How to Determine your Estimated Taxes for 2023

How to determine your estimated taxes

Sole proprietors, partners, and S corporation shareholders should make estimated tax payments if they expect to owe $1,000 or more when their return is filed. However, many people are uncertain how to go about figuring out their estimated taxes for a given year, let alone paying them. Here is a simple guide to determining your estimated taxes for 2023.

Estimating tax using Form 1040-ES

Most individuals use Form 1040-ES to determine their estimated taxes. It is a fairly simple calculation, provided you can provide all of the following:

  • Expected adjusted gross income
  • Deductions
  • Taxable income
  • Taxes
  • Credits

You can use your income, deductions, and credits for the prior year as a starting point, referring back to the federal tax return you previously filed.  Form 1040-ES includes a worksheet that you can use to figure out your taxes, based on these amounts. You need to estimate the amount of income you expect to receive for the coming year. If your estimated amounts are too high or too low, you can always complete another Form 1040-ES in the following quarter, adjusting the estimates you previously made. It is best to try to make your estimations as accurate as possible, however, in order to avoid penalties.

C-Corporations can follow a similar procedure, except that they use Form 1120-W. 

If you are not comfortable estimating your taxes and completing your Form 1040-ES, or if you run a business and would like to outsource your accounting and tax functions to qualified, certified accountants, contact Georgen Scarborough. We are a firm of CPA’s in Vienna, VA, and we will be happy to handle your estimated tax calculations.

How to Write a Financial Statement For a Non-Profit

How to write a financial statement for a non-profit

A financial statement for a non-profit is much more than just a collection of figures and accounting data. While the financial statement does indeed document a non-profit’s incoming and outgoing cash flows for a certain period, it actually does much more than that. It is, in fact, the key to a non-profit’s ability to conduct business successfully and sustainably. By recording the donations, grants and expenditures of the non-profit, a financial statement enables a non-profit to show its business dealings transparently, attract donors and ensure compliance with the relevant authorities. These statements are usually also required for tax purposes.

What goes into a financial statement?

To get a better understanding of the non-profit financial statement, let’s break it down into its four constituent parts and examine each separately. Each financial statement that is drawn up for a non-profit consists of the following:

  • Statement of Financial Position
  • Statement of Activities
  • Statement of Cash Flows
  • Statement of Functional Expenses

The Statement of Financial Position is a summary of the non-profit’s balance sheet at the end of a specific period—usually a particular financial year. It shows the organization’s assets minus its liabilities, reflected in the equation Assets = Liabilities + Net Assets. A non-profit’s assets are all the items or property that it owns or benefits from. Liabilities are what the organization owes. The net assets consist of the dollar value of the residual assets left over once liabilities are taken into account.

The Statement of Activities (income statement) reflects all the business activities conducted by the organization within the given period: all the incoming transactions versus the various expenses. The difference between these two is the change in net assets (net income) for the given period.

The Statement of Cash Flows records all of the movements of money into and out of the organization, providing explanations for all of the revenue and expenses reflected in the previous statements. A Statement of Cash Flows is divided into operating, investing, and financing activities.

The Statement of Functional Expenses shows expenses of each functional area of the organization, such as programs, fundraising, and management. This is most beneficial to non-profits because it enables them to show potential donors exactly how their money is being spent.

If you run a non-profit, you need accurate and thorough financial statements. It is always best to give this task to experienced certified public accountants. Georgen Scarborough is a firm of CPA’s in Vienna, VA. Contact us for more information.

4 Ways a CPA Can Maximize Your Tax Refund

4 Ways a CPA Can Maximize Your Tax Refund

Now that tax season has begun, many people are considering whether or not they should hire a Certified Public Accountant (CPA) to help them get more from their tax returns. And with good reason, CPAs can provide valuable assistance during this time. Here are some ways that a CPA can help you to maximize your tax refund:

Claim Your Credits

Tax credits are a dollar-for-dollar reduction of taxes that you owe. Most people who have a moderate to low income may qualify for the Earned Income Tax Credit. There are some requirements that you must meet to be eligible for this credit, and to get it, you must file a tax return (even if you don’t owe taxes.) While this may seem complicated, a CPA will be able to help you claim these credits.

Determine Whether You Qualify for Deductions

It is vital that you don’t miss any tax deductions, as finding only one missed deduction can make a big difference. In fact, if a CPA can find a large enough deduction, it might just be enough to cover their fee. The more deductions they can find, the higher your return will ultimately be.

Help You File Your Income Taxes

A qualified CPA will be able to help you determine the best filing status. Choosing the best filing status for you can significantly impact how much your refund will be. The status you choose will determine your standard deduction, filing requirements, the credits you qualify for as well as your tax refund. 

Correct Any Errors.

