Month: December 2018

Last month, we explained that the process of paying bills in QuickBooks requires two separate sets of actions. We went over what’s required to enter bills and to set up reminders, so they don’t get overlooked. This month’s column will walk you through the second step: paying the bills.

You’ll remember you must first click Enter Bills on the home page (or open the Vendors menu and select Enter Bills), which opens a graphical representation of a bill. Select a Vendor from the drop-down list and complete the remaining fields in the top box. Make sure the Amount Due carries over to the lower part of the screen under either the Expenses or Items tab and that the rest of the fields there are completed and correct before you save the bill.

A bill, once saved, will be available to you when you click Pay Bills on the home page. That action will open a window like this one:

Figure 1: When you click Pay Bills on QuickBooks’ home page, a screen containing a table like this will open. 

In the upper left corner, you’ll first SELECT BILLS TO BE PAID by either defining a date range or asking to see all bills that have been entered but not yet paid. To the right of those options is the Filter Byfield. You can open the list and click All Vendors or click on a specific vendor. Selecting an option in the Sort By field allows you to change the display order of the list of bills.

Selecting Bills

Next, you’ll have to indicate which bills you want to pay, and by what method. It may take more than one pass if you’re using different payment methods for different vendors. If that’s the case, you’ll have to select bills in batches. Click in the box in front of each bill that you want to pay (or click Select All Bills below the table).

There are several columns in the table you will see. Some will already be filled in for each vendor with information that was included in the actual bill, like REF. NO. and AMT. DUE. Others refer to discounts and credits. If you’ve already set up vendor discounts (early payment, for example) or are entitled to a credit (overpayment, returned merchandise, etc.) and have set up QuickBooks to apply those to bills automatically, they should appear in those columns.

Tip: If you are the company administrator, you can set up this option. Open the Edit menu and select Preferences | Bills. With the Company Preferences tab active, check the boxes in front of Automatically Use Credits and Automatically Use Discounts, and select the correct Default Discount Account. Discounts and credits are rather complex concepts in QuickBooks, and you might need help setting them up. If so, don’t hesitate to call.

The final step in bill paying on this page is to enter the AMT. TO PAY at the end of each applicable row.

Dispatching Payments

If you’ve selected All Bills (or chosen a batch that will use the same payment method), you’ll need to deal with the lower half of the bill-pay screen, which will look something like this:

Figure 2: Whether you’ll be dealing with credits and discounts or not you’ll still have some work to do at the bottom of the bill-paying screen.

You can click on Go to Bill if you need to see the original form; also, verify the Payment Date and Terms are correct. You can still Set Discount and Set Credits here, but again, please don’t do so until we’ve scheduled a session to go over these advanced tools if you plan to use them. Select a payment method for the bills you’ve selected; the options and account to the right of your choice will change depending on which it is.

When you’re done, click Pay Selected Bills and do any follow-up work that’s requested.

The bill-pay process in QuickBooks has a lot of moving parts, some of which may need prep work before you can dispatch bills. If you’re planning to use this element of QuickBooks, please call to set up a consultation. Although beneficial, it’s one of the more complicated processes in the software, and it must be carried out with extreme accuracy. When you’re ready to get started, please call the office for assistance.

• By Leon Clinton
• December 29, 2018

Tax reform legislation passed in December 2017 included numerous changes that affect businesses this year. One of them allows businesses to write off most depreciable business assets in the year they place them in service. Here are five facts to help businesses better understand this deduction:

1. The 100-percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property.

2. Machinery, equipment, computers, appliances, and furniture generally qualify.

3. The 100-percent depreciation deduction applies to qualifying property acquired and placed in service after September 27, 2017.

4. Taxpayers who elect out of the 100-percent depreciation deduction for a class of property must do so on a timely filed return.

5. The IRS has issued proposed regulations with guidance on what property qualifies and rules for qualified film, television and live theatrical productions, and certain plants.

For more details about the 100-percent depreciation deduction or electing out of claiming it, please call.

• By Leon Clinton
• December 27, 2018

Taxpayers born before July 1, 1948, generally must receive payments from their individual retirement arrangements (IRAs) and workplace retirement plans by December 31.

Known as required minimum distributions (RMDs), typically these distributions must be made by the end of the tax year, in this case, 2018. The required distribution rules apply to owners of traditional, Simplified Employee Pension (SEP) and Savings Incentive Match Plans for Employees (SIMPLE) IRAs but not Roth IRAs while the original owner is alive. They also apply to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.

An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount on Form 5498 in Box 12b. For a 2018 RMD, this amount is on the 2017 Form 5498, IRA Contribution Information, normally issued to the owner during January 2018.

A special rule allows first-year recipients of these payments, those who reached age 70 1/2 during 2018 to wait until as late as April 1, 2019, to receive their first RMDs. What this means that those born after June 30, 1947, and before July 1, 1948, are eligible. The advantage of this special rule is that although payments made to these taxpayers in early 2019 can be counted toward their 2018 RMD, they are taxable in 2019.

The special April 1 deadline only applies to the RMD for the first year. For all subsequent years, the RMD must be made by December 31. So, for example, a taxpayer who turned 70 1/2 in 2017 (born after June 30, 1946, and before July 1, 1947) and received the first RMD (for 2017) on April 1, 2018, must still receive a second RMD (for 2018 by December 31, 2018.

The RMD for 2018 is based on the taxpayer’s life expectancy on December 31, 2018, and their account balance on December 31, 2017. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. For most taxpayers, the RMD is based on Table III (Uniform Lifetime Table) in IRS Publication 590-B. For a taxpayer who turned 72 in 2018, the required distribution would be based on a life expectancy of 25.6 years. A separate table, Table II, applies to a taxpayer whose spouse is more than ten years younger and is the taxpayer’s only beneficiary. If you need assistance with this, don’t hesitate to call.

Though the RMD rules are mandatory for all owners of traditional, SEP and SIMPLE IRAs and participants in workplace retirement plans, some people in workplace plans can wait longer to receive their RMDs. Usually, employees who are still working can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions; however, there may be a tax on excess accumulations. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.

For more information on RMDs, please contact the office.

• By Leon Clinton
• December 24, 2018