Our regularly updated newsletter provides timely articles to help you achieve your financial goals.
Advance Child Tax Credit Payments Start This Month
The Internal Revenue Service has started sending letters to more than 36 million American families who, based on tax returns filed with the agency, may be eligible to receive monthly Child Tax Credit payments starting July 15, 2021. Here's what families need to know:
The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. The letters are going to families who may be eligible based on information they included in either their 2019 or 2020 federal income tax return or who used the Non-Filers tool on IRS.gov last year to register for an Economic Impact Payment.
Families who are eligible for advance Child Tax Credit payments will receive a second, personalized letter listing an estimate of their monthly payment, which begins July 15.
Most families do not need to take any action to get their payment. Normally, the IRS will calculate the payment amount based on the 2020 tax return. If that return is not available, either because it has not yet been filed or has not yet been processed, the IRS will instead determine the payment amount using the 2019 return.
Eligible families will begin receiving advance payments, either by direct deposit or check. The payment will be up to $300 per month for each qualifying child under age 6 and up to $250 per month for each qualifying child ages 6 to 17. The IRS will issue advance Child Tax Credit payments on July 15, August 13, September 15, October 15, November 15, and December 15.
Eligible Families Should File Tax Returns As Soon as Possible
The IRS urges individuals and families who haven't yet filed their 2020 return – or 2019 return – to do so as soon as possible so they can receive any advance payment they're eligible for. Doing so ensures that the IRS has their most current banking information, as well as key details about qualifying children. This includes people who don't normally file a tax return, such as families experiencing homelessness, the rural poor, and other underserved groups.
Throughout the summer, the IRS will be adding additional tools and online resources to help with the advance Child Tax Credit. One of these tools will enable families to unenroll from receiving these advance payments and receive the full amount of the credit when they file their 2021 return next year instead. In addition, later this year, individuals and families will also be able to go to IRS.gov and use a Child Tax Credit Update Portal to notify IRS of changes in their income, filing status, or number of qualifying children; update their direct deposit information, and make other changes to ensure they are receiving the right amount as quickly as possible.
New Online Tool Available
An online Non-filer Sign-up tool is scheduled to go live on the IRS.gov website on July 15 to help eligible families who don't normally file tax returns register for the monthly Advance Child Tax Credit payments. This tool provides a free and easy way for eligible people who don't make enough income to have an income tax return-filing obligation to provide the IRS the basic information needed—name, address, and Social Security numbers - to figure and issue their Advance Child Tax Credit payments. Often, these individuals and families receive little or no income, including those experiencing homelessness and other underserved groups.
People who did not file a tax return for 2019 or 2020 and who did not use the IRS Non-filers tool last year to register for Economic Impact Payments can also use this tool, which enables them to provide required information about themselves, their qualifying children age 17 and under, their other dependents, and their direct deposit bank information so the IRS can quickly and easily deposit the payments directly into their checking or savings account.
The tool is an update of last year's IRS Non-filers tool and is designed to help eligible individuals who don't normally file income tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.
Eligible families who already filed or plan to file 2019 or 2020 income tax returns should not use this tool. Once the IRS processes their 2019 or 2020 tax return, the information will be used to determine eligibility and issue advance payments. Families who want to claim other tax benefits, such as the Earned Income Tax Credit for low- and moderate-income families, should not use this tool and instead file a regular tax return.
Other useful new online tools, include:
Child Tax Credit Changes
The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for qualifying children under the age of 6 and to $3,000 per child for qualifying children between ages 6 and 17. Before 2021, the credit was worth up to $2,000 per eligible child, and 17 year-olds were not considered as qualifying children for the credit.
The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:
For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every extra $1,000 in modified AGI.
In addition, the entire credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.
Watch Out for Scams
As always, everyone should be on the lookout for scams related to both Advance Child Tax Credit payments and Economic Impact Payments. The only way to get either of these benefits is by either filing a tax return with the IRS or registering online through the Non-filer Sign-up tool, exclusively on IRS.gov. Any other option is a scam.
Be sure to watch out for scams using email, phone calls, or texts related to the payments. Remember: The IRS never sends unsolicited electronic communications asking anyone to open attachments or visit a non-governmental website.
Help is Just a Phone Call Away
Don't hesitate to contact the office for the most up-to-date information on the Child Tax Credit and advance payments.
