Enter your email below to subscribe to our monthly newsletter.
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.
Obtaining a six-month extension to file is relatively easy, and there are legitimate reasons for doing so; however, there are also a few downsides. If you need more time to file your federal income tax return this year, here’s what you need to know.
An extension of time to file is a formal way to request additional time from the IRS to file your tax return, which, in 2023, is due on April 18. Anyone can request an extension; you don’t have to explain why you’re asking for more time. Individuals filing an extension are automatically granted an additional six months to file their tax returns. In 2023, the extended due date is October 16.
Businesses can also request an extension. In 2023, the extended deadline for S corporations and partnerships is September 15, and for C corporations it’s October 16. Special rules may apply if you serve in a combat zone, a qualified hazardous duty area, or live outside the United States. Please contact the office if you need more information.
Taxpayers should be aware that an extension of time to file your return does not grant you any extension of time to pay your taxes. In 2023, April 18 is the deadline for most to pay taxes owed and avoid penalty and interest charges.
Let’s take a look at why taxpayers might consider filing an extension this year:
1. If you file your return more than 60 days after the due date (or extended due date), the minimum penalty is the smaller of $435 or 100 percent of the unpaid tax. The failure-to-pay penalty is one-half of one percent for each month, or part of a month, up to a maximum of 25 percent, of the amount of tax that remains unpaid from the unextended due date of the return until the tax is paid in full.
2. You won’t have to pay a late filing or late-payment penalty if you show reasonable cause for not filing or paying on time.
3. You can file a more accurate and complete tax return. Rather than rushing to prepare your return (and possibly making mistakes), you’ll have an extra six months to gather up required tax records, especially if you’re still waiting for tax documents that haven’t arrived or need more time to organize your tax documents in support of deductions.
4. If your tax return is complicated, your tax preparer or accountant will have more time to work on your return to ensure you can take advantage of every tax credit and deduction you’re entitled to under the tax code.
5. If you’re self-employed, you’ll have extra time to fund a retirement plan. Individual 401(k) and SIMPLE plans must have been set up during the tax year for which you’re filing, but it’s possible to fund the plan as late as the extended due date for that year’s tax return. SEP IRA plans may be opened and funded for the tax year by the extended deadline as long as an extension has been filed.
6. Filing an extension preserves your ability to receive a tax refund when you file past the extension due date. Filers have three years from the original due date (e.g., April 18, 2023) to claim a tax refund. However, if you file an extension, you’ll have an additional six months to claim your refund. In other words, the statute of limitations for refunds is also extended.
Now, let’s take a look at the downsides of filing an extension:
If you need more time to prepare your federal tax return, then filing an extension of time to file might be the best decision. If you have any questions or are wondering if you need an extension, don’t hesitate to contact the office.
If you enjoy collecting antiques and collectibles or investing in fine art, wine, or vintage cars, there may be a time when you’re ready to cash in and reap the financial rewards. But you need to be aware of the tax impact of selling collectibles.
To serious art and antique collectors, the word “collectibles” often has a negative connotation, conjuring up visions of Hummel figurines, childhood baseball card collections, or your cousin’s long-forgotten high school troll collection. Of course, in some cases, individual items from these collections may be quite valuable; certain vintage PEZ dispensers or Cabbage Patch dolls, for instance. They would fall under the IRS definition of collectibles under the Internal Revenue Code (IRC), which is as follows:
Gold or silver, or gold and silver exchange-traded funds (ETFs) that are bought and sold, are considered collectible and taxed as such. However, taxpayers should be aware that certain coins and metals are excluded from the IRS definition of “collectible.” These include any coin issued under the laws of any state or any gold, silver, platinum, or palladium bullion of a certain fineness if a bank or approved nonbank trustee keeps physical possession of it.
As noted above, the IRS has the authority to deem any tangible property not specifically listed as a collectible. So, collectibles could include such items as rare comic book collections, vintage sports cars, baseball cards, or PEZ containers.
Non-fungible Tokens (NFTs). Recently, the IRS issued preliminary guidance regarding the tax treatment of NFTs (non-fungible tokens) as collectibles and is soliciting comments until June 19, 2023, to determine further guidance. The popularity of NFTs rose during the pandemic, but interest has since waned.
