Five Tips to Get Ready for a Pain-Free Tax Time

Five Tips to Get Ready for a Pain-Free Tax Time
 
With the holiday season just around the corner, it’s a perfect time to get your financial records in order.  Tax moves you make now can mean finding more “green” to spend on family gifts and festivities.  Here are five quick tips for you to feel more prepared about your financial status as you go into year-end.05f0a7d2-d154-43ee-b5dc-99efa179652d-12
Avoid Penalties
This time of year is ideal to double-check your tax payments to make sure enough has been paid in, and even more important, to avoid overpaying so your money is not tied up unnecessarily. If you’re not sure of your 2016 tax liability, check with your tax consultant.

Balanced Books

Rather than wait until the busiest time of year for accountants and bookkeepers, you can get a head start now on catching up your books.  You’ll have more of their attention and you may even avoid a rate increase if you get your books done early.  Completed bank reconciliations are a very important part of catching up.
Forms
 It’s not too early to get your orders in for the forms you need at year-end like your W-2s, W-3s, 1099s, and 1096s.  That way, your forms will be onsite when you’re ready.

Records

Information that’s missing at the last minute can take up extra time and be costly.  It’s a great idea to do an audit now of W-9s to grab missing addresses and tax ID numbers of your contractors.  Also do a scrub of your employee payroll records so that your W-2s will be complete and accurate.
New Tax Changes
Be sure to check with your tax consultant on new laws affecting individuals and businesses next year.  One of the biggest ones making news is avoiding the fine involved regarding the new health care requirements for individuals.  And there are many more you’ll want to get up to speed on so that you’ll know how they affect your situation.
We know it’s early to be talking about taxes, but we’re also all about saving you money and time.  Try these five tips so you’ll have better peace of mind and be more prepared for year-end. We can help you with any of these activities – give us a call or email us for a free consultation. fran@quickbooksandbusinessconsulting.com or 866-363-5580.

 

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Get Ready for 2016 QuickBooks Can help

Get Ready for 2016: QuickBooks Can Help
 
tax time
 
We’ll be ringing in the New Year soon. Will you have wrapped up your 2015 finances by then?
There’s something very satisfying about turning our calendars to January. It always feels like a fresh start. We resolve to develop new, better ways of using our work and leisure time. We reflect on what we accomplished in the last 12 months, and we look forward to achieving even more in the next 12.
But sometimes we have a nagging feeling that we forgot something. And it often has to do with our finances, both personal and professional.
You can take steps now to make New Year’s Day less worrisome. Doing some extra work in QuickBooks during December will ensure that you’ll start 2016 ready to move ahead, rather than scrambling to see what you missed on January 2.
Thinking Ahead
 Where to start? Depending on how conscientiously you entered transactions and ran reports, you might need to set some extra time aside in the midst of your other year-end and holiday-related commitments.
For example, did you instruct QuickBooks to “close your books” at the end of the year? QuickBooks will automatically make year-end adjustments if you entered December 31 as a closing date in Preferences. However, it’s not required, and there are both advantages and disadvantages to doing so. We can help you decide if this is the best decision for your company.
Figure 1: If you set a closing date of December 31 in QuickBooks’ Preferences, you need to prepare your company file for this deadline in advance. We can help you get ready.
Prior to this, though, there’s another important task you should complete before the end of the year. It’s common sense, but not everyone thinks of it during the December rush: Make sure you’ve entered all transactions and payments that should be included in your QuickBooks file for 2015.
If anyone else on your staff works in QuickBooks, make sure they know that you’re trying to wrap up the year. If they’re holding anything back because of questions and comments, now’s the time to confer with you.
Taxes and Accounts
 