Small Business: Understanding Payroll Expenses
Federal law requires most employers to withhold federal taxes from their employees' wages. Whether you're a small business owner who is just starting or one who has been in business for a while - ready to hire an employee or two - here is what you should know about withholding, reporting, and paying employment taxes.
Federal Income Tax
Small businesses first need to figure out how much tax to withhold. Small business employers can better understand the process by starting with an employee's Form W-4 and the withholding tables described in Publication 15, Employer's Tax Guide. Please call if you need additional help understanding withholding tables.
Social Security and Medicare Taxes
Most employers also withhold social security and Medicare taxes from employees' wages and deposit them along with the employers' matching share. In 2013, employers became responsible for withholding the Additional Medicare Tax on wages that exceed a threshold amount. There is no employer match for the Additional Medicare Tax, and certain types of wages and compensation are not subject to withholding.
Federal Unemployment (FUTA) Tax
Employers report and pay FUTA tax separately from other taxes. Employees do not pay this tax or have it withheld from their pay. Businesses pay FUTA taxes from their own funds.
Depositing Employment Taxes.
Generally, employers pay employment taxes by making federal tax deposits through the Electronic Federal Tax Payment System (EFTPS). The amount of taxes withheld during a prior one-year period determines when to make the deposits. Publication 3151-A, The ABCs of FTDs: Resource Guide for Understanding Federal Tax Deposits and the IRS Tax Calendar for Businesses and Self-Employed are helpful tools.
Failure to make a timely deposit can mean being subject to a failure-to-deposit penalty of up to 15 percent. But the penalty can be waived if an employer has a history of filing required returns and making tax payments on time. Penalty relief is available, however. For more information, please call the office.
Reporting Employment Taxes
Generally, employers report wages and compensation paid to an employee by filing the required forms with the IRS. E-filing Forms 940, 941, 943, 944, and 945 is an easy, secure, and accurate way to file employment tax forms. Employers filing quarterly tax returns with an estimated total of $1,000 or less for the calendar year may now request to file Form 944, Employer's ANNUAL Federal Tax Return once a year instead. At the end of the year, the employer must provide employees with Form W-2, Wage and Tax Statement, to report wages, tips, and other compensation. Small businesses file Forms W-2 and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration and, if required, state or local tax departments.
Save Time - File Payroll Taxes Electronically
Running a business with employees can be hard work. Business owners can make things a little easier on themselves by filing payroll and employment taxes electronically. Not only does it save time, but it is also secure and accurate, and the filer receives an email to confirm the IRS received the form within 24 hours.
While the easiest way to file payroll and employment taxes is to have your tax professional file the forms for you, some employers prefer to do it themselves. Employers submitting the forms themselves will need to purchase IRS-approved software. There may be a fee to file electronically. The software will require a signature in one of two ways. The first way is by scanning and attaching Form 8453-EMP, Employment Tax Declaration for an IRS e-file Return. The second is to apply for an online signature PIN. Taxpayers should allow at least 45 days to receive their PIN. The software will prompt the user on the steps needed to request the PIN..
Some of the forms employers can e-file include:
Questions about payroll taxes?
If you have any questions about payroll taxes don't hesitate to contact the office.
Employee Relocation: What Happens to Your Home?
Employees and small business owners often have questions about what to do with an employee's home - and what the tax consequences might be - when they move to a new job location. Here are some answers:
Most employers want to protect the employee from being relocated against financial loss on a "forced" sale of their home. Here are the most common ways to do that, and the tax consequences to the employee:
The employer reimburses the employee's financial loss. Here, the employer has the home appraised and agrees to pay the employee the difference between the appraised fair market value and any lesser amount the employee gets on the sale. Such reimbursement would cover the employee's costs of the sale.
Financial loss as described here is not the same as a tax loss. The financial loss is the home's value less what the employee collects under "forced sale" conditions. In the current real estate market, the value is not always clearly determined. The relocating employee might think the home is worth more, based on earlier appraisals or comparative sales. A tax loss is the property's tax basis (cost plus capital investments) less what's collected on the sale.
If the employee has a gain on the sale (the amount collected on the sale exceeds the basis), the gain can be tax-exempt up to $250,000 ($500,000 on certain husband-wife sales). Tax-loss on the sale of one's residence, however, is not deductible.
