How to Save for College Tax-Free
According to the US Census Bureau, individuals with a bachelor's degree have the potential to earn more than double the salary of those with just a high school diploma, so even though tuition and fees are on the rise, most people feel that a college education is well worth the investment. That said however, the need to set money aside for their child's education often weighs heavily on parents.
Fortunately, there are two savings plans available to help parents save money that also provide certain tax benefits. Let's take a closer look.
The two most popular college savings programs are the Qualified Tuition Programs (QTPs) or Coverdell Education Savings Accounts (ESAs). Whichever one you choose, try to start when your child is young. The sooner you begin, the less money you will have to put away each year.
Example: Suppose you have one child, age six months, and you estimate that you'll need $120,000 to finance his college education 18 years from now. If you start putting away money immediately, you'll need to save $3,500 per year for 18 years (assuming an after-tax return of 7%). On the other hand, if you put off saving until your son is six years old, you'll have to save almost double that amount every year for 12 years.
Financial Calculator: College Savings Planner
Use this calculator to help develop and fine-tune your child's college education savings plan.
How Much Will College Cost?
Based on the survey completed for the 2011 Trends in College Pricing, the average cost for tuition, fees, and room and board for 2011-12 was:
$17,131 per year for 4-year public (in state) colleges and universities, an increase of 6.0% from the 2010-11 academic year.
$38,589 per year for 4-year private colleges and universities, an increase of 4.4% from the 2010-11 academic year.
According to Trends in Student Aid, full-time students receive on average $16,000 of financial aid per year in the form of grants and tax benefits for private 4-year institutions, $6,100 per year for public 4-year institutions, and $3,400 per year for public 2-year institutions.
Saving with Qualified Tuition Programs (QTPs)
Qualified Tuition Programs, also known as 529 plans, are often the best choice for many families. Every state now has a program allowing persons to prepay for future higher education, with tax relief. There are two basic plan types, with many variations among them:
The prepaid education arrangement. With this type of plan one is essentially buying future education at today's costs, by buying education credits or certificates. This is the older type of program and tends to limit the student's choice to schools within the state; however, private colleges and universities often offer this type of arrangement.
Education Savings Account (ESA). With an ESA, contributions are made to an account to be used for future higher education.
Tip: When approaching state programs, one must distinguish between what the federal tax law allows and what an individual state's program may impose.
You may open a 529 plan in any state, but when buying prepaid tuition credits (less popular than savings accounts), you will want to know what institutions the credits will be applied to.
Unlike certain other tax-favored higher education programs, such as the American Opportunity Credit (formerly the Hope Credit) and Lifetime Learning Credit, federal tax law doesn't limit the benefit to tuition, but can also extend it to room, board, and books (individual state programs could be narrower).
The two key individual parties to the program are the Designated Beneficiary (the student-to-be) and the Account Owner, who is entitled to choose and change the beneficiary and who is normally the principal contributor to the program.
There are no income limits on who may be an account owner. There's only one designated beneficiary per account. Thus, a parent with three college-bound children might set up three accounts. Some state programs don't allow the same person to be both beneficiary and account owner.
Tax Rules Relating to Qualified Tuition Programs
Income Tax. Contributions made by an account owner or other contributor are not tax deductible for federal income tax purposes, but earnings on contributions do grow tax-free while in the program.
Distributions from the fund are tax-free to the extent used for qualified higher education expenses. Distributions used otherwise are taxable to the extent of the portion which represents earnings.
A distribution may be tax-free even though the student is claiming an American Opportunity Credit (formerly the Hope Credit) or Lifetime Learning Credit, or tax-free treatment for a Coverdell ESA distribution, provided the programs aren't covering the same specific expenses.
Distribution for a purpose other than qualified education is taxable to the one getting the distribution. In addition, a 10% penalty must be imposed on the taxable portion of the distribution, which is comparable to the 10% penalty in Coverdell ESAs.
The account owner may change beneficiary designation from one to another in the same family. Funds in the account roll over tax-free for the benefit of the new beneficiary.
