Timothy W. Tuttle &
Volume 15 Edition 06
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Major Events This Month:
For June 2019
June 16: Father's Day
June 17: 2nd quarter
estimated taxes due
June 17: 2018 tax
deadline for U.S. citizens living abroad
Summertime offers unique tax
saving situations. Outlined here are five ideas everyone can use. Plus, this
issue includes ideas to help you unplug from your electronics and discusses
possible payroll fraud schemes. Finally, spend a minute reviewing the wisdom of
asking for help should you be contacted by the IRS.
Call if you would like to
discuss how any of this information relates to you. If you know someone that can
benefit from this newsletter, feel free to send it to them.
5 Summer Tax Savings
Ah, summer. The weather is
warm, kids are out of school, and itís time to think about tax saving
opportunities! Here are five ways you can enjoy your normal summertime
activities and save on taxes:
- Rent out your property
tax-free. If you have a cabin, condo, or similar property, consider
renting it out for two weeks. The rental income you receive on property rented
for less than 15 days per year is not considered taxable income. In addition,
you can still deduct your mortgage interest expense and property taxes in full
as itemized deductions!. Track the rental days closely ó going over 14 days
means all rent is taxable and rental income rules apply.
- Take a tax credit for
summer childcare. For many working parents, the summer comes with the
added challenge of finding care for their children. Thankfully, the Child and
Dependent Care Credit can cover 20-35 percent of qualified childcare expenses
for your children under the age of 13. Eligible types of care include day
care, nanny fees and day camps (overnight camps and summer school do not
- Hire your kids. If
you own a business, hire your kids. If you are a sole proprietor and your
child is under age 18, you can pay them to work without withholding or paying
Social Security and Medicare tax.
- Have a garage sale.
In general, the money you make from a yard or garage sale is tax-free because
you sell your goods for less than you originally paid for them. Once the sale
is over, donate the remaining items to a qualified charity to get a potential
charitable donation deduction. Just remember to keep a log of the items you
donate and ask for a receipt.
- Start a Roth IRA for
your children. Roth IRA contributions are limited to the amount of income
your child earns, so earned income is key. This can include income from mowing
lawns or selling lemonade. Start making contributions as soon as your child
makes some money to take advantage of the tax-free earnings available in a
Taking the time this summer
to execute these tips can put extra money in your pocket right away and provide
you tax-saving happiness in the future.
Get Your Life Back! Ideas to
With endless movies, TV shows
and video games available to us 24/7, itís become too easy to spend all our free
time on electronic devices. If you and your family are looking for ways to
unplug this summer, consider these ideas:
- Turn off notifications.
Hey! Guess what? Bill just posted a photo of his dinner! And look at this!
Minneapolis just set the world record for the largest pillow fight! Letís
be honest, most alerts you get on your phone are meaningless, yet we allow
them to steal our attention several times a day. Review your phone settings
and turn off all non-essential notifications to keep you focused on the things
that are important to you.
- Ration your screen
time. Limiting time in front of a screen is important for both you and
your kids. Setting daily screen limits is a good way to keep your media
consumption under control and allow for guilt-free time when you just want to
scroll through social media or watch a movie.
- Make a summer reading
goal. Set a goal (with prizes at the end!) for yourself and your children
to read a certain number of books before Labor Day. According to the Chicago
Tribune, because reading is an active activity (not passive, like watching
TV), ďit reduces stress, promotes comprehension and imagination, alleviates
depression, helps you sleep, and may contribute to preventing Alzheimerís.Ē
- Schedule phone-free
activities. Plan a get-together like a picnic or BBQ, but with a catch ó
phones need to be checked at the door. That way you and your guests can focus
on each other without the constant distraction of a phone. If some of the
guests donít know each other, even better! They might leave the party with a
few new friends.
- Start a new outdoor
hobby. Getting outside is a great way to separate yourself from your
electronics. By finding an outdoor hobby that interests you, like hiking,
gardening or camping, youíll have an activity that takes your attention away
from your phone and provides added benefits, like exercise and vitamin D.
By getting your electronic
habits to a manageable level, youíll free up more time and energy to live this
summer to the fullest.
Payroll Fraud Schemes Every
Business Should Know
According to the Association
of Certified Fraud Examiners, nearly 30 percent of businesses are victims of
payroll malfeasance, with small businesses twice as likely to be affected than
large businesses. Here are four scary payroll fraud schemes you need to know:
- Ghost employees. A
ghost employee does not exist anywhere except in your payroll system.
Typically, someone with access to your payroll creates a fake employee and
assigns direct deposit information to a dummy account so they can secretly
transfer the money into their own bank account.
- Time thieves. Time
stealing happens when employees add more time to their timecard than they
actually worked. Sometimes multiple employees will team up to clock each other
in earlier than when they arrive or later than when they depart for the day.
commissions. In an attempt to bump up a commission payment or attain a
quota, sneaky sales employees may alter a sales contract to their benefit. A
typical tactic used by a dishonest salesperson is to make a booked sale appear
larger than it is and then slide a credit memo through the system in a later
period. Companies with complicated commission calculations or weak controls in
this area are the most vulnerable.
- External swindlers.
A popular scam, known as phishing, starts with a fraudster impersonating a
company executive through email or over the phone asking an employee with
access to payroll data to wire money or provide sensitive information. These
imposters can make the correspondence look very real by using company logos,
signatures and email addresses.
Tips to combat payroll
Being aware of the threats is
a start, but you also need to know how to stop them. Here are some tips to
reduce your companies payroll fraud risk:
- Better internal
controls. While most employees are trustworthy, giving too much control
over your payroll to one person is not a good idea. Separating payroll duties
and formalizing an approval process protects both your business and your
- Review payroll records.
Designate someone outside of the payroll-processing department to periodically
review the payroll records. Have them review names, pay rates and verify that
the total payroll matches what was withdrawn from the business bank account.
- Perform random internal
audits. During an internal audit is when you can really get into the
details to look for potential payroll fraud. You can do an in-depth review of
the whole payroll system or select a random sample of dates and employees.
Keep the timing of the audit under wraps to prevent giving someone the chance
to cover up their misdeeds.
Managing your business
payroll is a daunting task by itself, and actively protecting against fraud adds
additional complexity. Please call for help with your business payroll needs.
Never Take on the IRS Alone
Sleuthing your way through a
tax audit by yourself is not the same as fixing a leaky faucet or changing your
oil. Here are reasons you should seek professional help as soon as you receive a
letter from the IRS:
- IRS auditors do this
for a living ó you donít. Seasoned IRS agents have seen your situation
many times and know the rules better than you. Even worse, they are under no
obligation to teach you the rules. Just like a defendant needs the help of a
lawyer in court, you need someone in your corner that knows your rights and
understands the correct tax code to apply in correspondence with the IRS.
- Insufficient records
will cost you. When selected for an audit, the IRS will typically make a
written request for specific documents they want to see. The list may include
receipts, bills, legal documents, loan agreements and other records. If you
are missing something from the list, things get dicey. It may be possible to
reconstruct some of your records, but you might have to rely on a good
explanation to avoid additional taxes plus a possible 20 percent negligence
- Too much information
can add audit risk. While most audits are limited in scope, the IRS agent
has the authority to increase that scope based on what they find in their
original analysis. That means that if they find a document or hear something
you say that sounds suspicious, they can extend the audit to additional areas.
Being prepared with the proper support and concise, smart answers to their
questions is the best approach to limiting further audit risk.
- Missing an audit
deadline can lead to trouble. When you receive the original audit request,
it will include a response deadline (typically 30 days). If you miss the
deadline, the IRS will change your tax return using their interpretation of
findings, not yours. This typically means assessing new taxes, interest and
penalties. If you wish your point of view to be heard ó get help right away to
prepare a plan and manage the IRS deadlines.
- Relying on an expert
gives you peace of mind. Tax audits are never fun, but they donít have to
be pull-your-hair-out stressful. Together, we can map out a plan and take it
step-by-step to ensure the best possible outcome. Youíll rest easy knowing
your audit situation is being handled by someone with the proper expertise
that also has your best interests in mind.
How to Save When Attending a
Planning on attending a
wedding or two (or three or four...) this summer? If youíre not careful the
costs will add up fast, especially if travel is involved. Here are five tips to
survive the financial cost of wedding season:
- Give a price-savvy
wedding gift. Most people want to give a wedding gift that, on some level,
reflects the relationship they have with the couple. That doesnít mean it has
to be expensive. Check wedding registries early to give you more reasonably
priced options before they're gone, consider splitting the cost of a bigger
gift with family or friends, or if you're handy, make a thoughtful homemade
gift. Sometimes your presence is a gift by itself, especially if you travel a
- Be smart about lodging.
If traveling to a wedding, start looking at lodging options as soon as you
know the date. First, check to see if you have family or friends in the area
where you would be comfortable staying. If so, you might have a free place to
stay! Next, consider reconnecting with friends that are attending and share a
room. Perhaps the wedding couple saved a block of rooms in a local hotel at a
special rate. If so, compare the cost of that hotel with nearby hotels and
home rental options like Airbnb and VRBO. Remember to figure out your
accommodations early so you donít get stuck with just one expensive option.
- Rent your attire.
Going to a bunch of weddings in a short amount time can cause a wardrobe
problem, and buying a new outfit for each one will cost you some serious cash.
If you take the one-and-done approach with your formal wear, renting a dress
or suit will only set you back a fraction of the cost of buying new clothes
for every wedding.
- Share your travel
expenses. As mentioned earlier, odds are you will have some friends or
family attending the same wedding as you. If the wedding involves some travel,
split some of the costs with them. This can include carpooling (if you are
taking a road trip), sharing a rental car, teaming up on taxi or ride-share
expenses, as well as sharing hotel accommodations.
- Respectfully decline.
Whether itís the cost of travel, bad timing or a different reason, itís OK to
decline the invitation. The wedding couple expects some people wonít be able
to make it to their big event. But it's important to let them know you wonít
be there. When sending back the RSVP, include a kind greeting and reason for
your absence, but you donít need to go into detail. When the wedding date
comes, remember to send a card or a gift.
Wedding season is a time of
fun and celebration. Knowing you made the best financial decisions possible
makes it even better.
Make Online Reviews Work for
Many factors play into a
potential customerís decision to buy your product or service, but one thing is
clear ó online reviews are at the top of the list. A recent study by BrightLocal
reveals that 91 percent of people read online reviews before making a purchasing
decision, and over 80 percent of people trust the reviews as much as a personal
referral! Here are suggestions to improve yours:
- Create an impactful
online presence. Unless you just opened your business, thereís a good
chance it already exists in at least one of the main online directories:
Google My Business, Yelp and Bing. If it does, you can claim the listing and
start managing your customer reviews. If it doesnít, go through the process to
create a new business profile. Then, set up a Facebook business page (with
reviews enabled) and add a review section to your website to encourage your
customers to engage with your business online. As you grow your online
footprint, your search engine optimization (SEO) will make it easier for
prospective customers to find you.
- Solicit great customer
reviews. While customers actively search out reviews when searching
online, they donít always think to leave a review after a positive experience
with your business. A personal request from you might be all that's needed to
spring a happy customer into action. Maybe itís a sincere thank you note after
a productive meeting or a customer appreciation email campaign that provides a
link to your directory listings. The goal is to have your satisfied customers
leave a review to boost your online profile and increase your SEO. Remember to
make this process as easy as possible for your customers.
- Use negative reviews to
your benefit. If left unresolved, bad reviews can crush your business
reputation. By keeping a close eye on your listings, you have the opportunity
to show potential customers how you effectively handle negative situations in
a timely manner. Take the time to understand their complaint, empathize with
their situation, apologize for the problem, and offer a reasonable solution.
Remember to use these reviews primarily to communicate to readers of the
reviews, not just the complainer.
- Keep listings fresh.
A long history of reviews is good to show that you are an established
business, but current reviews are imperative to building a prospective
customerís confidence. Seek out online reviews and keep your directory
listings up to date to continue to show relevance and ongoing business
Managing your online review
profiles may seem scary, but by understanding the mechanics of how they work you
can successfully display your quality business reputation to the online
As always, should you have
any questions or concerns regarding your situation please feel free to call.
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Timothy W. Tuttle & Associates