Thursday, January 16, 2014

Doing Your Taxes: 5 Apps to Dig Out and Track Tax Deductions

William Peacock, Esq. for Findlaw writes: I won't wait till April. I won't wait till April.
I won't wait till April.  Now that we have that out of the way, how can you harness the power of modern technology and smartphone apps to make this year's tax deadline suck ever-so-slightly less? For us disorganized procrastinators, we're going to have to dig though student loan bills, online purchases, charitable contributions, and other potential deductions that we failed to track throughout the past year. Plus, maybe, just maybe, we should change things up and start tracking those deductions as we go along.
 
Maybe.
 
It's time folks. Don't wait until April to do the digging. Your CPA, if you use one, will hate you.
 
Digging Up Deductions
Slice and Dice (Free)
Slice goes through your email inbox to track down every purchase you've ever made online. This is great for either skimming your list for deductable items. Plus, the "Slice and Dice" tab breaks your purchases into categories, such as travel, automotive, etc. A particularly useful feature, that has nothing to do with taxes, is the tracking of delivery dates.
 
Mint (Free)
Mint is the personal finance app. Ten million users. Rave reviews from pretty much everyone. It organizes your finances by connecting to your bank accounts. It even has a tax deduction tagging feature that we're itching to try out.
 
Make Next Year Better
Expensify (Free for Individuals)
Their motto is "expense reports that don't suck."What they lack in clever marketing, they make up for in utility.
 
Expensify stalks your credit card and bank accounts to pull out deductable purchases. You can also track deductable mileage with the mobile app and scan in receipts (which are automatically turned into expenses).
 
Evernote (Free or Premium)
If you're overloaded on dedicated apps, the uber-popular note-taking app Evernote is another great way to track deductions. Create a dedicated notebook for taxes and then save pictures of receipts, notes of online transactions, student loan payments, and anything else that'll help you squeeze change out of Uncle Sam's pockets. It's a less auto-magic solution than the alternatives, but if handing out your banking information to a handful of companies makes you nervous, this is a little more secure.
 
What's a Deduction?
Ask a CPA
If, like the rest of America, the tax code makes you want to beat yourself in the face repeatedly with a heavy object, Ask a CPA allows you to play Q&A with actual CPAs for free. You can read others' questions or submit your own.
 
Stop Procrastinating
Now that you have the tools, get to it! April may be four months away, but why wait? After all, digging through your inbox for deductions, even with Slice, is going to take awhile.
Posted on 6:06 PM | Categories:

Gluten-Free Glutton: Tax time an even bigger headache for celiacs / Tax Deduction Guide for Gluten-Free Products

Mark Basch for the Florida-Times Union writes: A year ago, I embarked on an exercise that I assumed would be futile and needlessly time-consuming. But in the interest of gluten-free research, I knew I had to pursue it.
 
I attempted to take the tax deduction available to celiacs for the extra cost of gluten-free food.
 
One year later, I can confirm my original hypothesis: Yes, the process was irritatingly time-consuming and, yes, it was futile — at least for me.
 
And while I didn’t spend enough money to qualify for the tax deduction, I was able to see just how much extra the gluten-free diet is costing me as I added this all up on Dec. 31. Happy New Year!
 
OK, when I wrote about the tax deduction a year ago, I promised I wasn’t going to whine about the extra cost, so I’ll stop there. But let me tell you about my wasted year spent documenting all of my gluten-free expenses.
 
First of all, for those of you who are newly diagnosed and may be unaware, the Internal Revenue Service does offer a potential tax deduction for people with celiac disease to cover the increased cost of gluten-free food.
 
Celiac disease is a medical condition with only one form of treatment — a strict gluten-free diet. So the additional cost of gluten-free food is considered a medical expense for people with a confirmed diagnosis.
 
Unfortunately, the deduction is not available for people who have some other type of gluten intolerance that has not been diagnosed as celiac. And needless to say, those of you who decided to go gluten-free because of a misguided notion that it’s a healthier lifestyle can’t take it either.
 
You won’t find any instructions on this deduction in any IRS publication and I doubt any tax help guide will give you information on it. The only official confirmation of the deduction I know of came in a letter from the IRS to the Celiac Sprue Association three years ago.
There is no separate deduction for celiacs. The gluten-free food costs have to be lumped in with all of your other medical costs when calculating your federal income taxes.
 
For years, the tax law allowed you to deduct only medical expenses that exceeded 7.5 percent of your adjusted gross income. That has made it very difficult for celiacs to take advantage of the gluten-free deduction.
 
Once you get the initial diagnosis, if you have no other problems, there’s no need to seek continuing treatment from a doctor, so you’re not going to rack up big medical expenses. I haven’t had any celiac-related medical bills since I was first diagnosed three years ago and I generally don’t make a lot of visits to the doctor, so I knew it was unlikely that I would reach the 7.5 percent threshold.
 
