Smart Money Choice$

Are you having fun? They say that time flies when you are. The fact that April 15th has nearly arrived and has caught a lot of people by surprise, must mean there’s a lot of fun going on! That’s the positive spin, anyway.

If you are one who had intended to have your taxes handled by now, but you still haven’t gotten to it, no worries. That’s why the IRS allows you to apply for an automatic 6-month extension to file. They realize that time can get away from us all. That is, at least when it comes to preparing your tax return. But the empathy stops there.

By filing a Form 4868, yes, you will automatically get six more months to FILE your tax return. No questions asked. However, there is no such thing as an extension to pay any taxes owed.

Of course, that’s just more proof of how whacked our tax system is. Isn’t the purpose of preparing a tax return to determine whether or not you have paid enough taxes in based on the amount of your income that’s subject to tax? So if you already knew the answer to that question, why would you need to file an extension in the first place!?! Typical governmental circular reasoning, isn’t it?

But fortunately, there are easy ways to deal with this dilemma.

How to Do It

First, you need to fill out and file the automatic extension form (Form 4868). You can do that for free online using the IRS’s FreeFile system. But if you prefer the old fashioned send-it-in-the-mail method, you can also fill out a PDF version of the form, print it out, and mail it in if you like. Just be sure it is postmarked by April 15th.

However, it is actually safer and more reliable these days to file for extension online. You will receive a confirmation from the IRS usually within 24 hours, giving you proof that your form has been filed successfully. But when you file by paper, you’ve just got to hope that it gets there safely AND that the IRS doesn’t lose it. (The IRS loses paperwork on a regular basis!) The only way you’ll know if they got it or not is if you don’t get any nasty notices from the IRS later asking you for your tax return.

My recommendation: File electronically if at all possible.

What Information Do You Need?

Fortunately, Form 4868 is the shortest and quickest tax form you’ll ever need to use! Heck, once you fill in your name, address and social security number, you’re half-way there!

After that, there are only four other lines you will need to fill in (in most cases). The toughest one is Line 4, where you must estimate your taxes for 2008. Of course, you won’t know that number for sure until you actually complete your tax returns. So we’re talking about your best guess here.

But you’ve got to make it a good guess. If you say you owe less in taxes than you really do, the IRS will smack you with underpayment penalties and interest. Remember, this is an extension to file, not one to pay.

There are, however, a couple fast and dirty ways to estimate smart.  Probably the easiest way is to take a look at last year’s tax return. If you made around the same income in 2008, your tax liability should be roughly the same. And even if you made more, you won’t be penalized for underpaying as long as you pay 100% of your 2007 tax liability. So, to be safe, if you really have no idea what your 2008 taxes will be, enter 100% of your taxes were last year (“total tax” Line 63 of your 2007 Form 1040).

Next you’ll need to fill in how much you’ve already paid in for 2008. Add up all federal estimated tax payments you’ve made, any overpayments applied to 2008 from last year, as well as taxes withheld from your W-2 or 1099 forms. The total should be entered on Form 4868 Line 5.

Finally, subtract the amount you’ve already paid in from the estimated tax liability, and you’re probably done. That is, if you paid in more than the tax. If that’s the case, all you need to do is file this form before midnight on April 15th. You now have until October 15, 2009 to finish up and file your tax return. Isn’t that a relief?

But What If You Didn’t Pay In Enough?

If, you have a balance due, you will need to pay that amount by April 15th. Again, you can do this by paper or electronically. When you file the Form 4868 online, you will be given instructions on how to make your payment. Again, you can do so electronically, use a credit card or by mailing in a check.

What If You Can’t Pay The Full Balance Due?

If you can’t pay the full balance due, simply pay as much as you can right now, and enter that amount you are paying on Line 7 of Form 4868.

The IRS will eventually send you a bill for the rest, including late payment penalties and interest. But don’t sweat it just yet. Remember the balance due is based on an estimate only. The final numbers will be known once you complete your tax return, so it might not be as bad as it may seem now.

