Get to know the 1099 Misc.

Tax season is almost upon us, as an Independent Contractor, the sooner you get organized the easier tax filing will be for you. If you are self employed you will want to get started on you Idaho Falls tax prep as soon as possible. If in the previous year you were self employed and earned over $600 annually you will need to file your taxes a little differently than you may have in the past. Being self employed entitles you to file deductions for your work and may also require you to pay income tax more than once a year depending on how much income you bring in. If you are an Independent Contractor you will want to file your taxes on a 1099-MISC form instead of the regular W-2 form.

One of the differences between filing a 1099-MISC form as opposed to a W-2 form, for your Idaho Falls tax prep, is that you are able to claim any deductions that the IRS deem necessary and relevant for your work. If you are required to drive for the type of work you do, you will be able to write off your gas mileage for that year. As of 2016 the IRS will pay for 54 cents per mile for business purposes and 19 cents per mile for moving or medical reasons. You will want to keep a mileage log so that when you do file your taxes this information is readily available to you. Taking detours along the way, to the gas station or a department store are things that you won’t be able to write off, so make sure that your log is accurate and you're not giving false information.


The IRS will only deduct ordinary and reasonable work expenses from your taxes. For example, if you need to travel to Las Vegas for work you can deduct things like your hotel and flight for your business, but probably not the Cirque Du Soleil show you go see. If your deductions equal or are less than $5,000 dollars you can use the shorter Schedule C-EZ form, anything above $5,000 you will want to use the Schedule C to file your claims.

Staying organized is key when filing your taxes as an Independent Contractor. Clients will not withhold taxes for Medicare or Social Security when they pay you, so it is your responsibility to make sure you have money saved to pay for these. These expenses will be on your Schedule SE form, which must be attached to your taxes. You are required by the IRS to pay these, so keeping money out for these expenses when tax season does come around will be crucial. Depending on how much you make within the year, how you file your taxes, and the tax withheld from other sources of income will determine if you are required to make up to 4 payments of income tax to the IRS within the year instead of just one. Being prepared by saving from each of your checks will make this a lot easier if you are in fact required to pay more than once in a year. Using a 1040-ES form will help you to determine if you are required to pay in more frequently.


To calculate your taxable income you will need to take your total self employment income (this can include other income that is not included on your 1099-Misc ) and subtract your total deductible income. This will be calculated with your other combined earnings and transferred onto a 1040 form to help you find out your final net profit for that year.

Next: What Deductions Can You Claim When You File 1099

Poston, Denney, and Killpack, PLLC: Finding the Right Certified Public Accountant in Idaho Falls

When considering a Certified Public Accountant there are some important factors to consider. A Certified Public Accountant (CPA) can offer a wide range of financial service needs from personal wealth management to performing business taxes. Before choosing a CPA you’ll need to determine you personal or professional needs.

Our business consultants at Poston, Denney, and Killpack, PLLC would like to help you choose the best Certified Public Accountant by taking a closer look at the following factors:

• Number of services offered
• Number of Certified Public Accountants available in the office
• Communication
• Experience level and Qualifications
• Education
• Reputation
• Cost
• Value

Room to Grow: Number of Services Offered

Choosing a CPA for personal use such as saving for college, personal finance and tax return preparation, and estate planning is an important decision. CPAs are considered to be the most trusted financial advisers with a respected code of ethics and integrity. Doing your due diligence of research your options for a CPA is just as crucial for personal use as it is for your business.

If you are looking for a CPA for your business’s accounting needs it would be wise to consider the amount of growth the office can handle. Although your business may start out small, keep in mind that hiring a CPA could lead to business growth you may never have expected, if you hire well. A one on one contact may work well for you, however if you are hoping for substantial business growth you may eventually need a team dedicated to your account. Consider the big picture of your needs for your business. Does your business just need a tax return prepared and year-end financial information? Or are you looking for more financial planning advice or help with your business plan? It would be helpful for you to consider some of the following questions:

• Will the firm be able to take my business from a small start up to a mid to large level business?
• If the workload exceeds that which an individual CPA can deal with, who will be assigned to my account?
• What business have they worked with in the past or currently that are similar to mine and how are the performing?
• What other services could be helpful in the future for my business?
• Does the firm seem genuinely interested in my business?

