Be Financially Free AND Responsible- Estimated Tax Payments

Do you make Passive Income? Are you earning any non salary income? So what do you need to do about this Abundance?

Wouldn't it be nice to pay your income taxes on time with the ease and grace of the King Archetype? Here's how...

Everyone is required to pay income tax as they earn the income, either as withholdings as an employee or from self employment tax.

Do you know what Estimated Tax Payments are?

Estimated tax payments are just that. They are pay-as-you-go tax payments based on what you estimate to earn for the year, usually paid on a quarterly basis. And ultimately, the payments have a hidden benefit as they keep you from falling behind on your and help you avoid the pain and suffering of a tax crunch come April 15th..

You may be charged late fees and penalties for not making at least 4 payments throughout the year by each deadline AND if you underpaid your tax (ie your estimated payments were below what you actually made during the tax period).



So who needs to pay?

Estimated Tax Payments are not just for people who own their own business. They are also for people with passive income. If you have any income that is received without income tax withholdings then you must pay Estimated Tax Payments. Examples of non employee income come from: earnings from your small business, side work as an independent contractor, other income from interest, dividends, rental properties, alimony, etc.


How do you pay?

The Estimated Tax Form, Calculations, Payment Stubs, Mailing Address & Instructions are available at:
http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Saving vs. Paying Quarterly?

Some people prefer to save their tax payments in a high yield interest bearing account, instead of paying quarterly to the government. Officially, this is not inline with IRS regulations. As stated above, you are required to pay your income as you go, but if at least part of your income has withholdings and you don’t have any past or present red flags you may slip under the IRS radar. Saving is beneficial if you are responsible to save the correct amount and trust yourself to not spend it when crisis calls. If you don’t trust yourself yet, it may be smarter to pay it quarterly to the IRS.

Avoid late fees and penalties and all the unnecessary stress and anxiety of needing to scramble at the end of the year to pay your taxes. Be smart, pay your taxes throughout the year.

If you have questions post them here as comments. If you want assistance setting up a system to take back your life from crisis choices and the anxiety and dread of woes-me thinking or you want coaching to make better choices that feel good and empower yourself to live the life you dream of, then contact me. Today is the best day to start- you are worth it!

Be financially free AND financially responsible-- Save before you get stuck.

Tye Kirk
Know your Numbers, Live Rich!
310-922-4419
Info@TheGreenBookkeeper.com
www.TheGreenBookkeeper.com

Credit Card Debt Wake Up Call

Have you recently negotiated a settlement on your credit card debt? Did you know this debt cancellation may increase your income taxes exorbitantly?

There are vital financial details to consider if you have already negotiated a deal on your credit card debt or are considering it.

Last year, a client of mine decided to contact his credit card company and negotiate to have part of his debt cancelled. Then when he filed his taxes, he was dismayed to learn that, unbeknownst to him, he owed a huge tax on this debt.

The IRS designates the cancellation of debt as income and so in most cases it is liable for income tax. Just when it seems like it can't get any worse, people struggling to get out of debt are hit with another tax, but as the IRS sees it there are no free rides. You either pay off the debt that you incurred or you pay taxes on this “gift” from the creditors.

For example, if you owe $50,000 on credit cards and negotiate a deal to have 30,000 forgiven, leaving you with 20,000 to repay. Then this $30,000 is considered income on which you pay Income Tax.



What is the 1099-C Form?
The 1099-C is an important form that must not be ignored or discarded as there are major tax implications. If you have negotiated a deal to cancel a portion of your debt, then you are responsible to report this amount on your taxes. The creditor will send you a 1099-C, which is your copy of what the creditor has sent to the IRS and which you must include with your tax filings.

The 1099-C, Cancellation of Debt Form, reports the amount of debt canceled by the credit card company or the debt buyer. One copy is sent to the IRS and one copy is sent to you the recipient. When you negotiate the debt cancellation this amount is reported to the IRS and you are responsible for paying taxes on it.

What to do next? First, contact your tax advisor. Second, be prepared: start budgeting and saving for this additional tax burden immediately.

Exceptions
There are a few exceptions for debt forgiveness, such as if you have filed for bankruptcy, declared insolvency, or the debt forgiveness is related to the mortgage of your primary home, so check with a trusted tax advisor.

Check the Accuracy of the Amount of the Debt Reported
Make sure that the amount on the 1099-C matches with the actual amount of debt that was forgiven. There have been cases where the creditors or debt buyers add in administration fees and interest on top of the actual debt. If there are errors request that corrected forms be sent to you and the IRS.

Consult your tax accountant or for more information, click on this IRS Link, which includes detailed examples on Canceled Debts, Foreclosures, Repossessions, and Abandonments, found in Publication 4681. Also see IRS news release IR-2008-17.



IRS Statistics show the number of people filing for debt forgiveness has more than doubled since 2003 and is expected to continue to rise for at least another 2 years.

