Piggy Banks
Give your child more than one piggy bank or money jar so that their money can be broken out into savings, spending or specific item accounts. This can help visualize goals, make it clear where the money goes as well as prepare them for their own bank accounts.

Allowances
If you give your child an allowance or if they get money as gifts for birthdays, make it easier for them to save by breaking the amount into savable denomination. Five $1 dollar bills are much easier to divide among the piggy banks than one $5 bill.

Cost of Living
As your child gets older introduce them to the family’s monthly bills. Children often think money grows on trees and that things that are used daily are free. Sit down and share the monthly bills with them as you pay them. You can choose to start simple with electricity, tv & internet bills and then introduce more complex cost like credit cards & taxes when they are ready. Make a more dramatic point by stacking money on each bill as you pay them.

Spending Journal
As your child starts making their own decisions on spending their money help them to document what they are buying and how much they are spending. They will be able to visualize both their good spending and bad spending better with a list that can be reviewed together.

401k Style Matching
Need to give your child a little more incentive to save? Consider matching what they save like a company does with employee 401k plans. You can even set rules on how much or when they can make withdrawals. Start to establish their perspective on the benefits of long term savings as they become more accustomed to their own spending and savings habits.

These are just a few tips on how to give your child a foundation for being responsible with money. Remember to make it fun, involve the whole family and have regular conversations so that there are always opportunities to learn about managing money wisely. Once they’ve grasped the fundamentals you can introduce them to the world of electronic banking, mobile apps and debit cards.

Our Web Client Organizer is designed to help you conveniently gather tax information needed to prepare your 2011 personal income tax return. We will be sending each client an email with detailed instructions on how they can log in to their personal Web Client Organizer, but here is a step-by-step overview of what to expect.

Step 1.
To access your Web Client Organizer, click the link http://284340.netlinksolution.com or copy and paste this link into the browser address line.

Step 2.
To protect your privacy, your Web Client Organizer is password protected. Access your Organizer using the login ID provided in your personalized email. The password to open your Web Client Organizer is your SSN. Enter the password using only numbers. For example, if your Social Security number is 111-22-3333 you would enter 111223333.

Step 3.
Your engagement letter has also been posted on the website as an action item. Once you have accessed your web portal, click the My Tax Documents link and then click the WALLACE-2011Organizer-ActionRequired link. After you review the letter, please print, sign and date, and return it to our office.

Step 4.
We have provided certain information from your 2010 personal income tax return to help you complete the Web Client Organizer with minimal time and effort.

Enter 2011 information on the Web Client Organizer screens provided. If any information does not apply to you or is incorrect, delete it or make the necessary corrections.
Please answer all applicable questions and use the Client Notes screen to enter additional information not provided in the Web Client Organizer. The Client Notes screen is also available for any questions that you may have for our office.

FAQs

I haven’t received my Unique ID & Password?
If you have not received you ID and Password by January 31 please contact Natalie Forssenius.

Can I still provide you with a printed version?
If you prefer not to use the electronic features of the client portal, you can print the Organizer as a PDF file. To do so, under the Web Organizer Index, select Create PDF.

What other documents will I need to provide?
We will also need the following information provided to our office:

• Forms W-2 for wages, salaries and tips.
• All Forms 1099 for interest, dividends, retirement, miscellaneous income, Social Security, state or local refunds, gambling winnings, etc.
• Brokerage statements showing investment transactions for stocks, bonds, etc.
• Schedule K-1 showing income from partnerships, S corporations, estates and trusts.
• Statements supporting deductions for mortgage interest, taxes, and charitable contributions (including any Form 1098-C).
• Copies of closing statements regarding the sale or purchase of real property.
• Legal papers for adoption, divorce, or separation involving custody of your dependent children.
• Any tax notices sent to you by the IRS or other taxing authority.
• A copy of your income tax return from last year, if not prepared by this office.

Can I upload my documents to the Web Client Organizer?
You can attach and send additional files with your Web Client Organizer to our office for retrieval. This is a convenient and secure way to send information regarding the preparation of your tax return without having to mail or deliver these documents to our office. You can attach the following types of files to your Web Client Organizer: Microsoft Money or Quicken tax exchange format (.txf), Microsoft Excel (.xls), Microsoft Word (.doc, .rtf), Adobe Reader (.pdf), image files (.jpg, .bmp, .tif, .png), and web pages (.html).

Can I upload QuickBooks Files?
The Web Client Organizer cannot currently accept Quickbooks Files but you can securely upload your QuickBooks file on our website using the Client Login link.