Tip: In 2009, the American Recovery and Reinvestment Act (ARRA) added expenses for computer technology/equipment or Internet access to the list of qualifying expenses. Software designed for sports, games, or hobbies does not qualify, unless it is predominantly educational in nature. In general, however, expenses for computer technology are not considered qualified expenses.
Gift Tax. For gift tax purposes, contributions are treated as completed gifts even though the account owner has the right to withdraw them. Thus they qualify for the up-to-$13,000 annual gift tax exclusion in 2012 (no change from 2011). One contributing more than $13,000 may elect to treat the gift as made in equal installments over the year of gift and the following four years, so that up to $65,000 can be given tax-free in the first year.
However, a rollover from one beneficiary to another in a younger generation is treated as a gift from the first beneficiary, an odd result for an act the "giver" may have had nothing to do with.
Estate Tax. Funds in the account at the designated beneficiary's death are included in the beneficiary's estate, another odd result, since those funds may not be available to pay the tax.
Funds in the account at the account owner's death are not included in the owner's estate, except for a portion thereof where the gift tax exclusion installment election is made for gifts over $13,000. For example, if the account owner made the election for a gift of $65,000 in 2012, a part of that gift is included in the estate if he or she dies within five years.
Tip: A Qualified Tuition Program can be an especially attractive estate-planning move for grandparents. There are no income limits, and the account owner giving up to $65,000 avoids gift tax and estate tax by living five years after the gift, yet has the power to change the beneficiary.
State Tax. State tax rules are all over the map. Some reflect the federal rules, some reflect quite different rules. For specifics of each state's program, see College Savings Plans Network (CSPN). If you need assistance with this, please contact us.
Saving with Coverdell Education Savings Accounts (ESAs)
You can contribute up to $2,000 in 2012 to a Coverdell Education Savings account (a Section 530 program formerly known as an Education IRA) for a child under 18. These contributions are not tax deductible, but grow tax-free until withdrawn. Contributions for any year, for example 2012 can be made through the (unextended) due date for the return for that year (April 15, 2013). There is no adjustment for inflation, therefore the $2,000 contribution limit is expected to remain at $2,000 for 2012 and beyond.
Only cash can be contributed to a Coverdell ESA and you cannot contribute to the account after the child reaches his or her 18th birthday.
The beneficiary will not owe tax on the distributions if they are less than a beneficiary's qualified education expenses at an eligible institution. This benefit applies to higher education expenses as well as to elementary and secondary education expenses.
Anyone can establish and contribute to a Coverdell ESA, including the child and an account may be established for as many children as you wish; however, the amount contributed during the year to each account cannot exceed $2,000. The child need not be a dependent, and in fact does not even need to be related to you. The maximum contribution amount in 2012 for each child is subject to a phase out limitation with a modified AGI between $190,000 and $220,000 for joint filers and $95,000 and $110,000 for single filers.
A 6% excise tax (to be paid by the beneficiary) applies to excess contributions. These are amounts in excess of the applicable contribution limit ($2,000 or phase out amount) and contributions for a year that amounts are contributed to a Qualified Tuition Program for the same child. The 6% tax continues for each year the excess contribution stays in the Coverdell ESA.
Exceptions. The excise tax does not apply if excess contributions made during 2011 (and any earnings on them) are distributed before the first day of the sixth month of the following tax year (June 1, 2012, for a calendar year taxpayer). However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. The excise tax does not apply to any rollover contribution.
The child must be named (designated as beneficiary) in the Coverdell document, but the beneficiary can be changed to another family member, for example, to a sibling where the first beneficiary gets a scholarship or drops out. Funds can also be rolled over tax-free from one child's account to another child's account. Funds must be distributed not later than 30 days after the beneficiary's 30th birthday (or 20 days after the beneficiary's death if earlier). For "special needs" beneficiaries the age limits (no contributions after age 18, distribution by age 30) don't apply.
Withdrawals are taxable to the person who gets the money, with these major exceptions: Only the earnings portion is taxable (the contributions come back tax-free). Also, even that part isn't taxable income, as long as the amount withdrawn doesn't exceed a child's "qualified higher education expenses" for that year.
