Making Dollars and $ense of Your Paycheck

Two questions that I am asked frequently by my clients are: “How much should I be paying in taxes on each paycheck?” and “How many exemptions should I claim for the year?”  My answer is usually suited to the particular client as each client have very unique situations. However, as a tax professional, you can’t know everything. It’s impossible to even try to do so! The last time I was asked this question (started in person and ended via text) the conversation went a little something like this:

Question: “Hey I have a question. One of my co-workers says she changes her exempt status like once or twice a year to have extra money. But she changes her exemptions back right after. Do you recommend that?”
Answer: “It depends on the person, and how well they manage their money. It sounds like your co-worker has a handle on her finances. The common mistake most people make is forgetting to change the exemption back. And honestly, this should be done no more than twice a year after you have paid enough taxes to cover yourself. I personally think that if most my clients increased their exemptions by one, they would see extra money in every paycheck. But this idea is a hard-sell because it means they will have a small tax refund next year.”
Question: “How can I figure out how much I will have to pay in taxes?”
Answer: “Personally, I estimate my federal and state income taxes based on last year’s tax return and the current year’s tax brackets. Then I take that number and divide by the number of paychecks I expect during the year. I request that I pay a flat tax amount every pay period. By doing this, I see my “extra” money throughout the year instead of once a year.”
Question: “Ok. But see that’s you! How can I determine the number of exemptions I need to claim?”
Answer: “The easiest way to determine the the number of exemption to claim is by going to the IRS website and searching for the withholding calculator. When using this calculator you will need your most recent paycheck stub. It will only be effective as the information you put in the calculator. I use it myself periodically, and it has been on point for the last couple of years. Try it out, and let me know what you think”. (You can try it too! Click here).

Question: “Good morning…I just tried doing the calculator thingy you were talking about, which I hope I did it right but it said 3 allowances. I currently claim 1 if that info will help you.”
Answer: In this case you are allowed to claim up to 3 allowances without penalty, “I would claim two to be on the safe side. Tax laws change every year in November. It’s a good rule and habit to check your withholding every June and December”

The key to income tax and withholding is making sure enough is being withheld from every pay check. I know people who are having too much withheld, while others are paying too little income tax. The tax system was designed to balance to 0. Or the worst case: you would have either a small refund or owe a small balance. It is the responsibility of every taxpayer to find that balance, not our employers or the IRS.

Are you claiming the right number of Exemptions- Adjust your tax exemptions
Use these nifty calculators to see if you are on the right track with your taxes. You will need your most recent paycheck stub and prior year’s tax return.
Federal Income Tax Calculator
State Income Tax Calculator
Exemption Calculator
If you want to find out what your net pay will look like, take a look at the Paycheck Calculator. This app will guide you through a line-by-line process and give you an accurate expectation of what you will take home each pay check.
Paycheck Calculator
Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being a Freelance Accountant, Fluent in plain English”.

Selling your home? Find out what you need to know about taxes

If you’re selling your home, there are a few things you need to know about federal taxes.
If you make a profit on the sale of your home, you may need to report the profit as a capital gain when you file your taxes. However, if you owned and lived in the home as your main home for at least two out of the past five years, you may be able to exclude up to $250,000 of the gain ($500,000 for married couples filing jointly). This excluded gain is also not subject to the new Net Investment Income Tax, which is effective as of 2013. If you are eligible to exclude the gain, you don’t need to report the sale on your tax return unless you receive a Form 1099-S, Proceeds from the Real Estate Transactions.
Here are some other points to remember:
· You cannot deduct a loss from the sale of your main home.
· Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523, Selling Your Home, for details.
· If the home was used for business or rental purposes, special rules apply.
· When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822Change of Address, to notify the IRS of your address change.
· If you or your spouse is on qualified official extended duty in the Uniformed Services, the Foreign Service or the intelligence community, you may elect to suspend the 5-year test period for up to 10 years.Publication 523 provides more information about selling your home and is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). This publication includes worksheets to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale and the gain that you can exclude.
Additional resources
IRS Summertime Tax Tip 2013-24  Ten Tax Tips for Individuals Selling Their Home
: https://www.irs.gov/uac/ten-tax-tips-for-individuals-selling-their-home

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being a Freelance Accountant, Fluent in plain English”.

Can I travel this summer and still keep a budget?

Do you wish to travel this summer, but don’t know if you can afford to? Or are you planning on traveling this summer and are worried about how this will impact your budget? Many have wondered about this very statement. You are not alone, I have wondered the same. Here are a few helpful budget tips to help.

