IRS Releases New Form W-11 Required for the New Hire Act Incentives

The IRS has posted the finalized Form W-11, Hire Act Employee Affidavit, that a new hire signs under penalty of perjury indicating that he or she was employed for a total of 40 hours or less during the 60-day period ending on the date the employment begins, thus qualifying the employer for the new HIRE incentives.

The “Hiring Incentives to Restore Employment Act” (HIRE Act) encourages companies to hire unemployed workers by exempting the employer from the employer’s share of the 6.2% Social Security payroll tax on that employee’s wages for the remainder of 2010. Thus, if the newly-hired and previously-unemployed worker earns $106,800 after March 18, 2010 and before the end of the year, the company could save a maximum of $6,621. In addition, the Act provides employers with a business tax credit if new hires are retained for at least 52 consecutive weeks. The credit(1), which will be taken on the employer’s 2011 tax return is non-refundable and is the lesser of $1,000 or 6.2% of the wages.

Additional Form Changes to Watch For:

• Form 941. IRS will be revising the second quarter Form 941, Employer's Quarterly Federal Tax Return, due on Aug. 2, 2010. It expects to finalize the new version sometime in April 6.

• Form W-2/W-3. There will be a new code on box 12 of the 2010 Form W-2 (Code CC) to indicate that a new hire had wages that qualified for the payroll tax exemption. Form W-3, Transmittal of Wage and Tax Statements, will be revised to include a line for total aggregate exempt wages.

(1) In order to be eligible, the employee's pay in the second 26-week period must be at least 80% of the pay in the first 26-week period. This credit is not available for domestic workers.

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Small Business Team Building

This article includes excerpts and recommendations for growing your business through team building from the Small Business Administration (SBA).

Whether you are in the business of making money, running governments, or organizing communities - teamwork is essential.  It is the basis of engagement, innovation and success.

To quote Laurie Benson, CEO of Wisconsin-based Inacom Information Systems and 2009 "SBA National Women in Business" Champion: "Very few people are ever successful or a failure by themselves, and probably, one of the most powerful elements in creating success - is a powerful team."

In business, powerful teams not only drive results, they empower, challenge and motivate employees to learn, grow and participate in the collective success of the business itself.  On the flip side, a culture or work place that does not build teams or foster teamwork can result in negativity, unchecked egos, and under-valued employees.  And this can have a knock-on effect on your bottom line.

But team building isn't easy; it means changing your habits as a business owner - from how you hire and incentivize employees, to how you give up some of the day-to-day business decision-making that you currently control.

And while there are numerous books and courses that you can take to learn effective team building techniques, some of the best advice can come from those who are in your shoes - other small business owners.

Team Building Tips from the Real World of Small Business - In December 2009, the (SBA) and Dell partnered to produce a series of online videos - Strategies for Growth: Advice for Expanding Your Business.  One of these strategies is team building.  Here is what they recommend.

• Tip #1: Empower your employees by giving them guidelines for making decisions - Far from relinquishing control of your business, empowering those who are closest to the action to make decisions, can lead to the right result.  Here's one example of how this can be achieved.  Laurie Benson, CEO of Inacom Information Systems, implemented what she calls an "empowerment triangle" whereby each employee is allowed to make any decision, as long as they consider the impact of their decision on three things - the customer, the employee, and profitability (hence the "triangle").  As Benson explains in the video, "We believe that the person closest to the action is probably the best one to make the decision - so if you're close to the customer, do the right thing.  But don't do it without thinking about the implication on profit and the employees."

• Tip #2: Acknowledging employees for what they bring to the table will help integrate individualists into the team - A team is only as good as the sum of its parts, but sometimes egos get in the way and disrupt the delicate balance of the team.  But by recognizing and acknowledging the intrinsic value of individual contributions, trust can follow and egos can be checked.  As Don Matzkin, also of Inacom Information Systems, explains, employees start to realize that "...the expression of the ego in this process only helps the mix.  The mix is sustained by the insertion of multiple egos."

