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Newsletter

February 2023

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Tax Tips

QuickBooks Tips

 
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Tax Due Dates

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.


Do You Need To File a 2022 Tax Return?

Most people file a tax return because they have to, but even if you don't, you might be eligible for a tax refund and not know it. The tax tips below should help determine whether you must file a tax return this year.

General Filing Rules

Whether you need to file a tax return depends on several factors: the amount of your income, your filing status, and your age. For example, if you're single and 24 years old, you must file if your income is at least $12,950. If you are 65 or older, income thresholds are higher ($14,700 in 2022 for single filers). Other tax rules may apply if you're self-employed or dependent of another person.

Employment Tax Withheld or Paid

If you held a job and answer "yes" to any of these questions, you could be due a refund, but you have to file a tax return to receive it:

  • Did your employer withhold federal income tax from your pay?
  • Did you make estimated tax payments?
  • Did you overpay last year, and have it applied to this year's tax?

Eligibility for Certain Tax Credits

Premium Tax Credit. If you, your spouse, or a dependent was enrolled in healthcare coverage purchased from the Marketplace in 2022, you might be eligible for the Premium Tax Credit - but only if you chose to have advance payments of the premium tax credit sent directly to your insurer during the year. However, you must file a federal tax return and reconcile any advance payments with the allowable premium tax credit.

Earned Income Tax Credit. Did you work and earn less than $59,187 last year? You could receive EITC as a tax refund if you qualify with or without a qualifying child. You may be eligible for up to $6,935. If you qualify, file a tax return to claim it.

Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don't get the full credit amount, you may qualify for the Additional Child Tax Credit and receive a refund even if you do not owe any tax.

American Opportunity Tax Credit. The AOTC (up to $2,500 per eligible student) is available for four years of post-secondary education. You or your dependent must have been a student enrolled at least half-time for at least one academic period. Even if you don't owe any taxes, you still may qualify; however, you must complete Form 8863, Education Credits, and file a return to claim the credit.

Health Coverage Tax Credit. If you, your spouse, or a dependent received advance payments of the health coverage tax credit, you will need to file a 2022 tax return. Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments, shows the amount of the advance payments.

Other Situations

You must file a return in other situations as well, including, but not limited to, the following situations:

  • You owe special taxes such as the alternative minimum tax (AMT), additional tax on qualified plans such as an individual retirement arrangement (IRA), another tax-favored account, or household employment taxes. However, if you are filing a return only because you owe these taxes, you can file Schedule H, Household Employment Taxes, by itself.
  • You (or your spouse, if filing jointly) received Archer MSA, Medicare Advantage MSA, or health savings account distributions.
  • You had net earnings from self-employment of at least $400.
  • You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.

Questions about whether you should file a return? Help is just a phone call away.

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Taxable vs. Nontaxable Income

Are you wondering if there's a hard and fast rule about what income is taxable and what income is not? The quick answer is that all income is taxable unless the law specifically excludes it. But as you might have guessed, there's more to it than that.

Taxable income includes any money you receive, such as wages, tips, and unemployment compensation. It can also include noncash income from property or services. For example, both parties in a barter exchange must include the fair market value of goods or services received as income on their tax return.

Nontaxable Income

Here are some types of income that are usually not taxable:

  • Gifts and inheritances
  • Child support payments
  • Welfare benefits
  • Damage awards for physical injury or sickness
  • Cash rebates from a dealer or manufacturer for an item you buy
  • Reimbursements for qualified adoption expenses

In addition, some types of income are not taxable except under certain conditions, including:

  • Life insurance proceeds paid to you are usually not taxable. But if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.
  • Income from a qualified scholarship is normally not taxable; that is, amounts you use for certain costs, such as tuition and required books, are not taxable. However, amounts used for room and board are taxable.
  • If you received a state or local income tax refund, the amount might be taxable. You should have received a 2022 Form 1099-G from the agency that made the payment to you. If you didn't get it by mail, the agency might have provided the form electronically. Contact them to find out how to get the form. Be sure to report any taxable refund you received even if you did not receive Form 1099-G.

Important Reminders About Tip Income

If you get tips from customers, you must pay federal income tax on any tips you receive. The value of noncash tips, such as tickets, passes, or other items of value, are also subject to income tax. You must include the total of all tips you received during the year on your income tax return, such as tips received directly from customers, tips added to credit cards, and your share of tips received under a tip-splitting agreement with other employees.

Bartering Income is Taxable

Bartering is trading one product or service for another. Small businesses sometimes barter to get products or services they need. For example, a plumber might trade plumbing work with a dentist for dental services. Typically, there is no cash exchange; however, if you barter, the value of products or services from bartering is considered taxable income by the IRS.

Barter and trade dollars are the same as real dollars for tax purposes and must be reported on a tax return. Both parties must report as income the fair market value of the product or service they get. The tax rules may vary based on the type of bartering. Barterers may owe income taxes, self-employment taxes, employment taxes, or excise taxes on their bartering income. How you report bartering on a tax return also varies. For example, if you are in a trade or business, you normally report it on Form 1040, Schedule C, Profit or Loss from Business.

Questions?

Don't hesitate to call if you have any questions about taxable and nontaxable income.

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Tax Breaks for Older Adults and Retirees

Everyone wants to save money on their taxes, and retirees and older adults are no exception. If you're 50 or older, here are six tax tips that could help you do just that.

1. Standard Deduction for Seniors

If you and your spouse are 65 or older and do not itemize your deductions, you can take advantage of a higher standard deduction amount. There is an additional increase in the standard deduction if you (or your spouse) are blind.

2. Credit for the Elderly or Disabled

If you and your spouse are either 65 years or older - or under age 65 years old and are permanently and totally disabled - you may be able to take the Credit for Elderly or Disabled. The credit is based on your age, filing status, and income.

You may only take the credit if you meet the following requirements:

The amount on Form 1040 or 1040-SR, line 11 is less than $17,500 ($20,000 if married filing jointly and only one spouse qualifies), $25,000 (married filing jointly and both qualify), or $12,500 (married filing separately and lived apart from your spouse for the entire year).

and

The nontaxable part of your Social Security or other nontaxable pensions, annuities, or disability income is:

  • Less than $5,000 (single, head of household, or qualifying widow/er with dependent child);
  • $5,000 (married filing jointly and only one spouse qualifies);
  • $7,500 (married filing jointly and both qualify); or
  • $3,750 (married filing separately and lived apart from your spouse the entire year).

3. Retirement Account Limits Increase

Once you reach age 50, you are eligible to contribute (and defer paying tax on) up to $27,000 in 2022 ($30,000 in 2023). The amount includes the additional "catch up" contribution ($6,500 in 2022 and $7,500 in 2023) for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan.

4. Early Withdrawal Penalty Eliminated

If you withdraw money from an IRA account before age 59 1/2, you generally must pay a 10 percent penalty; however, once you reach age 59 1/2, there is no longer a penalty for early withdrawal. Furthermore, if you leave or are terminated from your job at age 55 or older (age 50 for public safety employees), you may withdraw money from a 401(k) without penalty. However, you still have to pay tax on the additional income. To complicate matters, money withdrawn from an IRA is not exempt from the penalty.

5. Social Security Benefits Generally Not Taxable

Americans can sign up for social security benefits as early as age 62 or wait to receive full benefits at age 66 or 67 (depending on your full retirement age). Generally, you pay federal income taxes on your Social Security income only if you have other substantial income in addition to your benefits.

Most retirees do not pay income tax on their social security benefits. Some, however, do. The more income you have coming in, the more likely it is that a portion of your social security benefits will be taxed. Therefore, when preparing your return, it is advisable to be especially careful when calculating the taxable amount of your Social Security.

6. Higher Income Tax Filing Threshold

Taxpayers who are 65 and older are allowed an income of $1,750 more ($2,800 married filing jointly and both spouses are 65 or older) before they need to file an income tax return. In other words, older taxpayers age 65 and older with an income of $14,700 ($28,700 married filing jointly - both spouses over age 65) or less may not need to file a tax return.

Don't Miss Out

If you have any questions about these and other tax deductions and credits available for older Americans, please call.

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What Is a Designated Roth Account?

Many 401(k) plans allow taxpayers to make Roth contributions as long as the plan has a designated Roth account. Your plan may also allow you to transfer amounts to the designated Roth account in the plan or borrow money.

Check with your employer to find out if your 401(k), 403(b), or 457 governmental plan has a Designated Roth account and whether it allows in-plan Roth rollovers or loans.

A designated Roth account allows you to:

  • Make designated Roth contributions to the account; and
  • if the plan permits, roll over certain amounts in your other plan accounts to the Roth account.

Pretax Deferrals vs. After-tax Contributions

Unlike pretax salary deferrals, which are not taxed when you contribute them to the plan, you have to pay taxes on any contribution you make to a designated Roth account. Any pretax salary deferrals and related earnings are taxable when you withdraw them from the plan.

Your gross income for the year in which you make designated Roth contributions will be higher than if you had made only pretax salary deferrals.

Roth contributions, on the other hand, are not taxed when you withdraw them from the plan. Earnings on Roth contributions are also not taxed when withdrawn from the plan if your withdrawal is a qualified distribution. A "qualified distribution" is a distribution that is made:

  • At least five years after the first contribution to your Roth account; and
  • After you are age 59 1/2 or because you are disabled, or to your beneficiary after your death.

Maximum Contribution Amounts

Roth IRA. In 2023, the maximum contribution to a regular Roth IRA account is $6,500 ($7,500 if age 50 or older). Furthermore, contributions are limited by tax filing status and adjusted gross income.

Designated Roth Account. In contrast, in 2023, the maximum contribution to a Designated Roth account is $22,500 ($30,000 if age 50 or older), and contribution limits are not impacted by filing status or adjusted gross income.

New Rules for 2023

Effective January 1, 2023, employers can let employees choose between having a company match in a Roth 401k or a regular 401k. In prior years, only employee elective deferrals were allowed to be contributed to a designated Roth account. Matching employer contributions went into a pretax account within the plan (such as a regular 401k) - even if taxpayers put money in their Roth 401k.

Questions?

Depending on your particular tax situation, contributing to a designated Roth account could be a smart move. Please call to learn whether you should take advantage of a designated Roth account.

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Small Business: Deducting Startup Costs

If you've recently started a business - or are thinking about starting a business - you should know that as an owner, all eligible costs incurred before you began operating the business are treated as capital expenditures. As such, they are part of the cost basis for the business.

Generally, the business can recover costs for assets through depreciation deductions. Businesses with costs paid or incurred after September 8, 2008, can deduct a limited amount of start-up and organizational costs enabling business owners to recover the costs they cannot deduct currently over a 180-month period. This recovery period starts with the month the business begins to operate active trade or as a business.

Business Start-up Costs

Start-up costs are amounts the business paid or incurred for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for-profit and to produce income in anticipation of the activity becoming an active trade or business.

Examples of start-up costs include amounts paid for the following:

  • An analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
  • Advertisements for the opening of the business.
  • Salaries and wages for employees who are being trained and their instructors.
  • Travel and other necessary costs for securing prospective distributors, suppliers, or customers.
  • Salaries and fees for executives, consultants, or similar professional services.

Qualifying Costs

A start-up cost is recoverable if it meets both of the following requirements:

  • It's a cost a business could deduct if they paid or incurred it to operate an existing active trade or business in the same field as the one entered into by the business.
  • It's a cost a business pays or incurs before the day their active trade or business begins.

Nonqualifying Costs

Start-up costs don't include deductible interest, taxes, or research and experimental costs.

Purchasing an Active Trade or Business

Recoverable start-up costs for purchasing an active trade or business include only investigative costs incurred during a general search for or preliminary investigation of the business. These are costs that help in deciding whether to purchase a business. Costs incurred to purchase a specific business are considered capital expenses and cannot be amortized.

Disposition of business

If you completely dispose of your business before the end of the amortization period, you can deduct any remaining deferred start-up costs. However, you can deduct these deferred start-up costs only to the extent they qualify as a loss from a business.

Questions about deducting start-up costs for your small business? Help is just a phone call away.

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What Is the Saver's Credit?

The Retirement Savings Contributions Credit, also known as the Saver's Credit, is a special tax credit for low-and moderate-income workers. In tax year 2020, the most recent year for which complete figures are available, Saver's Credits totaling more than $1.7 billion were claimed on about 9.4 million individual income tax returns. That's an average of about $186 per eligible return.

Income Limits Apply

Income limits, based on a taxpayer's adjusted gross income and marital or filing status, apply to the Saver's Credit. Due to inflation, the limits will increase significantly in 2023, and taxpayers should take note. As a result, the Saver's Credit can be claimed by:

  • Married couples filing jointly with incomes up to $68,000 in 2022 or $73,000 in 2023.
  • Heads of household with incomes up to $51,000 in 2022 or $54,750 in 2023.
  • Married individuals filing separately and singles with incomes up to $34,000 in 2022 or $36,500 in 2023.

The credit helps offset part of the first $2,000 workers voluntarily contribute to Individual Retirement Arrangements, 401(k) plans, and similar workplace retirement programs. The credit also helps any eligible person with a disability who is the designated beneficiary of an Achieving a Better Life Experience (ABLE) account to contribute to that account.

The Saver's Credit is available in addition to any other tax savings that apply. Like other tax credits, the Saver's Credit can increase a taxpayer's refund or reduce the tax owed. Though the maximum Saver's Credit is $1,000 ($2,000 for married couples), the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.

It supplements other tax benefits available to people who set money aside for retirement. For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.

There's Still time to Make a Contribution for 2022

Eligible workers still have time to make qualifying retirement contributions and get the Saver's Credit on their 2022 tax return. Taxpayers have until April 18, 2023 - the due date for filing their 2022 return - to set up a new IRA or add money to an existing IRA for 2022. Both Roth and traditional IRAs qualify.

Taxpayers participating in workplace retirement plans must have made elective deferrals by December 31, 2022, for contributions to count for this year - including a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees.

A taxpayer's credit amount is based on their filing status, adjusted gross income, tax liability, and amount contributed to qualifying retirement programs or ABLE accounts. Taxpayers should use Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the Saver's Credit.

Other special rules that apply to the saver's credit include:

  • Eligible taxpayers must be at least 18 years of age.
  • Anyone claimed as a dependent on someone else's return cannot take the credit.
  • A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.

Any distributions from a retirement plan or ABLE account reduce the contribution amount used to figure the credit. For 2022, this rule applies to distributions received after 2019 and before the due date, including extensions of the 2022 return. Form 8880 and its instructions have details on making this computation.

Please call if you have any questions about this or other tax credits.

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Unemployment Tax Break Refunds Issued for 2020

Final corrections for taxpayers who overpaid their taxes on unemployment compensation received in 2020 have been completed by the IRS. Approximately 14 million returns were corrected, resulting in nearly 12 million refunds totaling $14.8 billion.

Background

The American Rescue Plan Act of 2021, which became law in March 2021, allowed taxpayers to exclude up to $10,200 in 2020 unemployment compensation from taxable income calculations (up to $10,200 for each spouse if married filing jointly). The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.

To ease the burden on taxpayers, the IRS reviewed Forms 1040 and 1040-SR that were filed prior to the law's enactment to identify taxpayers who had already reported unemployment compensation as income and were eligible for the correction. The IRS determined the correct taxable amount of unemployment compensation and tax.

Overpayments Refunded or Applied to Tax Due

With an average refund of $1,232, some taxpayers received refunds, while others had the overpayment applied to taxes due or other debts. In some cases, the exclusion only resulted in a reduction in their adjusted gross income. Letters were mailed to these taxpayers to inform them of the corrections. Taxpayers should keep that letter with their tax records.

Many of the adjustments included corrections to the:

  • Earned Income Tax Credit
  • Recovery Rebate Credit
  • Additional Child Tax Credit
  • American Opportunity Tax Credit
  • Premium Tax Credit
  • Advance Premium Tax Credit

Of note is that a taxpayer who is eligible for the unemployment compensation exclusion but whose account was not corrected by the IRS may need to file an amended 2020 tax return. Taxpayers who filed 2020 Forms 1040 and 1040-SR can file Form 1040-X, Amended U.S. Individual Income Tax Return, to claim the exclusion and any applicable non-refundable or refundable credits impacted by the exclusion. Taxpayers should not file an amended return if they previously filed one claiming the exclusion.

Taxpayers that need to file an amended tax return can view their 2020 tax records in their Online Account or request that a 2020 tax account transcript be mailed to them. Please call the office for more information about this topic, including eligibility requirements.

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Standard vs. Itemized Deductions

When completing a tax return, taxpayers have two options: take the standard deduction or itemize their deductions. Most taxpayers use the option that gives them the lowest overall tax. Due to all the tax law changes in recent years, including increases to the standard deduction, that means taking the standard deduction - but not always. Let's look at a few details about these two options.

Standard deduction

The standard deduction amount increases slightly every year and varies by filing status. Factors that affect the standard deduction amount include the taxpayer's filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and don't itemize deductions are entitled to a higher standard deduction.

Most filers who use Form 1040, U.S. Individual Income Tax Return, can find their standard deduction on the first page of the form. For most filers of Form 1040-SR, U.S. Tax Return for Seniors, the standard deduction is on page 4.

Not all taxpayers can take a standard deduction. Those taxpayers include:

  • A married individual filing as married filing separately whose spouse itemizes deductions - if one spouse itemizes on a separate return, both must itemize.
  • An individual who files a tax return for a period of less than 12 months. This situation is uncommon and could be due to a change in their annual accounting period.
  • An individual who was a nonresident alien or a dual-status alien during the year. However, nonresident aliens who are married to a U.S. citizen or resident alien can take the standard deduction in certain situations.

Itemized deductions

Taxpayers who choose to itemize deductions should file Schedule A, Form 1040, Itemized Deductions. Itemized deductions that taxpayers may claim include:

  • State and local income or sales taxes
  • Real estate and personal property taxes
  • Home mortgage interest
  • Mortgage insurance premiums on a home mortgage
  • Personal casualty and theft losses from a federally declared disaster
  • Gifts to a qualified charity
  • Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income

Some itemized deductions, such as the deduction for taxes, may be limited. Don't hesitate to contact the office for more information on these limitations or any other questions.

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What Businesses Need To Know About the Excise Tax

Excise tax is an indirect tax on specific goods, services, and activities. Federal excise tax is usually imposed on the sale of things like fuel, airline tickets, heavy trucks and highway tractors, indoor tanning, tires, tobacco, and other goods and services.

This tax is commonly included in the cost of the product. While the end consumer doesn't usually see the excise tax on their receipt, it may be charged at the time of:

  • Import
  • Sale by the manufacturer
  • Sale by the retailer
  • Use by the manufacturer or consumer

Many excise taxes go into trust funds for projects related to the taxed product or service, such as highway and airport improvements. Excise taxes are independent of income taxes. Generally, businesses subject to excise tax must file a Form 720, Quarterly Federal Excise Tax Return to report the tax to the IRS.

Often, the retailer, manufacturer, or importer must pay the excise tax to the IRS and file Form 720. Some excise taxes are collected by a third party. The third party then sends the tax to the IRS and files Form 720. For example, the tax on an airline ticket generally is paid by the purchaser and collected by the airline.

When to file

Businesses must file the form for each quarter of the calendar year. Here are the due dates:

  • Quarter 1 – January, February, March: deadline, April 30
  • Quarter 2 – April, May, June: deadline, July 31
  • Quarter 3 – July, August, September: deadline, October 31
  • Quarter 4 – October, November, December: deadline, January 31

If the deadline for filing a tax return falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.

How to file

E-filing excise tax returns is safe, secure, easy, and accurate, and while the IRS does accept paper excise tax returns, electronic filing is strongly encouraged. The contact information for all approved e-file transmitters of excise forms is listed on IRS.gov. Businesses can submit forms online 24 hours a day.

When businesses e-file, they get confirmation that the IRS received their form. Also, e-filing reduces processing time and errors. To electronically file, business taxpayers will have to pay the provider's fee for online submission.

The excise tax forms available for electronic filing include:

  • Form 720, Quarterly Federal Excise Tax Return
  • Form 2290, Heavy Highway Vehicle Use Tax
  • Form 8849, Claim for Refund of Excise Taxes, Schedules 1, 2, 3, 5, 6 and 8

Please call the office if you have any questions or want more information about federal or state excise taxes.

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How Filing Status Affects Your Tax Return

A taxpayer's filing status defines the type of tax return form they should use when filing their taxes. Filing status can affect the amount of tax they owe, and it may even determine whether they need to file a tax return at all. As taxpayers get ready for the upcoming filing season, let's take a closer look at how filing status affects a tax return.

Taxpayers can choose from five different filing statuses when filing their returns:

  • Single. Normally, this status is for taxpayers who are unmarried, divorced, or legally separated under a divorce or separate maintenance decree governed by state law.
  • Married filing jointly. A taxpayer can file a joint tax return with their spouse if a taxpayer is married. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
  • Married filing separately. Married couples can choose to file separate tax returns. Doing so may result in less tax owed than filing a joint tax return.
  • Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year.
  • Qualifying widow(er) with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.

When preparing and filing a tax return, filing status affects:

  • If the taxpayer is required to file a federal tax return
  • If they should file a return to receive a refund
  • Their standard deduction amount
  • If they can claim certain credits
  • The amount of tax they should pay

Filing status generally depends on the taxpayer's marital status as of December 31 of the filing tax year (e.g., 2022). More than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to pay the least amount of tax.

Not sure which filing status you should use this year? Help is just a phone call away.

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Use QuickBooks To Get Your Finances in Order for 2023

Now that it's the new year, it's time for a fresh start in a lot of ways, including your bookkeeping. But you can't look ahead very effectively if you're not sure where you are now, so it is strongly recommended that you take stock of the state of your QuickBooks company file. Are you caught up on bills? Do customers need to be invoiced? Are any of them past due on their payments to you?

QuickBooks is great at customer and vendor management, transaction processing, and reports. It can also serve as a barometer of your overall financial health. Let's take a look at what you can do to update your company file and get ready for the challenges coming in 2023.

Who Do You Owe?

It's easy to let some bills slip at the end of the year. Extra expenses in December may have caused you to run short on funds. Maybe you simply forgot, or you didn't have a chance to deal with your payables. Whatever the reason, you can easily find out what bills you need to pay using QuickBooks.

The first thing you should do is run an A/P Aging Detail report. Open the Report Center (Reports | Report Center) and click Vendors & Payables . Locate the report and click the green arrow button. When the report opens, click Customize Report in the upper if you want to change the Dates . Then look to see if any bills are past due. Double-click on any row to see the original bill and pay it. You can also run the Unpaid Bills Detail report.


 Figure 1 - The <strong>Unpaid Bills Detail</strong> report.
Figure 1: The Unpaid Bills Detail report.

You've probably heard this before, but it's important: If you're past due on any bills, contact the vendors and let them know when they might expect payment. It makes a difference.

Who Owes You?

Just as you may have missed some bills in December, your customers might have let invoice payments slip, and you will need to find out who is in arrears. Two reports can help you here. Open the Report Center again and click Customers & Receivables. Run the A/R Aging Detail report and look at the Aging column to see if any customers have gone past due on payments. Open Invoices, too, can alert you to those customers.

How Should You Approach Past-Due Customers?

This is a problem for every small business. You don't want to come on too strong and threaten the goodwill you've built with your customers, but you have your cash flow to consider. Here are some approaches:

  • Set up payment reminders so you'll remember to send follow-up emails. Go to Edit | Preferences | Payments | Company Preferences. Answer the questions under Payment Reminders.
  • Automate reminders. Open the Customers menu and select Payment Reminders | Schedule Payment Reminders. This step is a little complicated; you may want our help. You'll be creating schedules to automate the sending of invoices or statements at intervals you define. So you might dispatch an invoice to All customers when their payments are 15 days after the due date, for example. Click Add reminder to see the default text for the email accompanying the invoice and edit it.

  •  Figure 2 - QuickBooks can automatically send out reminder invoices and statements when customers are a specific number of days past due.
    Figure 2: QuickBooks can automatically send out reminder invoices and statements when customers are a specific number of days past due.

  • Send a handwritten note. This is only realistic, of course, if your customer base is small or isn't often delinquent on payments. Handwritten notes are so unusual these days that they're more likely to get noticed than an email.

Don't know how to create statements in QuickBooks? Go to Customers | Create Statements. Here, you'll tell QuickBooks who should receive statements and specify any other preferences you might have for their content. Please call with any questions or need a QuickBooks expert to walk you through the process.

How Do You Turn On Reminders?

Turning on the Reminders tool in QuickBooks can help keep you current on bills, invoices, and other critical tasks. Open the Edit menu and click Preferences. Click Reminders and make sure the box is checked under the My Preferences tab so Reminders will open every time you run QuickBooks. Click Company Preferences and tell QuickBooks which reminders you want to see and when.


 Figure 3 - Figure 3: QuickBooks' <strong>Reminders</strong> tool can help you stay current with bills and invoices and other critical activities.
Figure 3: QuickBooks' Reminders tool can help you stay current with bills and invoices, and other critical activities.

Making 2023 a Better Year Using QuickBooks Tools

Now that you know how to clean up your receivables and payables from 2022, next month's topic will discuss steps you can take in QuickBooks to make 2023 a more productive - and hopefully, prosperous - year, including evaluating your inventory.

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Tax Due Dates for February 2023

February 10

Employees - who work for tips. If you received $20 or more in tips during January, report them to your employer. You can use Form 4070.

Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2022. This due date applies only if you deposited the tax for the quarter in full and on time.

Farm Employers - File Form 943 to report Social Security and Medicare taxes and withheld income tax for 2022. This due date applies only if you deposited the tax for the year in full and on time.

Certain Small Employers - File Form 944 to report Social Security and Medicare taxes and withheld income tax for 2022. This tax due date applies only if you deposited the tax for the year in full and on time.

Employers - Nonpayroll taxes. File Form 945 to report income tax withheld for 2022 on all nonpayroll items. This due date applies only if you deposited the tax for the year in full and on time.

Employers - Federal unemployment tax. File Form 940 for 2022. This due date applies only if you deposited the tax for the year in full and on time.

February 15

Individuals - If you claimed exemption from income tax withholding last year on the Form W-4 you gave your employer, you must file a new Form W-4 by this date to continue your exemption for another year.

Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in January.

Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in January.

All businesses. Give annual information statements to recipients of certain payments made during 2022. You can use the appropriate version of Form 1099 or other information return. This due date applies only to payments reported on Form 1099-B, Form 1099-S, and substitute payments reported in Box 8 or gross proceeds paid to an attorney reported in Box 10 of Form 1099-MISC.

February 16

Employers - Begin withholding income tax from the pay of any employee who claimed exemption from withholding in 2022, but did not give you a new Form W-4 to continue the exemption this year.

February 28

Businesses - File information returns (for example, certain Forms 1099) for certain payments you made during 2022. However, Form 1099-NEC reporting nonemployee compensation must be filed by January 31. There are different forms for different types of payments. Use a separate Form 1096 to summarize and transmit the forms for each type of payment. See the General Instructions for Certain Information Returns for information on what payments are covered, how much the payment must be before a return is required, what form to use, and extensions of time to file.

If you file Forms 1097, 1098, 1099 (except a Form 1099-NEC reporting nonemployee compensation), 3921, 3922 or W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms generally remains January 31.

Payers of Gambling Winnings - File Form 1096, Annual Summary and Transmittal of U.S. Information Returns, along with Copy A of all the Forms W-2G you issued for 2022. If you file Forms W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms remains January 31.

Health Coverage Reporting - If you are an Applicable Large Employer, file paper Forms 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and 1095-C with the IRS. For all other providers of minimum essential coverage, file paper Forms 1094-B, Transmittal of Health Coverage Information Returns, and 1095-B with the IRS. If you are filing any of these forms with the IRS electronically, your due date for filing them will be extended to March 31.

Large Food and Beverage Establishment Employers - with employees who work for tips. File Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Use Form 8027-T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, to summarize and transmit Forms 8027 if you have more than one establishment. If you file Forms 8027 electronically your due date for filing them with the IRS will be extended to March 31.

March 1

Farmers and Fisherman - File your 2022 income tax return (Form 1040 or Form 1040-SR) and pay any tax due. However, you have until April 18 to file if you paid your 2022 estimated tax by January 17, 2023.

March 2

Health Coverage Reporting - If you are an Applicable Large Employer, provide Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to full-time employees. For all other providers of minimum essential coverage, provide Form 1095-B, Health Coverage, to responsible individuals.


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