Just be sure to send in Form 4868 by April 15th. And if you owe a payment, don’t delay filing the form. That will only cost you more. The smart choice is to file for an automatic extension on time.

Now you can breathe a sigh of relief because you now have six more months to get your taxes in order. That wasn’t so bad now, was it?

~Gabrielle

P.S. If you still need to get your bookkeeping records in shape for completing your taxes, and you use QuickBooks, be sure to check out the time saving tip for quick and easy tax prep at QB QuickTips and check out my latest mini-lesson that will make QuickBooks do a lot of the tax organizing for you this year, and you may never need to go on extension again.

Many people have never heard of Use Tax, but it could be a tax that just might jump up an bite you!

Use Tax is not something new. It has been around as long as it’s much more famous brother, Sales Tax. Generally, Use Tax is paid to states that charge Sales Tax. The purpose of Use Tax is to equalize the Sales Tax burden between in-state and out-of-state purchases. Sales Tax and Use Tax go hand-in-hand.

Everyone knows that you must pay Sales Tax at the time of purchase to a vendor selling a taxable product in that state. The reason  is because it is presumed you will use what you’ve bought in that same state.

If, however, you make purchases in a no-tax state, and then cross the state lines and use your purchase in a state that charges sales tax, or you make your purchase through mail order or on the Internet, they are generally not required to collect sales tax from you. (That is, if they don’t have a presence in your state.) On significant purchases, most people consider this as a savings. By law, it shouldn’t be.

As you might imagine, it is nearly impossible (at present) for a state to require an out-of-state vendor to collect sales taxes if they do not operate any part of their business in that state. Those vendors are outside of the state government’s jurisdiction.

Therefore, Use Tax is expected to be paid by the one making the purchase; the one who will USE the taxable product in that state. Hence, the name, Use Tax. Though that’s the law, it has been near impossible to enforce, since there is no way for the state taxing authorities to know what is being purchased and brought into the state.

However, in theory, Use Tax is a significant source of state revenue for states that charge Sales Tax. But because of the difficulty of enforcement, it has largely gone uncollected. Until now.

With the rapid growth of Internet sales, this potential source of revenue has become more than substantial and the taxing agencies know it. Therefore, these states are starting to collaborate to come up with ways to pull in the “extra” revenue.

Guess who the taxing agencies are targeting first? Yep, businesses. Especially businesses who are already registered to collect sales tax. At this point, they are attempting to threaten a full-scale audit if “voluntary compliance” is not adhered to by businesses who are collecting sales tax.

The states knows businesses are buying taxable products across state lines, as well as via the Internet, just like everyone else. So if these businesses are not reporting Use Tax with their Sales Tax returns, they’ve got them. Several states are sending out letters asking businesses to start reporting out-of-state and Internet purchases from now on. These “requests” are laced with a threat of future audits for non-compliance.

Use Tax applies to purchases that are shipped to you from another state and consumed by your business. It does not apply to purchases you make for resale.

If you are already collecting Sales Tax, it may be in your best interest to start tracking your out-of-state purchases made for your business and remitting your fair share of Use Tax. In most cases, this will not be a large additional expense, and it will help you to stay under the radar of your state’s tax collector’s blood hounds.

If you have already received a notice that you are expected to pay Use Tax, do you have a reliable method of tracking the applicable transactions? QuickBooks, of course, can make it easy.

You may want to check out the video tutorial I just posted on my FREE QuickBooks training blog. It shows a couple insider tips to save you time and minimize the sting of paying yet another tax that bites into your bottom line.

WANT TO USE THIS ARTICLE IN YOUR OWN BLOG OR E-ZINE? You have permission to re-publish it, as long as you include the following author’s bio and link:

Gabrielle Fontaine, PB is a freelance Professional Bookkeeper and Certified QuickBooks ProAdvisor. She specializes in assisting Internet-savvy entrepreneurs to get control of their books and maximize profits. Gabrielle also publishes the business-boosting online ezine, Smart Money Choices. Get more information at http://www.BookkeepingDirect.com

Believe it or not, there is over $266 million in tax refunds that the IRS can’t seem to give away! Did you get yours?

