Cienega Business Management Inc.

01/22/2019

Good afternoon everyone! CBM Inc is up and running for the tax season. The IRS will start to process returns on 1/28/2019. I am available for any questions you may have about the numerous tax changes this season. Please give me a call or send me a message if you need any assistance. 575-740-8834. Thanks and have a great day!

10/17/2017

Good Morning everyone! I am finally able to start working again after my recent illness. While tax season is a ways off, I am available to answer any questions and provide tax advice for the upcoming season. Please feel free to contact me if I can be of assistance. Have a wonderful day!

01/30/2017

Deducting Business Expenses

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.
•What Can I Deduct?
•Cost of Goods Sold
•Capital Expenses
•Personal versus Business Expenses
•Business Use of Your Home
•Business Use of Your Car
•Other Types of Business Expenses

Note: If you do not carry on the activity to make a profit, you must report all of the gross income (without deductions) from the activity on Form 1040, line 21. Special limits apply to what expenses for a not-for-profit activity are deductible; for detailed information, refer to Publication 535, Business Expenses.

What Can I Deduct?

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

It is important to separate business expenses from the following expenses:

•The expenses used to figure the cost of goods sold,

•Capital Expenses, and

•Personal Expenses.

Cost of Goods Sold

If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Some of your expenses may be included in figuring the cost of goods sold. The cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense.

The following are types of expenses that go into figuring the cost of goods sold.

•The cost of products or raw materials, including freight

•Storage

•Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products

•Factory overhead

Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs.

This rule does not apply to personal property you acquire for resale if your average annual gross receipts (or those of your predecessor) for the preceding 3 tax years are not more than $10 million.

For additional information, refer to the chapter on Cost of Goods Sold, Publication 334, Tax Guide for Small Businesses and the chapter on Inventories, Publication 538, Accounting Periods and Methods.

Capital Expenses

You must capitalize, rather than deduct, some costs. These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business. In general, there are three types of costs you capitalize.

•Business start-up costs (See the note below)

•Business assets

•Improvements

Note: You can elect to deduct or amortize certain business start-up costs. Refer to chapters 7 and 8 of Publication 535, Business Expenses.

Personal versus Business Expenses

Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part.

For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and is not deductible. Refer to chapter 4 of Publication 535, Business Expenses, for information on deducting interest and the allocation rules.

Business Use of Your Home

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Refer to Home Office Deduction and Publication 587, Business Use of Your Home, for more information.

Business Use of Your Car

If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses. For a list of current and prior year mileage rates see the Standard Mileage Rates.

Other Types of Business Expenses

•Employees' Pay - You can generally deduct the pay you give your employees for the services they perform for your business.

•Retirement Plans - Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees' retirement.

•Rent Expense - Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.

•Interest - Business interest expense is an amount charged for the use of money you borrowed for business activities.

•Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.

•Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.

This list is not all inclusive of the types of business expenses that you can deduct. For additional information, refer to Publication 535, Business Expenses.

01/27/2017

Special Rules Help Many People With Disabilities Qualify for the Earned Income Tax Credit; Up to 1.5 Million Fail to Claim Valuable Benefit

IRS YouTube Video
Claiming EITC or ACTC? Your Refund May Be Delayed: English | Spanish | ASL Español

IR-2017-07, Jan. 23, 2017

WASHINGTON — The Internal Revenue Service wants taxpayers with disabilities and parents of children with disabilities to be aware of the Earned Income Tax Credit (EITC) and correctly claim it if they qualify.

The EITC is a federal income tax credit for workers who don't earn a high income ($53,505 or less for 2016) and meet other eligibility requirements. Because it’s a refundable credit, those who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund.

The EITC could put an extra $2 or up to $6,269 into a taxpayer’s pocket. Nevertheless, the IRS estimates that as many as 1.5 million people with disabilities miss out on this valuable credit because they fail to file a tax return. Many of these non-filers fall below the income threshold requiring them to file. Even so, the IRS urges them to consider filing anyway because the only way to receive this credit is to file a return and claim EITC.