• Tip #3: When hiring for growth, look for motivated people. They can be trained and will grow into new positions - Finding the perfect candidate based on a skills-match might not be good for the team.  As Anthony Bracali of Friday Architects/Planners, Inc., an SBA e200 Participating Company, explains, "...for a lot of people trying to grow their business, finding someone who is energetic and enthusiastic, ...who wants to grow personally, is almost more valuable than having the highest skill level, because that person could improve ...with training."

• Tip #4: Offer cash incentives to your team members who bring in qualified prospects - This is quite a common practice during competitive hiring seasons, but, for many small businesses, it can have a sustained and long-lasting impact.  Jeanna Sellmeyer, CEO, ASSET Group, and SBA National Small Business Person of the Year 2009, has implemented what she calls "bounties" or employee referral bonuses at her company that only get paid out after the hew hire has been employed for a year. Why? As Sellmeyer explains, "...it makes the employee invested in helping the new employees stay."

• Tip #5: Mentor and tutor employees who have the potential to grow with the company - Hiring the right employees can be a challenge, but setting the bar high can pay off in the end: "Try to hire someone who's smarter than you.  Don't be threatened by them.  You can only build from that.  Hire the guy who can take your position.  Because you can't move up until they move up," explains Jeanna Sellmayer.  The path to promotion starts with you, "...anyone who wants to better themselves, I am right there side-by-side with them."

• Tip #6: Challenge your employees. See how they respond - Instead of working within the confines of their job description and daily tasks, Jennifer Fogg, COO, of ASSET Group, Inc., encourages small business owners to challenge their employees to work outside the box. "Really great leaders do more than just recognize talent, they promote talent within others...that usually comes when we task them with more than we think they might be able to handle."

• Tip #7: Pay attention to the families of your employees. Your business depends on their support - Building a strong team also means taking into consideration those who support the team - the families of your employees.  Plan company functions and events that are oriented towards employees and their families - from picnics to movie nights; bring your kids/pets to work days - the choice is yours and need not break the bank.

• Tip #8: Incentives are a great way to engage and stimulate the employee support for your mission - In addition to standard incentives, such as "employee of the month," consider recognizing achievement by functional or project achievement.  For example, ASSET Group, a full-service contractor firm, recognizes their "Superintendent of the Year" with a new work truck and hardhat.  They also honor their "Safety Person of the Year" and incentivize employees for project completion.

• Tip #9: Do not expect lifetime loyalty; get the most of the relationship you have at the time. Invest in your employees - Your employees are one of your greatest assets.  An investment in them is an investment in your business.  It's a philosophy Jeanna Sellmeyer endorses, "...we work hard and play hard... Because people are happy, they do better work... it makes talent want to come here and it helps you retain talent ... if you don't treat your people well they are going to go somewhere else."

• Tip #10: Make giving to the community part of your corporate culture. And support your employees in their efforts to help others - Inacom came up with an interesting idea while brainstorming with its employees about their vacation needs and philanthropic goals - it would offer all its employees up to a week off to do social service work and pay 50% of their salary, over and above their vacation time. So "together we provide the means, the opportunities and the ideas to make a difference in the world."

For more on team building, you can view three brief videos of award-winning small businesses talk about the strategies and tactics that they have adopted to build their successful business teams.

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Liberalized IRA-to-Roth IRA Conversions

Beginning this year, taxpayers are able to convert funds in regular IRAs (as well as qualified retirement plans) to Roth IRAs regardless of their income level. Prior to 2010, taxpayers could not make a conversion if their gross income was in excess of $100,000.

Roth IRAs provide two big advantages: all future earnings and distributions at retirement will be tax-free, and the Roth IRAs are not subject to the required minimum distribution rules.

There are other tax advantages as well. Because distributions from Roth IRAs are tax-free (if they are qualified distributions), they may keep a taxpayer from being taxed in a higher tax bracket than would otherwise apply if he or she were withdrawing taxable distributions, don’t enter into the calculation of tax owed on Social Security payments, and have no effect on AGI-based deductions and credits. What’s more, the benefits flow through to beneficiaries of Roth IRA accounts, who also can make tax-free withdrawals from such accounts (they are, however, subject to the same annual post-death minimum distribution rules that apply to beneficiaries of regular IRAs).