To make it even harder, the federal government last year increased the threshold for deducting unreimbursed medical expenses to 10 percent of adjusted gross income, for people under age 65. I didn’t learn about that until midway through the year and, if I knew that at the beginning of 2013, I may not have even started this project. The 7.5 percent threshold was difficult but the 10 percent threshold is hopeless, at least as far as my potential gluten-free deduction is concerned.
 
I thought about giving up when I learned about the new 10 percent rule, but since I was well into the project and had already spent enough time on it, I decided to continue.
The process of trying to take the deduction is time-consuming because you have to document every expense you have. Also, there is little guidance from the IRS on what expenses can be included.
 
The only guidance comes in the letter to the Celiac Sprue Association that said you can deduct expenses “to the extent the cost of the food for the special diet exceeds the cost of the food that satisfies a taxpayer’s normal nutritional needs if the special diet were not required.”
 
So how do you figure out the excess cost? Every time I bought a special gluten-free product last year, I entered the item and the price into a spreadsheet. And then I wandered through Publix or another store trying to find the price of an equivalent item. This was the part of the process I actually found the most annoying, because it wasn’t easy. Fortunately, nobody seemed to notice when I walked through the store with a little notepad and pen, because I didn’t want to stop and explain what I was doing.
 
Just as an example of how this works, the very first item on my spreadsheet is a package of four Udi’s gluten-free hamburger buns for $4.69. I found a package of eight Publix-brand buns for $1.29, which would mean four Publix hamburger buns cost about 65 cents. So I calculated the excess cost of my Udi’s buns at $4.04.
 
Do you see how expensive a gluten-free diet can be?
 
Of course, I have no idea if that would be a valid deduction. The IRS could argue that the Publix buns were not equivalent to the Udi’s buns, or they could argue that hamburger buns are not part of my normal nutritional needs.
 
As I said last year, who’s to say what my normal nutritional needs are? I entered every six-pack of gluten-free beer I bought into my spread sheet and calculated the difference between that and a six-pack of “normal” beer. Does anyone want to argue with me about that one?
 
Meanwhile, I was drinking a lot of gluten-free bottles of beer at bars and restaurants that cost a lot more than other available beers (very few places offer gluten-free beer specials). I didn’t put those into my spreadsheet because I couldn’t figure out a good way to calculate the excess cost.
 
Some restaurant meals at least make calculations easy because they have a clear gluten-free surcharge spelled out on the receipt. For example, Epik Burger adds a $2 surcharge for gluten-free buns with its burgers and other sandwiches, and Larry’s Giant Subs has a $2.25 surcharge for a gluten-free sub roll. I just entered the surcharge onto my spreadsheet.
While that’s easy, I missed out on a bunch of restaurant charges that I could have added to the spreadsheet. Oftentimes when I leave a restaurant, I instinctively grab a copy of my credit card receipt, but the credit card receipt doesn’t have the detail of the original receipt, so I had no record of the gluten-free charges.
 
If you hadn’t guessed this already, you have to keep every receipt to document your gluten-free costs if you take the tax deduction.
 
At the end of the year, my spreadsheet showed a total of $501.90 in gluten-free charges. Remember, this isn’t the amount of money I spent on gluten-free food, but a calculation of the extra costs beyond the normal charges for my “nutritional needs.”
 
I’ll bet I lost another couple of hundred dollars in gluten-free charges because of lost or forgotten receipts, so let’s say my excess gluten-free costs for the year were about $700. That turns out to be more than I spent on medical bills. So no, when I added it all up, I did not meet the 10 percent threshold.
 
Obviously, this is no surprise. Maybe one day, celiac advocates will successfully lobby Congress to put a straightforward celiac deduction into the tax code. But until that time, I’m not going to spend any more time thinking about a tax deduction.
Meanwhile, I was left with a file full of receipts to document my year of gluten-free spending. As I finished the project, it made for a nice pile of confetti to ring in the New Year.  Mark Blog's about the Gluten-Free life - click here.
 
Posted on 4:31 PM | Categories:

Filers’ Cheat Sheet: Recap of 2013 Tax Law Changes

Bonnie Lee for Fox Business writes:   As you prepare to file your 2013 income tax return, you will need to know some of the tax law changes that occurred last year.
After all, the year started off with federal tax developments on new year’s day with the passage of the American Taxpayer Relief Act of 2012 (ATRA), which permanently extended the Bush-era tax cuts for all but the highest income taxpayers.
Listed below are some highlights of tax law changes during 2013 that may affect your tax situation:
Same Sex Marriages. Married same-sex couples may now use the filing status of married filing joint. Please note that you must have been married in a state that recognizes same-sex marriages (rather than civil unions). You don’t need to reside in that state in order to file jointly.
New Medicare Taxes. Effective Jan. 1, 2013, the Affordable Care Act imposed two new Medicare taxes on qualified taxpayers: a 3.8% net investment income tax and 0.9% Additional Medicare tax. Generally, these taxes will affect you if your income exceeds $200,000 (single) or $250,000 (married filing joint), $125,000 (married filing separately).
Health Savings Accounts (HSA). If you have a high-deductible health insurance plan and an HSA, you may contribute $3,250 (individual plan) or $6,450 (family coverage plan) for 2013. The contribution limits increase to $3,300 or $6,550 respectively for 2014.
Broker Reporting. The IRS issued final regulations on the requirement that brokers report the basis of debt instruments and options that they sell on behalf of customers. If you deal in these types of investments, your 1099 should now include basis of any sell transactions.
Casualty/Theft Losses. In a court ruling last year, the IRS allowed a theft loss resulting from home repair fraud. If you found yourself the victim of this type of fraud or any other bad investments resulting from fraud (say for example, a Ponzi scheme), you may be able to write it off.  
IRA Contribution and other Retirement Plan Limits. For both 2013 and 2014, IRA contributions are allowed up $5,500. If you are entitled to make catch-up contributions, you may add an additional $1,000. For defined contribution plans, the limit is $51,000 for 2013 and $52,000 for 2014. Check with your employer as other restrictions may apply.
Standard Mileage Rates. For 2013, the standard mileage rate is 56.5 cents, medical and moving is 24 cents, charitable is 14 cents. The rates for 2014 decrease to 56 cents, and 23.5 cents respectively. The charitable rate remains the same as it is set by statute.
Per Diem Rates. Prior to Sept. 30, 2013 the per diem rates for travel and meals were set at $242 for high-cost areas and $163 for low-cost areas. These rates increase after September 30, 2013 to $251 and $170 respectively.
Home Office Deduction. The IRS announced a new optional method to determine your home office deduction which will no longer require tracking actual expenses. The maximum deduction allowed under this safe harbor method is $1,500 based on 300 square feet. For most of you, tracking actual expenses will result in a higher deduction.
Posted on 11:29 AM | Categories:

Xero vs Clear Books vs FreeAgent vs others

Over at AccountingWeb UK we read:   Just looking for quick feedback folks. I use Xero and have a number of clients on the system. Few things bug me such as no easy payment on a/c option for customers/suppliers, EU VAT problem, lack of bank feeds with some NI banks.

Clear books looks pretty neat at first glance and seems to have bank feed technology too.
Anyone give me a list or pros/cons of Xero against Clear Books or against other online systems? Clear Books seems to have payroll too? -sparkey999
 

DMGbus's picture
new

Final stat accs & iXBRL

DMGbus PM | | Permalink
 
Whichever one is closest to having the following capabilities would be the best so far as I am concerned:
  1. Capability of producing compliant statutory accounts (Xero fails on this, as when I last looked it had references to 1993 (yes 1993) Companies Act, presumably an NZ Co's Act)
  2. iXBRL capabilities to satisfy HMRC CT filing
Advantages arising from the above: ditch rubbish accounts production software and eliminate to/froing between bookkeeping software and accounts production software.


petersaxton's picture
new

Clear Books looks good

petersaxton PM | | Permalink
 
I've asked people what they prefer but I am going to look at Clear Books and Xero and make my own decision based on that. I'll tell you what I decide.


Glennzy's picture
new

I started off looking at Xero

Glennzy PM | | Permalink
 
but I find it difficult to judge how good it is from the free trial as you need a full of set of figures to work it properly. In addition I found the whole accreditation process tedious and quite costly, and the whole gold silver and bronze stuff gets my goat. This may sound strange but I also feel the need to like the people I deal with in order to do business with. Xero only seem to want to be with platinum sellers and someone like me who may only have 10 or 15 people using there software they were not interested. So after Paul Scholes recommendation I looked at Clear Books which I really like. I am doing my own stuff on it and have a few clients using it now with a few more to sign up next month. Its better priced and very easy to use. You get a better feel of dealing with them, as the staff are great and helpful and they come across as interested in supporting you to grow and recommend their products, and I hope they do well. I think they have a trial version of accounts production coming soon and also have payroll. I am based in North East where Sage dominates still as there are a lot of there ex staff working around about but they have lost their way a long time IMO.


new

cloud accounting

georgeford PM | | Permalink
Hi there,
I really like Kashflow but know that its not for everyone.

cheers
george


Paul Scholes's picture
new

I'm using all three 1 thanks

Paul Scholes PM | | Permalink
 
Hi sparkey999 - even though I'm about up to my limit of 3 in being able to keep track of how they each work, two of my clients use the same bookkeeper who is wedded to QBs and so, taking a deep breath, I've just signed up to QBO to see how it works and also to discover the details of the partner fees, which seem to evolve as quickly as a flu virus.
And that just about sums up how I've had to approach this, ie it's picking the system that best suits the needs of the user and, in our case, that means pretty much the clients, as I would rather they do most of the work than me/us.