NFTs are defined by the IRS as a unique digital identifier recorded using distributed ledger technology and may be used to certify the authenticity and ownership of an associated right or asset. In simple terms, NFTs represent unique digital assets, typically in the form of visual art, music, and other digital content. They can be bought and sold like any other property and use “distributed ledger technology,” such as blockchain technology, to record transactions and identify ownership.
The maximum rate on net capital gains from the sale of collectibles is 28%. By comparison, the maximum long-term capital gains rate from the sale of an asset such as a home or stocks is 20%.
If you sell a collectible after holding it one year or less, you will pay short-term capital gains, taxed as ordinary income at your marginal tax rate. To determine how long you held the asset, you generally count from the day after the day you acquired the asset up to and including the day you disposed of the asset. Depending on adjusted gross income, taxpayers may also be subject to the net investment income tax of 3.8%. For more information about this tax, see What Is the Net Investment Income Tax? below.
There are two ways to figure the taxable basis of collectibles. If acquired through inheritance, the basis is the fair market value (FMV) at the time it was inherited. If the collectible was purchased, the basis is the cost of the item plus any fees, such as the cost of using a broker. The net capital gain is figured by subtracting the basis from the sale price. Generally, tax liability is less when the collectible has a higher basis.
Because the long-term capital gains tax rate on the sale of collectibles is higher than that on regular capital gains, strategies such as selling over multiple years to reduce the amount of taxable gain in a given year are often beneficial to taxpayers.
If you have any questions about how the sale of collectibles affects your tax situation, don’t hesitate to contact the office.
What Is the Net Investment Income Tax?
While the Net Investment Income Tax (NIIT) most often affects wealthier individuals, in certain circumstances, it can also affect moderate-income taxpayers whose income increases significantly in a given tax year.
The NIIT is a 3.8 percent tax on certain net investment income of individuals, estates, and trusts with income above statutory threshold amounts.
In general, net investment income includes but is not limited to interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading financial instruments or commodities, and passive business activities such as rental income or income derived from royalties.
The following types of income are not included:
Permanent Fund Dividends
Individuals with modified adjusted gross income (MAGI) over $250,000 (married filing jointly) or $200,000 (single and head of household filers) are taxed at a flat rate of 3.8 percent on the lesser of their net investment income or the amount by which their MAGI exceeds the applicable threshold. The NIIT is a flat rate tax paid in addition to other taxes owed, and threshold amounts are not indexed for inflation.
Non-resident aliens are not subject to the NIIT; however, if a non-resident alien is married to a U.S. citizen and is planning to file as a resident alien as married filing jointly, there are special rules. Please call if you have any questions about this.
Investment income is generally not subject to withholding, so being subject to the NIIT could cause you to owe tax when you file your return. In addition, even lower-income taxpayers who wouldn’t normally meet the threshold amounts may be subject to NIIT if they receive a windfall, such as a one-time sale of assets that significantly bumps up their MAGI.
Tax planning is crucial. For example, if you’re anticipating a windfall (this tax year or next), there are strategies you could use to minimize your MAGI and reduce tax liability when you file your tax return. These include but are not limited to:
The NIIT doesn’t apply to any amount of gain on the sale of a principal residence that is excluded from gross income for regular income tax purposes ($250,000 for single filers and $500,000 for a married couple) . In other words, only the taxable part of any gain on the sale of a home has the potential to be subject to NIIT, providing the taxpayer is over the MAGI threshold amount.
Estates and trusts are subject to the NIIT if they have undistributed net investment income and also have adjusted gross income over the dollar amount at which the highest tax bracket for an estate or trust begins for such taxable year. In 2023, this threshold amount is $14,450 ($13,450 in 2022).
Special rules apply for certain unique types of trusts, such as Charitable Remainder Trusts and Electing Small Business Trusts. Some trusts, including Grantor Trusts and Real Estate Investment Trusts (REITs), aren’t subject to the NIIT.
Non-qualified dividends generated by investments in a REIT and taxed at ordinary tax rates may be subject to the NIIT.