In the past years a large amount of our paper consumption comes from our yearly Client Organizer. This printed document helps our clients get organized for their yearly tax returns by providing them with a printed checklist and questionnaire to fill in prior to meeting with us. Last year we used over 11,000 sheets of paper in the process, not including envelopes and mailing labels. This year we are bringing it all online with our new Web Client Organizer. With the online version in place we have completely eliminated the need for a printed version. We will be sending a personalized email with details to each client by January 31. Contact Natalie Forssenius if you don’t receive your detailed email by then.

Though our Web Client Organizer is our biggest Green program this year, our other initiatives around the office include a completed transition to paperless filing (including client files), emails ‘printed’ to electronic PDF files, paper shredding and recycling services as well as recycling non-paper items around the office. We look forward to finding more ways to make our workplace a Greener one.

New credit legislation has been enacted in Virginia to encourage telework arrangements.  Telework is a work arrangement where an employee is allowed to perform  normal work duties at a location other than their central work location.  To be eligible as a teleworker for the purposes of claiming the tax credit, an employee must telework at least one day per week.  The teleworking employee must enter into a signed telework agreement on or after July 1, 2012, but before January 1, 2014, and must be a new teleworker (not previously teleworking) to qualify for the tax credit.

The legislation provides for a tax credit up to $1,200 per employee, up to $50,000 per organization, for eligible telework expenses incurred during taxable years 2012 and 2013. Eligible telework expenses include:

-          Computer equipment (laptops/netbooks/tablets)

-          Networking equipment and software

-          Security and antivirus software

-          Internet access

-          Communications equipment and services  (VoIP, mobile phones, Smartphones,       

            phone service, routers, modems/web cams, VPN)

-          Telework Center fees

Eligible expenses may also include up to $20,000 for conducting a telework assessment on or after January 1, 2012.  These expenses include consultant or other expenses to asses existing teleworking (both formal and informal), equipment and training needs, barriers/issues, management and employee support, developing telework policies and procedures, and determining employee position eligibility and performance measurement.

The amount of the credit claimed cannot exceed the tax liability of the taxpayer and there is no carryforward of any unused credit.  Any credit attributable to a partnership, S-Corporation or limited liability company will be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest in the business entity.

Businesses must apply for tentative approval of the credit through the Virginia Department of Taxation using Form TEL-1.  The deadline for submitting Form TEL-1 for a 2012 credit is October 31, 2011.

If you believe you qualify for this credit, or would like additional information, please contact Desiree Bryan at 804-888-8468.  Additional information can also be found at www.teleworkva.org.

“We are very proud that our continued success has been recognized,” says Partner, Kelli Meadows.  ”We are very fortunate to have a great team of staff and clients.”

Wood graduated from Strayer University Summa Cum Laude with a Masters of Science in Accounting.  She was previously employed by the Monticello Area Community Action Agency as their Chief Financial Officer.  

The trend: It may no longer be a matter of IF you get audited by the IRS, but WHEN??

The IRS fiscal year 2012 budget proposal summary includes $339 million in new IRS enforcement initiatives, which are projected to raise $1.3 billion in revenue annually.

“Our firm has already seen an increase in audit activity in the past few months”, says Shannon Cook, Tax Partner. “ The IRS is challenging tax positions such as real estate professionals and other positions that allow the deduction of large losses.”

According to sources, the IRS has already begun the examination process for 2010. They have started with individuals who file a schedule C or schedule E with their Form 1040.

What you should do…

Make sure you understand tax positions you are taking on your tax return and have all tax positions documented. This can  include expense reports which document business meetings, travel/mileage logs. These can help in documenting material participation in a business venture.

• Keep receipts for tax deductions. This includes credit card transactions for meals and entertainment expenses. Make sure you document the attendees and the business purpose of the meeting.
• Report all of your income.
• And if you are audited, contact your tax preparer immediately. Having a CPA represent you in an audit can seem costly, but it could prove to save you time and money in potential taxes and penalties.

Other important news…

The IRS is attempting to revamp the lien-filing process. The changes include:

• increasing the dollar threshold above which liens are generally filed
• making lien withdrawals easier after the taxes have been paid
• withdrawing liens in most cases when a taxpayer enters into a direct debit installment agreement.