You may have already been working with us on tax planning for the 2015 tax year. If you haven’t, and you haven’t been doing so on your own, you need to look at your incoming and outgoing funds for the year before it’s over. Do you need to hold until 2016 some income and/or expenses that haven’t been recorded until 2016? This kind of question really needs to be resolved now.
Figure 2: Time is short, but we may be able to help you make some decisions about carrying some 2015 income and/or expenses over to 2016 if it will help reduce your tax obligation.
Talk to us about your tax situation if you think this may be necessary. We can’t prepare your taxes yet, of course, but we can create some reports and advise you on any situations where you might want to put off – or accelerate – some actions. Is your income running high and your offsetting expenses low? If so, this may be a good time to make a fairly major purchase you’ve been considering.
Odds and Ends
 
How do you back up your QuickBooks company file? On a local drive or in the cloud? How often do you do this? Archiving your data is critical. Think about what would happen if you lost your customer records or a month’s worth of transactions or multiple payments. This is an area where we can provide guidance. Is there a better, safer way to ensure data security? Are there special backup activities you should do at year’s end?
Of course, if you are one of our clients and are using our hosting in the cloud service or using Qbox through our company you are safe as we take care of that for you. (If you need more information on either of these services – give us a call @ 866-363-5580)
Some companies wait until January to do a physical inventory count. Rather than being surprised in January, you may want to consider doing this now if it’s feasible.
And when you think you’ve entered everything but payments or transactions that may come in at the last minute (unless you’re going to defer these until 2016), all accounts should be reconciled. QuickBooks makes it easy to do this regularly.
Figure 3: Before the end of December, you should do a final reconciliation of all accounts for 2015.
It will be painful to open QuickBooks on January 2 if you don’t feel like you paid extra attention to your finances in December. We can help you ring in the New Year on a more confident note.
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Is There An App for That?

Is There an App for That?

The technology side of the accounting industry is rapidly changing and expanding.  Literally hundreds, if not thousands of new companies and new software applications have sprung up to help small businesses automate their processes and save time and money.

 

The best way to profit from all of this innovation is to first identify where you can best use the technology in your business.  Here are three places to look:

 

1 –  Paper Chase

What business tasks are you still using pen and paper for?   Look what’s on your desk or in your filing cabinet in the form of paper, and that will be your next opportunity for automation.  For example, are you still hand-writing checks?   There’s an app (or two) for that.

 

Sticky notes and to do lists have been replaced with Evernote.  Business cards you collect can go in a CRM (customer relationship manager).  All of your accounting invoices and bills can be digitized and stored online.

 

Make a list of all the manual and paper processes you do every day and look for an app that can make the task faster for you.

 

2 – Fill the Gap

Take stock of what systems you already have in place.  The opportunity to fill the gap is where you might have systems that should talk to each other but don’t.  If you need to enter data into two different places, there may be a chance to automate and/or integrate the systems or data.  For example, your point of sale or billing system should integrate well with your accounting system.  A few other examples include accounting and payroll, CRM and accounting, inventory and accounting, project management and time tracking, and time tracking and payroll.

 

The more your systems integrate and work as a suite, the better.

 

3 – Mismatched

It could be you have your systems automated, but the systems are not the best choice for your business requirements.  If your systems don’t meet many of your business requirements, it may be time to look for an upgrade or a replacement.

 

If you are performing a lot of data manipulation in Excel or Access, this might also signal that your systems are falling short of your current needs.  Look where that’s happening, and you will have identified an opportunity for improvement.

 

Look in these three areas in your business, and I bet you’ll not only find an app for that, you’ll also find some freed up time and money once you automate.

 

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How To Read Your Balance Sheet

How to Read Your Balance Sheet

The Balance Sheet is an important report in your business’s financial statements.  Most small business owners are unsure of what all of the numbers mean on this report, so let’s see if we can shed some light on what they mean.

 

A Summary of Balances

One big characteristic of a balance sheet is that it represents one date in time, for example, 12/31/2014.  The numbers represent balances, and since the balances change daily, a balance sheet only represents one point in time versus a range.

