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Werner, O'Meara's Best Year-End Tax Tips

1. Know where you are by estimating your current tax liability.

2. If you owe taxes, consider adding to your Federal income tax withheld or consider paying your January 15th Estimated Tax Payment.

3. Establish a retirement plan by December 31st. Depending on the plan, this can be funded up until due date of your tax return including extensions. IRA contributions are due by April 15th.

4. If you are itemizing deductions or claiming medical or miscellaneous deductions, consider bunching these deductions in the current year by pre-paying next year's deductions.

5. Pay charitable contributions before year-end. These must be received by the charity before December 31st.

6. Use up your balances in your cafeteria (Sec. 125) plans.

7. Those over 70½ need to take their Required Minimum Distributions.

8. Recognize capital losses from your investments to offset capital gains.

9. Consider doing a Roth IRA Rollover to offset tax losses, control income, or to take advantage of Roth IRA’s tax benefits.

10. Certain businesses must pay bonuses to their owners before year-end in order to deduct the bonus this year and reduce overall taxes.

11. Businesses should consider buying and placing equipment into service before year end to get accelerated depreciation deductions.

Our last suggestion - after considering all of the above tax steps pour a tall mug of eggnog and look forward to a happy and prosperous New Year.

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1099 Penalty Increased

The maximum penalty for not filing the required 1099s has increased from $350 to $500 for each instance of non-filing. As a reminder, 1099s are generally required to be distributed to recipients by January 31, and filed with the IRS by the last day of February. If you think you may need to issue a 1099 from your trade or business, or have any other questions regarding the issuance of 1099s, give us a call.

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Shred This? A Guide to Document Retention

As the year comes to a close, files do too. Before you pack away your information, it might be a good idea to check the back of your file cabinet for documents you don’t need any more. Here are some general guidelines for when to answer “YES!” to shredding:

Filed tax returns - Never. Keep these as proof of filing.

Tax return supporting documents (bank & credit card statements, receipts, etc) - 7 full years after date of filing.

Business receipts - 7 full years after the date of filing.

Purchase papers (business asset purchase receipts, HUD-1 Forms for home purchases, etc) - As long as you own the asset; then treat as a tax return supporting document.

Remember, to make sure you dispose of these papers appropriately. If you don’t own a shredder, keep your eye out for a community shredding drive – many of these are either free, or require a minimal contribution. When in doubt, feel free to give us a call!

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The Importance of Good Accounting in the Information Age

In history, various periods get tagged with a description. There were the Dark Ages followed by the Age of Enlightenment, later came the Industrial Age and more recently the Atomic Era. Our era seems likely to be destined as the “Information Age”. The proliferation of computerization, use of the internet, and the increased presence of smart phones are now sending great quantities of information at lightning speed to the far corners of the world. In this Age of Information, accounting has become more important than ever. Businesses are doing comprehensive double entry accounting on a real-time basis and are providing real-time performance information to owners, managers, creditors and other interested parties. Small companies are using inexpensive general ledger software, midsized companies are adopting various canned software and large companies customize systems to meet their unique needs. In the end, the results travel faster, but are also expected to travel better. As a result, missteps in business, and especially accounting missteps, are greatly magnified and now cause indelible harm, whereas in the past most businesses could have merely stepped around reporting issues.

Why is this important to your business? It is because accounting is how business communicates how well it is doing to those interested. With good accounting, a misstep can be promptly identified and corrected before major damage occurs. Moreover, accounting reports tell others how the business is doing in this environment compared to budgets, prior periods, and competitors.

At Werner, O’Meara & Co., we make it a priority to advise our business clients on how to improve their accounting methods and means of reporting business results. We can help you improve the accounting and reporting systems at your business — please call us when the time is right.

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Sales Tax Tips for Businesses

For businesses that deliver products or services to different locations, reporting sales tax can be a difficult task. The State of Washington Department of Revenue (DOR) requires a breakdown of sales into location codes. For example, there are five different location codes in Everett alone. The DOR’s website has tools to help businesses save time and report sales tax properly.

The first step is finding the correct location code and sales tax rate for the delivery address. On the DOR homepage,, there is a link that says, “I need to find a sales tax rate”. When you click on this link you simply enter the delivery address for the location code and tax rate.

If your business is using QuickBooks, the DOR has a tool that you can use to upload all of the location codes into QuickBooks. When you go to create an invoice, all the state’s location codes will be set up as sales tax items. Once you select the correct code, it will populate the appropriate tax rate. To upload this tool, visit the DOR homepage and click on “Sales Tax Rates”, then select “QuickBooks file format”. This will direct you to download a QuickBooks file to your hard drive. The website will list several effective dates, in almost all cases you will want to select the most current date. The instructions are also on the DOR website at

Remember that the State changes the sales tax rates periodically; the DOR recommends that you update your rates once a quarter. If you have questions, please feel free to call anytime.

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Contact Information:

Werner, O'Meara & CO., PLLC

PO Box 2037 •
19109 36th Ave W, Suite 213
Lynnwood, WA 98036

Phone: 425.774.8888
Fax: 425.774.4834