Someone To Talk To: Availability of CPA’s in the Office

At Poston, Denney, and Killpack, PLLC we know how busy tax season is for business owners and accounting firms alike. Not surprisingly, the tax season is a busy time for CPA’s. Knowing that there will be someone available for you to ask questions and inquire for information is an important consideration. A firm with several experienced CPA’s is more likely to have an accountant available for you to speak with during busier times. If you only need a CPA for personal tax return purpose, a single individual will fit your purposes well. If your business is growing and you are in need of other services and regular assistance, a larger accounting firm could be the right choice.
Confidence: The Importance of Communication

When looking for a CPA, whether for a large firm or for your individual needs, it is essential to find someone with whom you can establish a healthy working relationship. A Certified Public Accountant can be beneficial addition to your business or personal finances, readily providing answers and assistance.

However, while you do not need to be on excessively friendly terms with your CPA, to take full advantage of their expertise, you will need to remain in regular communication, which is why it is very important to keep looking if you do not feel comfortable maintaining a communicative relationship with you current CPA.

Industry Know-how: Is Your CPA Experienced and Qualified?

When you are looking for a CPA it is important to consider if they have expertise in your particular industry or even a similar industry. With experience in the industry your CPA will have important insights for your growing business. If you want advice on business finances, a CPA that specializes in individual tax returns is not going to be able to help you the way that you need. How can you find out if a CPA has the experience that will best benefit you and your financial needs? Asking straightforward questions about their professional experience and let them explain to you how their expertise will be a beneficial for your financial relationship. You can investigate a CPA further by looking at their online CPA profile pages to see their past education portfolio and any current memberships.

Education and Keeping up With the Times

A Certified Public Accountant will have achieved an undergraduate degree and passed the exam and experience requirements for state certification. Continuing education is an important part of a CPA maintaining their certification. Their continuing education requirements keep them up with the changing accounting standards. In addition to keeping up their education in accounting, once every three years, a CPA’s accounting and auditing practices are thoroughly reviewed by their peers to ensure they are maintaining their professional integrity.

Another important consideration is whether a CPA is a member in the American Institute of Certified Public Accountants. Membership requires accountants to continue their professional education by taking approved course work that will keep them current on the latest accounting and taxation policies.

Ask Around: Great Service Leads to a Great Reputation

It is a great idea to ask around about the experiences your friends and business associates have had with their accountants. A referral from a trusted source is a great way to know that you are on the right track for getting involved with an experienced and reputable CPA. Ask if your friends and associates hear from their accounts not only at tax time but also throughout the year with advice or important proactive and helpful information. Getting the best value from your accountant will mean that they are forward thinkers that provide great service.

If you are having trouble finding a referral from people you know, consider asking people in a similar industry as you for referrals of their accountants. Explain that you are looking for a trusted accountant with expertise in your particular industry.

Remember that your accountant is meant to be a trusted advisor for either your personal finances or your business venture. The relationship between you and your accountant needs to be a trusting one so that you can reap the greatest benefit from the relationship.

Even with a great referral from a trusted source be sure to take time to interview firms and the individual candidates. Don’t be shy! This is your financial future and you want to do all that you can to ensure that it will be in good hands. Ask for additional references and follow up with them. Before you make a decision, be sure to interview at least three CPS’s. Perform your due diligence to get your personal or your business’s financial future off to the best start with a great Certified Public Accountant.

Cost: Be Sure to Check Out the Competition

Money, money, money! Accountants are great with numbers and that is why you are paying them. Inquire about hourly rates and fees. Request quotes for what you can expect to pay for services. Compare rates with several professionals before settling on one. You may save you or your business a whole lot of money by taking this important step in your decision making process.

And Above All, Value

At Poston, Denney, and Killpack, PLLC we would like to leave you with this thought, that the most important aspect you must consider as you search for a Certified Public Accountant, is the value they bring to the relationship. A CPA should be helping your business to grow, should be ensuring that your tax returns are the highest they have ever been, should be supplying you with peace of mind during the stressful tax season by knowing your accounts are in competent hands. Whatever the reason that you have sought out a CPA, you need to see that they are bringing indispensable value to your professional relationship.

If you are in search of a CPA in the Idaho Falls area, Poston, Denney, and Killpack, PLLC is here to help if you have further questions on how to choose a CPA that will best meet your needs. We want to help you get the most out of your personal or professional finances and our professionals know how to get you there. Ask us for our references, additional services for both your personal and business finances. For your business needs we have great services for small business accounting, help with strategic business planning, cash flow management and everything you need to get your business off to a great start. We are here to make your money work for you.

So... what exactly is a tax refund and why do some people get more than others?

There are dozens of them scattered around town. You know, at those kiosks at the shopping market. Others are located in shopping centers and strip malls often accompanied by a mascot or costumed person dancing with and waiving signs. We see them really get into marketing gear in January when their pamphlets and brochures begin appearing in your mailbox and email inbox. And they all claim to get you the biggest tax refund possible.