 

Three Parts

There are only three parts to a balance sheet, and the easiest part to understand is the assets, or what you own.  Most balance sheets start off with cash balances, and these typically represent what you have in the bank less any un-cashed checks that could reduce your account once they come in.

 

If customers owe you money that you have invoiced but not collected, you might see an Accounts Receivable balance on your balance sheet.

 

If you sell products, the cost of all of them that you haven’t sold yet and that you may have stored in a warehouse is in the Inventory account.

 

If you own equipment, furniture, cars or trucks or something similar that lasts for years, you will have a balance in Fixed Assets for what you paid for these items.   If it’s been a while since you’ve owned them, you may have a Depreciation account, and when you net the two, your Fixed Asset values are reduced.

 

All of the above are assets and they are listed in the first section of a balance sheet.

 

What You Owe

If you owe money for taxes, to vendors, or to employees, then it will show in the Liabilities section which is the second of three major sections of a balance sheet.  Day to day unpaid bills are in an account called Accounts Payable.

 

If you have bank loans, they usually each have a separate account like a bank account does.   Each bank loan account represents the principal due on a loan (the interest you pay goes to another place).

 

Equity 

The final section of the balance sheet is Owner’s Equity.  It is the section that will vary the most depending on the type of entity your business is set up as.  For example, if your business is a corporation, then there will be a common stock account which will represent the original amount of money you put into the business; it will match the Articles of Incorporation that you drew up when you incorporated.  This amount will rarely ever change for the life of the business.

 

There is also usually an account called Paid-in Capital which is how much additional money you’ve put in or taken out of the company beyond the common stock balance.

 

A corporation will also have a Retained Earnings account.  This reflects accumulated profit (or loss) through the years of operation.

 

If your business is set up as a partnership, the equity section will include an account for each partner that represents their balance in the firm, which is the net amount of money they have put into the business over the years plus or minus the business income or loss through the years.

Keeping It Simple

These are the very basics of the numbers represented on your balance sheet.  If you have questions about any of the numbers, please feel free to reach out and ask.

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Does Your Small Business Need a CRM?

Bed and Breakfast Have you ever stayed at a hotel and then returned, finding that they have stocked your room with everything you asked for the last time you were here? Your special allergenic pillow was already waiting for you, you were asked if you would like a dinner reservation made just like you always do the first night, and there were even extra hangars because you always need extra hangars. None of this would be possible for the hotel if it didn’t have a CRM, customer relationship management, system in place.

Would your clients be impressed if you remembered all of the details about your last conversation, their last purchase, or their preferences? If so, your business might benefit from a CRM system.

Benefits of a CRM

Businesses that have more than 30 or so clients may benefit from a system that allows you and your employees to enter detailed information about each client interaction that they have. It can work for both current and future clients, i.e., prospects. A CRM is basically a great big customer database at its core. It contains master file information on a customer or client, such as name, company, address, contact info, and custom fields. It is also transaction-driven in that you can log activity such as calls, meetings, proposal dates, and more.

A good CRM system is also integrated with your other internal systems, such as your accounting or POS system or both. In some CRM systems, you can see invoice and payment history, so that when a client calls in, you can also peek to see whether they owe you money or what goods they ordered that they may be calling about.

There are literally hundreds of CRM systems to choose from. The gold standard for large companies is SalesForce.com; however, some small businesses use it as well. SugarCRM is the largest open source CRM, meaning its programming code is available to the public. ZohoCRM is one of the largest small business CRMs and offers a suite of products for small businesses. And Act! is also very popular and plays well with social media.

Decide What You Want It to Do

Before choosing a CRM, decide what you want it to do and how you will be using it. One of the most important aspects of profiting from a CRM is to make sure it gets used, and that takes some habit-changing from you and your staff. Once you have your requirements, you can evaluate the software options available, and choose the one that works best for you.

When your clients start talking about how great your service is and how much attention you pay to the details they care about, you’ll know your CRM is paying off for you.