Should You Make an IRA-to-Roth IRA Conversion? Everyone’s financial circumstances are unique and it may not be an appropriate choice in your situation. It can also be a tough decision because the conversions are taxable, except for non-deductible amounts. Thus, to gain the benefits in the future, a tax hit must be taken now.

Generally, taxpayers with the following tax profiles should consider making a conversion:

• Taxpayers that still have a number of years to go before retirement and time to recoup the conversion tax dollars;

• Are in a lower than normal tax bracket in the year of conversion;

• Anticipate being taxed in a higher bracket in the future; and

• Can pay the tax on the conversion from funds other than pre-tax retirement funds.

Special Rules for 2010 – Although conversions, without income limitations, can be made in any year after 2009, Congress has provided a unique income inclusion rule that applies for IRA-to-Roth-IRA conversions occurring in 2010. Under this rule, unless a taxpayer elects otherwise, none of the gross income from the conversion is included in income in 2010. Instead, half of the income resulting from the conversion will be includible in gross income in 2011 and the other half in 2012. This requires some careful planning since, without Congressional action, the current lower tax brackets of 35%, 33%, 28% and 25% will revert to their pre-2001 levels of 39.6%, 36%, 31% and 28% after 2010. So it may be less costly for certain taxpayers to opt out of paying the tax in 2011 and 2012 and instead pay it in 2010.

These are additional items to take into consideration:

• It might be appropriate for you to design your own custom conversion plan over a number of years rather than to convert everything at once.

• Where does the money to pay the conversion tax come from? Generally, it must be from separate funds. If it is taken from the IRA being converted, then for individuals under age 59½ the funds withdrawn to pay the tax will also be subject to the 10% early distribution penalty in addition to being taxed.

Conversions can be tricky! If you are considering a conversion, it might be appropriate to call for an appointment so that this office can help you properly analyze your conversion options.

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Don?t Panic If You Receive an IRS Notice

If it is not your refund check in the mail box, that letter from the IRS will probably increase your heart rate a little.  Don’t panic; many of these letters can be dealt with simply and painlessly.

Each year, the IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account, or to request additional information.  The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what needs to be done to satisfy the inquiry.

However, the letters also have to advise you of your rights and other information required by law.  Thus, these letters can become overly lengthy and sometimes difficult to understand.  That is why it is important to either call this office immediately or forward a copy of the letter or notice so it can be reviewed and handled accordingly.

Do not procrastinate or throw the letter in a drawer hoping the issue will go away.  Most of these letters are computer generated and, after a certain period of time, another letter will automatically be generated.  And, as you might expect, each succeeding letter will become more aggressive and less easily dealt with.

Most importantly, don’t automatically pay an amount the IRS is requesting unless you are positive you owe it.  Quite often, you will not owe what is requested and it will be difficult to get your payment back.  It is good practice to have this office review the notice prior to making any payment.

It is important for any IRS correspondence to be dealt with promptly and correctly.  This office can handle these matters for you so please call for assistance.

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Read This Before Tossing Old Tax Records

Now that your taxes have been completed for 2009, you are probably wondering what old records can be discarded.  If you are like most taxpayers, you have records from years ago that you are afraid to throw away.  It would be helpful to understand why the records needed to be kept in the first place.

Generally, we keep “tax” records for two basic reasons: (1) in case the IRS or a state agency decides to question the information reported on our tax returns, and (2) to keep track of the tax basis of our capital assets so that the tax liability can be minimized when we actually dispose of them.

With certain exceptions, the statute for assessing additional tax is three years from the return due date or the date the return was filed, whichever is later.  However, the statute of limitations for many states is one year longer than the federal.  In addition to lengthened state statutes clouding the recordkeeping issue, the federal three-year assessment period is extended to six years if a taxpayer omits from gross income an amount that is more than 25 percent of the income reported on a tax return.  And, of course, the statutes don’t begin running until a return has been filed.  There is no limit where a taxpayer files a false or fraudulent return in order to evade tax.

