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Archives for September 2012

5 Best Practices When Hiring Employees

September 29, 2012 by mrice

Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

Who you hire for your organization can be the most critical decision you make for the future success of your company. Hire the right team and success is almost guaranteed. Hire the wrong group and your company’s very survival can be in jeopardy. In other words, hiring is nothing to take lightly. This article will serve to provide the 5 best practices when hiring employees.

Practice 1. Define the position

Create a clear and exact description of the position you are seeking employees for. This will enable you to advertise to attract only those who are qualified for the position. Prospective employees need to know exactly what you are seeking before applying for the position. Fail to do this and you may be overwhelmed by ill qualified candidates.

Practice 2. Determine the salary range

Knowing what you are able to pay for the position can eliminate many headaches in the hiring process. If the position requires years of experience, a higher starting salary can attract qualified candidates. On the other hand, if the position is entry level, a lower starting salary can eliminate your dealing with prospective employees who need greater compensation.

Practice 3. Look inside first

Many hiring managers only look outside the organization when seeking talent. However, the best candidates are often already within the company. Hiring from within eliminates many of the hassles of training someone new into the company’s culture. Not to mention, a much lower cost than recruiting from outside. Always look inside first.

Practice 4. Advertise on many sources

If you can’t locate someone inside the company, the position should be marketed on multiple sources. This includes newspapers, websites, social media, universities and even by word of mouth with your current employees, coworkers and fellow business people.

Practice 5. Put it in writing

Once you locate the ideal candidate, put the offer in writing to avoid any misunderstandings. Verbal offers are a major no in this day and age. Be certain that the offer letter contains a complete description of the position, salary, benefits and expectations of the employee. It’s far better to have the employee turn down the job based on the offer letter than to hire and find out there was a misunderstanding about what the position entails.

TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
 

Filed Under: Uncategorized

What Is the Age Limit for Claiming a Child as a Dependent for Federal Tax Purposes?

September 23, 2012 by mrice

Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

 
Claiming a child as a dependent for federal tax purposes offers the taxpayer a number of tax related benefits. Along with being able to claim an exemption for the child, the taxpayer may also be able to take advantage of the Child and Dependent Care Credit and the Earned Income Credit, further reducing a taxpayer’s federal income tax obligation. In order to claim a child as a dependent, there are five basic tests that must be passed first. Those tests are the relationship, residency, support, joint return, and age test.
 
According to the age test, a child must be under the age of 19 at the end of the tax year in which a taxpayer plans to claim the child. In addition, the child must be younger than the taxpayer or the taxpayer’s spouse if filing jointly. If, however, the child is a full-time student, the age limit is raised. In that case, the child must be under the age of 24 at the end of the tax year and younger than the taxpayer, or the taxpayer’s spouse if filing jointly.
 
The age test does not apply if the child is permanently and totally disabled at any time during the tax year in question. In that case, there is no age limit

TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
 

Filed Under: Uncategorized

HRA Qualified Medical Expenses for 2012

September 16, 2012 by mrice

Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

 
A Health Reimbursement Arrangement, or HRA, is a plan offered to employees that will reimburse certain qualified medical expenses tax-free. Your individual HRA will be unique to what your business offers, but the basic eligible medical expenses and non-eligible medical expenses are the same. Understanding which expenses qualify under the HRA can help you get the most out of your plan.
 
HRA Qualified Medical Expenses for 2012
 
Under each HRA plan, there will be qualified medical expenses. These expenses include a certain amount that will be covered for the prevention, treatment, or diagnosis of certain medical conditions or illnesses as defined under Section 213(d) of the IRS Code.
 
For example, some of the common qualified medical expenses for 2012 HRA plans are ambulance fees, prescription birth control pills, acupuncture, dental treatment, chiropractic care, crutches, diabetes blood sugar test devices, eye glasses, hearing aid and batteries, laser eye surgery, lab fees, sterilization, surgery, optometrist, physician prescribed stop-smoking programs, x-rays and a list of dozens more eligible medical expenses.
 
HRA Non-Qualified Medical Expenses for 2012
 
There are also medical expenses that are not eligible for the HRA plan, including over-the-counter medications without a prescription, which became ineligible for HRA’s, along with Health Savings Accounts and Flexible Spending Accounts, as of January 1st 2011. Any medical expenses that occurred before you signed up for your HRA will not qualify under the HRA.
 
Other non-qualified medical expenses for 2012 include health club memberships, cosmetic surgery, bottled water, diaper service, hair transplant, maternity clothing, nutritional supplements, and other expenses.
 
The HRA provided by your company lets you receive reimbursements that are tax-free from medical expenses you are going to make throughout the year. If you know ahead of time that you will have many of the expenses that qualify for 2012, it can be extremely beneficial for you to sign up for your company’s HRA plan.
 
TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
 

Filed Under: Uncategorized

Federal Income Tax Return Filed Incorrectly: What Should I Do?

September 8, 2012 by mrice

Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

Because the IRS’s tax laws are complicated, it is possible to mistake a mistake — whether minor or major — when preparing your federal tax return. In fact, the IRS encounters thousands every year. If you have already sent in your federal tax return, but realize you made an error, you need to amend the return. In light of this, the IRS makes this as easy as possible by providing you with printable forms that give you detailed instructions on how to amend previous filed incorrect federal tax return.
 
Steps to File an Amended Return
 
1. Obtain and print Form 1040X, which is titled “Amended US Individual Income Tax Return.” From the IRS website. Form 1040X should be used if you originally filed forms 1040, 1040A, 1040EZ, 1040NR, or 1040NR-EZ.
 
2. Write the amending return year at the top of the form, complete your corrections on the form, and sign it at the bottom. The Form 1040X makes it easy to amend your return by listing step-by-step instructions on how to enter your corrections. Double-check that the amended return is 100% correct before signing it and preparing it to be sent.
 
3. Mail the completed and signed form to the address listed on the Form 1040X. If you are amending more than one tax return, you should fill out and send two separate forms and envelopes.
 
If you send in your amended tax return quickly, or shortly after the original return was sent, you may have a chance to get your return processed in a timely manner. However, you should expect a minor delay in your tax refund while the IRS verifies the old return versus the amended return. The amended refund form gives you the chance to make your corrections and receive the appropriate refund. In addition, if your federal income tax return had a mistake, your state tax liability may be affected.
TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
 

Filed Under: Uncategorized

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