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August 21, 2018

Keep an eye out for extenders legislation

Keep an eye out for extenders legislation
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The pieces of tax legislation garnering the most attention these days are the Tax Cuts and Jobs Act (TCJA) signed into law last December and the possible “Tax Reform 2.0” that Congress might pass this fall. But for certain individual taxpayers, what happens with “extenders” legislation is also important.

Recent history

Back in December of 2015, Congress passed the PATH Act, which made a multitude of tax breaks permanent. However, there were a few valuable breaks for individuals that it extended only through 2016. The TCJA didn’t address these breaks, but they were retroactively extended through December 31, 2017, by the Bipartisan Budget Act of 2018 (BBA), which was signed into law on February 9, 2018.

Now the question is whether Congress will extend them for 2018 and, if so, when. In July, House Ways and Means Committee Chair Kevin Brady (R-TX) released a broad outline of what Tax Reform 2.0 legislation may contain. And he indicated that it probably wouldn’t include the so-called “extenders” but that they would likely be addressed by separate legislation.

Mortgage insurance and loan forgiveness

Under the BBA, through 2017, you could treat qualified mortgage insurance premiums as interest for purposes of the mortgage interest deduction. This was an itemized deduction that phased out for taxpayers with AGI of $100,000 to $110,000.

The BBA likewise extended through 2017 the exclusion from gross income for mortgage loan forgiveness. It also allowed the exclusion to apply to mortgage forgiveness that occurs in 2018 as long as it’s granted pursuant to a written agreement entered into in 2017. So even if this break isn’t extended, you might still be able to benefit from it on your 2018 income tax return.

Tuition and related expenses

Also available through 2017 under the BBA was the above-the-line deduction for qualified tuition and related expenses for higher education. It was capped at $4,000 for taxpayers whose adjusted gross income (AGI) didn’t exceed $65,000 ($130,000 for joint filers) or, for those beyond those amounts, $2,000 for taxpayers whose AGI didn’t exceed $80,000 ($160,000 for joint filers).

You couldn’t take the American Opportunity credit, its cousin the Lifetime Learning credit and the tuition deduction in the same year for the same student. If you were eligible for all three breaks, the American Opportunity credit would typically be the most valuable in terms of tax savings.

But in some situations, the AGI reduction from the tuition deduction might prove more beneficial than taking the Lifetime Learning credit. For example, a lower AGI might help avoid having other tax breaks reduced or eliminated due to AGI-based phaseouts.

Still time . . .

There’s still plenty of time for Congress to extend these breaks for 2018. And, if you qualify and you haven’t filed your 2017 income tax return yet, there’s even still time to take advantage of these breaks on that tax return. The deadline for individual extended 2017 returns is October 15, 2018. Contact us with questions about these breaks and whether you can benefit.

August 14, 2018

The TCJA prohibits undoing 2018 Roth IRA conversions, but 2017 conversions are still eligible

The TCJA prohibits undoing 2018 Roth IRA conversions, but 2017 conversions are still eligible
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  • Converting a traditional IRA to a Roth IRA can provide tax-free growth and tax-free withdrawals in retirement. But what if you convert your traditional IRA — subject to income taxes on all earnings and deductible contributions — and then discover you would have been better off if you hadn’t converted it?

Before the Tax Cuts and Jobs Act (TCJA), you could undo a Roth IRA conversion using a “recharacterization.” Effective with 2018 conversions, the TCJA prohibits recharacterizations — permanently. But if you executed a conversion in 2017, you may still be able to undo it.

Reasons to recharacterize

Generally, if you converted to a Roth IRA in 2017, you have until October 15, 2018, to undo it and avoid the tax hit.

Here are some reasons you might want to recharacterize a 2017 Roth IRA conversion:

  • The conversion combined with your other income pushed you into a higher tax bracket in 2017.
  • Your marginal income tax rate will be lower in 2018 than it was in 2017.
  • The value of your account has declined since the conversion, so you owe taxes partially on money you no longer have.

If you recharacterize your 2017 conversion but would still like to convert your traditional IRA to a Roth IRA, you must wait until the 31st day after the recharacterization. If you undo a conversion because your IRA’s value declined, there’s a risk that your investments will bounce back during the waiting period, causing you to reconvert at a higher tax cost.

Recharacterization in action

Sally had a traditional IRA with a balance of $100,000 when she converted it to a Roth IRA in 2017. Her 2017 tax rate was 33%, so she owed $33,000 in federal income taxes on the conversion.

However, by August 1, 2018, the value of her account had dropped to $80,000. So Sally recharacterizes the account as a traditional IRA and amends her 2017 tax return to exclude the $100,000 in income.

On September 1, she reconverts the traditional IRA, whose value remains at $80,000, to a Roth IRA. She will report that amount when she files her 2018 tax return. The 33% rate has dropped to 32% under the TCJA. Assuming Sally is still in this bracket, this time she’ll owe $25,600 ($80,000 × 32%) — deferred for a year and resulting in a tax savings of $7,400.

(Be aware that the thresholds for the various brackets have changed for 2018, in some cases increasing but in others decreasing. This, combined with other TCJA provisions and changes in your income, could cause you to be in a higher or lower bracket in 2018.)