If an exception does not apply to you, for federal purposes, most of your tax records that are more than three years old can probably be discarded; add a year or so to that if you live in a state with a longer statute.

Examples - Sue filed her 2009 tax return before the due date of April 15, 2010. She will be able to dispose of most of her records safely after April 15, 2013. On the other hand, Don files his 2009 return on June 2, 2010. He needs to keep his records at least until June 2, 2013. In both cases, the taxpayers may opt to keep their records a year or two longer if their states have a statute of limitations longer than three years.  Note: If a due date falls on a Saturday, Sunday or holiday, the due date becomes the next business day.

The big problem!  The problem with the carte blanche discarding of records for a particular year because the statute of limitations has expired is that many taxpayers combine their normal tax records and the records needed to substantiate the basis of capital assets.  They need to be separated and the basis records should not be discarded before the statute expires for the year in which the asset is disposed.  Thus, it makes more sense to keep those records separated by asset.  The following are examples of records that fall into that category:
 
• Stock acquisition data - If you own stock in a corporation, keep the purchase records for at least four years after the year the stock is sold.  This data will be needed in order to prove the amount of profit (or loss) you had on the sale.

• Stock and mutual fund statements – Where you reinvest dividends.  Many taxpayers use the dividends that they receive from a stock or mutual fund to buy more shares of the same stock or fund.  The reinvested amounts add to the basis in the property and reduce gain when it is finally sold.  Keep statements at least four years after the final sale.

• Tangible property purchase and improvement records - Keep records of home, investment, rental property, or business property acquisitions AND related capital improvements for at least four years after the underlying property is sold.

For example, when the large $250,000 and $500,000 home exclusion was passed into law several years back, homeowners became lax in maintaining home improvement records thinking that the large exclusions would cover any potential appreciation in the home’s value.  Now that the exclusion may not always be enough, records of home improvements are vital.  Records can be important, so please use caution when discarding them.

Have questions about whether or not to retain certain records?   Give us a call first; it is better to make sure before discarding something that might be needed down the road. 

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Too Many Estimated Tax Vouchers?

Taxpayers without the ability to have taxes withheld or who simply wish to prepay some additional amount can do so by making payments with estimated tax vouchers.

When the potential need for vouchers is determined during a tax appointment, this office will discuss the issue with the client, and, if estimated vouchers are warranted, they will be prepared for the client.  By prepaying taxes, taxpayers can avoid some substantial underpayment penalties that otherwise might apply.  Typically, this occurs where a taxpayer has self-employment income, substantial investment income, wages are earned by both spouses, or there is simply underwithholding that will result in a large amount due when the return is filed.

The IRS is not privy to our advanced planning or can determine whether or not you were provided with vouchers.  They only see a large balance due or know that you made estimated tax payments for the prior year, and, therefore, may send you a second set of estimated vouchers.  So, if you have already or subsequently receive a set of estimated tax vouchers from the IRS, here is what you need to do:

• If, at your appointment, the need for vouchers was discussed and it was determined that they were not needed, you can probably discard the ones the IRS sent.

• If this office prepared and supplied you with a set of vouchers, continue to use the ones provided since they are already printed with the amount that should be paid.  If you decide to use the ones the IRS sent to you, be sure to fill in the payment amount on each voucher.

• If you normally receive a refund without making prepayments other than withholding, and 2010 is going to be a similar year tax-wise, then there is probably no need for the vouchers and you can discard them.

• If, for some reason, you believe that you will have an increase in taxes for 2010, you may wish to retain the vouchers and call this office for assistance.

Estimated tax vouchers include your name, address and SSN so be sure to discard them carefully.   

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Convert Unused Property into a Tax Deduction

As we approach the season for spring house cleaning it may be appropriate for you to really clean house and get rid of all those clothes that no longer fit and all those household items you never use.  They have the potential of providing you with a tax deduction.