The employer's reimbursement of the employee's financial loss is taxable pay to the employee. Employers who want to shelter the employee from any tax burden on what is usually an employer-instigated relocation may "gross-up" the reimbursement to cover the tax. But gross-up can be costly. For example, a grossed-up income tax reimbursement for a $10,000 loss would be $15,385 for an employee in the 35% bracket - more where Social Security taxes or state taxes are also grossed-up.
Employer buys the home. Few employers directly buy and sell employees' homes. But many do this indirectly, effectively becoming the homes' owners, through relocation firms acting as the employers' agents. Known as a Guaranteed Home Sale (formerly known as a Guaranteed Buy-Out or GBO), there is no tax on the employee when using either of these two options:
Option 1. The relocation firm as employer's agent buys the home for its appraised fair market value and later resells it. The firm collects a fee from the employer, covering sales costs and any financial loss to the firm on resale. The IRS now says that this fee is not taxable to the employee. Also, the employee's gain on the sale to the relocation firm qualifies for the tax exemption under the limits described above ($250,000 or $500,000).
Option 2. The relocation firm offers to buy the home for its appraised value, but the employee can choose to pursue a higher price through a broker they choose from a list provided by the relocation firm. If a higher offer is made, the relocation firm pays that price to the employee (whether or not the home is then sold to that bidder). Here again, the employee is not taxed on the firm's fee, and the gain is tax-exempt under the above limits.
Either option works for the employee, letting him or her realize full value on the sale of the home (with possibly greater value through Option 2), without an element of taxable pay.
If the deal is structured so that the relocation firm facilitates a sale from the employee to a third-party buyer (rather than to the relocation firm), the employer's payment of the relocation firm's fee is taxable to the employee.
The Employer's Side
Reimbursing the employee's loss. This is fully deductible as a business expense, as would be any additional amount paid as a gross-up.
Buying the home. The change in the IRS rule was good news for employees, but it gave nothing to employers whose tax treatment wasn't covered. The official IRS position is that employer costs (other than carrying costs such as mortgage interest, maintenance, and fees to a relocation management company) are deductible only as capital losses, which, for corporate employers, are deductible only against capital gains. Taxpayer advocates tend to argue that employer costs here are fully deductible ordinary costs of doing business.
Questions about Relocating?
If you've been offered a job that requires relocating to another state and wondering how it might affect your tax situation, don't hesitate to call.
Settling Tax Debt With an IRS Offer in Compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer's tax liabilities for less than the full amount owed. That's the good news. The bad news is that not everyone can use this option to settle tax debt; the IRS rejected nearly 60 percent of taxpayer-requested offers in compromise. If you owe money to the IRS and wonder if an IRS offer in compromise is the answer, here's what you need to know.
Who is Eligible?
If you can't pay your full tax liability or doing so creates a financial hardship, an offer in compromise may be a legitimate option. However, it is not for everyone, and taxpayers should explore all other payment options before submitting an offer in compromise to the IRS. Taxpayers who can fully pay the liabilities through an installment agreement or other means generally won't qualify for an OIC.
To qualify for an OIC, the taxpayer must have:
IRS Acceptance Criteria
Whether your offer in compromise is accepted depends on several factors; however, typically, an offer in compromise is accepted when the amount offered represents the most the IRS can expect to collect within a reasonable time frame - referred to as the reasonable collection potential (RCP). In most cases, the IRS won't accept an OIC unless the amount offered by a taxpayer is equal to or greater than the reasonable collection potential (RCP), which is how the IRS measures the taxpayer's ability to pay.
The RCP is defined as the value that can be realized from the taxpayer's assets, such as real property, automobiles, bank accounts, and other property. In addition to property, the RCP also includes anticipated future income minus certain amounts allowed for basic living expenses.
The IRS may accept an OIC based on one of the following criteria:
Doubt as to liability. An OIC meets this criterion only when there's a genuine dispute about the existence or amount of the correct tax debt under the law.
Application and Fees
When requesting an OIC from the IRS, use Form 656, Offer in Compromise, and also submit Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals. If you are applying as a business, use Form 433-B (OIC), Collection Information Statement for Businesses. A taxpayer submitting an OIC based on doubt as to liability must file additional forms as well.
A nonrefundable application fee, as well as initial payment (also nonrefundable), is due when submitting an OIC. If the OIC is based on doubt as to liability, no application fee is required, however.
If the taxpayer is an individual (not a corporation, partnership, or other entity) who meets Low-Income Certification guidelines, they do not have to submit an application fee or initial payment. They will not need to make monthly installments during the evaluation of an offer in compromise.
