Acorn Bookkeeping & Tax

At my Middleburg, FL office , the biggest mistake I see small businesses make is using trust taxes as short-term loans to aid cash flow in their business. What are trust taxes and why is it a mistake to use them? Trust taxes are typically sales tax and payroll tax that you collect from your customers or employees and then remit to the government on their behalf. They are called “trust taxes” because you are collecting and holding them “in trust” for the government. Basically--it is never your money. The problem comes when it is crunch time and the business needs to pay an important vendor but money is tight. The account balance shows there is enough money but most of that is payroll taxes that are due in about a week. The owner of the business may think, ‘Next week sales will be better, and I can make it up’ and then decide to pay that important vendor. This gets out of hand quickly if next week’s sales aren’t better. The problem begins snowballing and the business quickly digs a...

At my Middleburg, FL office , when new clients come in, I always ask them for copies of prior tax returns to review. Many times, I find that clients have been playing the ‘ audit lottery ’. The audit lottery, as I like to call it, is when you know a deduction you’re using is sketchy at best, but you take it anyway hoping the IRS won’t notice. You may even convince yourself that it is legitimate since you got your refund as usual and no one said anything. For example, you heard from your best friend’s mother-in-law that she always writes off her dry cleaning, make up, and manicures because she is a Realtor and must look professional. Alright, I see where she’s going with that idea, but it seems a little sketchy. Perhaps your mechanic writes off a home office because he takes his invoices home from the shop to reconcile his bank account in peace and quiet. He’s working right? Seems legit. Guess what? Those are examples of what is NOT allowed. It doesn’t matter how many years they’...

My Middleburg, FL practice  focuses on representing clients who have  problems with the IRS  that they're not sure how to handle. One such thing I hear  about is that they really need to get out from under the expenses of owning their home, but they don’t think they can sell because there’s a tax lien recorded in public records. Guess what? You can still sell your house. In fact, the IRS WANTS you to sell your house, especially if you can’t afford it anymore. Basically, a tax lien is just the IRS posting a public notice saying, “I get mine before the homeowner gets theirs.” That’s all. Here are some examples: 1.       Your house is worth $200,000, you owe the bank $100,000, and there is a tax lien for $20,000. Let’s assume closing costs are $10,000. This one is easy; the IRS will get all their money. $200,000 sale price minus $100,000 to the bank, $20,000 to the IRS, and $10,000 for closing costs. That leaves $70,000 for you. 2. ...

My Middleburg, FL practice  focuses on representing clients who have  problems with the IRS  that they're not sure how to handle. One situation  I hear  a lot is that people haven't filed their tax returns in many years. Maybe they prepared them one year and owed money but couldn't pay it and then it just spiraled out of control. There are a ton of reasons why people get in this situation. So, what now? Regardless of why you're in that situation, how do you get out of it? 1. The first step is to get the 6 most recent years of tax returns filed as soon as possible. In general, the IRS considers filing the 6 most recent years' tax returns to be compliant even if there have been more years that were not filed. There are situations where they may require more than that but those are case by case situations. 2. Now that you know the amount owed for all those years you're able to determine what to do about it. There are a variety of collection options avai...