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Standard or Itemized: Choose the Deduction Method that’s Best for You

Issue Number:    IRS Tax Tip 2015-39

Inside This Issue


Standard or Itemized: Choose the Deduction Method That’s Best for You

Most people claim the standard deduction when they file their federal tax return. But did you know that you may lower your taxes if you itemize your deductions? Find out if you can save by doing your taxes using both methods. Usually, the bigger the deduction, the lower the tax you have to pay. You should file your tax return using the method that allows you to pay the least amount of tax. The IRS offers these six tips to help you choose:

1. Use IRS Free File.  Most people qualify to use free, brand-name software to prepare and e-file their federal tax returns. IRS Free File is the easiest way to file. Free File software will help you determine if you should itemize and file the right tax forms. It will do the math and e-file your return – all for free. Check your other e-file options if you can’t use Free File.

2. Figure your itemized deductions.  Add up deductible expenses you paid during the year. These may include expenses such as:

  • Home mortgage interest
  • State and local income taxes or sales taxes (but not both)
  • Real estate and personal property taxes
  • Gifts to charities
  • Casualty or theft losses
  • Unreimbursed medical expenses
  • Unreimbursed employee business expenses

Special rules and limits apply. Visit IRS.gov and refer to Publication 17, Your Federal Income Tax, for more details.

3. Know your standard deduction.  If you don’t itemize, your basic standard deduction for 2014 depends on your filing status:

  • Single $6,200
  • Married Filing Jointly $12,400
  • Head of Household $9,100
  • Married Filing Separately $6,200
  • Qualifying Widow(er) $12,400

If you’re 65 or older or blind, your standard deduction is higher than these amounts. If someone can claim you as a dependent, your deduction may be limited.

4. Check the exceptions.  There are some situations where the law does not allow a person to claim the standard deduction. This rule applies if you are married filing a separate return and your spouse itemizes. In this case, you can’t claim a standard deduction. You usually will pay less tax if you itemize. See Pub. 17 for more on these rules.

5. Use the IRS ITA tool.  Visit IRS.gov and use the Interactive Tax Assistant that takes you through a series of questions just like one of our customer service representatives would.  The tool can help determine your standard deduction. It can also help you figure several of your itemized deductions.

6. File the right forms.  To itemize your deductions, use Form 1040and Schedule A, Itemized Deductions. You can take the standard deduction on Forms 1040, 1040A or 1040EZ.

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Health Care Law Affects 2014 Tax Returns – Tax Help Available

Issue Number:    HCTT-2015-12I


2014 and CadeusesHealth Care Law Affects 2014 Tax Returns – Tax Help Available

Starting with the 2014 tax year, certain provisions of the Affordable Care Act will affect federal tax returns. The majority of taxpayers will simply need to check a box on their tax return to report health coverage for everyone on their return for all of 2014. Some need to indicate that they’re eligible for an exemption from maintaining coverage. And others will have to calculate their shared responsibility payment and add it to their tax return.

The IRS has several options to help you file your tax return when the tax filing season starts. Filing electronically is the easiest way to file a complete and accurate tax return. Electronic Filing options include free Volunteer Assistance,IRS Free File, commercial software and professional assistance.

Volunteer Assistance

Each year millions of people have their tax returns prepared for free by volunteers. These volunteers are part of the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly program. The IRS sponsors both programs and works with community groups to train and certify volunteers.

Using VITA and TCE will help ensure your taxes are prepared accurately,  , including provisions related to the Affordable Care Act such as the premium tax credit and exemptions from coverage.

Most VITA are now open. You can visit IRS.gov/VITA to find the nearest VITA site, Search the word ’VITA’ and then click on “Free Tax Return Preparation for You by Volunteers.” Site information is also available by calling the IRS at 800-906-9887.