Currently the Internal Revenue Manual calls for the automatic filing of a lien when a taxpayer’s balance due exceeds $5,000. The IRS announced that they would “significantly increase” this threshold, but they have not announced what the new threshold will be. Also, for unpaid assessments of $25,000 or less, the IRS will allow lien withdrawals if the taxpayer enters into a direct debit installment agreement.

IRS further delays health insurance coverage information reporting for small employers.

The new health reform legislation generally requires employers to report the cost of health insurance they provide to employees on their W-2 forms. Last fall, the IRS made this new reporting requirement optional for all employers for the 2011 Forms W-2. More recently, the IRS announced that the reporting requirement will continue to be voluntary for small employers at least through 2012.

Repeal of expanded 1099 requirements signed into law.

The President has signed into law a retroactive repeal of the unpopular Form 1099 information reporting rules added by 2010 legislation. The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 specifically repeals:

• the requirement for businesses, charities, and governmental entities to report payments to companies for merchandise purchased in the aggregate of $600 or more (originally effective for 2012),
• the requirement for rental property owners to report expense payments in the aggregate of $600 or more (originally effective for 2011), and
• the requirement for businesses, charities, governmental entities, and rental property owners to report payments for services and merchandise to corporations (other than attorneys and certain health care providers) in the aggregate of $600 or more (originally effective for 2012).

The repeals under the new law are retroactive, thus reinstating the status quo for Form 1099 reporting as established prior to enactment of the 2010 Patient Protection and Affordable Care Act and the 2010 Small Business Jobs Act.

When proper, consistent procedures are not in place, employees can learn to manipulate the accounting system to their benefit.  Whether they steal money from the company or they make errors that go undiscovered, the end result can greatly impact your company’s management discussions, financial reports and tax filings.

Unfortunately, once your financial records have been altered, discovering problems is extremely difficult.  Most standard accounting practices are not designed to uncover internal problems such as embezzlement.

Therefore, the best way to safeguard your company’s assets is to recognize and improve weaknesses in your internal control procedures.  The following business practices can help you minimize potential internal control problems: 

• Related duties should be assigned to different people.  Certain accounting functions are designed to cross-reference each other for accuracy (writing/signing checks, ordering/paying/receiving materials, handling cash/recording cash, etc.).  These procedures can reveal inconsistencies in your records in a timely manner.
• Reconcile and scrutinize your bank statements every month.  A bank statement can tell you a lot about your business if you review the information in a timely manner.  Review unopened bank statements and examine cancelled checks for proper endorsements and payees; track transactions between accounts; compare payroll checks with employee records, and ask questions about anything that you think is unusual.
• Review your cash disbursements records for missing checks.  Sometimes, when an employee steals a check, that check number will be missing from your cash disbursements records.  Periodically running a report for missing checks will show where gaps in the check sequence lie, prompting you to ask questions of your employees.
• Always ask for proof before you sign a check or authorize a transaction.  When you insist on reviewing original documentation, your employees become more accurate and communicate their needs more clearly.  You should also verify the names of your vendors and your employees occasionally.  And, remember to cancel supporting materials after signing a check.
• Review your payroll records periodically.  One way for an employee to steal from a company is to change their wages/salary in the payroll system or to create a fictitious employee.  By reviewing payroll records periodically, you will prevent employees from altering the information in the payroll system without detection.
• Scrutinize credit card statements every month.  If you give company credit cards to employees, review the monthly credit card statements and supporting documentation (such as receipts) to verify that the charges are for business purposes only.
• Scrutinize employee expense reimbursements.  When employees submit expense reimbursements, supporting documentation (such as receipts) should be attached for each item on the request.  You should review the attachments to verify the reimbursement was for a valid business purpose.  In addition, receipts attached to expense reimbursement reports should always be the original receipt, not a copy.  You should also consider matching mileage reimbursement requests to time cards, if applicable, to verify your employees actually incurred travel expenses on that particular day.
• Lock and protect your valuables.  Keep blank checks and signature stamps secured (although we strongly recommend not even having a signature stamp), and deposit cash and checks daily.  It’s also important to secure fidelity bonds and insurance for all accounting and key personnel.
• Know your employees and examine behavior changes.  Always verify employee references and perform background checks before hiring.  Many white-collar crimes go unreported and continue to be repeated.  Watch for trouble signs:  possible substance abuse, change in lifestyle, living beyond means, possessiveness of work or defensiveness when questioned. 

These internal controls can help you reveal many discrepancies, as well as recognize the excellent efforts of your staff.  Our firm can help you develop and implement internal controls to address the weaknesses you identified and/or your areas of concern.  Please call us if you have any questions.