1. Shop early- although the official kick-off to the summer is around the corner, this doesn’t limit your chances to relax.  Search fun travel destinations and look for off peak travel dates, this may include traveling on weekdays. For many fun in the sun destinations, early booking to save is 57 days before departure for domestic travel.

2. When it comes to airfare- Don’t buy tickets on Friday. When you book your ticket can have a big impact on your fare. Typically the best day to book your ticket is Sunday followed by Saturday. It’s also important to shop around. Use search engine websites like Expedia, GOOGLE ITA Flight Matrix, AirfareWatchDOG or Hopper. But don’t also forget to shop the airline website directly.

3. Consider a Stay-cation (stay local). Wisconsin and surrounding states within a short drive have wonderful vacation options. I agree you may have to look hard for the sandy beaches, but don’t lose hope they are here. Visit the Travel Wisconsin website to learn more about places to stay and things to do at https://www.travelwisconsin.com/

4. Budget, Budget, Budget- I admit this should have been number 1 on the list. Now that you know what you want to do, let’s check the budget. If you’ve seen some of my earlier post you have started your monthly and annual budget. You know how much money you have coming in and what’s going out. Now that we have an idea of our ideal vacation, now let’s figure out how to fit this within our budget. This is key, so many spend and take a trip without budgeting and deal with the aftermath when they’ve returned. Quickly losing that vacation relaxation glow. Let’s minimize our stress by following a few steps:
1. Know how much you will spend on this trip, and add 15% or more for incidentals (adjustments).
  2. Calculate your savings time by dividing the trip budget amount by the months (or days) till travel.
3. Can you save this amount within this time? Is it reasonable?
4. What can be paid now and what can be paid in the future. Limit the amount you will place on credit. Try not to use credit to cover the entire vacation. This will minimize your after vacation stress.
5.  What other discounts can you find? What can you go without? STAY ON BUDGET
6. Limit the last minute shopping. Make sure you have all the essentials before you travel. Last minute shopping can be very expensive.
7. Know your budgetary impact and plan accordingly. With a monthly budget you can easily track and save for this trip, but don’t just limit this budget to before the trip. Make sure you have a realistic projected amount for travel expenses not paid or spent added to your annual budget.  If this will set you back, then consider a lower cost trip or delaying your travel to a slower month.

We are here to help with your personal budgeting needs. Feel free to give us a call.
Do you know your limits? Post a comment or question.

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being a Freelance Accountant, Fluent in plain English”.

The Cliff Notes to Improving Your Credit Scores

Credit scores should be viewed as a person’s financial report card. Each credit score given by the three credit bureaus is simply an assessment of your financial ranking as a consumer. Credit scores are important because these numbers determine how much interest you will pay when obtaining credit cards and installment loans. Credit scores are also used by insurance companies to determine eligibility and rates, and by potential employers.  Here’s how to fix your score in four steps that take less than a day.

1).  Review your credit report. The next step in improving your credit score is getting a free credit report from each of the 3 credit bureaus. This can be accomplished by visiting www.annualcreditreport.com. Consumers are allowed 1 free credit report from each bureau, each year by law.  Each credit report should be reviewed for and negative incorrect information. If any information is incorrect, you should contact bureau(s) right away to update the information and request that it changes are made immediately. Reviewing your credit reports may vary time due to each person’s financial history. I would suggest spending at least 20 minutes looking at each credit report.
2). Find out what your score is or could be. To find out what your current credit scores ratings are, you can sign up for free trial membership at www.freecreditscore.com. But you would have to remember to cancel your membership before the promotional period is over.  Another option is estimating your credit score with FICO calculator at www.myfico.com. I have used this numerous times, and found it to be within a 10-point range of my actual credit score. Both methods should require no more than 15 minutes of your time.

3). Create a plan, and work that plan. The next step to improving your credit score is creating a budget plan that will either pay down or pay off your debts within 90 days to 6 months. It typically takes 30 days for a credit bureau to update balances. If you have substantial debt (over $30,000), create plan that you can accomplish in 18 months to 3 years. Allocate about 1 hour to creating your budget plan.

4). Don’t believe the hype. The most common misunderstanding about credit is that a zero credit score is a negative thing. Having a credit score of 0 means simply that you don’t have debt with a financial institution. In situations where major lending may be required, your financial habits can be verified through alternative sources of credit. Alternative sources typically include utility payments, cell phone accounts, rental history, and medical bills. Another common misunderstanding is making regular and timely payments on your accounts will automatically improve your scores. The reality is that paying your balances in full each month will increase your credit score. If you are just making the minimum payments on your accounts, do not expect a credit score anywhere near 750.
Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being a Freelance Accountant, Fluent in plain English”.

