Wellington-based Xero's net loss widened to $17.1 million, or 14 cents per share, in the six months ended Sept. 30, from $7 million, or 7 cents, a year earlier, it said in a statement after the close of trading on the NZX.

The company had already reported an 84 percent gain in first-half sales to $30.3 million, and said it expects annual revenue to exceed 80 percent growth and bigger operating losses in the second half of the year.

Xero is flush with cash after raising $180 million in new capital last month, mainly from US investors, leaving it with some $230 million in funding to launch its assault on the US market, where it claims to be the number one challenger.

"The board is continuing to follow a growth agenda focused on creating longer-term shareholder value rather than short-term profitability," the company said. "Xero is investing in the infrastructure to support millions of customers and create a significant cloud-based financial platform for its customers and partners."

The shares fell 0.9 percent to $35.66 on the NZX, before the release, and have almost doubled from $17.95 from before the October capital raising. The shares were down 1.8 percent to A$31.61 on the ASX, where trading was still open.

Xero's operating cash-burn more than doubled to $8.9 million in the first half from $3.7 million a year earlier, while investing cash outflow surged to almost $14 million in the half from $4.8 million, mainly on increased capitalised development costs.

2013 Year End Federal Tax Planning – Individual

DebFox Financial Wellness writes: If you want to want to make sure your money is more in “your pocket” than Theirs (The IRS), now is the time to act. Estimating your 2013 tax bill keeps you from being surprised next year. More importantly, it provides the opportunity to perhaps decrease your actual tax amount by planning and acting strategically before the end of this year.

To start:

• Determine how much you have earned this year
• Determine what you have paid toward your 2013 Federal tax bill
• Then increase each of these amounts to estimate the year-end amounts

Keep these amounts in mind as you consider the following simplified tax form

Income
- Above the Line Deductions= Adjusted Gross Income
- Standard Deduction or Itemized Deductions
- Exemptions
= Taxable Income
- Tax Credits
- Tax Paid
= Tax Owed or Refunded

With the visual in mind, you might find it easier to review each major section to see if there is action that you can take now to reduce your tax bill:

1. Income:

If you think your income will decrease next year and your tax rate would be lower, can you:

• Defer a year-end bonus to January 2014?
• Postpone a sale that will trigger a gain to next year?
• Delay exercising stock options?

Alternatively, it may make sense to move income to this year:

• Covert a traditional IRA or a SEP IRA into a Roth IRA and recognize the conversion income this year?
• Take IRA distributions this year?

2. Above The Line Deductions:

• Above the Line Deductions include:

1.   Health Savings Accounts
2.   IRA Deduction

• Establish an IRA for yourself
• Establish a Spousal IRA

3.   Qualified Student Loan Interest
4.   Self-employed health insurance or qualified pension plans

• Establish a Defined Benefit Plan

3. Estimate what is going to save you the most money:

The Standard Deduction or the Itemized Deduction?

The 2013 Standard Deductions are:

$ 12,200 Married, Filing Joint
$ 8,950 Head of Household
$ 6,100 Single or Married, Filing Separate

There is an additional Standard Deduction amount of $1200 for those over the age of 65, blind, or both.

It is important to note that there is a reduction for Personal Exemptions and Itemized Deductions for taxpayers with Adjusted Gross Income over:

$250,000 Single
$300,000 Married, Filing Joint
$275,000 Head of Household
$150,000 Married, Filing Separate

• This will have the effect of increasing taxes on affected taxpayers

If you itemize, would you benefit if you changed the timing of some of your payments?

If you expect your income to decrease next year, then you might want to move some payments/deductions to the current year to offset your higher income this year:

• Prepay property taxes
• Make your January mortgage payment
• If you owe state income taxes, consider making up any shortfall rather than waiting until your return is due
• Medical Expenses are deductible only to the extent they exceed 10 percent (7.5 percent if you or your spouse are 65 before the end of the year) of your adjusted gross income (AGI).
• Sell some or all of your loss stocks
• If you qualify for a health savings account, consider setting one up and making the maximum contribution allowable.

Defer Deductions into 2014

If you expect tax rates to increase next year, or if you anticipate a substantial increase in taxable income, you may want to explore waiting to take deductions until 2014:

• Postpone year-end charitable contributions, property tax payments, and medical and dental expense payments, to the extent you might get a deduction for such payments
• Postpone the sale of any loss-generating property

State and Local Sales Tax Deduction

The option to deduct state and local sales taxes in lieu of state and local income taxes is scheduled to expire at the end of this year. If you are thinking of purchasing an expensive item that will generate a larger deduction than the state and local income tax deduction, buying the item this year may be beneficial.

Deduction for Eligible Teacher Expenses

This is the last year that eligible educators (teachers) can deduct $250 of qualified expenses paid during the year.

• If you itemize and you have not reached the limit, take advantage of it by buying next years supplies now

4. Exemption Amount is $3900 (phase-outs apply)

5. Use your numbers to estimate your 2013 Taxable Income

Income
- Above the Line Deductions= Adjusted Gross Income
- Standard Deduction or Itemized Deductions
- Exemptions
= Taxable Income
- Tax Credits
- Tax Paid
= Tax Owed or Refunded

6. Use this Chart to estimate the amount of tax owed

Tax rate	Single filers	Married filing jointly or qualifying widow/widower	Married filing separately	Head of household
10%	Up to $8,925	Up to $17,850	Up to $8,925	Up to $12,750
15%	$8,926 – $36,250	$17,851 – $72,500	$8,926- $36,250	$12,751 – $48,600
25%	$36,251 – $87,850	$72,501 – $146,400	$36,251 – $73,200	$48,601 – $125,450
28%	$87,851 – $183,250	$146,401 – $223,050	$73,201 – $111,525	$125,451 – $203,150
33%	$183,251 – $398,350	$223,051 – $398,350	$111,526 – $199,175	$203,151 – $398,350
35%	$398,351 – $400,000	$398,351 – $450,000	$199,176 – $225,000	$398,351 – $425,000
39.6%	$400,001 or more	$450,001 or more	$225,001 or more	$425,001 or more

Rev. Procedure 2013-15 can provide additional information

7. Apply Tax credits, including these that will expire this year

Expiring Energy-Related Tax Credits

• Residential Energy Credit: If you are considering energy improvements to your home, you may want to make the improvements this year. The credit is 10 percent of the amount paid or incurred for qualified energy efficiency improvements installed during the tax year and the amount of residential energy property expenditures paid or incurred during the tax year, up to a maximum credit of $500.
• Qualified two- or three-wheeled plug-in electric vehicles: The credit is equal to the lesser of 10 percent of the cost of such a vehicle or $2,500.

In summary, yes, this involves some work and at a time of year where most of us are busier as we approach year-end and the holidays. If it saves you some money, isn’t it worth it?