Comparing these or any other 3 is a really difficult task, not only because they each come at things differently and have different pricing structures and discounts, but because you can never take any function, or lack of function, for granted, because they can change month by month.

As many will know I've been working with ClearBooks for a few months now on their accountants' "Pro" products (year end accounts, tax etc) but it's also given me the opportunity to use & learn the bookkeeping/payroll side and to feedback suggestions for improvements & enhancements and what's really impressive is how quickly things can be changed and this is one of the main advantages of Cloud stuff, ie Sage desk-bound may have loads of developers working but they are planning the next release in X months/years time, whereas Cloud developers are working on corrections & enhancements to go live that day/week.

I and others have made lots of postings about the relative general merits of the three systems you mention and, even though I'm involved with CBs I still see FreeAgent as being a non-accountant user's system, Xero as an equivalent to Sage in operation and usability, more accountant based, and CBs as a bridge between the two, mainly as you can turn on & off loads of functionality. Both FA & CBs come with integrated payroll, which is another area where I'm getting clients more involved, and all three, to varying degrees, are committed to providing the year end add-ons for accounts &/or tax as well as practice management and related internal systems.

If there are key features you are interested in having (or avoiding!) PM me and I'll tell you what I've experienced with each.

As far as the non-technical stuff is concerned, ie the the approach and ethos of each company to its users and accountants, I've made my views clear on this on many occasions, but as I'm now involved with CBs and (hopefully) even those things can evolve, I'm keeping my mouth shut.


petersaxton's picture
new

QBO

petersaxton PM | | Permalink
The latest pricing is £4.99 for life!
I think QBO is quite good but I think Clear Books is likely to be the "clear" leader in terms of quick improvements. If you want to get to know QBO you can go on a one day course to get certified.

AccountancyMarket PM | | Permalink
I love the payroll in Freeagent - so easy to file RTI through the system, takes seconds.
No sign yet of Xero integrating UK payroll and they rely on add-ons.
For me, FreeAgent is great for one-man bands with low volume of transactions, who you can get to do a lot of the work themselves - would definitely recommend it for that type of client.

For high volume transactions business, I would recommend Xero though. I have a client who runs an online business - for every sale they make, there are 3 transactions generated. The sales income, a paypal fee, and another fee to the platform they use. For 50 sales, I can post 150 transactions in about 90 seconds using rules and cash coding - having set up the rules which allocates all of the amounts to the correct accounts, I just perform a review and then can multi-select the transactions to be posted. These features are lacking in FreeAgent.

Both are really lacking with regards to VAT at the moment.


Paul Scholes's picture
new

QBO Peter

Paul Scholes PM | | Permalink
Hi Peter - wish I'd asked you first! Mainly as a result of Spam filters catching anything with Qbs on it, it's taken me a few days to get registered.

Save me having to search through the website, can you give me a link to the monthly cost you quote, or give details here, is this for any client/package and does it only apply if you get to and keep certified status or whatever they call it? (bottom of this page)

Originally it was a fiver for a year but, as a result of groans on here I hope, it seems they have re-thought this.
Thanks

 
Paul Scholes's picture
new

More speed & automation 1 thanks

Paul Scholes PM | | Permalink
Expanding on AccountancyMarket's points, the benefits of systems like Xero & CBs is that you can import transactions in bulk, via csv imports, making the transition from another system, mid-year easier than say FA, where transactions, such as sales & purchase invoices have to be entered one at a time.

The automation of the whole sales process can be so much easier now with the cloud. Given that it's you, the user, generating the invoice, some or all of which might be recurring, and the ability to integrate systems with banks and other financial processors, there is no reason why companies with standard invoicing should not be able to automate the whole process of invoicing out & money in, in other words, with little if any human intervention.
Xero & ClearBooks have these facilities and my own books, for example, provide a link to Gocardless with the invoice that the client can click into to authorise single or multiple payments and, when the money is taken by Gocadless a balance appears in the Gocardless bank account in my books and the invoice is paid off. Leaving me more time to try and suss out what the 5 debit card payments to Amazon were for last month!

 
petersaxton's picture
new

£4.99 per month for life

petersaxton PM | | Permalink
I got an email from my contact at Intuit who quoted it so I don't know the precise terms.
"We are now offering our best product – Quickbooks Online ‘Plus’ at the amazing price of £4.99 + VAT for life!

This is no longer a 12 months introductory offer, this price lasts in perpetuity.
You still receive the Quickbooks Online Accountant version for free, and now your clients can access our best product for a fiver a month for life!"