Knowing your limits…beyond Happy Hour

Knowing your limits…beyond Happy Hour 
I love to hang out with family and friends. Who doesn’t, right? Recently, I noticed that I spend most of my free time hanging out, and I spend a lot of funds doing so. Now, I have to ask myself: When is enough “enough”? I honestly believe that I can save some money, and still have some fun.

I keep a schedule of budget and my cash flow in an Excel spreadsheet. I typically review it 3 to 4 times a month to see if I am staying within my limits. But I never established a true limit for entertainment and dining out. I thought I could hangout with friends without spending money. The truth is I tried and felt extremely bored. It’s time that I find a common ground for my financial goals and my social life style without setting unrealistic restraints.

Set a Limit: My approach to my problem is simple: Make a plan and work the plan. The new plan is to cap all my entertainment expenditures to $120 each month (much more realistic than $0). This should allow me enough “wiggle room” between work, my social calendar, and my financial goals. After all, I did not include a boring life in my 3 year plan and the first step in my plan is to be realistic in regards to my money habits.

Use cash instead of Plastic: To work this plan, I feel that physically drawing out $120 cash each month to spend forces me to stay within that boundary. It’s a form of an adult allowance, and to be honest I miss the days when I did get an allowance. The excess funds will have to be deposited in the safest place I know: my online savings account for emergencies. By doing this, I will be implementing one of my favorite money principles: Out of sight, out of my mind.

Adapt to the plan: I have to change my social habits as well so I can stretch that $120. Two simple changes should do it. The first change I will have to make is eating before I meet up with my girls for cocktails. The second habit I will have to implement is a drink maximum along with a drink price limit. I am the type that loves the $15 martini. By sticking to a 3-$10-drink maximum once a week, I could save $120 each month.

Making these small changes should put me on a path that leads toward my financial goals… without leaving many happy hour celebrations behind.

Do you know your limits? Post a comment or question.

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being a Freelance Accountant, Fluent in plain English”.

Putting My Money Where My Mouth Is?

Each year around this time we begin the conversations around Money, how to save it and where to spend it. Saving money can be a daunting task for anyone, including me, an accountant. I want Éclat Enterprises to grow based on my hard work and my commitment to my clients. Realistically, how can I help my clients, when I am not one myself? Even though I have been practicing various money managing techniques for years, I never bothered to explain how I’ve done it.  Through my Financial Blog post I share tips and techniques I’ve use,  “put my money where my mouth is” and blog about my financial epiphanies.  And for those who know me well… I’m pretty mouthy.

 1. When it comes to managing your finances, Be realistic.  
a. We all want to save, but a drastic shift in your money spending and saving habits can become a set-back. Start small and allow time for realistic saving goals. 

2. Become a “paperless” person.  
  a. Many services provide a % discount for paperless billing. This will also protect you from a possible breach of information. This is ideal for more tech savvy persons, but not so much for others. For some the arrival of paper documents is an indicator and a reminder. Do what is best for you.   

3. Make retirement contributions, savings deposits, and bill payments automatic (in this order). Pay yourself first.
a. 
The book, The Automatic Millionaire, by David Bach and The Forbes Personal Finance outline this format to building personal Wealth.

4. Turn hobbies into additional sources of income.       
a. Small business (Éclat Enterprises)  
 b. Cooking  

5. Lower the cost of fixed payments (i.e. insurance) and installment /revolving debt.

6. Trim the cost of living  
 a. Grocery shopping on the “outside” of the store  
 b. Use less energy- Go energy efficient   
 c. Shop outside of seasons- Plan ahead and buy gifts and goods before or following the season.    

7. Cut back on “luxuries”  
a. Cable / Satellite Television- Consider internet channels and streaming devices. (This may require higher internet speeds, do the math) Resource
b. Cell Phone-Shared data plans- or lower current plan- shop competitors if needed.
c. Manicures/pedicures/hair stylists- Doing at home saves $?
d. No fast food for 60 days?  Sit down experience once a month.
e. Bar-hop at home?  Buying liquor wholesale.

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being a Freelance Accountant, Fluent in plain English”.

Life After April 15th

The tax day deadline was 1 month and 11 days ago. And I am so glad that tax season is over! I love my clients, I really do. But I prefer to handle my clients tax needs January through April each year.

Why? Filing late has financial consequences for most taxpayers. Applying for an extension does NOT give you an extension to pay. So here’s the good, bad and the ugly about filing late.

