Learning Center for Tax and Financial Insights

Article Highlights: Foreign-Account Reporting Requirement Financial Crimes Enforcement Network Penalties for Failure to File Types of Accounts Affected Form 8938 Filing Requirements All United States entities (including citizens and resident aliens, as well as corporations, partnerships, and trusts) that have financial interests in or authority over one or more foreign financial accounts (e.g., bank accounts and securities) need to report these relationships to the U.S. Treasury, provided that the aggregate value of those accounts exceeds $10,000 at any time during the year. Failure to file the required forms can result in severe penalties.Due Date – For 2018, the due date for filing this report is April 15, 2019. This filing is not made with the IRS; rather, it involves completing Bank Secrecy Act forms and electronically filing them through the U.S. Treasury’s Financial Crimes Enforcement Network. Extensions – The Financial Crimes Enforcement Network grants an automatic extension to October 15, 2019, for filers who fail to meet the Report of Foreign Bank and Financial Accounts (FBAR) due date of April 15, 2019. Accordingly, specific requests for this extension are not required. Failure to Report Penalties – A civil penalty of up to $10,000 may be imposed for a non-willful failure to report; the penalty for a willful violation is the greater of $100,000 or 50% of the account’s balance at the time of the violation. A willful violation is also subject to criminal prosecution, which can result in a fine of up to $250,000 and jail time of up to five years. CAUTION: On Schedule B of the Form 1040 tax return, you must state whether you have a financial interest in or signature authority over one or more foreign financial accounts. If you answer yes but don’t file the FBAR, your failure to file may be considered willful, which could subject you to the larger fine and jail time. Financial Account – The term “financial account” includes securities; brokerage, savings, checking, deposit, and time deposit accounts; commodity futures and options; mutual funds; and even nonmonetary assets (e.g., gold). Such an account is classified as “foreign” if the financial institution that holds it is located in a foreign country. Shares of a foreign stock or of a mutual fund that invests in foreign stocks are not considered foreign if they are held in an account at a U.S. financial institution or brokerage, so they do not need to be reported under the FBAR rules. In addition, an account maintained at a branch of a foreign bank is not considered a foreign financial account if the branch is physically located in the U.S.

May 10 - Report Tips to Employer If you are an employee who works for tips and received more than $20 in tips during April, you are required to report them to your employer on IRS Form 4070 no later than May 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.May 31 - Final Due Date for IRA Trustees to Issue Form 5498

Withdrawing money early from your 401(k), your IRA or some other type of retirement fund is something that may be necessary for a wide range of reasons. Maybe you're dealing with unexpected medical bills and could use a bit of financial assistance. Perhaps you've gone through some type of life-changing event like a divorce. Regardless — it happens, and it's totally understandable. It is not, however, a decision that should be made lightly. If you want to withdraw funds from your 401(k) or IRA and avoid the often hefty penalties that follow, you'll need to keep a few key things in mind. Avoiding Penalties on Retirement Accounts: What You Need to Know All told, there are actually a number of different ways that you can qualify for a penalty exemption on withdrawals from these types of retirement accounts — provided that you're using that money for very specific purposes. Currently, these include but are not limited to things like: Education expenses. Provided that your expenses count as tuition, books, fees to a university or other supplies, you're allowed to take an IRA distribution for "qualified higher education expenses." You're about to buy a new home. If you are buying a home in your name for the first time, you can take out up to $10,000 from your IRA without suffering a penalty. If you happen to be married, your spouse is able to do the same — so long as neither of you has had any type of ownership interest in another piece of property at any point over the last two years. Medical expenses. If you happen to be dealing with medical expenses that themselves are greater than 10% of your adjusted gross income for the current calendar year, you'll be happy to know that you can pay for them directly out of your IRA without dealing with a penalty of any kind. Family circumstances. If at any point you've been required to pay funds to a member of your family (like your children, dependents or even a divorced husband or wife), you can get the penalty fee waived on your withdrawal.