The initial payment is based on which payment option you choose for your offer in compromise:
If the IRS rejects your OIC, you will be notified by mail. The letter will explain why the IRS rejected the offer and provide detailed instructions on appealing the decision. An appeal must be made within 30 days from the date of the letter.
If you have any questions about the IRS Offer in Compromise program, don't hesitate to contact the office for more information.
What Is the Net Investment Income Tax?
While the Net Investment Income Tax (NIIT) tends to affect wealthier individuals most often, in certain circumstances, it can also affect moderate-income taxpayers whose income increases significantly in a given tax year. Here's what you need to know.
What is the Net Investment Income Tax?
The Net Investment Income Tax (NIIT) is a 3.8 percent tax on certain net investment income of individuals, estates, and trusts with income above statutory threshold amounts referred to as modified adjusted gross income or MAGI.
What is Included in Net Investment Income?
In general, investment income includes, but is not limited to interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities, and passive business activities such as rental income or income derived from royalties.
What is Not Included in Net Investment Income?
The following types of income are not included:
Individuals with MAGI of $250,000 (married filing jointly) or $200,000 for single filers are taxed at a flat rate of 3.8 percent on investment income such as dividends, taxable interest, rents, royalties, certain income from trading commodities, taxable income from investment annuities, REITs and master limited partnerships, and long and short-term capital gains. The NIIT is a flat rate tax paid in addition to other taxes owed and threshold amounts are not indexed for inflation.
Non-resident aliens are not subject to the NIIT; however, if a non-resident alien is married to a US citizen and is planning to file as a resident alien as married filing jointly, there are special rules. Please call if you have any questions about this.
Investment income is generally not subject to withholding, so NIIT is going to affect your tax liability for the 2021 tax year. In addition, even lower-income taxpayers not meeting the threshold amounts may be subject to NIIT if they receive a windfall such as a one-time sale of assets that bumps their MAGI up high enough to be subject to the NIIT.
Strategies to Minimize NIIT
Tax planning is crucial. For example, if you are anticipating a windfall (this tax year or next), there are several strategies that you could use to minimize your MAGI and reduce or possibly eliminate tax liability when you file your tax return. These include but are not limited to:
Sale of a Home
The Net Investment Income Tax does not apply to any amount of gain that is excluded from gross income for regular income tax purposes ($250,000 for single filers and $500,000 for a married couple) on the sale of a principal residence from gross income for regular income tax purposes. In other words, only the taxable part of any gain on the sale of a home has the potential to be subject to NIIT, providing the taxpayer is over the MAGI threshold amount.
Estates and Trusts Affected
Estates and Trusts are subject to NIIT if they have undistributed net investment income and also have adjusted gross income over the dollar amount at which the highest tax bracket for an estate or trust begins for such taxable year. In 2021, this threshold amount is $13,050.
Special rules apply for certain unique types of trusts such a Charitable Remainder Trusts and Electing Small Business Trusts. Some trusts, including "Grantor Trusts" and Real Estate Investment Trusts (REIT), are not subject to the NIIT.
Non-qualified dividends generated by investments in a REIT and taxed at ordinary tax rates may be subject to the Net Investment Income Tax.
Reporting and Paying the Net Investment Income Tax
Individual taxpayers should report (and pay) the tax on Form 1040. Estates and Trusts report (and pay) the tax on Form 1041. Please call if you need assistance or have any questions abut reporting and paying the NIIT.
For tax years 2018 and beyond, individuals, estates, and trusts that expect to pay estimated taxes should adjust their income tax withholding or estimated payments to account for the tax increase and avoid underpayment penalties. The NIIT is not withheld from an employed individual's wages; however, it is possible to request that additional income tax be withheld.
Wondering how the Net Investment Income Tax could affect your tax situation? Give the office a call today and find out.