The Good: If you are due a refund there is no penalty if you file a late tax return. That’s it! Nothing more to see here.

The Bad: If you owe tax, and you failed to file and pay on time (by April 15th), you will usually owe interest and penalties on the tax you pay late. You should file your tax return and pay the tax as soon as possible to stop them. But there’s more to it. Filing late gets ugly.

The Ugly: The IRS has the right to charge you penalties and interest when you owe taxes and file after April 15th.

Here’s the low-down about penalties and interest:

1. The first penalty doled out is the failure-to-file penalty for late filing. This penalty is can be between 5%-25% of your unpaid taxes.

2. The second given is the failure-to-pay penalty for paying late. Just like the failure-to file penalty, it is between 5%-25% of your unpaid taxes.

3. If you file your return 61 days after April 15th (without an extension filed) or October 15th (with an extension filed), there is a minimum late filing penalty, which is the smaller of $135 or 100% of the unpaid tax.

4. If you manage to file and pay your taxes after April 15th, you will subject to a late payment penalty. This penalty is 0.50% of unpaid taxes per month, with a max of 25%. The penalty starts calculating as of April 16th.

5. If you cannot pay your tax bill in full, you can apply for an Installment Agreement. But you will be charged an interest rate of 8% of the life of the agreement. The IRS will give you a maximum of 72 months to pay.

The Moral of the Story: Plan ahead and pay all of your federal income taxes on or before April 15th. If you don’t, the IRS can put you in the slammer. But that is the very last resort!


The IRS offers the recommendations for those who file and pay after April 15th:

File even if you can’t pay. In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty. So if you can’t pay in full, you should file your tax return and pay as much as you can. The IRS will work with you to help you resolve your tax debt. Most people can set up an installment agreement with the IRS using the Online Payment Agreement tool on IRS.gov.

Late payment penalty may not apply to you. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.

No penalty if there is a reasonable cause. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time. There is also penalty relief available for repayment of excess advance payments of the premium tax credit for 2014.

Jéneen R. Perkins is a freelance accountant and is fluent in plain English, not “Accountant-ese”.

If You Don’t Use Me, Do Your Taxes for Free!

This message is straight from the horse’s (IRS) mouth:

43 million Americans have saved by using IRS Free File. You can use name-brand software or fillable forms to prepare and e-file your federal tax return – all for free. Combined with direct deposit, electronic filling is the quickest way to get your refund.

Here are some tips about IRS Free File:

1. Go to IRS.gov/FreeFile.  The only way to use IRS Free File is through the IRS website. Once you choose a Free File company, you’ll go to their website to prepare and e-file your federal tax return.

2. Find tax breaks. The question and answer format of tax software will help you find tax breaks. This could include tax credits, such as the Earned Income Tax Credit. The software selects the appropriate tax forms and does the calculations for you. Free File can help with the new health care law tax provisions as well.

3. Free for all.  If you made $60,000 or less you can use brand-name software. If you earned more, you can use Free File Fillable Forms. This option uses electronic versions of IRS paper forms. It is best for people who are used to doing their own taxes.

4. Easy online extensions.  If you can’t finish your tax return by the April 15 deadline, it’s easy to use Free File to ask for a six-month extension. An extension of time to file is not an extension of time to pay. If you owe federal taxes, you need to estimate the amount and pay it with your request to avoid penalties and interest.

The IRS partners with 14 leading tax software companies, the Free File Alliance, to make this service available. Some companies offer free federal and free state returns. Choose your option on IRS.gov/freefile.

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

Accounting Apps that will Help You

These are cloud accounting apps my mom could use!

Last year around this time I posted Cloud Accounting Options for Non-Accountants . This article covered some of the well-known and unsung heroes of the cloud accounting applications. Well, I have learned more and experimented more…with the accounting applications that is. Most accounting software and cloud applications operate the same from my perspective. However, I look for solutions that make my clients’ lives easier. Here are my top picks (in random order) for cloud accounting solutions for those who are doing the books themselves in a quick and dirty format.


Who (Uses it): Zoho has over 10 million users in its ecosystem, Books has less than 1 million. People who are CRM savvy should use this!

What (It Offers): A streamlined accounting add-on that syncs with Zoho CRM. Cool!!!

When (Did the Company start): Started in June 2014

Where (Is it used or based): Used in Over 120 countries, Offices in California, Texas, India, China, and Japan.

How (Much does it cost): $24 per month, or $240 per year

Why (I like it): It has mobile applications across all platforms! You can find Zoho Books in the Apple App, Google Play, Windows Phone, and Amazon Apps stores.