When you give away items like clothing, appliances, vehicles and other goods to a qualified charity, your generosity can add up to a tax write-off if you itemize your deductions. The amount of your deduction is generally the donated property's “fair market value.” The IRS definition of FMV is “the price a willing buyer would pay and a willing seller would accept for an item, when neither party is compelled to buy or sell and both parties have reasonable knowledge of the relevant facts.”

Below are guidelines to help determine FMV on the most common types of non-cash donations (miscellaneous personal items) that have decreased in value since the time they were first acquired:

• Used Clothing: The IRS provides no set formula for valuing clothing items. However, keep in mind that the fair market value of used clothing and other personal items is usually much less than what was paid for them. A guideline is to claim as the value the price that buyers of used clothing actually pay in used clothing stores, such as thrift stores and consignment shops, for similar items. Generally, the tax code requires that the clothing be in good used condition or better before a deduction is allowed.  In addition, items of minimal monetary value, such as used socks and undergarments, are generally not deductible.

• Household Items: Household items include furniture, furnishings, electronics, appliances, linens, and other similar items.  Food, paintings, antiques, and other objects of art, jewelry and gems, and collections are excluded from the definition of household items. The value of used household goods is also much less than their original cost. If the property is worn, inoperable or out of style, it may have little or no market value. For these reasons, the IRS does not accept formulas such as a percentage of original or replacement cost as a way to determine FMV. Like used clothing, the items must generally be in good used condition or better before a deduction is allowed. Establishing true value can be difficult.  Some charities do that for you while others do not.  If you are making a substantial contribution, it may be appropriate to visit a thrift shop to get an idea of how to value your contribution.  Photographs, purchase receipts and newspaper ads describing similar property should help support a valuation.

Documentation Requirements for Non-Cash Contributions – The documentation required depends upon the value of the contribution.  The higher the value, the more complicated the documentation requirements become.

Deductions of Less Than $250 - A taxpayer claiming a non-cash contribution must obtain and keep a receipt from the charitable organization showing the name of the charitable organization, the date and location of the charitable contribution, and a reasonably detailed description of the property.  In addition, the taxpayer must keep a record of the FMV at the time of the contribution and how it was determined.  A taxpayer is not required to have a receipt where it is impractical to get one (for example, if the property was left at a charity’s unattended drop site).  Caution: this rule is based on the total deduction claimed for the year and not on individual contributions made during the year.

Deductions of At Least $250 But Not More Than $500 - If a taxpayer claims a deduction of at least $250 but not more than $500 for a non-cash charitable contribution, he or she must have and keep an acknowledgment of the contribution from the qualified organization. If the contributions were made by more than one contribution of $250 or more, a taxpayer must have either a separate acknowledgment for each or one acknowledgment that shows the total contribution.  The acknowledgment(s) must be written and include:

1. The name of the charitable organization;

2. The date and location of the charitable contribution;

3. A reasonably detailed description (but not necessarily the value) of any property contributed;

4. Whether or not the qualified organization gave the taxpayer any goods or services as a result of the contribution (other than certain token items and membership benefits); and

5. If goods and/or services were provided to the taxpayer, the acknowledgement must include a description and good faith estimate of the value of those goods or services.  If the only benefit received was an intangible religious benefit (such as admission to a religious ceremony), that generally is not sold in a commercial transaction outside the donative context, the acknowledgment must say so and does not need to describe or estimate the value of the benefit.

Deductions Over $500 But Not Over $5,000 - If a taxpayer claims a deduction over $500 but not over $5,000 for a non-cash charitable contribution, they must have the same acknowledgment and written records as for contributions of at least $250 but not more than $500 described above.  In addition, the records must also include:

o How the property was obtained.  For example, by purchase, gift, bequest, inheritance, or exchange.

o The approximate date the property was obtained or, if created, produced, or manufactured by the taxpayer, the approximate date the property was substantially completed.

o The cost or other basis, and any adjustments to the basis, of property held less than 12 months and, if available, the cost or other basis of property held 12 months or more. If the taxpayer is not able to provide information on either the date the property was obtained or the cost basis of the property, and there is reasonable cause for not being able to provide this information, a statement of explanation can be attached to the return.