With the rise in debt and the curtailing of federal unemployment benefits, the time is now to get your numbers in alignment with your mission in life and start building for your dreams. Know your Numbers, Live Rich!

Tip #5 City Business Tax & Renewals Due

The Green Bookkeeper Tip #5 February 2010:
Tip #5 City Taxes

Are you operating a home business, sole proprietorship, corporation, et al.? Have you filed all the correct paperwork?

The yearly City Business License Renewals and City Tax are due for the City of Los Angeles and Culver City March 1st. Check your local area if you live or engage in business outside Los Angeles County.

Is your home business or independent contractor work registered?

How do you know if you may be subject to the Business Tax?
LAMC Section 21.00(i) states, “If you are conducting, operating, managing or carrying on of a business within the City you would be considered as ‘engaging in business’ and subject to business tax. You must register, and file your taxes annually with the Office of Finance. Individuals, Independent Contractors and home-based businesses are also subject to this provision.”

Depending on where you live and operate your business, you may be subject to business tax in other cities within Los Angeles County as well. Other cities have their own business offices, such as Santa Monica (310) 458-8745, Beverly Hills (310) 285-2424, and Culver City (310) 253-5870 require a separate business license to conduct business within their city. You are required to pay their City Business Tax as well.

You can go online to learn more and register for the City of Los Angeles at: http://www.ci.la.ca.us/finance/

The City of LA Office of Finance shares data with the State Franchise Tax Board and penalties and late fees can be pretty pricey so make sure you are in compliance.

*Note this is a general discussion of several tax & license issues which need to be considered according to your specific situation. There are other issues to consider and Tip #5 does not purport to address all issues.

For other ways to get in the know & receive support in transforming your business and money habits contact:

Tye Kirk
Know your Numbers, Live Rich!
310-922-4419
info@TheGreenBookkeeper.com
www.TheGreenBookkeeper.com

My Philosophy for business and the world

"You never change things by fighting the existing reality. Instead, build a new model that makes the old one obsolete!" R.Buckminster Fuller

This quote matches with what i am doing in the world. Instead of fighting against the system, lets build it in-line with our dreams, hearts, talents and gifts. We have so much talent within just waiting to be harnessed and expressed. Its possible i see it happening all around me everyday. Let's Go!

Tip #4 Rate Plans Lowered for AT&T / Verizon

The Green Bookkeeper Tip #4 January 2010:
Tip #4 Rate Plans Lowered from $99 to $69 for AT&T & iPhone Users

Attention: AT&T, Verizon & iPhone Users


I want to notify you about the new rate changes for AT&T (and Verizon). If you are with AT&T this could save you A LOT of money.

The changes for AT&T went into effect on Monday, January 18, 2010. I know for the unlimited rate plan the price dropped from $99 to $69.

Be aware, they will only lower your rate if you call them.

Call their customer service to see if you qualify and have them lower their rates. For other ways to save money & receive support in transforming your business and money habits contact:

Tye Kirk
Know your Numbers, Live Rich!
310-922-4419
Info@TheGreenBookkeeper.com
www.TheGreenBookkeeper.com

Expansion Quote

"The expansion phase is a demanding one, but if the choice is made for life & for following our true convictions, our energy level is intensified." Gail Sheehy

I find this quote to be so true. I found the quote in my Harbrace College Grammar Handbook as i was doing my daily grammar practice, which sometimes i think is not helping, but i will prevail.

I have noticed that as I clear out what is inessential in my life, my energy, motivation, clarity and creativity has expanded.

I clear out old energy thru completing old projects, goals, task, and commitments on which i had been dragging my feet. I focus my attention on the work that is most important and get it done and off my mind. I do the scariest or most dreaded tasks of the day first. I put daily time and energy into the things that i love and bring me joy- this is such a gift to my soul! I remind myself that to get better at something takes practice and persistence- (read Mastery: The keys to success and long-term fulfillment by Aikido Master George Leonard) And if i love it,it is worth doing and doing well.

Love+Peace

Tip #3 Issue 1099s & W-2s by January 31st

The Green Bookkeeper Tip #3 January 2010:

Tip#3 January- Deadline for issuing 1099s & W-2s is 01/31/10

Attention: Business Owners

The deadline for issuing 1099s & W-2s is January 31st

Quickbooks has a feature that enables you to print 1099s for all your independent contractors. I can work with you remotely, if need be, to set up this up.

Begin now to make sure you have included everyone in your list of professional consultants and independent contractors, so you will properly report everyone and ensure you receive the maximum deductions you have coming to you. If you haven’t done it already have your independent contractors fill out a W-9 Form, you will need this info to send them a 1099.

For more tips refer to my website at: www.thegreenbookkeeper.com

Love and prosperity in the New Year,

Tye Kirk

info@thegreenbookkeeper.com