For tax years 2018 and beyond, individuals, estates, and trusts that expect to pay estimated taxes should adjust their income tax withholding or estimated payments to account for the tax increase and avoid underpayment penalties. The NIIT is not withheld from an employed individual’s wages; however, it is possible to request that additional income tax be withheld.
If you are wondering how the NIIT could affect your tax situation, contact the office today and find out.
If you’re a savvy investor, you probably know that you must generally report any mutual fund distributions as income, whether you reinvest them or exchange shares in one fund for shares in another. In other words, you must report and pay any capital gains tax owed.
But if real estate’s your game, did you know that it’s possible to defer capital gains by taking advantage of a tax break that allows you to swap investment property on a tax-deferred basis?
Named after Section 1031 of the Internal revenue code (IRC), a like-kind exchange generally applies to real estate. It is designed for people who want to exchange properties of equal value. If you own land in Oregon and trade it for a shopping center in Rhode Island, as long as the values of the two properties are equal, nobody pays capital gains tax even if both properties may have appreciated since they were originally purchased.
Section 1031 transactions don’t have to involve identical types of investment properties. You can swap an apartment building for a shopping center or a piece of undeveloped, raw land for an office or building. You can even swap a second home that you rent out for a parking lot.
There’s no limit on how many times you can use a Section 1031 exchange. It’s possible to roll over the gain from your investment swaps for many years and avoid paying capital gains tax until a property is finally sold. Keep in mind, however, that gain is deferred, but not forgiven, in a like-kind exchange and you must calculate and keep track of your basis in the new property you acquired in the exchange.
Section 1031 is not for personal use and is limited to exchanges of real property. For example, you can’t use it for stocks, bonds, and other securities or personal property (with limited exceptions such as artwork). Furthermore, in 2021, the IRS issued a legal memo concluding that swaps of certain cryptocurrencies cannot qualify as a like-kind exchange under Section 1031.
Let’s say you have a small piece of property and want to trade up to a bigger one by exchanging it with another party. You can make the transaction without paying capital gains tax on the difference between the smaller property’s current market value and your lower original cost.
That’s good for you, but the other property owner doesn’t make out so well. Presumably, you will have to pay cash or assume a mortgage on the bigger property to make up the difference in value. This is referred to as “boot” in the tax trade, and your partner must pay capital gains tax on that part of the transaction.
To avoid that, you could work through an intermediary, often known as an escrow agent. Instead of a two-way deal involving a one-for-one swap, your transaction becomes a three-way deal.
Your replacement property may come from a third party through the escrow agent. The escrow agent may arrange evenly valued swaps by juggling numerous properties in various combinations.
Under the right circumstances, you don’t even need to do an equal exchange. You can sell a property at a profit, buy a more expensive one, and defer the tax indefinitely.
You sell a property and have the cash put into an escrow account. Then the escrow agent buys another property that you want. They get the title to the deed and transfer the property to you.
When considering a Section 1031 exchange, it’s important to consider mortgage loans and other debt on the property you plan to swap. For example, if you hold a $200,000 mortgage on your existing property but your “new” property only holds a mortgage of $150,000. Even if you’re not receiving cash from the trade, your mortgage liability has decreased by $50,000. In the eyes of the IRS, this is classified as “boot,” and you will still be liable for capital gains tax because it is still treated as “gain.”
A Section 1031 transaction takes planning. You must identify your replacement property within 45 days of selling your estate. Then you must close on that within 180 days. There is no grace period. If your closing gets delayed by a storm or other unforeseen circumstances, and you cannot close in time, you’re back to a taxable sale.
Find an escrow agent specializing in these types of transactions and contact your accountant to set up the IRS form ahead of time. Some people sell their property, take cash, and put it in their bank account. They figure all they have to do is find a new property within 45 days and close within 180 days. But that’s not the case. As soon as “sellers” have cash in their hands, or the paperwork isn’t done right, they’ve lost their opportunity to use this tax code provision.
Section 1031 doesn’t apply to personal residences, but the IRS lets you sell your principal residence tax-free as long as the gain is under $250,000 for individuals and under $500,000 if you’re married.
Section 1031 exchanges may be used for swapping vacation homes but present a trickier situation. Here’s an example of how this might work: Let’s say you stop going to your condo at the ski resort and instead rent it out to a bona fide tenant for 12 months. In doing so, you’ve effectively converted the condo to an investment property, which you can then swap for another property under the Section 1031 exchange.