10 Tips to Help You Start Saving for Retirement
It's never too late to start, but the sooner you begin saving, the more time your money has to grow. Gains each year build on the prior year's gains - that's the power of compounding - and the best way to accumulate wealth. These ten tips will help you get started:
What to Know About Backup Withholding
Backup withholding is a federal tax on income that otherwise typically doesn't require tax withholding, such as 1099 and W2-G income. Taxpayers who receive this type of income may have backup withholding deducted from their payments. Here is what you should know about backup withholding:
1. Backup withholding is required on certain nonpayroll amounts when certain conditions apply.
The payer (employer) making such payments to the payee (individual taxpayer) doesn't generally withhold taxes from certain payments. As such, the payees report and pay taxes on this income when they file their federal tax returns. There are, however, certain situations when the payer is required to withhold a percentage of tax to make sure the IRS receives the tax due on this income. The payer's requirement to withhold taxes from payments not otherwise subject to withholding is known as backup withholding. Backup withholding can apply to most kinds of payments reported on Forms 1099 and W-2G.
2. Backup withholding rate is a percentage of a payment.
The current backup withholding tax rate is 24%.
3. Payments subject to backup withholding include:
Examples of when the payer must deduct backup withholding:
If a payee has not provided the payer a Taxpayer Identification Number (TIN):
A TIN is one of the following numbers: Social Security, employer identification, Individual taxpayer identification, or adoption taxpayer identification. If the IRS notified the payer (employer) that the payee (individual taxpayer) provided a TIN that does not match their name in IRS records, the payer does not secure the correct TIN from the payee. Payees should make sure that the payer has their correct name and TIN to avoid backup withholding.
Questions about backup withholding? Don't hesitate to contact the office for assistance.
Six Steps to Protect Against Taxpayer ID Theft
Tax-related identity theft occurs when someone uses a taxpayer's stolen personal information, such as a Social Security number, to file a tax return claiming a false refund. Thieves are actively working to steal taxpayer information and identities, and everyone should do everything they can to prevent identity theft.
Here are six ways to help taxpayers protect themselves against identity theft:
1. Always use security software. This software should have firewall and anti-virus protections.
2. Use strong, unique passwords. They should also consider using a password manager.
3. Learn to recognize and avoid phishing emails, threatening calls, and texts from thieves. These scammers pose as legitimate organizations such as banks, credit card companies, and even the IRS.
4. Don't click on links in unsolicited emails or messages from unknown senders. People shouldn't click on links or download attachments from emails that seem suspicious, even if they appear to be from senders they know.
5. Protect personal information and that of any dependents. For example, people shouldn't routinely carry around their Social Security cards. They should also make sure tax records are secure.
6. Get an Identity Protection PIN. The Identity Protection PIN is a six-digit code known only to the taxpayer and the IRS that helps prevent identity thieves from filing fraudulent tax returns using a taxpayer's personally identifiable information.
Please call the office if you have any concerns about taxpayer ID theft.
Tips for Taxpayers With Hobby Income
Hobby activities are a source of income for many taxpayers. For instance, during the pandemic many people may have started making handmade items and selling them for a profit. As a reminder, this income must be reported on tax returns.
What is considered a hobby?
A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. This differs from those that operate a business with the intention of making a profit. When determining whether their activity is a business or hobby, taxpayers must consider the following nine factors:
Reporting hobby income
All factors, facts and circumstances with respect to the activity must be considered. And, no one factor is more important than another. If a taxpayer receives income from an activity that is carried on with no intention of making a profit, the income they receive must be reported on Schedule 1, Form 1040, line 8.
For questions about hobby income, please contact the office.
It's Hurricane Season: Safeguarding Tax Records
With hurricane season in full swing, now is a good time to create or review emergency preparedness plans for surviving natural disasters, which include more than just hurricanes. For example, in the last year, the Federal Emergency Management Agency (FEMA) declared major disasters following hurricanes, tropical storms, tornadoes, severe storms, flooding, wildfires, and an earthquake. Individuals, organizations, and businesses should take time now to make or update their emergency plans.
Here are five steps taxpayers can take to safeguard their tax records before disaster strikes:
1. Secure key documents and make copies. Taxpayers should place original documents such as tax returns, birth certificates, deeds, titles, and insurance policies inside waterproof containers in a secure space. Duplicates of these documents should be kept with a trusted person outside the area of the taxpayer. Scanning them for backup storage on electronic media such as a flash drive is another option that provides security and portability.
2. Document valuables and equipment. Current photos or videos of a home or business's contents can help support claims for insurance or tax benefits after a disaster. All property, especially expensive and high-value items, should be recorded. The IRS disaster-loss workbooks in Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook, can help individuals and businesses compile lists of belongings or business equipment.
3. Employers should check fiduciary bonds. Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider. As such, employers should carefully choose a payroll service provider.