The definition of "qualified higher education expenses" includes room and board and books, as well as tuition. In figuring whether withdrawals exceed qualified expenses, expenses are reduced by certain scholarships and by amounts for which tax credits are allowed. If the amount withdrawn for the year exceeds the education expenses for the year, the excess is partly taxable under a complex formula. A different formula is used if the sum of withdrawals from a Coverdell ESA and from the Qualified Tuition Program exceed education expenses.
As the person who sets up the Coverdell ESA, you may change the beneficiary (the child who will get the funds) or roll the funds over to the account of a new beneficiary, tax-free, if the new beneficiary is a member of your family. But funds you take back (for example, withdrawal in a year when there are no qualified higher education expenses, because the child is not enrolled in higher education) are taxable to you, to the extent of earnings on your contributions, and you will generally have to pay an additional 10% tax on the taxable amount. However, you won't owe tax on earnings on amounts contributed that are returned to you by June 1 of the year following contribution.
Considering the wide differences among state plans, federal and state tax issues, and the dollar amounts at stake, please call us before getting started with any type of college savings plan.
Tips for Safeguarding Financial Records
With the 2012 hurricane season now under way and memories of tornadoes and other natural disasters fresh in our collective minds, now is the time for individuals and businesses to safeguard their tax records by taking a few simple steps.
Take Inventory. Gather all of your documents and make an inventory list. You may find everything in a single location, but more likely than not, you’ll have to hunt around to find all of your documents. Don't forget to check computer files, storage boxes, file cabinets, old and new computers and laptops, thumb drives, and external hard drives and backup disks.
Depending on how complex your finances are, you may opt for a single list or choose to make two separate lists. The first list might include items such as insurance policies, mortgages and deeds, car titles, wills, pension and retirement-plan documents, powers of attorney, medical directives, and so on. The second list might contain a list of less essential documents such as brokerage accounts, loans that have been paid off, end-of-year bank statements, and copies of old tax returns and supporting documentation.
Create a Backup Set of Records and Store Them Electronically. Keeping a backup set of records -- including, for example, bank statements, tax returns, insurance policies, etc. -- is easier than ever now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet.
Even if the original records are provided only on paper, they can be scanned and converted to a digital format. Once the documents are in electronic form, taxpayers can download them to a backup storage device, such as an external hard drive, or burn them onto a CD or DVD (don't forget to label it).
You might also consider online backup, which is the only way to ensure that data is fully protected. With online backup, files are stored in another region of the country, so that if a hurricane or other natural disaster occurs, documents remain safe. Contact us if you need assistance with this.
Visually Document Valuables. Another step you can take to prepare for disaster is to photograph or videotape the contents of your home, especially items of higher value. Call us for more help compiling a room-by-room list of belongings.
A photographic or video record can help prove the fair market value of items for insurance and casualty loss claims. Store the photos or video with a friend or family member who lives outside the area, or as part of your online document backup.
Update Emergency Plans. Emergency plans should be reviewed annually. Personal and business situations change over time, as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.
Check on 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.
If disaster strikes, call us right away. We can help you get back copies of tax returns and all attachments, including your Form W-2. We're here to help.
Residential Energy Tax Credits for 2012
Summer's here and if you've been thinking about "going green" and making your home more energy efficient, then there's no time like the present, especially if you take advantage of residential energy tax credits still available to homeowners.
The Residential Energy Efficient Property Credit is available to individual taxpayers to help pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and residential wind turbines. Qualifying equipment must have been installed on or in connection with your home located in the United States.
Geothermal pumps, solar energy systems, and residential wind turbines can be installed in both principal residences and second homes (existing homes and new construction), but not rentals. Fuel cell property qualifies only when it is installed in your principal residence (new construction or existing home). Rentals and second homes do not qualify.
The tax credit is 30% of the cost of the qualified property, with no cap on the amount of credit available, except for fuel cell property.
Generally, labor costs can be included when figuring the credit. Any unused portions of this credit can be carried forward. Not all energy-efficient improvements qualify so be sure you have the manufacturer's tax credit certification statement, which can usually be found on the manufacturer's website or with the product packaging.
What's Included in the Tax Credit?
Geothermal Heat Pumps. Must meet the requirements of the ENERGY STAR program that are in effect at the time of the expenditure.