However, there’s a catch if you want to use your new property as a vacation home. You’ll need to comply with a 2008 IRS safe harbor rule in each of the 12-month periods following the 1031 exchange; you must consecutively rent the dwelling to someone for 14 days (or more). In addition, you cannot use the dwelling for more than the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented out for at fair rental price.
You must report a section 1031 exchange to the IRS on Form 8824, Like-Kind Exchanges, and file it with your tax return for the year in which the exchange occurred. If you do not specifically follow the rules for like-kind exchanges, you may be held liable for taxes, penalties, and interest on your transactions.
Like-kind exchanges may seem straightforward but can be complicated. If you’re considering a Section 1031 exchange or have questions, please call the office for assistance.
By law, U.S. citizens and resident aliens living abroad must file a U.S. income tax return and report any worldwide income. Some key tax benefits, such as the foreign earned income exclusion, are only available to those who file U.S. returns. As such, if you are living or working outside the United States and Puerto Rico, you generally must file and pay your tax the same way as people living in the U.S. This includes people with dual citizenship. Here’s what taxpayers need to know about reporting foreign income:
Federal law also requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to file Schedule B (Form 1040), Interest and Ordinary Dividends, with their tax returns. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.
Some taxpayers may need to file additional forms with the Treasury Department:
Form 8938. Generally, U.S. citizens, resident aliens, and certain nonresident aliens must report specified foreign financial assets on Form 8938, Statement of Specified Foreign Financial Assets if the aggregate value of those assets exceeds certain thresholds. FATCA (Form 8938) is submitted on the tax due date (including extensions, if any) of your income tax return.
FBAR. Taxpayers with foreign accounts whose aggregate value exceeded $10,000 at any time during 2022 (or in 2023 for next year’s filing returns) must file a Treasury Department FinCEN Form 114 (formerly TD F 90-22.1), Report of Foreign Bank and Financial Accounts (“FBAR”). FBAR is not a tax form but is due to the Treasury Department by April 18, 2023, and must be filed electronically through the BSA E-Filing System website. It may be extended to October 16.
Many Americans who live and work abroad qualify for the foreign earned income exclusion when they file their tax return. This means taxpayers who qualify will not pay taxes on up to $112,000 of their wages and other foreign earned income they received in 2022 ($120,000 in 2023).
Taxpayers may also be able to take either a credit or a deduction for income taxes paid to a foreign country. This benefit reduces the taxes these taxpayers pay in situations where both the U.S. and another country tax the same income.
An income tax filing requirement applies even if a taxpayer qualifies for tax benefits such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which reduce or eliminate U.S. tax liability. These tax benefits are available only if an eligible taxpayer files a U.S. income tax return.
U.S. citizens and resident aliens whose tax home and abode are outside the U.S. and Puerto Rico on April 18, 2023, qualify for an automatic two-month extension (until June 15) to file their 2022 federal income tax returns. The extension of time to file also applies to those serving in the military outside the U.S. Taxpayers must attach a statement to their returns explaining why they qualify for the extension.
U.S. citizens and resident aliens living abroad may be granted a filing extension of up to six months (October 16, 2023) by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return prior to the due date of the tax return (April 18, 2023). However, a taxpayer filing an extension must pay any tax due by the original date or be subject to late payment penalties and interest.
If you’re a taxpayer or resident alien living abroad that needs help with tax filing issues, IRS notices, and tax bills, or have questions about foreign earned income and offshore financial assets in a bank or brokerage account, don’t hesitate to call.
People working in the gig economy earn income as freelancers, independent workers, or employees. Typically, an online platform is used to connect people with potential or actual customers to provide goods or services. Examples include renting out a home or spare bedroom and providing meal delivery services or rides.
During the pandemic, many people joined the ranks of the gig economy to help make ends meet – and they’re still doing so. Whether you are part of the gig economy because it’s a primary source of income or want to make extra money with a side business, taxpayers must understand that money earned through this work is usually taxable. As such, it must be reported as income on their tax returns.