To qualify for EITC, the taxpayer must have earned income. Usually, this means income either from a job or from self-employment. But taxpayers who retired on disability can also count as earned income any taxable benefits they receive under an employer’s disability retirement plan. These benefits remain earned income until the disability retiree reaches minimum retirement age. The IRS emphasized that social Security benefits or Social Security Disability Income (SSDI) do not count as earned income.

Additionally, taxpayers may claim a child with a disability or a relative with a disability of any age to get the credit if the person meets all other EITC requirements. Use the EITC Assistant, on IRS.gov, to determine eligibility, estimate the amount of credit and more.

People with disabilities are often concerned that a tax refund will impact their eligibility for one or more public benefits, including Social Security disability benefits, Medicaid, and Food Stamps. The law is clear that tax refunds, including refunds from tax credits such as the EITC, are not counted as income for purposes of determining eligibility for benefits. This applies to any federal program and any state or local program financed with federal funds.

The best way to get the EITC is to file electronically: through a qualified tax professional; using free community tax help sites; or through IRS Free File.

Many EITC filers will receive their refunds later this year than in past years. That’s because a new law requires the IRS to hold refunds claiming the EITC and the Additional Child Tax Credit (ACTC) until mid-February. The IRS cautions taxpayers that these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27. Taxpayers claiming the EITC or ACTC should file as soon as they have all of the necessary documentation together to prepare an accurate return. In other words, file as they normally would.

The IRS and partners nationwide will hold the annual EITC Awareness Day on Friday, Jan. 27, 2017 to alert millions of workers who may be missing out on this significant tax credit and other refundable credits. One easy way to support this outreach effort is by participating on the IRS Thunderclap to help promote through social media. For more information on EITC and other refundable credits, visit the EITC page on IRS.gov.

01/26/2017

The Health Care Law & Your Taxes: Not Too Early to Determine if You Qualify for Exemption

IRS Health Care Tax Tip 2016-80, December 14, 2016

With the 2017 tax filing season approaching, it’s not too early to think about how the health care law affects your taxes. The Affordable Care Act requires you and each member of your family to do at least one of the following:
•Have qualifying health coverage called minimum essential coverage
•Qualify for a health coverage exemption
•Make a shared responsibility payment with your federal income tax return for the months that you did not have coverage or an exemption

If you meet certain criteria for the tax year, you may be exempt from the requirement to have minimum essential coverage. You will not have to make a shared responsibility payment for any month that you are exempt. Instead, you'll file Form 8965, Health Coverage Exemptions, with your federal income tax return. For any month that you do not qualify for a coverage exemption, you will need to have minimum essential coverage or make a shared responsibility payment.

You may be exempt if you meet one of the following:
•The lowest-cost coverage available to you is considered unaffordable
•You have a gap in coverage that is less than 3 consecutive months
•You qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group specifically exempt from the coverage requirement

The Federally-facilitated Marketplace is no longer granting exemptions for members of a health care sharing ministry, members of Indian Tribes, and incarceration. Eligible individuals can still claim these exemptions on a tax return. For a full list of exemptions and how to claim them, see our Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting page on IRS.gov/aca.

Find out if you’re eligible for a coverage exemption or must make a payment by using our interactive tool, Am I eligible for a coverage exemption or required to make an Individual Shared Responsibility Payment?.

Federal tax returns that do not reflect at least one of these options – reporting health care coverage, claiming a coverage exemption or reporting a shared responsibility payment - will be rejected if the return is filed electronically. If filed on paper,tax returns that do not reflect at least one of these options will take longer to process and any refunds will be delayed.You should respond promptly to IRS correspondence about your health care coverage.

The Affordable Care Act contains comprehensive health insurance reforms and includes tax provisions that affect individuals, families, businesses, insurers, tax-exempt organizations and government entities. These tax provisions contain important changes, including how individuals and families file t...