Who (Uses it): over 5 million users, best for freelancers who charges hourly

What (It Offers): A simple invoicing, expense monitoring, time tracking application all in one!

When (Did the Company start): Started in 2003

Where (Is it used or based): Used in Over 120 countries, HQ in Toronto, Canada

How (Much does it cost): $0-$39.95 per month

Why (I like it): It offers a full reporting module, it is simple for my clients to use, and has mobile capabilities. Also I helps you find an accountant near you that is a FreshBooks Certified Beancounter if you need additional help.

Who (Uses it): around 1.8 million users, works for best for companies that do not have inventories of stuff (product to sell) and have less than 10 employees

What (It Offers): “Point-click” accounting that is not intimidating

When (Did the Company start): Launched in 2010

Where (Is it used or based): Used in Over 200 countries, HQ in Toronto, Canada

How (Much does it cost): $0 per month. Some add-ons cost per use or month.

Why (I like it): This company actually makes stuff with small business owners in mind. I also love the fact you get a free personal budget platform with your Wave business account.


Who (Uses it): GoDaddy.com has over 12 million customers, Bookkeeping has around 350,000 users, works best for solo-preneurs that sell online

What (It Offers): Cash basis accounting in a simple DIY format

When (Did the Company start): Launched in 2008, acquired in 2012

Where (Is it used or based): All over the freaking globe, HQ in California

How (Much does it cost): $9.95 per month or $99 per year.

Why (I like it): It has integrations with “The Big 3” of e-commerce: Etsy, Amazon, and eBay.

Who (Uses it): around 1 million users, works for any type of business

What (It Offers): A comprehensive accounting solution that is compatible with Apple and Android products

When (Did the Company start): Founded in 1983

Where (Is it used or based): Used in Over 130 countries, HQ in California

How (Much does it cost): $12.95 to 39.95 per month

Why (I like it): It has all the major reports. It has improved drastically in the last 9 months. Also, it has the most add-ons and plug-ins in the industry.

Have more questions? Ask your friendly neighborhood accountant by calling me to discuss what options are available to you.

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”

Why I Hate Networking

I decided to write this post while at the 2014 Small Business Academy last week. Why? I was listening the speakers and I realized I only wanted to meet someone from two of the organizations represented today. I don’t want to hand my card to everyone. (Someone actually did this, shamelessly.)

As I have become more seasoned as an entrepreneur, I realized some things are not for me. Two of those things: coffee and massive networking events.

Here are 5 reasons why I hate networking at huge networking events:

1. Someone assumes that they know all about me and what I do. It never fails at each event someone blurts out, “I already have an accountant! ” or “I prefer to use Turbo Tax.”. The truth is: I am  relatively new on the scene. I am here to make new connections, that’s it. Keep calm… please.

2. I am handed a business card, and there is an expectation I give mine back. I only go to an event with 5 cards. And I give them out with a certain level of snootiness. I listen to the person to see if there is any genuine business interest in having my info. If there’s no interest,  why bother?  And unofficial reason I do not give my card out is I receive enough spam and unusual newsletters already.

3. Some folks just talk too much. I admit I ask a lot of questions, so I can listen for a need for sort.  But I shouldn’t know your how life story after asking, “What do you do?”

4. Those sticky name tags are the worse. They never stay on! Also, people just try to read your name tag to figure out who you are. How about you just ask me what my name is? At some events, the name tags are color coded. In those situations, I always pick a random color just to screw with people. Sometimes the colored name tags identify me as prey for some sales people.

5. No one likes to follow-up except insurance agents. I always hear the” I need to meet other entrepreneurs.” and a bunch other statements from those who say they want to network.  I meet these folks all the time, but they don’t call back or respond. WTF!

I usually stick to smaller events that based in communities throughout Southeastern Wisconsin. Why? I get better leads. I meet great people every time. And I get the best word of mouth testimonials from these groups. So I am sticking to my gatherings, breakfasts, and lunches at co-working spaces, local non-franchise restaurants and coffeehouses.

If you have a strong dislike for networking events, read this article. It gives some tips to help those who absolutely hate networking. It also links to another article called 10 Tips for Successful Business Networking.

Thanks for reading my rant! Hopefully you got some useful information out of it.

<span “font-size:10.5pt;font-family:”arial”,sans-serif;=”” mso-fareast-font-family:”times=”” roman”;mso-fareast-theme-font:minor-fareast”=””>Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in plain English instead of “Accountant-ese”.