This income is usually taxable even if:
There are tax implications for both the company providing the platform and the individual performing the services. For example, people working in the gig economy are generally required to pay income taxes, Federal Insurance Contribution Act or Self-employment Contribution Act tax and additional Medicare taxes.
Independent contractors may be able to deduct business expenses but should double-check the rules around deducting expenses related to using things like their car or house. Special rules usually apply to a rental property also used as a residence during the tax year. Taxpayers should remember that rental income is generally fully taxable and should remember to keep records of all business expenses.
Workers who do not have taxes withheld from their pay have two ways to pay their taxes in advance:
If you have questions about working in the gig economy and how it affects your taxes, don’t hesitate to call the office.
Businesses that make structural adaptations or other accommodations for employees or customers with disabilities may be eligible for tax credits and deductions. Here’s an overview of the tax incentives designed to encourage employers to hire qualified people with disabilities and offset some of the costs of providing accommodations.
Work Opportunity Tax Credit
The work opportunity tax credit is available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. This includes people with disabilities and veterans.
The maximum amount of tax credit for employees who worked 400 or more hours of service is:
A 25% rate applies to wages for individuals who work at least 120 hours but less than 400 hours for the employer.
Disabled Access Credit
The disabled access credit is a non-refundable credit for small businesses that have incurred expenses for providing access to persons with disabilities. An eligible small business earned $1 million or less or had no more than 30 full-time employees in the previous year.
The business can claim the credit each year they incur access expenditures. Eligible access expenditures must be reasonable and necessary to accomplish the following purposes and include amounts paid or incurred:
1. To remove barriers that prevent a business from being accessible to or usable by individuals with disabilities – but do not include expenditures paid or incurred in connection with any facility first placed in service after November 5, 1990;
2. To provide qualified interpreters or other methods of making audio materials available to deaf and hard-of-hearing individuals;
3. To provide qualified readers, taped texts, and other methods of making visual materials available to individuals with visual impairments; or
4. To acquire or modify equipment or devices for individuals with disabilities.
Barrier Removal Tax Deduction
The architectural barrier removal tax deduction encourages businesses of any size to remove architectural and transportation barriers to the mobility of people with disabilities and the elderly. Businesses may claim a deduction of up to $15,000 a year for qualified expenses on items that normally must be capitalized.
Businesses claim this deduction by listing it as a separate expense on their income tax return. Also, businesses may use the disabled tax credit and the architectural/transportation tax deduction together in the same tax year if the expenses meet the requirements of both sections. To use both, the deduction is equal to the difference between the total expenses and the amount of the credit claimed.
Don’t hesitate to contact the office with questions about these and other small business tax credits.
If you, your spouse, or dependents had significant medical or dental costs in 2022, you may be able to deduct those expenses when you file your tax return this year. Here’s what you should know about medical and dental expenses and other benefits:
You Must Itemize
You can only claim medical expenses you paid for in 2022, and only if you itemize Schedule A on Form 1040. If you take the standard deduction, you can’t claim these expenses.
Deduction is Limited
You can deduct all the qualified medical costs that you paid for during the year. However, for 2022, you can only deduct the amount that is more than 7.5% of your adjusted gross income.
Expenses Paid in 2022
You can include medical and dental expenses you paid during the year, regardless of when the services were provided. For example, if you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. Save your receipts and keep good records to substantiate your expenses.
No deduction for Reimbursed Expenses
Your total medical expenses for the year must be reduced by any reimbursement. Costs reimbursed by insurance or other sources do not qualify for a deduction. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.
Qualified Medical Expenses
Include qualified medical expenses you pay for yourself, your spouse, and your dependents. Some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement, or those with a qualifying relative who is not your child.
You can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment, or prevention of disease or treatment affecting any structure or function of the body. You can only deduct prescription medication and insulin (i.e., no over-the-counter medicines). You can also include premiums for medical, dental, and certain long-term care insurance in your expenses, and you can also include lactation supplies.
You may deduct transportation costs primarily for and essential to medical care that qualifies as a medical expense, including fares for a taxi, bus, train, plane, or ambulance as well as tolls and parking fees. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil. Or, you can deduct the standard mileage rate for medical expenses, which was 22 cents per mile (July 1-December 31, 2022) and 18 cents per mile (January 1-June 30, 2022).