01/25/2017

Below are 2016 Tax Changes per the IRS:

Three Extra Days to File and Pay

Taxpayers will have until Tuesday, April 18, 2017 to file their 2016 returns and pay any taxes due. That’s because of the combined impact of the weekend and a holiday in the District of Columbia. The customary April 15 deadline falls on Saturday this year, which would normally give taxpayers until at least the following Monday. But Emancipation Day, a D.C. holiday, is observed on Monday, April 17 giving taxpayers nationwide an additional day. By law, D.C. holidays impact tax deadlines for everyone in the same way federal holidays do. Taxpayers requesting an extension will have until Monday, Oct. 16, 2017 to file.

Refunds Delayed for Some Taxpayers

A law change that went into effect this year requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until at least Feb. 15. Still, even with this change, the fastest way to get a refund is to file electronically and choose direct deposit. Even though the IRS will begin releasing EITC and ACTC refunds on Feb. 15, many early filers will still not have actual access to their refunds until at least the week of Feb. 27. The additional delay is due to several factors including the time needed by banks to process direct deposits.

Under this change, required by the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud. Taxpayers should file as usual, and tax return preparers should submit returns as they normally do. Beginning a few days after Feb. 15, affected taxpayers can check the status of their refund by visiting IRS.gov/Refunds and clicking on Where's My Refund? Or using the IRS2Go mobile app.

Renew ITIN Soon to Avoid Refund Delays

Many Individual Taxpayer Identification Numbers (ITINs) expired on Jan. 1, and affected taxpayers should act soon to avoid refund delays and possible loss of eligibility for some key tax benefits until the ITIN is renewed. An ITIN is used by anyone who has tax-filing or payment obligations under U.S. law but is not eligible for a Social Security number.

Under a PATH Act change, any ITIN not used on a tax return at least once in the past three years has expired. Also now expired is any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN).

It can take up to 11 weeks to process a complete and accurate ITIN renewal application. For that reason, the IRS urges anyone with an expired ITIN needing to file a return this tax season to submit their ITIN renewal application soon. ITIN renewal applicants can get help by visiting IRS.gov/ITIN, consulting a Certified Acceptance Agent or Acceptance Agent or making an appointment at an IRS Taxpayer Assistance Center (TAC).

Olympic Medals and Prize Money Now Tax-Free for Most Olympians

Starting in 2016, most Olympic and Paralympic winners qualify for a new tax benefit. To qualify, the taxpayer’s adjusted gross income (AGI) must be $1 million or less ($500,000 or less, if married filing separately. For these taxpayers, the value of Olympic and Paralympic medals and the amount of United States Olympic Committee (USOC) prize money is not taxable. These amounts are shown in Box 3 on Form 1099-MISC. See the Form 1040 instructions for Lines 21 and 36 for details on how to report.

ABLE Accounts Now Available for Some People with Disabilities

States are now offering specially designed, tax-favored ABLE accounts to people with disabilities who became disabled before age 26. Originally authorized in legislation enacted in late 2014, these special accounts first became widely available during 2016. Recognizing the special financial burdens faced by families raising children with disabilities, ABLE accounts are designed to enable people with disabilities and their families to save for and pay for disability-related expenses.

Contributions totaling up to the annual gift tax exclusion amount -- $14,000, in both 2016 and 2017 -- can generally be made to an ABLE account each year. Though contributions are not deductible, distributions are tax-free if used to pay qualified disability expenses. See the Tax Benefit for Disability page for more information.

Standard Mileage Rates Revised

The standard mileage rates for the use of a car, van, pickup or panel truck are:
•54 cents per mile for business miles driven in 2016, down from 57.5 cents in 2015. For those planning ahead, the 2017 rate, for use on a 2017 return filed next year, is 53.5 cents per mile.
•19 cents per mile driven for medical or moving purposes in 2016, down from 23 cents in 2015. The 2017 rate is 17 cents.
•14 cents per mile driven in service of charitable organizations. This rate is set by law and is unchanged.