Deductions Over $5,000 - If the taxpayer claims a deduction of over $5,000 for a charitable contribution of one property item or a group of similar property items, they must obtain acknowledgment from the charitable organization and have the written records described in the “Over $500 But Not Over $5,000” section above.  In determining whether the deduction is over $5,000, combine the deductions for all similar items donated to any charitable organization during the year.  Generally, the taxpayer must also obtain a qualified written appraisal of the donated property from a qualified appraiser.

For all donations that require an acknowledgment from the charitable organization, the taxpayer must obtain the acknowledgment by the earlier of the date the taxpayer files his or her tax return for the year of the contribution or the extended due date of that return (usually October 15 of the year following the donation year).

If you have additional questions related to non-cash contributions, please give this office a call.

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Facts About the Foreign Earned Income Exclusion

The worldwide income of a U.S. citizen or resident alien generally is subject to U.S. income tax regardless of where the taxpayer is living. However, taxpayers are allowed to exclude from their income a certain amount of foreign earned income and housing allowance if they meet certain requirements while living abroad. Here are some facts related to the income exclusion.

1.  The Foreign Earned Income Exclusion: United States citizens and resident aliens who live and work abroad may be able to exclude all or part of their foreign salary or wages from their income when filing their U.S. federal tax return. They may also qualify to exclude compensation for their personal services or certain foreign housing costs.

2.  The General Rules: To qualify for the foreign earned income exclusion, a U.S. citizen or resident alien must have a tax home in a foreign country and income received for working in a foreign country (otherwise known as foreign earned income). The employer can be a U.S. employer or a foreign one as long as the income is earned while working in a foreign country. The taxpayer must also meet one of two tests: the bona fide residence test or the physical presence test.

• Bona fide residence test – Generally, to meet the bona fide residence test, a U.S. citizen or U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect must be a resident of a foreign country for an uninterrupted period that includes an entire tax year. Thus, except in rare circumstances, the first tax year living and working in a foreign country will not meet the entire tax year requirement, and a taxpayer will need to qualify under the physical presence test to exclude income.

• Physical presence test – To qualify under the physical presence test, a U.S. citizen or a U.S. resident alien must be physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. The 12-month period will span two years, requiring a prorated exclusion for the first year living and working in a foreign country. Because the exclusion period must actually be met before a return can be filed taking the exclusion, a filing extension may be required.

3.  The Exclusion Amount: The foreign earned income exclusion is adjusted annually for inflation. For 2010, the maximum exclusion is up to $91,500 per qualifying person ($91,400 in 2009). Thus, a husband and wife both living and working out of the country can each qualify for the full exclusion amount.

4.  Housing Exclusion: In addition to the foreign earned income exclusion, there is also a foreign housing exclusion when the housing costs are in excess of a government set base amount. The base amount for 2010 is $14,640 (up slightly from $14,624 in 2009), and the maximum housing exclusion amount for 2010 is $12,810 (up slightly from $12,796 for 2009).

5.  Taking Other Credits or Deductions: Once the foreign earned income exclusion is chosen, a foreign tax credit or deduction for taxes cannot be claimed on the excluded income.

The foregoing is only a brief summary of the foreign earned income exclusion.  If you are currently living and working in foreign country, or have plans of doing so in the future, and would like to find out if this deduction will work for your particular circumstances, please call this office for additional details.

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School?s Almost Out: Teach Yourself Better Reporting

This being May, your children will be coming home with report cards soon.

It might be a good time to grade yourself, to get a close look at how your business is doing. And there’s no better way to do that in QuickBooks than to run reports. You probably do that a lot already, but are you really making full use of the program’s reporting tools?

Let’s take a look. Reporting changed a lot between QuickBooks 2009 and 2010 in terms of interface, navigation, and access to reports. We’ll look at version 2010 since the core reporting mechanisms are similar, and wrap up with a brief summary of the new features in 2010.