No Double Benefit
You can’t claim a tax deduction for medical and dental expenses you paid for with funds from your Health Savings Accounts (HAS) or Flexible Spending Arrangements (FSA). Amounts paid with funds from those plans are usually tax-free. This rule prevents two tax benefits for the same expense.
Please call if you need help determining what qualifies as a medical or dental expense.
An important part of estate planning is designating a power of attorney; however, the IRS will not discuss your taxes or identity with anyone without your authorization. Recently, the IRS has made it easier for taxpayers to quickly review, approve and sign power of attorney and tax information authorization requests through their IRS Online Account.
Power of attorney allows someone to represent a taxpayer in tax matters before the IRS. Taxpayers may choose to represent themselves before the IRS, or authorize someone to represent them. If they choose to have someone represent them, the representative must be an individual authorized to practice before the IRS such as an enrolled agent.
Taxpayers should use Form 2848, Power of Attorney and Declaration of Representative if they want to authorize an individual to represent them before the IRS. Certain tax professionals can use their Tax Pro Account to submit a power of attorney authorization request to access a taxpayer’s online account. The taxpayer can log into their Online Account to review, electronically sign and manage authorizations.
Once a taxpayer has signed a power of attorney, the authorized person can:
Taxpayers can ask an eligible tax professional to use a Tax Pro Account to submit the request to their Online Account.
Tax Information Authorization
Taxpayers can also approve a tax information authorization submitted through Tax Pro Account in their individual Online Account. With real-time processing, Tax Pro Account lets you submit an electronically signed authorization request in 15 minutes or less. A tax information authorization allows the taxpayer’s appointed designee to review or receive the taxpayer’s confidential information verbally or in writing for the tax matters and years or periods, the taxpayer specifies.
It also allows taxpayers to disclose their tax information for a purpose other than resolving a tax matter, such as, for example, providing income verification needed by a lender or a background check.
Please contact the office if you need assistance with this or any other tax matters affecting you and your family. Help is just a phone call away.
Special tax rules may apply to some children who received investment income in 2022 or expect to receive it in 2023. Investment income generally includes interest, dividends, and capital gains. It also includes other unearned income, such as taxable scholarships or from a trust. These rules may affect the amount of tax and how to report the income.
If your child has investment income, here are some important points to keep in mind:
Parent’s Tax Rate. If your child’s total investment income is more than $2,300 ($2,500 in 2023), your tax rate may apply to part of that income instead of your child’s tax rate. See the instructions for Form 8615, Tax for Certain Children Who Have Unearned Income.
Parent’s Return. You may be able to include your child’s investment income on your 2022 tax return if it was more than $1,150 but less than $11,500 for the year ($1,250 and $12,500, respectively, in 2023). If you make this choice, your child will not have to file their own return. For more information, see Form 8814, Parents’ Election to Report Child’s Interest and Dividends.
Child’s Return. If your child’s investment income was $11,500 or more in 2022 ($12,500 in 2023), they must file their own return. File Form 8615 with the child’s federal tax return.
Net Investment Income Tax. Your child may be subject to the Net Investment Income Tax if they must file Form 8615. Use Form 8960, Net Investment Income Tax, to figure this tax.
If you have any questions about your child’s investment income, don’t hesitate to call.
When you receive an inaccurate or sloppy, unattractive invoice from a vendor, it may leave you wondering if they are as careless with creating their products and services. Whether they think about it consciously or not, the quality of your paper and digital communications impacts their perception of you.
In other words, appearance matters regarding forms and other documents you share with your customers and suppliers. So make them the best they can be. It’s a small thing to do that can make a positive impression down the road.
Much of the interaction you have with your business contacts has to do with money. It makes sense, then, that QuickBooks contains tools that can help you create a design for your forms that can be consistent. Your invoices can look like your purchase order, and your sales receipts can resemble your estimates. Let’s take a look at the possibilities:
QuickBooks’ form customization tools allow you to control how your forms look and what they include. You can modify the templates included for your invoices, estimates, sales receipts, statements, purchase orders, and bill payment stubs to look similar.