You know who we're talking about - local and national chain tax preparation services. Each and every one vying for your business. Each and every one guaranteeing you your biggest tax refund possible.

While we're not going to review any of these tax prep services or even what they can "promise" you, instead we'd like to cover what a tax return is, why some people get more or less than others, and what you can do to maximize your tax refund.

What a tax refund actually is

In the most basic sense, a tax refund is money given back to you at the end of the fiscal year when you have paid more in your withholding than what you actually owe. In other words, it is the over payment of taxes to the IRS out of each paycheck that is returned to you. Also, it needs to be noted that these also include refundable tax credits you may qualify for.

Why do some people get more in their tax refunds than others do?

Many people have circumstances and situations where they will qualify for a "refundable credit." What this means is that, for instance, somebody qualifies for a $2,000 refundable credit and has no tax liability, they will receive a $2,000 refund. The Earned Income Tax Credit is a refundable credit. The Earned Income Tax Credit is a tax credit that people receive if they earn wages in a lower range that has been established by the IRS. People with children usually qualify for this credit and can receive a refund even if their total tax liability is nonexistent.

A "non-refundable credit" is a tax credit that is applied to your total tax liability making it lower. For instance, if you made $3,000 from your employer and is taxed at 25%, you would owe the IRS $750. However, let's say that you qualified for a $1,000 non-refundable tax credit. This credit would be deducted from your total earnings and you would only be liable to pay taxes on $2,000 of your earnings. Taxed at 25%, you'd owe the IRS $500. That ends up saving you $250. If you have paid $750 in witholdings, you'd receive a $250 check back from the treasury.

Finally, there are "partially refundable tax credits." These types of credits often fit both categories of credits and only a portion of the credit can be refunded. As per the IRS:

The American Opportunity Tax Credit (AOTC) is an example of a partially refundable credit. The maximum credit amount is $2,500 per eligible student, per year. If the credit reduces your tax liability to zero, you can receive up to 40% of the remaining credit amount (up to $1,000) as a tax refund.

Obviously, things like deductions for business expenses, income from other sources, and many other factors will determine exactly what your refund will be. If you have any questions about your refund, a good place to start would be contacting a certified public accountant.

How you can get the biggest refund

If you have overpaid taxes in your withholdings, you will be refunded the difference once your total tax liability has been determined. So, in order to receive the most money back in your tax return, there are multiple things you can do. For instance:

• Do you use your private vehicle for business? If so, your mileage might be able to be deducted from your gross income (before taxes are deducted). This lowers your tax liability.
• Have you made a donation to a 501(c)(3) organization? If so, these contributions might be deductible. Be sure to keep all receipts!
• Do you have a home office? Office supplies, equipment, and inventory can all be deducted as long as everything is exclusively used for work.
• If you are paying alimony, you can write it off. But not child support - that is not deductible.
• Are you funding an IRA for retirement? Keep doing it because what you pay into your IRA lowers your tax liability. How does this work? Because once you start withdrawing from your IRA when you retire, you will then pay taxes of it due to the fact that IRA withdraws are considered "income." There are some other things to consider with an IRA as well such as the fact that some IRA's have a maximum amount that can be applied to your lax liability. Contact your CPA for more information.
• Are you paying off student loans? Every year, your student loan lending institution will send you a form  1098-E that details how much you paid in interest payments while paying off your student loans. These interest payments can be deducted and make your total tax liability lower.

Why it's not a bad thing if you don't get a refund

While it's nice to get a big tax refund at tax time, realize that a tax refund is simply money you overpaid to the IRS during the year and they are just giving it back to you. If you don't get a big refund, or even any at all, that simply means that you have broken even. That's a good thing because instead of overpaying each month, you kept more money in your pockets through out the year.

If you want to know more about tax refunds and what you can do to manage your taxes, call a professional certified public accountant in Idaho Falls. CPA's like Poston, Denney, & Killpack, PLLC has been serving individuals and small businesses throughout east Idaho for years and can help you get the biggest refund possible. Professional tax preparation can help you manage your tax liability and help you keep more money in your pocket, where it belongs.

Poston, Denney, & Killpack, PLLC offers professional small business tax services to include payroll, accounting, audit compliance and assistance, succession planning, new business formation, and non-profit organization tax management. Call us today at (208) 522-0886 or email us at admin@cpapdk.com and we'll get back to you ASAP. We employ licensed and certified tax preparation experts and accountants all dedicated to the success of your small Idaho business.