The tax instructions have details on taking advantage of each of these provisions.

New Self-Certification Available for Missed Rollover Deadline

Beginning Aug. 24, 2016, a taxpayer who inadvertently fails to properly complete a tax-free rollover of a distribution from an IRA or workplace retirement plan to another eligible retirement program can often qualify to use a new self-certification procedure. Under the procedure, eligible taxpayers, encountering a variety of mitigating circumstances, can qualify for a waiver of the 60-day time limit and avoid possible early distribution taxes. Normally, an eligible distribution from an IRA or workplace retirement plan can only qualify for tax-free rollover treatment if it is contributed to another IRA or workplace plan by the 60th day after it was received. Previously, in most cases, taxpayers who failed to meet the time limit could only obtain a waiver by requesting a private letter ruling from the IRS.

Now, a taxpayer who missed the time limit ordinarily qualifies for a waiver if one or more of 11 circumstances apply to them. They include a distribution check that was misplaced and never cashed, the taxpayer’s home was severely damaged, a family member died, the taxpayer or a family member was seriously ill, the taxpayer was incarcerated or restrictions were imposed by a foreign country.

Ordinarily, the IRS and plan administrators and trustees will honor a taxpayer’s truthful self-certification that they qualify for a waiver under these circumstances. Moreover, even if a taxpayer does not self-certify, the IRS now has the authority to grant a waiver during a subsequent examination. Further details, including a sample self-certification letter that a taxpayer can use to notify the administrator or trustee of the retirement plan or IRA receiving the rollover that they qualify for the waiver, can be found in Revenue Procedure 2016-47, posted on IRS.gov.

The IRS encourages eligible taxpayers wishing to transfer retirement plan or IRA distributions to another retirement plan or IRA to consider requesting that the administrator or trustee make a direct trustee-to-trustee transfer, rather than doing a rollover. Doing so can avoid some of the delays and restrictions that often arise during the rollover process. For more information about rollovers and transfers, check out the Can You Move Retirement Plan Assets? section in Publication 590-A or the Rollovers of Retirement Plan and IRA Distributions page on IRS.gov.

New Deadline for Reporting Foreign Accounts

The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is now the same as for a federal income tax return. This means that the 2016 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 18, 2017. FinCEN will grant filers missing the April 18 deadline an automatic extension until Oct. 16, 2017 to file the FBAR. Specific extension requests are not required. In the past, the FBAR deadline was June 30 and no extensions were available.

In general, the filing requirement applies to anyone who had an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2016. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-Filing System website.

01/22/2017

Hello Everyone!! The IRS will start processing tax returns tomorrow ( January 23, 2017). I will be in T or C to pick up and/or deliver tax returns on Tuesdays and Thursdays this season. Please call or email if you need to set an appointment for a different day and/or time. I look forward to working with all of you this year! Thanks!

04/21/2016

Thank you everyone for a great tax season!

Please remember, I am available all year round for accounting and bookkeeping needs.

01/07/2016

Welcome to Cienega Business Management, Inc. (CBM Inc.)!

The IRS will begin processing tax returns on January 19, 2016 for the 2015 tax year.

CBM, Inc. will start preparing tax returns for the 2015 tax year on January 11, 2016.

I have been a local resident of Sierra County since August 2009 and have been preparing tax returns for approximately 20 years.

I am a Registered Tax Preparer with the IRS and have completed all necessary continuing education credits in order to give my clients the most up to date information possible.

CBM, Inc.'s rate are quite reasonable. Each and every initial consultation is free of charge, and, in addition, any and all fees for work performed are due and payable only after all work is performed and complete customer satisfaction.

Feel free to contact me with any questions at [email protected] or please call 575-740-8834.