Small Residential Wind Turbines. Must have a nameplate capacity of no more than 100 kilowatts (kW).
Solar Water Heaters. At least half of the energy generated by the "qualifying property" must come from the sun. The system must be certified by the Solar Rating and Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed. The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling. Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.
- Solar Panels (Photovoltaic Systems). Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.
Fuel Cell (Residential Fuel Cell and Microturbine System.) Efficiency of at least 30% and must have a capacity of at least 0.5 kW.
We're happy to help you sort out the tax credits available for your "green" home improvements this summer. Give us a call or email us today!
Travel & Entertainment: Maximizing Tax Benefits
Tax law allows you to deduct two types of travel expenses related to your business, local and what the IRS calls "away from home".
First, local travel expenses. You can deduct local transportation expenses incurred for business purposes, for example the cost of getting from one location to another via public transportation, rental car, or your own automobile. Meals and incidentals are not deductible as travel expenses, although as you will read later in this guide, you can deduct meals as an entertainment expense as long as certain conditions are met.
Second, you can deduct away from home travel expenses-including meals and incidentals; however, if your employer reimburses your travel expenses, your deductions are limited.
Local Transportation Costs
The cost of local business transportation includes rail fare and bus fare, as well as the costs of using and maintaining an automobile used for business purposes. For those whose main place of business is their personal residence, business trips from the home office and back are considered deductible transportation and not non-deductible commuting.
You generally cannot deduct lodging and meals unless you stay away overnight. Meals may be partially deductible as an entertainment expense.
Away From-Home Travel Expenses
You can deduct one-half of the cost of meals (50%) and all of the expenses of lodging incurred while traveling away from home. The The IRS also allows you to deduct 100% of your transportation expenses--as long as business is the primary reason for your trip.
Here's a list of some deductible away-from-home travel expenses:
- Meals (limited to 50%) and lodging while traveling or once you get to your away-from-home business destination.
- The cost of having your clothes cleaned and pressed away from home.
- Costs for telephone, fax or modem usage.
- Costs for secretarial services away-from-home.
- The costs of transportation between job sites or to and from hotels and terminals.
- Airfare, bus fare, rail fare, and charges related to shipping baggage or taking it with you.
- The cost of bringing or sending samples or displays, and of renting sample display rooms.
- The costs of keeping and operating a car, including garaging costs.
- The cost of keeping and operating an airplane, including hangar costs.
- Transportation costs between "temporary" job sites and hotels and restaurants.
- Incidentals, including computer rentals, stenographers' fees.
- Tips related to the above.
There are limits and restrictions on deducting meal and entertainment expenses. Most are deductible at 50%, but there are a few exceptions. Meals and entertainment must be "ordinary and necessary" and not "lavish or extravagant" and directly related to or associated with your business. They must also be substantiated (see below).
Your home is considered a place conducive to business. As such, entertaining at home may be deductible providing there was business intent and business was discussed. The amount of time that business was discussed does not matter.
Reasonable costs for food and refreshments for year-end parties for employees, as well as sales seminars and presentations held at your home are 100% deductible.
If you rent a skybox or other private luxury box for more than one event, say for the season, at the same sports arena, you generally cannot deduct more than the price of a non-luxury box seat ticket. Count each game or other performance as one event. Deduction for those seats is then subject to the 50% entertainment expense limit.
If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. The amounts separately stated for food and beverages must be reasonable.
Deductions are disallowed for depreciation and upkeep of "entertainment facilities" such as yachts, hunting lodges, fishing camps, swimming pools, and tennis courts. Costs of entertainment provided at such facilities are deductible subject to entertainment expense limitations.
Dues paid to country clubs or to social or golf and athletic clubs however, are not deductible. Dues that you pay to professional and civic organizations are deductible as long as your membership has a business purpose. Such organizations include business leagues, trade associations, chambers of commerce, boards of trade, and real estate boards.
Tip: To avoid problems qualifying for a deduction for dues paid to professional or civic organizations, document the business reasons for the membership, the contacts you make and any income generated from the membership.
Entertainment costs, taxes, tips, cover charges, room rentals, maids and waiters are all subject to the 50% limit on entertainment deductions.
How Do You Prove Expenses Are "Directly Related"?
Expenses are directly related if you can show:
- There was more than a general expectation of gaining some business benefit other than goodwill.
- You conducted business during the entertainment.
- Active conduct of business was your main purpose.
Record-keeping And Substantiation Requirements
Tax law requires you to keep records that will prove the business purpose and amounts of your business travel, entertainment, and local transportation costs. For example, each expense for lodging away from home that is $75 or more, must be supported by receipts. The receipt must show the amount, date, place, and type of the expense.
The most frequent reason that the IRS disallows travel and entertainment expenses is failure to show the place and business purpose of an item. Therefore, pay special attention to these aspects of your record-keeping.
Keeping a diary or log book--and recording your business-related activities at or close to the time the expense is incurred--is one of the best ways to document your business expenses.
If you need help documenting business travel and entertainment expenses, don't hesitate to call us. We'll help you set up a system that works for you--and satisfies IRS record-keeping requirements.
Managing Tax Records After You File
Keeping good records after you file your taxes is a good idea, as they will help you with documentation and substantiation if the IRS selects your return for an audit. Here are five tips to keeping good records.
1. Normally, tax records should be kept for three years.
2. Some documents, such as records relating to a home purchase or sale, stock transactions, IRAs, and business or rental property, should be kept longer.
3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
Call us today if you need more information on what kinds of records you should keep and for how long.
10 Things to Know About Capital Gains
Did you know that almost everything you own and use for personal or investment purposes is a capital asset? Capital assets include a home, household furnishings and stocks and bonds held in a personal account.
When you sell a capital asset, the difference between the amount you paid for the asset and its sales price is a capital gain or capital loss. Here are 10 facts you should know about how gains and losses can affect your federal income tax return.
1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.
2. When you sell a capital asset, the difference between the amount you sell it for and your basis -- which is usually what you paid for it -- is a capital gain or a capital loss.
3. You must report all capital gains.
4. You may only deduct capital losses on investment property, not on personal-use property.
5. Capital gains and losses are classified as long-term or short-term. If you hold the property more than one year, your capital gain or loss is long-term. If you hold it one year or less, the gain or loss is short-term.
6. If you have long-term gains in excess of your long-term losses, the difference is normally a net capital gain. Subtract any short-term losses from the net capital gain to calculate the net capital gain you must report.
7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2012, the maximum capital gains rate for most people is 15 percent. For lower-income individuals, the rate may be 0 percent on some or all of the net capital gain. Rates of 25 or 28 percent may apply to special types of net capital gain. These rates are set to expire on December 31, 2012. Starting in 2013 the maximum rate is scheduled to increase to 20 percent (10 percent for taxpayers in the 15% bracket).
8. If your capital losses exceed your capital gains, you can deduct the excess on your tax return to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.
9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.
10. In 2011, a new form was introduced (Form 8949, Sales and Other Dispositions of Capital Assets) to calculate capital gains and losses and list all capital gain and loss transactions. Subtotals are then carried over to Schedule D (Form 1040), where gain or loss is calculated.
Give us a call us if you need more information about reporting capital gains and losses.
Injured or Innocent Spouse Relief: The Facts
You may be an injured spouse if you file a joint tax return and all or part of your portion of a refund was, or is expected to be, applied to your spouse's legally enforceable past due financial obligations. Here are seven facts about claiming injured or innocent spouse relief.
1. To be considered an injured spouse you must have paid federal income tax or claimed a refundable tax credit, such as the Earned Income Credit or Additional Child Tax Credit on the joint return, and not be legally obligated to pay the past-due debt.
2. Special rules apply in community property states. Give us a call for more information about the factors used to determine whether you are subject to community property laws.
3. If you filed a joint return and you're not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing Form 8379, Injured Spouse Allocation, which may be filed electronically with your original tax return or by itself after you receive an IRS notice about the offset. If you need assistance with this, please call us.
4. If you are claiming innocent spouse relief you must file form 8857, Request for Innocent Spouse Relief. This relief from joint liability applies only in certain limited circumstances. However, in 2011 the IRS eliminated the two-year time limit that applies to certain relief requests.
Are you an injured or innocent spouse? Call us. We'll make sure you get the relief you are entitled to.
Best Filing Status for Married Couples
Summer is wedding season. After you say, "I do" you'll have two filing status options to choose from when filing your 2012 tax returns: married filing jointly, or married filing separately.
Married Filing Jointly
You can choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions.
If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.
Joint Responsibility. Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.
Married Filing Separately
If you are married, you can also choose married filing separately as your filing status. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return.
We Can Help
Give us a call if you're not sure which status to file under. If you and your spouse each have income, we will figure your tax both ways and let you know which filing status gives you the lowest combined tax.
Backup or Portable Company File? How to Decide
When you think about it, it's pretty amazing that Intuit is able to pack the lion's share of your financial data into one giant company file. It certainly makes it easier to separate from QuickBooks and move when necessary.
There are actually three options for saving and relocating that file. You know about backups, since you should be producing them religiously. You generate them so that if QuickBooks -- or your computer itself --- stops working or your file becomes corrupt, you can re-create the entire environment. Portable company files are more limited, and are best used when you want to save your file to a temporary location and/or email it to someone else.
You would only use an Accountant's Copy, of course, when you want us to check your progress. We'll work with you on setting this up.
Figure 1: Once you save and send off an Accountant's Copy, you can't work on transactions created before the dividing date.
The Critical Backup
We can't emphasize this enough: Losing your financial data can be the beginning of the end of your company. You won't know what you're owed, so you'll be unable to collect. You'll miss vendor payments. Payroll will be impossible to reconstruct, and you won't be able to submit payroll taxes. And how will you know what your income tax obligation is?
It can happen to you.
QuickBooks simplifies this process. Click File | Create Backup… You'll be asked whether you want to back up locally -- to a network folder or thumb drive, for example – or to the cloud, using Intuit Data Protect (fees apply). If you select the local preference, click on Options to designate a location in this window:
Figure 2: Choose from options in this window to create a backup profile.
Click OK, then Next. QuickBooks will ask when you want to save your backup copy and offer scheduling options. When you're done, click Finish.
Warning: If you're using Intuit Sync Manager, there are special rules about copying the company file. Let us help you handle this safely.
Just the Facts
Portable company files are more compact than backup files, so they can be easily e-mailed as attachments or copied onto another computer. But they don't contain everything that backups do. They lack, for example, letters, logos, attachments, images and templates. Don't use this option if changes will be made, since they can't be merged back into the file.
Be sure to create a current backup before you begin to move your file.
To save a portable company file, click on File | Create Copy (you can do this to copy any kind of file, actually). This window opens:
Figure 3: Click File | Create Copy… to access any of QuickBooks' three options.
Select Portable company file and click the Next button. In the following window, you'll browse to a location for your file. QuickBooks will already have entered the name and will save your data in .qbm format. Click Save, then OK when QuickBooks tells you it must close and reopen your file first. Click OK again when you're told that the file has been created.
Opening the File Elsewhere
When you're ready to open the file at another location, click File | Open or Restore Company… In the window that opens, select Restore a portable file. The Open Portable Company File window opens; make sure that the file's location is displayed in the Look in: field. Click Open. QuickBooks then asks where you want to restore the file.
The following step is critical. Rename your file unless you want to overwrite your current company file. You can add a date or some other identifying information like a version number.
Click Save. QuickBooks will convert your portable file to a standard company file with a .qbw extension.
QuickBooks makes it easy to create copies of your data, but an error here can threaten your company's future. We can help ensure that that doesn't happen.
Tax Due Dates for July 2012
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.
Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the second quarter of 2012. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until August 10 to file the return.
Employers - Federal unemployment tax. Deposit the tax owed through June if more than $500.
Employers - If you maintain an employee benefit plan, such as a pension, profit sharing, or stock bonus plan, file Form 5500 or 5500-EZ for calendar year 2011. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends.
Certain Small Employers - Deposit any undeposited tax if your tax liability is $2,500 or more for 2012 but less than $2,500 for the second quarter.
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