Extensive customization

Open the Reports menu. You can go directly to the Report Center, but since the interfaces are different (and very self-explanatory), we’ll work from the menu.

Drop down to Sales, and in the pop-out menu, click Sales by Customer Detail.  You’ll see a window similar to Figure 1.

 

Figure 1: You may just be changing the date range when you run reports in QuickBooks. If so, you’re missing out on a lot of customization and other features.

Don’t like displaying the date/time/basis for each report? Click Hide Header and then Show Header if you want to bring it back.

Are some of your columns—usually Name, Item, and Memo—being truncated (such as Gutter clean… in the example above)? Grab the diamond to the right of the column name and drag it to the right with your mouse. It may take some adjusting to make every column header display properly.

Are you exporting a lot of reports to Excel workbooks but never clicking on the Advanced tab in the dialog box? If your reports always look different in Excel and you don’t like them, it may be because you’re skipping this step. Click the Export button, and the dialog box shown in Figure 2 appears. Click Advanced to see this view.

 

Figure 2: Before you export a report to an Excel worksheet, click the Advanced tab in the Export Report dialog box. You’ll be able to select options that will preserve or ignore the original QuickBooks formatting.

Sophisticated modifications

To get to the real meat of your modifications, click the Modify Report button. You’ll be able to tinker with a number of report elements here, including (and shown in Figure 3):

• Display. What dates should the report cover? Which columns should display (you’ll have plenty to choose from)? Cash or accrual? How do you want to total and sort data? Click Advanced to show all accounts or those in use during the report period, and to display a customer’s current balance or the balance as of the report’s ending date.

• Filters. QuickBooks builds in powerful filtering capabilities, allowing you to corral a subset of data that contains exactly what you want, down to the words included in the Memo field. Take some time here and read the accompanying help files. A box on the right displays the current filters; you can easily remove any of them or revert to the original configuration.

• Header/footer. Easy stuff. How should the report look? QuickBooks gives you a lot of control over that. You’ll simply check or uncheck boxes, and enter information.

• Fonts & Numbers. Easy here, too. You can make choices about the fonts and colors you want your report to contain, and how you want numbers to be displayed.

Figure 3: QuickBooks gives you an enormous amount of control over the format and content of your reports.

Memorization and more

Once you’ve gone through all the trouble of formatting a report, you’ll probably want to save it so you can use it again (the settings are memorized, not the data). QuickBooks makes this easy. With the report open, click Memorize. In the window that opens, type a name for your report (if you want to specify a new one), and check the box next to Save in Memorized Report Group if you want it categorized. To access a memorized report, open the Reports menu and put your mouse on Memorized Reports. From the pop-out menu, select the report you want. You’ll still be able to modify it.

The new Report Center in QuickBooks 2010, shown in Figure 4, makes it easier to locate the desired reports quickly. It features a scrolling 3-D representation of sample reports in each financial category (list and grid views are also available); you can click on icons in a toolbar to see your own version of the report, change the dates, learn more about it, and tag it as a favorite. Other links let you toggle the view among standard, memorized, favorite, and recently accessed reports.

 

Figure 4: This “carousel” view of sample reports in QuickBooks 2010 especially helps beginners find the correct report. Grid and list views are also available, as are other tools for locating the right screen.

When you’re just running reports for your own edification, you may not do more than select a report and change the date range. But there will likely be many occasions when you’re presenting reports to an audience, like bankers or potential customers. QuickBooks’ report tools can help you slice and dice your data in myriad ways and make your financials look polished and professional. The ability to export to Excel opens up even more possibilities.

If you need help with this feature, or have any questions on QuickBooks's reporting, don't hesitate to give us a call.

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Adoption Tax Credit Changes

One of the non-health care-related items included in the new health care legislation was an increase in the dollar limitation for the adoption credit from $12,170 to $13,170 for 2010 and to adjust the amount for inflation in future years.  But more significantly, the credit is now refundable, where before it could only be used to offset a tax liability with any excess lost.  This will significantly help families with a small tax liability who would like to adopt a child.

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