May 10 - Social Security, Medicare and Withheld Income Tax File Form 941 for the first quarter of 2019. This due date applies only if you deposited the tax for the quarter in full and on time.May 15 - Employer’s Monthly Deposit Due If you are an employer and the monthly deposit rules apply, May 15 is the due date for you to make your deposit of Social Security, Medicare and withheld income tax for April 2019. This is also the due date for the non-payroll withholding deposit for April 2019 if the monthly deposit rule applies.

There is an excellent chance that even if you're an expert in your particular industry, you're probably not an expert in small business finances. This may not seem like that big of an issue on the surface. However, in order to make the best decisions possible for your company, you need to have complete and accurate information to work from. It's easy to see how failing to grasp the financial side of the equation can quickly cause problems everywhere else. For example, just because your company looks profitable on the surface doesn't necessarily mean that this is the case. In fact, there are a number of clear ways in which your SMB might not be as profitable as it could be that are certainly worth exploring.Not Everything Is About SalesMaybe the most important thing for you to understand is that just because sales are high does NOT mean that your company is experiencing profitable growth in the way you think it is. This is actually just one small part of a much larger (and more complicated) story.Sales could be going up AND profits could be going down in a number of ways. Maybe you're selling a higher volume of low-margin items while also not selling as many high-margin goods. Perhaps the cost to actually make your product has increased higher (and faster) than your revenue. It's possible that your operating expenses are so high that even though you're increasing sales, your business is still not as profitable as it could be.The lesson here is that you need to look beyond sales growth to find out what is really happening with your company. If you do discover a problem like those outlined above, come up with a specific solution designed to address those particular issues in the most effective way possible.Dive Deep Into Your Line-Item ProfitsLikewise, you need to recognize the difference between bottom-line profits and line-item profits — particularly in terms of the health of your business year-over-year. Instead of just looking at the bottom line, look at the tangible contribution that each product or service makes to that bottom line.Break down all of your sales by product lines, individual products and services. Is Product A losing so much money that it is eating into the profits generated by the hugely successful Product B? If that's the case, Product B probably isn't as "successful" as you thought it was.

The data in your QuickBooks company file contains some of the most sensitive information on your computer. Make sure it’s secure. Your customer list is gold. And those Social Security and bank card numbers in your payroll, client, and vendor records need to be protected from intruders and only viewed by authorized employees. It’s not just large corporations and financial institutions that get hacked. That’s what the bad guys want you to think. In reality, small businesses are often the victims of data breaches because their owners think they’re immune from data theft and destruction. Even if you’re password-protecting your PCs and running antivirus and anti-malware software, there’s more you need to do when it comes to your accounting records. Here’s what we suggest. Restrict access by setting up user permissions. If you have multiple staff members using QuickBooks, don’t share the same user name and password. That obviously gives everyone access to all data and activity. If something goes awry, you have no way of knowing when or how it happened, and who was responsible. To protect yourself and everyone else who logs in, it’s critical that all users have their own unique logins. They should only be allowed to access information and functions that relate to their job duties. You can restrict QuickBooks users to certain screens and activities. To assign these permission levels, open the Company menu and click on Set Up Users and Passwords, then Set Up Users. This opens the User List window, where you should be identified as the Admin. Click Add User. Enter a user name and password for an employee who needs access (this can be changed later). Check the box in front of Add this user to my QuickBooks license. Tip: Not sure how many users are allowed under your current license? Click F2 and look in the upper left corner. If you need to add licenses, let us know. Click Next. The next screen lists three options. You can grant access to all areas or to selected areas. You can also create a login for us as your external accountant, which lets us see everything except sensitive customer data. Select the second option and click Next. You can see in the image above that you can give the employee different levels of responsibility. When you’ve made your choice, click Next. The subsequent nine screens deal with different areas of QuickBooks and their related activities. Tip: When you need to change your password, which you should do at a minimum every three months, go to Company | Set Up Users and Passwords | Change Your Password.