Having a CPA on hand can help you avoid any mistakes or commit unintentional fraud. Besides this, they can also help you create a budget plan if you have unpaid taxes. This will help you work out a payment plan with the IRS for your taxes to save more money. Ultimately, your CPA will be able to keep track of costs and financial planning so that you don’t have to.

For expert, professional assistance with your 2022 tax returns, contact us at Georgen Scarborough Associates, PC, today.

Get ahead on your 2022 tax filing

Get ahead on your 2022 tax filing

The deadline for your 2022 tax filing is only a few months away. You may think that’s plenty of time, but it is always better to start early, be prepared. It’s even better to file early if you can. Here are a few pro tips to help you avoid the last-minute stresses of tax season.

Tips to stay ahead on your tax return in 2022

For most people, a frantic, last-minute rush is par for the course when it comes to filing their tax returns. However, there really is no need to manage your taxes in this way. By taking a few simple steps early in the season, you can ensure that your taxes are wrapped up efficiently, accurately, and without stress. Here are four simple steps to help you stay ahead.

  • Organize your records: The best way to avoid last-minute stress is to ensure that all your tax documents are collected, collated, and filed at all times. This includes pay stubs, receipts, etc. Don’t leave paperwork at the bottom of a desk drawer. Nor should you save your electronic documents in a haphazard way. This will have you searching for hours through folders and email attachments to get them in order. Organize everything as you go.
  • Set up an online IRS account: With an online IRS account, you can get immediate access to your tax records without having to reach out by phone or email. Then you can work faster and more accurately as you prepare your taxes.
  • Check on the annual changes to tax rates and deductions: At the end of each year, the IRS announces rate adjustments. Make sure you stay on top of these so you can file accurately and timely.
  • Get the help of a CPA: One of the best ways to rid yourself of the stress of filing your taxes is to leave the job to a professional. A certified public accountant knows all the rates and regulations, will be able to guide you through the filing procedure, and will know what it takes to file on time and with the most benefit to you.   

As you prepare your taxes for the coming year, reach out to Georgen Scarborough for help. We are a firm of CPAs based in Vienna, Virginia. Contact us if you need help with your 2022 tax filing.

Learn more about current ax laws in the Wall Street Journal’s Tax Guide 2022.

Tax inflation adjustments for 2022

Tax inflation adjustments for 2022

At the end of last year, the IRS announced its latest set of tax inflation adjustments for 2022. It is very important that both individual taxpayers and businesses familiarize themselves with these changes so that they can make the necessary provisions for their tax filing and payments in the coming year. Here is a brief look at the most important adjustments.

Adjusted tax rates for 2022

Among the most important new provisions for the new tax year are the following:

  • The standard deduction for married couples filing jointly has risen by $800 from $25,100 to $25,900.
  • The standard deduction for individual taxpayers has risen to $12,950 (up $400)
  • The maximum Earned Income Credit has also risen. It now stands at $6,935—a $207 rise from the previous year.
  • As of 2022, the dollar limitation for employee salary reductions for health flexible spending arrangements increases to $2,850.
  • The foreign earned income exclusion is $112,000, as opposed to $108,700 in 2021.
  • Deceased estates (for people who pass away during 2022) have a basic exclusion amount of $12,060,000, up from a total of $11,700,000 for estates of decedents who died in 2021.
  • The annual exclusion for gifts increases to $16,000 for 2022, up from $15,000 for 2021.

It is advisable to get the assistance of an experienced certified public accountant (CPA) to help you manage your taxes in 2022. CPAs always have a complete grasp of the new tax limits, rates and regulations, and will know exactly how to apply them to your income and tax requirements. Georgen Scarborough is a firm of CPAs based in Vienna, Virginia. Contact us if you need help managing the tax inflation adjustments for 2022.

Charitable donations tax deduction limit 2021

Charitable donations tax deduction limit 2021

The charitable donations tax deduction limit for 2021 contains provisions that enable businesses to help those in need. It also helps by claiming certain deductions against their tax bills. The CARES Act, together with the stimulus package signed into law at the end of 2020, makes several provisions in regard to charitable tax incentives. Are you planning your income, expenditures, and taxes for this year?  You should take careful note of the CARES Act and its stipulations. This will keep you informed of charitable donations tax deduction limits for 2021.  

How much can you deduct from charitable donations for 2021?

The CARES Act and the stimulus package allow for deductions of up to 100% of your adjusted gross income (AGI). This applies to cash contributions made in 2021. If you are itemizing your charitable donations, you can receive this deduction.

Also, the CARES Act allows for other deductions if you are not itemizing your cash contributions. It allows for an additional, “above-the-line” deduction for charitable gifts made in cash of up to $300. This provision is extended into 2021 for taxpayers filing separately. Plus, it increases the deduction to $600 for taxpayers filing jointly. 