 
Posted on 10:40 AM | Categories:

Deducting financial management fees

Kenneth Peterson for the Monterey Herald writes: Question: If you have a financial adviser managing your retirement accounts, can you deduct his charges when you file your taxes each year? Reading the tax rules that are posted on the IRS site, it seems like you can, but I'm still not sure. I have heard from several people who say you can, but I'm still a little hesitant.
 
Answer: The IRS considers investment management fees as expenses for the management of property held for the production of income and allows you to deduct them as a miscellaneous itemized deduction along with other miscellaneous itemized deductions including tax preparation fees.
You report your miscellaneous itemized deductions on Schedule A of your tax return and then you reduce them by subtracting 2percent of your adjusted gross income.
 
For example, let's assume your investment advisory fees were $10,000 and your tax preparation fee was $1,000. Also assume that your adjusted gross income was $100,000. Your total miscellaneous itemized deductions of $11,000 will be reduced by $2,000 (2 percent of $100,000), leaving a deduction of $9,000. If you are subject to the alternative minimum tax, your miscellaneous itemized deductions along with certain other itemized deductions, including the state and local taxes you pay, may not count.
 
If you are working and trying to maximize your contributions to your retirement plan, then you should consider paying the investment management fees from outside funds. The fees are deductible as explained above and you will leave more money in your retirement fund to grow tax-deferred.
However, if you are retired and no longer contributing to your IRA or other retirement plan, then you may be better off paying the management fees from inside the retirement account. That's because an advisory fee withdrawn directly from a retirement account is not reported as taxable income. Nor is it tax-deductible. Think of it as a tax-free withdrawal.
 
Here is an example: Rob and Mary, both single, are retired and have $1 million IRA accounts. They each pay a $10,000 investment management fee. Rob withdraws $40,000 from his IRA this year and pays a $10,000 investment management fee using outside funds from his checking account. He reports a $40,000 taxable IRA distribution on his tax return and claims a $10,000 miscellaneous itemized deduction that may be reduced by the 2 percent adjusted gross income limit, depending on his adjusted gross income and what other miscellaneous deductions he can claim.
 
Mary withdraws $30,000 from her IRA and her adviser draws her $10,000 investment management fee from that account. Because Mary paid her management fee from funds inside her IRA, her reportable IRA distribution is $30,000 even though her total withdrawal was $40,000. Rob and Mary both withdrew $40,000 from their IRA accounts, but Mary has $10,000 less taxable income and Rob has a possible $10,000 tax deduction. Your tax practitioner can run the numbers for you to see which way works best.
Question: Can I pay the fees for my Roth IRA from my traditional IRA?
Answer: No. It would be a nice way to save taxes if you could, but you can't use traditional IRA money to pay fees on other investment accounts, including Roth IRA accounts.
Posted on 10:23 AM | Categories:

Xero shares retreat from stellar run

Financial Review writes: A funny thing happened to cloud accounting software group Xero on Thursday – its share price actually went down from a 28 per cent gain since January. Since the start of the year, the New Zealand-based company has added $1.1 billion to its market capitalisation, which now stands at $4.5 billion.
Posted on 10:00 AM | Categories:

Level Money App Launches for Android Devices

Level, the mobile-first financial services company, today unveiled Level Money for Android, a free app that turns any Android device into a digital money meter, enabling users to track spending in real time. The company, which launched its first app on iOS in October 2013, is continuing in its commitment to create the next generation of financial services with Millennials in mind.

“The release of Level Money for Android is an exciting milestone for the company, just three months after our initial launch on iOS,” said Level CEO and Co-Founder Jake Fuentes. “We’ve heard from our members; we knew we couldn’t stay single-platform for long. Android is an incredible ecosystem and a natural next step. We are delighted to offer a radically simple, mobile-first approach to finance to Android users.”

Level Money, available today for the first time in the Google Play store, provides a live snapshot of a user’s spendable income, eliminating the need for antiquated spreadsheets and budget categories. After linking to credit and debit accounts, Level Money automatically calculates a user’s total income, recurring bills and recommended savings each month. It then tracks a simple “spendable” balance, broken down by day, week and month. Every time users complete a transaction – such as pumping gas or buying coffee – the app automatically updates their remaining cash available for that day.