To get started, you’ll need to select one of the templates that QuickBooks supplies. Open the Lists menu and select Templates. Double-click one of the templates in the open window, like Intuit Service Invoice. Click Manage Templates at the top of the window. It’s a good idea to leave the original template intact, so you should make a copy of the template that you can modify and save. If you’d rather edit the original template, click OK. Otherwise, click Copy, then OK. The Basic Customization window will open, as shown below.
Figure 1: You will see your options in the Basic Customization window.
The left side of this window displays all of your design and content options. First, add your logo if you have one by clicking the Use logo box and locating it in the directory of your computer that comes up.
Next, select a color scheme for your invoice by clicking the down arrow below Select Color Scheme. Click Apply Color Scheme. You can see how that would look on the right side of the window, which displays a preview as you make changes. If you want to change the fonts for your header (Title, Company Name, etc.), click each element and then click Change Font. A window containing your options here will open.
When you’re done with fonts, you can choose Company and Transaction Information and indicate your preferences by checking and unchecking boxes. If you get a message warning you about overlapping fields, you will have to go into the Layout Designer, where you can drag and drop your form elements around to make them fit. This isn’t particularly easy if you’ve never worked with a design tool before).
Figure 2: The Basic Customization window also displays these options for your forms.
So far, you’ve only modified the top of your invoice. You also have control over the rest of it. Click Additional Customization to see your options here. The window that opens contains a field selection pane on the left and a preview of your work-in-progress on the right again. There are five areas to consider. You can change the field label for each and indicate whether they should appear on the screen and/or the printed copy. The three you should be most concerned with are:
Figure 3: You have control over many elements of your invoice template.
When you’re done customizing here, click OK, then OK again in the Basic Customization window. Your newly-designed invoice will now appear in the list of templates.
You can copy the design of one form to another to make them consistent. Go to Lists | Templates again and highlight the form you want to copy (like Copy of Service Invoice). Click the Templates button in the lower left to open the menu and select Duplicate. In the window that opens, select the type of template you want to copy to (like Sales Receipt). Click OK. When the Templates window opens again, you’ll see a Copy 2: Intuit Service Invoice. In the corresponding Type column, you’ll see Sales Receipt. You can make any adjustments necessary here.
QuickBooks is not a graphic design program, and you are not expected to be a professional graphic designer, but if you use the tools, keep your modifications simple. By all means, add a logo, work with the color scheme and fonts, and maybe add or delete a few fields. But if you do too much, you risk getting tangled up in the Layout Designer.
Although it’s a good idea to make your forms’ designs look the same across multiple types of transactions, your main concern should be what information is entered into those fields. If there are areas of accounting where you’re unsure of yourself, please call and speak to a QuickBooks professional who is available to take your questions and help you make the most of the tools provided by QuickBooks.
Employees who work for tips – If you received $20 or more in tips during March, report them to your employer. You can use Form 4070.
Individuals – File an income tax return for 2022 (Form 1040 or Form 1040-SR) and pay any tax due. If you want an automatic 6-month extension of time to file the return, file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return and pay what you estimate you owe in tax to avoid penalties and interest. Then file Form 1040 or Form 1040-SR by October 16.
Household Employers – If you paid cash wages of $2,400 or more in 2022 to a household employee, file Schedule H (Form 1040 or Form 1040-SR) with your income tax return and report any employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040 or Form 1040-SR) if you paid total cash wages of $1,000 or more in any calendar quarter of 2021 or 2022 to household employees.
Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in March.
Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in March.
Individuals – If you are not paying your 2023 income tax through withholding (or will not pay in enough tax during the year that way), pay the first installment of your 2023 estimated tax. Use Form 1040-ES.
Corporations – File a 2022 calendar year income tax return (Form 1120) and pay any tax due. If you want an automatic 6-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe in taxes.
Corporations – Deposit the first installment of estimated income tax for 2023. A worksheet, Form 1120-W, is available to help you estimate your tax for the year.
Employers – Federal unemployment tax. Deposit the tax owed through April if more than $500.
Employers – Social Security, Medicare, and withheld income tax. File form 941 for the first quarter of 2023. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until May 10 to file the return.
Copyright © 2023 All materials contained in this document are protected by U.S. and international copyright laws. All other trade names, trademarks, registered trademarks and service marks are the property of their respective owners.