What is a tax levy?

If you’ve received a lien notice and haven’t taken action to get it resolved, the IRS will impose a levy against you and your property. This is basically the actions the IRS will take against you to satisfy your tax debt. This includes the actual seizure of physical property such as your home, vehicles, savings account, stocks, bonds, and wages you earn.

As per Internal Revenue Code (section 6331): If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax. Levy may be made upon the accrued salary or wages of any officer, employee, or elected official, of the United States, the District of Columbia, or any agency or instrumentality of the United States or the District of Columbia, by serving a notice of levy on the employer (as defined in section 3401(d)) of such officer, employee, or elected official.

Basically stated, if you don’t resolve your tax debt with the IRS, under current law, the IRS will have the right to collect that tax by taking possession of your property and wages equal to the taxes you owe. This also includes any interest that has accumulated, penalties assessed, and all legal costs the IRS accrues while taking possession of your property.

As you can guess, this is probably the worst case scenario when it comes to not paying your taxes. Can you be jailed for not paying your taxes? Yes. However, imprisonment is very rare and is typically reserved for the most egregious of cases. Still, it is of utmost importance to resolve your tax burden as soon as possible because even a levy is serious.

What can I do if the IRS levies my property and wages?

When it comes to a tax levy, there are many stipulations the IRS must adhere to. The IRS must:

• Notify you (in person or by certified mail) no less than 30 days before the levy happens.
• Include information pertaining to the provisions of the levy, the procedures of the levy, the administrative appeals available to whom the levy applies, and alternatives to levy available to the taxpayer, among other things.
• Suspend the levy during the day the taxpayer is appearing before an IRS after summons.
• Suspend the levy if an “offer in compromise” has been approved by the IRS.
• More information can be found here.

If you find that the IRS has levied your property or wages, one of the very best things to do is contact a certified public accountant (CPA). These accounting professionals have the knowledge and experience necessary to respond to a tax levy. Poston, Denney, & Killpack, PLLC in Idaho Falls can help you if you find yourself subject to a levy.

What is a tax lien?

When it comes to taxes, there are a lot of terms that you may be familiar with but may not know exactly what they mean. In this post, we are going to specifically address what a “lien” is.

Many times, a lien is confused with a levy (which is covered here). While the two are related, they're very different in their function.

First of all, here is the definition of a lien as per Internal Revenue Code (section 6321): If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belong to such person.

Basically, what this says is that if you fail to pay taxes legally due to the IRS, the IRS will make an official request (or, demand) for those taxes to be paid. If you fail to respond to the request, the IRS will impose a lien. The lien itself is simply the legal mechanism with which the IRS can use to move forward with actions to collect those taxes. This includes any interest that has accumulated, any penalties that have been imposed, and any administrative costs the IRS accrues to collect these taxes.

In addition, the Internal Revenue (section 6322) states: Unless another date is specifically fixed by law, the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time.

What this means is that the lien imposed is enforceable from the moment the it was handed down and continues to be in effect until the tax burden has been paid in full or a specified amount of time has passed and it becomes unenforceable. This amount of time is either 10 years from the date of assessment (on liens assessed on or after November 6th, 1990) or 6 years from the date of assessment (on liens assessed on or before November 5th, 1990).

What if you have received a letter from the IRS saying they have imposed a lien on you?

Receiving a lien from the IRS can be an unsettling event. However, it’s not the end of the world and there are options available for those having financial difficulties when paying taxes.

The first thing you should do if you’ve receive a lien notification is to respond to the IRS. Do not ignore them! You can respond to them directly or you can have a representative such as a certified public accountant (CPA) contact them for you. The IRS will work with you to pay your delinquent taxes.

While you tax bill will continue to accumulate interest and penalties while you pay it off, working with the IRS will keep them from taking further actions against you regarding your property. Hiring a CPA can help when it comes to negotiating a repayment plan with the IRS. A CPA can even help you apply for an “offer in compromise” which can lower the amount of taxes you owe or temporarily delay collections until you are in a better financial situation to pay your tax bill.

The worst thing you can do is ignore a lien. By doing so, the IRS will begin taking action against you and your property by way of a levy. So, in short, you can think of a lien as an official “warning” that the IRS is about to begin the process of taking away your property and savings to satisfy a tax bill.

If you have any questions about what a lien is and what you can do if you’ve received a lien, call Poston, Denney, & Killpack PLLC in Idaho Falls, ID. We can answer your questions and offer guidance so that you can make the best decisions regarding your options.