In a world where most of our money is represented digitally rather than as physical cash, Level Money provides the mobile equivalent of opening up your wallet to see how much money is left to spend. Key benefits include:
  • A digital money meter: Level Money automatically updates spendable cash as you make purchases each day, week and month and provides a simple, real-time picture of where you stand in order to stay in the black.
  • No budgets or categories required: You want to know where you stand with your money, and finally you can find out without having to build a budget or spreadsheet. There’s no need to manually categorize transactions or do mental math.
  • Built on a foundation of security: Level is designed with bank-level security and encryption and high privacy standards. The company has partnered with Intuit to help manage sensitive data. Intuit provides Level Money members a trusted security and technology platform already trusted by millions of people.
Posted on 9:57 AM | Categories:

Maximizing 529 College Savings Plan Tax Breaks

Ashlea Ebeling for Forbes writes: Almost a third of contributions to 529 college savings plans are made in the fourth quarter, but there are good reasons to contribute in the beginning of the New Year. The earlier you get the money in, the longer it has to grow tax-free. Also, some states will let you take a 2013 state tax deduction for contributions made up until April 15, 2014. And tax season—when you’re preparing your taxes–is a good time to look at how 529 plans fit into your overall tax planning strategy.
Tax savings is one of the main drivers of 529 plan growth. You can get a triple, or even quadruple, tax break. The money you contribute grows federal and state tax-free and comes out federal and state tax-free if used to pay college expenses. By contributing to a plan you get money out of your estate, potentially saving on state and federal estate taxes.  And depending where you live and which plan you pick, state tax breaks are available.  
Stretching out tax-deferral. While the minimum contribution to open an account is typically $250, many high-net-worth families stash away tens of thousands of dollars. Grandparents who are forced to take required minimum distributions from retirement accounts but don’t need the money to live on move the money from one tax-deferred account to another by setting up plans for their grandkids, says Kevin Farrell, divisional manager for RIA sales at SSgA (the investment manager for Nevada’s 529 plan).

Side-stepping estate tax levies. Another strategy Farrell sees advisors implementing on behalf of wealthy grandparents and parents is accelerated gifting.  You can give five years worth of $14,000 annual exclusion gifts at once—that’s the amount the Internal Revenue Service allows as a tax-free gift from one individual to another. So grandma and grandpa could fund an account for a grandchild with $140,000 (multiply that times the number of your grandchildren), and it’s out of their estate. A bonus: “You still have control over the assets until they’re distributed,” Farrell says.
The state tax breaks keep getting better. In 33 states and Washington, D.C. you can get a tax break for contributions to 529 plans, usually a state income tax deduction. North Carolina eliminated its deduction as part of a tax reform package last year. But the trend is still for states to make their deductions more generous, say Joseph Hurley, founder of Savingforcollege.com, which has state-by-state details here.
Arizona made its deduction permanent in 2012 and in 2013 increased it from $750 to $2,000 a year for individual tax filers and from $1,500 to $4,000 a year for joint filers. Nebraska increased its deduction from $5,000 to $10,000 for single filers and married couples filing jointly and from $2,500 to $5,000 for a married individual filing separately, beginning in 2014. Ohio and Wisconsin are considering improvements to their deductions, Hurley says.
Get a deduction for contributing to an out-of-state plan. Six states (Arizona, Kansas, Maine, Missouri, Montana and Pennsylvania) let you take a deduction for contributions to other states’ plans. That’s important because although your state’s direct-sold plan might be the best, it pays to shop around on fees (look at the total for administrative fees and investment fees) and investment choices. Farrell says Nevada’s plan is unusual in that it’s an institutionally-managed portfolio of exchange-traded funds, which keeps the costs down. Basing your decision just on the tax breaks can be a mistake.
Timing your contribution and deduction. Most states match the tax year you get to take the deduction with the year you make the contribution. So if you make a contribution in 2014, you’ll get the break on your 2014 taxes when you file in the spring of 2015. But a few states have an April 15 deadline—so there’s still time in 2014 before you file your 2013 tax return to make a contribution and get a 2013 deduction. The April 15 deadline states are Georgia, Mississippi, Oklahoma, Oregon and South Carolina.
E-gifting.
E-gifting programs make funneling gifts from family and friends easier. TIAA-CREF launched e-gifting in California and Connecticut in 2012 and now offers it in all 11 states where it administers plans. Once you have an account, you can email your daughter’s aunt a link where she can enter her banking information and make a direct contribution to the account. There is no administrative fee for the TIAA-CREF e-gifting service (watch out for fees at some third party 529 gift conduit services). Note: If Aunt Sally makes the contribution directly to the 529 account, she gets the potential tax break, allowing her to essentially give more.

Posted on 9:47 AM | Categories:

VP & Managing Director of Intuit India : Interviewed

 vaibhav+ for Magazine42 writes: Roughly there are more than 30 million small and medium enterprises in India which makes our country a big and lucrative market of opportunities for startups, service providers and foreign merchants who are eying to sell their services. But harnessing this big market is not that easy as it sounds.  We spoke to Nikhil Arora, Vice President and Managing Director, Intuit India about his views on Indian SME market and on the company’s strategy to tap it.
[Edited Excerpts]