4. Rebuilding documents. Reconstructing records after a disaster may be required for tax purposes, getting federal assistance, or insurance reimbursement. If you have lost some or all your records during a disaster, please call the office immediately for assistance.
After FEMA issues a disaster declaration, the IRS may postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief.
5. Get assistance from a tax professional. Taxpayers who do not reside in a covered disaster area but suffered impact from a disaster may qualify for disaster tax relief and other available options. Please call if you have any questions or need more information about safeguarding your tax records.
Save Time By Memorizing Transactions in QuickBooks
Accounting involves a lot of repetition. You send invoices and receive payments and pay bills, over and over. Sometimes they're similar enough every month that you'd swear you already processed them.
QuickBooks has a feature that can both save time by reducing duplicate data entry and minimize errors. Once you've created a transaction, but before you save it, you can memorize it. Then when it comes up again, the software will have created a template that you can either send as is or make any changes necessary. If more than one transaction is due on the same day, you can save all of them as a group and dispatch them together.
This repetition is easy to set up, but you need to take care with it. Here's how it works:
Sales and Purchase Forms
You can memorize multiple types of transactions, including invoices, sales orders, and bills. Let's look at this process by creating a repeating invoice. You might want to use a sample file to practice. Open the File menu and highlight Open Previous Company, then select either a product or service-based company.
Click Create Invoices on the home page (or Customers | Create Invoices). Fill out the form using the sample data. In our example, we're billing the customer for four weekly gardening sessions. Click Memorize in the toolbar or Edit | Memorize Invoice. This small window will open:
Figure 1: When you memorize a transaction, you have multiple options for setting up its processing.
QuickBooks gives you three ways to handle the transaction. You can:
Add to my Reminders List. QuickBooks will add an entry in your Reminders list X number of days before the invoice should be entered. In order to get it, of course, you need to have Reminders turned on. Open the Edit menu and select Preferences, then Reminders | My Preferences. Click in the box in front of Show Reminders List when opening a Company file. Then click Company Preferences and select Show Summary or Show List next to Memorized Transactions Due and enter the number of days before the due date that you want to be reminded. Click OK.
Do Not Remind Me. You might select this for a transaction that doesn't have a set schedule, just so it's available when you need it.
Automatic Transaction Entry. Just like it sounds. QuickBooks will automatically enter the transaction according to the schedule you establish, changing only the date. If you select this option, you need to select How Often the transaction will be processed (Weekly, Monthly, etc.) and what the Next Date will be (be sure this date is in the future). In our example above, the customer only had a contract for a year, so we entered 12 (months), which included the Next Date. Then choose the Days In Advance To Enter.
When you're done, click OK.
Adding to a Group
There's a fourth option in this window: Add to Group. You can set up groups of memorized transactions whose due dates are the same, or similar enough to be stored together. Open the Lists menu and select Memorized Transaction List. Once you've memorized a transaction, you'll see it listed there. Right click anywhere on that screen and select New Group to open this window:
Figure 2: You can create Groups of transactions that have similar due dates.
Give your Group a recognizable name and fill out the rest of the fields, then click OK. It will now appear in the list of memorized transactions. Open or create a transaction that you want to include in the Group and click Memorize again. In the window that opens, click the button in front of Add to Group and click the down arrow next to the field for Group Name to open the list. Select the correct one and click OK.
You can memorize bills, too, following a similar process, but we'd caution you about using the automated transaction entry option for these unless your payment is exactly the same every month.
If you do automate a transaction and the amount changes, or if you want to edit a memorized transaction for any reason, open the Memorized Transaction List. There are two ways to edit. If you want to change your reminder option, frequency, etc., highlight the one you want to edit and right click on it. Select Edit Memorized Transaction and make your modifications, then click OK.
If you want to alter the content of the transaction itself, double click on it, make your changes, and click Memorize. Click on Replace in the small window that opens, then save the transaction. You can also choose Delete Memorized Transaction and create a new one.
It's not difficult to memorize transactions in QuickBooks, but you can get tangled up when you try to edit them or when you're setting up the automated entry option. If you're unsure of these features, or anything else when dealing with QuickBooks that is unfamiliar or complicated, don't hesitate to contact the office. As always, if you need support for your small business accounting operations, help is just a phone call away.
Tax Due Dates for July 2021
Employees Who Work for Tips - If you received $20 or more in tips during June, report them to your employer. You can use Form 4070.
Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in June.
Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in June.
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