IRS Free File

IRS Free File offers easy-to-use software or online fillable forms. IRS Free File is a partnership between the IRS and the Free File Alliance. The Alliance is a group of private-sector tax software companies that make their products available for free.

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, print and e-file your tax return.

The question and answer format of Free File software will help you find tax breaks that you may be entitled to claim. The software selects the appropriate tax forms and does the calculations for you.

Taxpayers who earn $60,000 or less can use brand-name software. If you earned more than that, you can use Free File Fillable Forms. This option uses electronic versions of IRS paper forms.

Professional Assistance

Many people hire a professional when it’s time to file their tax return. If you pay someone to prepare your federal income tax return, the IRS urges you to choose that person wisely. Even if you don’t prepare your own return, you’re still legally responsible for what is on it.

Some tips to keep in mind when choosing a tax preparer include:

  • Preparer’s qualifications – make sure they have a Preparer Tax Identification Number
  • Service fees – avoid preparers who base their fee on a percentage of your refund
  • E-file – make sure your preparer is an e-file provider
  • Available – make sure the preparer will be available after the filing deadline in case questions come up about your return

The IRS has recently launched a new return preparer directory that is a searchable, sortable listing featuring:  the name, city, state and zip code of attorneys, CPAs, enrolled agents and those who have completed the requirements for the voluntary IRS Annual Filing Season Program. All preparers listed also have valid 2015 Preparer Tax Identification Numbers.

It is important that you file a complete and accurate tax return to avoid any processing delays.  If your return includes errors or is incomplete, it may require further review and could delay your refund.   IRS e-file is the best way to file an accurate tax return. The tax software that you use to e-file helps avoid mistakes by doing the math for you. It guides you every step of the way as you do your taxes. IRS e-file can also help with the new health care law tax provisions.

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What Should Know If You Changed Your Name

Issue Number:    IRS Tax Tip 2015-22

Inside This Issue


What You Should Know if You Changed Your Name

Did you change your name last year? If you did, it can affect your taxes. All the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund. Here’s what you should know if you changed your name:

• Report Name Changes.  Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.

• Dependent Name Change.  Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.

If you adopted a child who does not have a SSN, you may use anAdoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. You can visit IRS.gov to view, download, print or order the form at any time.

• Get a New Card.  File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on SSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.

• Report Changes in Circumstances in 2015.  If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, be sure to report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplacethroughout the year. Reporting changes will help make sure that you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance.

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New on IRS.Gov

IRS Issue Number:  2015-2

Inside This Issue

 

  1. New on IRS.gov
  2. Filing Information Returns Electronically
  3. The Affordable Care Act’s Employer Shared Responsibility Provisions
  4. Form 8922, Third-Party Sick Pay Recap
  5. Technical Guidance

  1.  New on IRS.gov


2014 Pub 531, Reporting Tip Income
2014 Form W-4, Employee’s Withholding Allowance Certificate
2014 Pub 17, Your Federal Income Tax (For Individuals)
2014 Inst W-9, Instructions for the Requestor of Form W-9, Request for Taxpayer Identification Number and Certification
2014 Pub 15, Circular E, Employer’s Tax Guide 2014 Pub, 15-B, Employer’s Tax Guide to Fringe Benefits
2014 Pub 15-A, Employer’s Supplemental Tax Guide (Supplement to Circular E, Employer’s Tax Guide, Publication 15)
2014 Pub 15-B, Employer’s Tax Guide to Fringe Benefits
2015 Pub 15, Circular E, Employer’s Tax Guide
2015 Pub 15-A, Employer’s Supplemental Tax Guide (Supplement to Circular E, Employer’s Tax Guide, Publication 15)
2015 Pub 15-B, Employer’s Tax Guide to Fringe Benefits
2014 Inst 8959, Instructions for Form 8959, Additional Medicare Tax
2014 Form W-9, Request for Taxpayer Identification Number and Certification
2015 Form W-2, Wage and Tax Statement (Info Copy Only)
2015 Form W-4P, Withholding Certificate for Pension or Annuity Payments

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  2.  Filing Information Returns Electronically


The law requires any corporation, partnership, employer, estate or trust, who is required to file 250 or more information returns for any calendar year, must file electronically. IRS encourages filers who have less than 250 information returns to file electronically as well. By transmitting your information returns through FIRE, you can process your files faster and with fewer errors.