Inc42:Tell us about Intuit? When it started operations in India?
Intuit is a $4.2 billion global company founded in 1983, and is a leading provider of business and financial management solutions for small and mid-sized businesses. Intuit India, the company’s first venture in Asia Pacific, commenced operations in 2005 and currently has more than 800 employees across offices in Bangalore, Mumbai and New Delhi.
Our commitment and investment in India is three-fold:
o Building solutions to help Indian small businesses be more successful
o Investing in Indian employees
o Learning from the best in India
Our flagship products globally like QuickBooks, Quicken and TurboTax are all developed with the goal of making financial lives of small businesses owners easier. QuickBooks started its journey 25 years ago as a desktop product, and is sold globally in markets like the US, Canada, UK and of course, in India. Today, QuickBooks Online is the leading cloud business and financial management software globally, with over 1.48 million users using it in over 124 countries in 12 languages.
Intuit launched its flagship small business financial and business management software, QuickBooks Online in India, in October 2012.
intuit
Inc42: What are your main product offerings for Indian market? Up till now how has been the growth? If you can give us any data points on no. of customers (approx. like >50,000), no. of registered users vs. no. of paid users (in %age will work)?
Our flagship product QuickBooks has been trialed by more than 50,000 small business owners since its launch in India last year. The Accountant community in India has emerged as a strong supporter of QuickBooks in the last six months with a 49% growth rate in adoption, and they are playing a key role in recommending their own clients to migrate to QuickBooks. Over half of QuickBooks subscribers in India are located primarily in 4 cities – Bangalore, New Delhi, Mumbai and Chennai and the figure is growing.
Inc42: Tell us more about QuickBooks. Has the product been customized for Indian market? What are your typical customers in India?
We started with extensive interaction with small businesses and tested QuickBooks with customers in the alpha phase. Based on the rich feedback and data gathered, we began to customize the product with basic local currency and business taxes in mind while introducing the product in India. In addition, we incorporated features that small business and accountant users can customize to fit their applicable tax needs, including VAT and service tax. Also, based on understanding the requirements from our customers during the alpha testing phase, Intuit introduced 4 new features in the India product:
• Inventory – Enables our retail and wholesale customers to keep track of their stock and goods.
• SMS updates – Enables small businesses to stay on top of their business finances by opting to receive regular updates on balances, reports via SMS. (Available in Plus version and will work if you are not NCPR registered)
• Schedule XI Reports (Profit & Loss and Balance Sheet) – Reports to assist conformance to accounting regulations in India.
QuickBooks was launched in India in October last year (2012) and we are very encouraged with the results we have achieved so far.
In terms of verticals, today, QuickBooks provides the most value for small businesses in the service sector such as IT Consultants, Lawyers, Advertising & Design agencies, Event management agencies, Architects, Interior Designers etc.
In November this year Intuit launched the reimagined QuickBooks–as the global small business operating system for better functionality.
Inc42: Being a cloud based product, do you face any problems and challenges in selling it to Indian SME’s? What is the response of SME’s you have witnessed?
It is a market reality that even though we have a significant number of small businesses in India, only a small percentage of them are online. Cloud is often perceived as a complicated technology, which is not true at all. In fact, our communication to small businesses has always focused on highlighting cloud as a better alternative to reduce capex and improve productivity.
There are also concerns that small business owners bring up on network infrastructure and data security. There is some education that is needed to create awareness on this issue at an industry level, but we are seeing things change at a good pace. Cloud solutions are definitely the way to go and I am confident that we will see this trend pick up rapidly among small businesses in India as well.
Inc42: Indian SME market is very big but a tough nut to crack. What measures you use for marketing and customer acquisition?
Our market approach focuses on the following key pillars -
1. Direct channels – through web search marketing via SEO, SEM
2. Interactive Webinars to onboard
3. PR and social
4. Tele-sales channel
We would like to be an enabler of the small business ecosystem in India. We have set up an India Advisory Board, under which we have brought together policymakers and thought leaders that empower micro and small businesses through the adoption of technology, training and other key capacity building efforts. Intuit’s association with the Ministry of MSME (Micro, Small and Medium Enterprises), Govt of India, is an endeavor to identify solutions to improve the technology adoption among small businesses in India to enable growth.
Another key aspect is, as part of our, ‘In India for India’ philosophy, we practice “Follow-me- homes” which means Intuit employees spend time in customers’ own environment to be able to discover unique behaviors, wants and needs of the Indian SMB market. This approach has been used very successfully, globally, by Intuit and we gain incredible insights and value from this exercise.
Inc42: Tell us some of your strategies you apply for retaining customers?
Our strategy has been to address the three As: Awareness, Availability and Affordability.
• Awareness – relates to reaching and influencing our customers. Today our main channels of reaching customers are through web marketing, social media, events, partnership and collaboration within the small business ecosystem.
• Availability – is delivering a seamless experience for our customers to try and purchase our product. We have a robust telesales team that engages with a user the minute they sign up for a free trial. Assisted on-boarding or training are provided via customer care and in-product help whenever a user requires it. We also have accountant managers who manage customers across regions and ensure we are engaged with our customers, listen to their needs and do our best to solve for them.
• Affordability – QuickBooks has been priced on a yearly subscription model. A one-year subscription is priced at INR 4999, which is less than INR 15 per day for a year. We also provide a 30-day free trail, enabling users to try the product and then make a purchase decision.
Inc42: How you plan to move ahead with the product in coming couple of years? How you see Intuit India shaping up in Indian SME market?
We will work hand in hand with our customers to ensure the product closely mirrors the needs of our customers. Our vision is to be the operating system behind the success of Indian small business. By 2020, we want 1 in 4 small businesses in India to use Intuit products. We have been successful in being the small business ecosystem service provider in other markets like North America and the United Kingdom, and we believe we can successfully replicate the model in India by helping small business and accountants grow their business, manage their finances and manage their payroll.
Another initiative we have is the Intuit QuickBooks Excellence Awards. We constituted these awards for emerging businesses that have embraced innovation and high degree of customer orientation.
We have hosted several workshops and sessions on the benefits and impact of cloud on helping Indian accountants grow their practice and become globally competitive.
Inc42: Tell us something about yourself, your background etc.?
I grew up in New Delhi and Chandigarh. After completing my schooling at St. Xaviers in New Delhi, I received a scholarship to study Russian language in the then, Soviet Union. I spent two years in the Soviet Union, and then moved to the United States to pursue my higher education in finance and international business. I picked up my first job at the age of twenty-one working at Miramax Films. My work career spanning nearly twenty years has offered me the opportunity to live in five continents including Central Asia, Europe and North America and has allowed me to work across five diverse industries.
I joined Intuit two years ago with a mandate to drive the company’s strategic growth in India and lead its regional go-to-market efforts for small business and consumer offerings.
Posted on 9:47 AM | Categories:

Intuit To Host Annual Stockholder Meeting Jan. 23 / Live Webcast Available

Intuit Inc. (Nasdaq:INTU) will hold its annual stockholder meeting on Thursday, Jan. 23 at 8 a.m. Pacific time at its Mountain View, Calif., headquarters. Brad Smith, Intuit’s president and chief executive officer, will present the company's fiscal year 2013 results and discuss the company’s fiscal year 2014 strategy for growth. The meeting will be webcast live on Intuit’s website at http://investors.intuit.com/events.cfm. A replay of the webcast will be available approximately 24 hours after the meeting ends.   To repeat, the meeting will be webcast live on Intuit’s website at http://investors.intuit.com/events.cfm. A replay of the webcast will be available approximately 24 hours after the meeting ends. 
Posted on 9:47 AM | Categories:

IRS Free File To Open January 17, Two Weeks Before Tax Season Officially Opens

Kelly Phillips Erb for Forbes writes:  While tax season doesn’t officially kick off for individuals until January 31, 2014, the Internal Revenue Service has announced that Free File will open as early as January 17, 2014.
Or maybe announced is a bit understated. The IRS is practically begging taxpayers to return to the Free File site on IRS.gov by posting the following message:
Everyone can use one of the Free File options. The most popular – and the one that IRS touts the most – is a free federal income tax prep and electronic filing program for taxpayers with an annual gross income in 2013 of $58,000 or less (yes, the website still says $57,000 but I expect that to change based on statements made by Tim Hugo, executive director of the Free File Alliance). About 70% of all taxpayers file into this category.
The Free File Fillable Forms are online versions of paper tax forms. This option does not offer state tax returns and performs only basic calculations. The Free File Fillable Forms are not income dependent which means that all taxpayers can use them.
Both versions are made possible through the Free File Alliance. The Free File Alliance is a nonprofit coalition of industry-leading tax software companies who have partnered with the IRS. The public-private partnership has been around since 2002 and the first returns came out of program in 2003. Originally, the IRS entered into a three-year agreement with a group of private computer-software companies to provide free electronic filing for at least 60% of all taxpayers who file an individual tax return. The program was renewed for four years in 2005 and an additional five years in 2009. Since the program made its debut, nearly 40 million returns have been filed through the program.
Participating software companies make their products available through the IRS web site. You’ll note that some of the names sound familiar – you’ve seen these companies before. Keep in mind, though, that to qualify to file for free under the partnership, you must use the IRS Free File program: if you click directly to a company’s website, you may be charged a fee.
You can find out more about IRS Free File here:

Even though the program will accept taxpayer submissions beginning on January 17, 2014, two weeks before the season opens, that doesn’t necessarily give you an edge beyond putting you at the start of the line. The IRS has continued to make it clear that they will not begin the actual processing of any form 1040 until January 31.
The IRS says that beginning on January 17, Free File companies will “securely hold your completed tax return until January 31 when the IRS begins accepting returns.” That’s not just true of Free File: that date holds true for all tax preparation services.
Posted on 9:46 AM | Categories: