6 Terrific Tax Tips from Mengali Accountancy
It’s getting close to tax time again. With that in mind, Renee Mengali, CPA, took time out of her very busy tax-time schedule to share some money-saving and organizational tips with Healdsburg Patch readers.
Mengali Accountancy (http://www.mengaliaccountancy.com) has been in business since 1996. It is located in the Foss Creek Business Park. The company specializes in outsourced bookkeeping services, handling everything from payroll to bank reconciliations and management-use financial statements.
They also provide QuickBooks training and consulting services, and for business owners doing their own books, plus tax services mainly to businesses, and personal tax returns of the business owners’ who utilize their business service.
Here are some tips to help you prepare for tax time, and help make you profitable each month. Once you read them, you’ll be glad you did, especially so you’re not giving the IRS an interest-free loan every month.
1. Keep track of your money every month and ensure you are profitable, spending less than you make.
“I firmly believe that we’d all be much better off in this county (financially speaking) if we paid more attention to where our money went and what we were spending it on,” Mengali said emphatically.
She tells the story of how, at 19, she began tracking her finances on QuickBooks – including recording her gross paycheck, tax withholdings from it, and everything she spent it on. “I made myself a goal to be 'profitable' every month,” said Mengali. “This meant that I had to spend less than I made every month, including credit purchases which allowed me to begin saving my money for a rainy day.”
Once you track everything you spend, you can analyze your spending and make key decisions in your financial life. “With currently available technology, you can download your banking and credit card transactions into a program like Quicken or QuickBooks and categorize them properly,” Mengali said.
“By investing just a few minutes each month, you can have a running tally on your expenses to make informed decisions, you can track your expenses against your personal budget AND you can be completely prepared for tax season without any stress, and this is a complete win-win,” Mengali continued.
2. Consult with a tax professional so you don’t overpay your estimated taxes and don’t claim single with zero with your employer as a way of “forcing” yourself to save money.
“If you do this, you’re really giving the IRS an interest-free loan with your hard earned money, said Mengali. “Instead, if you’re on direct deposit, have your employer split your paycheck into two bank accounts and send an amount equal to the extra tax you were paying to a savings account that you never touch,” she explained.
“This way, you’ll earn interest on the money and you’ll have access to it in case of emergency, Mengali said. “Neither one is true when you inflate your withholdings.”
3. Keep all tax documents that come in during late January and early February in one file or large envelope.
“Mark the applicable year on the outside (i.e. 2010 important tax documents) because tracking down missing documents eats up a lot of time, so keep them organized as they come in,” Mengali said.
4. Be sure you have documentation for all of your deductions.
“One of the most common reasons for audit adjustments is a lack of documentation submitted to the IRS by the taxpayer,” said Mengali. “Keep ALL documentation to support each tax deduction you are planning to take and be sure you have receipts and letters acknowledging your charitable donations. Take pictures of your home office to substantiate that deduction. Keep a mileage log if you’re claiming deductible mileage.”
5. Wait until you have everything and don’t try and file your tax return in mid-January unless you’re positive that you have received all of the tax forms you are expecting.
“This year, the IRS is not expecting to be ready to begin processing tax returns until mid-February due to all the changes late in 2010,” Mengali cautioned. “Take the extra time to be sure you receive all of the 1099s, W-2s, and other tax documents that you were expecting because filing an amended return later is a headache.”
6. Track your income and expenses in a program designed for this purpose and hire a tax professional to ensure you get every deduction you’re entitled to.
“For most people, the word tax is synonymous with anxiety, and the stress just is not worth it,” said Mengali. Mengali wants all taxpayers to know that they will see their take home pay increase in 2011, as a result of the 2010 Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act.
This Act lowered the FICA tax withholding rate from 6.2% to 4.2%. The reduction doesn’t affect your future benefits and employers still must pay in at the 6.2% rate. Due to the last passage of this legislation, employers have until January 31, 2011 to correct their payroll software and withhold at the lower rate. If any paychecks were issued to employees in 2011 with 6.2 percent FICA withheld, employers must give back the over withheld tax no later than March 31, 2011.
Mengali epitomizes professionalism and dedication to the environment as well. She received the Spirit of Sonoma award last year, being recognized nationally for their best practices in paperless office implementation. She also served as a judge for those same awards last year.
Given her background, Mengali quite obviously has a real passion for her business. She fell in love with accounting and bookkeeping at the age of 16 when she took a bookkeeping class at Piner High (http://www.pinerhigh.com). She liked it so much, and was so bored with high school, that she convinced her parents to let her test out of high school, which allowed her to start taking college classes on bookkeeping.
In 1995 she graduated from Heald Business College (http://www.heald.edu) at 17 with an AS in accounting and went to work as a full time bookkeeper for a local plant. Following a move, she obtained her real estate broker’s license and worked as a controller for a boutique real estate firm in the financial district in San Francisco, and met her husband, Joe, in 2000.
They decided to move to Healdsburg, and Mengali completed her bachelor's degree in management. In 2005, she graduated summa cum laude from Napa Pacific Union College.
Following that she obtained her CPA license and remains happily married, having just celebrated their eighth wedding anniversary. They love working out together in their home gym, cooking delicious meals from local ingredients in their newly remodeled kitchen, and spending time with friends and family. “We are truly living the dream here in beautiful Sonoma County," Mengali said.
One of Mengali's clients summarizes her work remarkably.
"Mengali Accountancy and Renee's work is the most impressive I have ever seen. She is ultra efficient, effective and paperless to boot," says Loretta Strong of Raymond James Financial Services. (http://www.raymondjames.com)