The IRS is looking for more than 279,000 taxpayers who are missing their economic stimulus checks totaling about $163 million, and more than 104,000 taxpayers who are missing their regular refund checks totaling about $103 million.

What’s the problem?

These refund checks were returned by the U.S. Postal Service due to mailing address errors. If you moved since you filed your tax return, or if the address on your tax return is wrong, the IRS may owe you money!

Economic Stimulus Checks

Everyone who has a stimulus check owed to them needs to update their address with the IRS by Nov. 28, 2008. By law, economic stimulus checks must be sent out by Dec. 31 of this year. The undeliverable economic stimulus checks average $583 each.

The “Where’s My Stimulus Payment?” tool on the IRS’s website is the quickest and easiest way to check the status of a stimulus check and receive instructions on how to update your address on their records.

Regular Refunds

The regular refund checks that were returned to the IRS average $988 each. These checks are automatically resent once the address is updated.

If you need to update your address with the IRS, you only need to do it once. The IRS will then send out all checks due.

To update your address, use the “Where’s My Refund?” tool on the IRS website. You can also use it to check the status of your refunds. You’ll need to supply your social security number, filing status and amount of refund shown on your 2007 federal tax return.

Since time is short for getting out the lost Economic Stimulus checks, the IRS has also made this Audio file availabe to help get the word out.

So if you haven’t received yours yet, be sure and contact the IRS pronto and claim your dough.

As with most information surrounding marketing, there can be a lot of hype on a topic like this. But the simple truth is that one of the biggest reasons 95% of all start-up businesses fail is because they hang out their shingle and just expect business to show up.

It doesn’t work that way.

I’m going to make a bold statement here. Marketing is THE most important function in your business. Yes, you heard that from me, the QuickBooks consultant who is always telling you how vital it is to have accurate financial records.

I’m not changing my tune on that, but reality is you won’t have any financial records to keep track of if you don’t have enough business coming in the door. Sales come in by getting the word out about the value your business offers the world for which they need to pay you. It’s really all about communication.

If, by means of your marketing methods you are able to vividly communicate to a large, targeted audience the value of what you have to offer them, you will pull in new business. Guaranteed. Of course, to build a reputation that will keep people coming back, you have to deliver on that promise of value. But even those who do not offer high quality services and products will make money if they use effective marketing methods. You know that’s true.

So, the question is, what marketing methods are most effective? I’m glad you asked.
The answer really does depend, at least in part, to the type of business you want to build and who your customers are.

Remember that marketing is all about communication. And guess what? The Internet is all about communication too. That’s why the two work so well together. And what does communication really do? It builds relationships. And relationships are what drive business. People do business with people they know, like and trust. So effective online marketing is about building relationships with your prospects and customers.

That’s why most companies can benefit by marketing through the Internet. Some prosperous businesses are even marketed exclusively online. Mine is one of them.

I’ve never been one to go along with the crowd. So when it comes to marketing my QuickBooks consulting and training business, taking a non-traditional approach is really paying off.

Because I work exclusively on a virtual basis with my clients (that means I don’t go on-site to visit my clients’ offices, but work with them using the Internet and telephone only), it made sense to market my business using only the Internet as well. But I did more than just put up a website and be done with it.

Of course my website is the central point of contact online. But Internet marketing involves much more. Getting results means you have to be where people will find you AND you need to be proactive about building relationships with them. Here are just a few ways I’ve used to get attention and build ongoing relationships with online marketing:

- List in online directories
- Write articles that are published online
- Publish an online newsletter
- Offer online training and/or information for free
- Participate in online forums and social networks
- Advertise using pay-per-click search engine ads

But not all online marketing methods are created equal. The hardest part is not the actual marketing methods. In fact, those are easy and most are quite inexpensive (when compared to off-line marketing). The most formidable obstacle in using online marketing to rake is more business than you can handle is the learning curve.

It took me a few years to figure this stuff out! Literally. But it doesn’t need to take you that long, You can quickly tap into the abundance marketing online has to offer – and I HIGHLY recommend that you do. So here are the ”insider” strategies I’d use, if I had to start again from scratch to learn how to use online marketing in my business.

1. I’d absorb the information being offered for free by the leading Internet marketers.

2. I would go to live marketing events as soon as I could possibly afford it.

3. I would pay for ONLY the information I needed when I needed it.

So how do you know which Internet marketers to listen to (there are a slew of them) and/or which marketing events will get you the most bang for your buck? Here are the marketers I follow because, in my opinion and experience, they are the best of the best.

Jim Edwards‘ free multi-media online newsletter: I Gotta Tell You.  He also has a membership site (of which I am a long-standing member) called The Net Reporter. Jim teaches everything, nuts-and-bolts style, you will ever need to know about marketing your business on the Internet. The way my business is going, I know that I cannot afford NOT to be a member of Jim’s site!
 
Armand Morin: Live seminar – BigSeminar This is considered THE online marketing seminar and the only one that millionaire business owners consistently attend. The reason? It is the best both for content and for networking. It’s not cheap, but you can learn a ton just by attending the preview training calls Armand hosts with each of the speakers for free.

The next BigSeminar is October 3-5, in Atlanta (I’ll be there!), and the first of the FREE preview training calls starts tonight (Tuesday, August 19th). You can learn more about it Here.

So will Internet marketing boost your business’s bottom line? YES! But you’ve got to get past the learning curve first!

This is the time of year when the IRS is sending out notices not only regarding Tax Rebates, but also on discrepancies relating to tax returns filed in April. The scammers are taking advantage of the timing.

The latest scheme involves a tax refund form that is sent via email, supposedly by the Taxpayer Advocate Service (a real organization within the IRS that assists taxpayers with unresolved problems). This one is especially blatant in the type of information it requests.

At the bottom of the message is a phony name and signature, claiming to be the Taxpayer Advocate. The idea is that you fill in the form and submit it directly to the Taxpayer Advocate to receive a tax refund.

Of course, the only way to get a tax refund (or the Economic Incentive Rebate this year) is to file your annual tax return. Refunds are not issued with the use of a separate application form. And the IRS sends notices via US Postal Service, not email.

So, if you receive this bogus message, be assured that it is a scam and simply delete it.

Another scam circulating is less obvious. In fact, I actually received one of these emails in my inbox recently. It’s supposedly from the US Tax Court.

This message is what’s called “Spear Phishing,” which is an email spoofing attempt that targets a specific organization. Again, this is a scam. The Tax Court is not sending any email notices to anyone, whether they currently have a case before the Tax Court or not.

You can identify this fake email because it will have the words “US Tax Petition” in the subject line, along with a fake docket number. The sender address is noreply@ustaxcourt.org.

If you get one of these messages, DO NOT reply or click through on any of the links. Just delete it. And have no fear. If either the IRS or the Tax Court wants to contact you, they’ll send you a letter in the regular mail.

You can get more information on these scams straight from the government websites:

www.ustaxcourt.gov
www.irs.gov/newsroom/article/0,,id=155682,00.html

WANT TO USE THIS ARTICLE IN YOUR OWN BLOG OR E-ZINE? You have permission to re-publish it, as long as you include the following author’s bio and link:

Gabrielle Fontaine, PB is a freelance Professional Bookkeeper and Certified QuickBooks ProAdvisor. She specializes in assisting Internet-savvy entrepreneurs to get control of their books and maximize profits. Gabrielle also publishes the business-boosting online ezine, Smart Money Choices. Get more information at http://BookkeepingDirect.com