Contributions to Donor-advised Funds

No changes have been made to existing deductions for contributions made to a donor-advised fund sponsor like Fidelity Charitable. So, you can still deduct up to 60% AGI in cash. Or, you can deduct up to 30% AGI in appreciated assets contributed to a donor-advised fund. Also unchanged are rules around Qualified Charitable Distributions (QCD). Surprisingly, these allow seniors over 70½ years of age to donate up to $100,000 in IRA assets directly to charity annually. Meanwhile, these donations of IRA assets would not count toward the distribution of taxable income.

Need help managing your charitable donations for 2021?

The assistance of an experienced certified public account (CPA) can help you manage your taxes, including the charitable donations tax deduction limit for 2021. Georgen Scarborough is a firm of CPAs based in Vienna, Virginia. Contact us if you need help with your taxes.

Making sense of the government’s contract cost accounting rules

Demystifying Government Contract Cost Accounting Rules-min

Government contract cost accounting rules apply to all companies contracted to do government work across all sectors. Some contractors find these rules difficult to understand. But, this does not have to be the case. We’ll demystify them for you! We’ll also help you understand why they exist and how to interpret them. In this blog, we’ll help you make sense of the government’s contract cost accounting rules.

The essentials of government contract cost accounting

The rules relating to government contract costs have two basic functions. First, to provide guidelines for cost allowability. And second, to set parameters for cost allocability. These terms may sound unfamiliar and unnecessarily complicated for some. So, let’s break them down to their simplest terms. Allowability refers to what costs the government will cover. And allocability refers to how much of these costs the government is prepared to bear. The government does not cover at all costs deemed unallowable. On the other hand, allowable costs will be covered only to the extent that the government is prepared to accept, i.e., what portion of these costs you are permitted to allocate as government expenses.

What this means at its most basic is that the government will cover only a certain portion of your project costs—i.e., only those deemed allowable. Of those, the government will pay only for a specific portion—that which is considered allocable. The problem is that the concepts of allocability and allowability tend to feature numerous grey areas and are seldom straightforward. While the concepts themselves are relatively easy to understand, the exact rules and quantitative guidelines pertaining to them can be nebulous at times, and also tend to change frequently. Unfortunately, this uncertainty and potential for confusion often come with the territory when it comes to government work. 

The best way to deal with these challenges is to seek the help of a certified public accountant. We have the knowledge and experience necessary to help you apply government contract costing rules to your projects, and the accounting practices to help you manage them to the greatest advantage. Contact Georgen Scarborough to see if we can assist you with your government contract cost accounting.

How Contractors Account for General and Administrative Expenses

How Contractors Account for General and Administrative Expenses-min

Government contractors deal with a range of general and administrative expenses or overhead costs. The term ‘overhead costs’ is a broad category. It’s not usually confined to a single project, but allocated and distributed across several projects. There are two types of costs in this regard: general & administrative (G&A) and indirect. How should a contractor go about allocating G&A expenses?

How to allocate G&A costs

You should consult a certified public accountant on your allocation of overhead costs. As these can be quite complex. Some of the matters to consider on how contractors account for general and administrative expenses are:

  • the real costs associated with completing a job
  • what costs can be considered as overhead costs
  • the best method for allocating G&A costs, and
  • the technology that the company uses.

Once answering these questions, you can allocate your costs in question in a number of ways. For example, label them as direct job costs or as direct labor costs (direct labor hours). The types of projects involved and the type of company determine the right method. For example, contractors whose work is less labor-intensive would do well to allocate their costs based on total direct job costs, rather than direct labor hours. In contrast, the pricing for more labor-intensive work depends on labor hours.

How to determine overhead rates

Determine overhead rates by using the chosen method of cost allocation. Calculate your rate as a percentage of revenue or a portion of revenue if your costs are allocated according to job cost. If you focus on labor costs, then calculate your rate as a percentage of those. You can also track actual costs in your general ledger (G/L). Then distribute them proportionally across your jobs.

Allocate your general and administrative expenses in a way that best suits your company, projects, and working methods with a certified public accountant. Contact Georgen Scarborough to make your financials more accurate and manageable.

How financial statements can be helpful in decision making

2-financial statements make future decisions on the basis of accurate data

Financial accounting and financial statements are a vital part of a company’s operations. Financial statements can be helpful in decision-making on the basis of making good decisions on accurate data. Properly kept and presented financial records allow companies and outside parties to get a complete picture of the organization’s financial health. Financial statements inform decision-making in the following ways. 

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What a QuickBooks advisor can do for you

7-Find out how a QuickBooks Advisor can help you make the most of the program

QuickBooks is an extremely useful tool, and makes it easier than ever for businesses to stay on top of their finances. However, not all businesses use this tool effectively. A QuickBooks advisor is often necessary to help you make the most of this powerful software.

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