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  3.  The Affordable Care Act’s Employer Shared Responsibility Provisions


The employer shared responsibility provisions apply as of January 1, 2015. Employers should get prepared and make decisions regarding health insurance coverage offered to their employees. No employer shared responsibility payments will be due for 2014. For more information seeHeadliner Volume 349.

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  4.  Form 8922, Third-Party Sick Pay Recap


Beginning with tax year 2014 (processing year 2015) taxpayers will file 2014 Form 8922 with IRS. For tax year 2014 a paper Form 8922 is required. This form replaces the Third-Party Sick Pay Recaps that were filed on Form W-2 and Form W-3 with the Social Security Administration. The reporting of third-party sick pay recaps to the SSA ends after tax year 2013. Other reporting requirements for third party sick pay remain unchanged.

The purpose of filing Form 8922 is to reconcile employment tax returns (for example, Form 941) with Forms W-2 when third-party sick pay is paid by a party other than the employer and when the liability for Federal Insurance Contributions Act taxes is split between the third party and the employer for which services are normally performed.

Failure to file the Form 8922 will cause the IRS to be unable to reconcile Forms 941 and W-2. Notices are sent and penalties often assessed due to the non-reconciliation of employment tax returns (for example Form 941) and Forms W-2.

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  5.  Technical Guidance


Notice 2015-02, Monthly Public Transit Benefit

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How to Get a Copy of Your Prior Year Tax Information

How to Get a Copy of Your Prior Year Tax Information

There are many reasons you may need a copy of your tax return information from a prior year. You may need it when applying for a student loan, home mortgage or for a VISA. If you don’t have your copy, the IRS can help. It’s easy to get a free transcript from the IRS. Here are several ways for you to get what you need:

  • Tax Return Transcript.  A return transcript shows most line items from your tax return just as you filed it. It also includes forms and schedules you filed. However, it does not reflect changes made to the return after you filed it. In most cases, your tax return transcript will have all the information a lender or other agency needs.
  • Tax Account Transcript.  This transcript shows any adjustments made by you or the IRS after you filed your return. It shows basic data, like marital status, type of return, adjusted gross income and taxable income.

How to Get a Transcript.  You can request transcripts online, by phone or by mail. Both types of transcripts are free of charge. They are available for the most current tax year after the IRS has processed the return. You can also get them for the past three tax years.

Order online.  Use the ‘Get Transcript’ tool available on IRS.gov. You can use this tool to confirm your identity and to immediately view and print copies of your transcript in a single session for free. The tool is available for five types of tax records: tax account transcript, tax return transcript, record of account, wage and income and verification of non-filing.

Order by phone.  Call 800-908-9946. A recorded message will guide you through the process.

Order by mail.  The easy way to order your transcript by mail is to use the “Get Transcript by Mail” online option on IRS.gov. On the other hand, you can complete and mail Form 4506T-EZ to get your tax return transcript. Use Form 4506-T to request your tax account transcript by mail.

  • How to Get a Tax Return Copy.  Actual copies of your tax returns are generally available for the current tax year and as far back as six years. The fee per copy is $50. Complete and mail Form 4506 to request a copy of your tax return. Mail your request to the IRS office listed on the form for your area.

Delivery times for online and phone orders typically take 5 to 10 days from the time the IRS receives the request. You should allow 30 days to receive a transcript ordered by mail and 75 days for copies of your tax return. You can print tax forms online at IRS.gov/forms. To get forms in the mail go toIRS.gov/orderforms to place an order.

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