Know your options

If you converted a traditional IRA to a Roth IRA in 2017, it’s worthwhile to see if you could save tax by undoing the conversion. If you’re considering a Roth conversion in 2018, keep in mind that you won’t have the option to recharacterize. We can help you assess whether recharacterizing a 2017 conversion or executing a 2018 conversion makes sense for you.

August 13, 2018

Get SMART when it comes to setting strategic goals

Get SMART when it comes to setting strategic goals
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Strategic planning is key to ensuring every company’s long-term viability, and goal setting is an indispensable step toward fulfilling those plans. Unfortunately, businesses often don’t accomplish their overall strategic plans because they’re unable to fully reach the various goals necessary to get there.

If this scenario sounds all too familiar, trace your goals back to their origin. Those that are poorly conceived typically set up a company for failure. One solution is to follow the SMART approach.

Definitions to work by

The SMART system was first introduced to the business world in the early 1980s. Although the acronym’s letters have been associated with different meanings over the years, they’re commonly defined as:

Specific. Goals must be precise. So, if your strategic plan includes growing the business, your goals must then explicitly state how you’ll do so. For each goal, define the “5 Ws” — who, what, where, when and why.

Measurable. Setting goals is of little value if you can’t easily assess your progress toward them. Pair each goal with one or more metrics to measure progress and success. This may mean increasing revenue by a certain percentage, expanding your customer base by winning a certain number of new accounts, or something else.

Achievable. Unrealistically aggressive goals can crush motivation. No one wants to put time and effort into something that’s likely to fail. Ensure your goals can be accomplished, but don’t make them too easy. The best ones are usually somewhat of a stretch but still doable. Rely on your own business experience and the feedback of your trusted managers to find the right balance.

Relevant. Let’s say you identify a goal that you know you can achieve. Before locking it in, ask whether and how it will move your business forward. Again, goals should directly and clearly support your long-term strategic plan. Sometimes companies can be tempted by “low-hanging fruit” — goals that are easy to accomplish but lead nowhere.

Timely. Assign each goal a deadline. Doing so will motivate those involved by creating a sense of urgency. Also, once you’ve established a deadline, work backwards and set periodic milestones to help everyone pace themselves toward the goal.

Eye on the future

Strategic planning, and the goal setting that goes along with it, might seem like a waste of time. But even if your business is thriving now, it’s important to keep an eye on the future. And that means long-term strategic planning that includes SMART goals. Our firm would be happy to explain further and offer other ideas.

August 01, 2018

Failure Isn’t Fatal

losing_ted
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“Don’t worry about failure,” advises a successful CEO, “you only have to be right once.”

Both true and misleading, the statement inspires entrepreneurs to keep fighting past the initial failures that are the hallmark of new enterprise. Get past that and numerous skills to master present themselves.

In any business the primary goal is the same- succinctly stated, we aim to create, communicate and deliver value to a target market at a profit.

At the most basic level every business owner is trying to do the same 4 things.

Product management: Improving the tangible or intangible value you wish to deliver to a welcoming and loyal customer base.

Customer management: Knowing your customer base. Who is your target market? The demographics and psychographics of your ideal customer will help you both brand and deliver your product successfully.

Branding: Identifying company values and communicating them to the public. Before attempting to educate the public, you’ll have to be able to answer these few simple questions to yourself: Why are customers going to like this? Why will they adopt this? Why is it better than the traditional way? How do I best identify and communicate our shared values and inspire excitement they are likely to share?

Profitability: Keeping and measuring data is paramount in generating revenue. Understanding the metrics of production costs vs. other business expenses will compel decisiveness about how best to drive profitability. At different times reducing costs, or increasing turnover, productivity or efficiency can be the right answer. You may also choose to expand into new market sectors, or develop new products or services.

Finding all these proficiencies in one human proves difficult, which is why business owners hire employees whom they hope will excel where they lag. But people management can sometimes prove more complicated than product and data management put together. In a recent survey of over 2,000 employees in the marketing sector 83% experienced what they consider poor management with 59% reporting having left a job due to it.

On entrepreneurship, a successful CEO advised, “Failure and invention are inseparable twins. To invent is to experiment- to do it successfully you cannot be failure averse.” It should be your intention to streamline the experience of failure to only those failures that pave the road to success.

August 01, 2018

Trust is an essential building block of today’s websites

man and woman working in the office
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When business use of websites began, getting noticed was the name of the game. Remember pop-up ads? Text scrolling up the screen? How about those mesmerizing rotating banners? Yes, there were — and remain — a variety of comical and some would say annoying ways to get visitors’ attention.

Nowadays, most Internet users are savvy enough not to be impressed by flashy graphics. They tend to want simplicity and the ability to navigate intuitively. Most of all, they want to feel protected from scams and hackers. That’s why, when maintaining or updating your company’s website, trust is an essential building block.

Make it personal

Among the simplest ways to establish trust with customers and prospects is conveying to them that you’re a bona fide business staffed by actual human beings.

Include an “About Us” page with the names, photos and short bios of the owner, executives and key staff members. This will help make the site friendlier and more relatable. You don’t want to look anonymous — it makes customers suspicious and less likely to buy.

Beyond that, be sure to clearly provide general contact info. This includes a phone number and email address, hours of operation (including time zone), and your mailing address. If you’re a small business, use a street address if possible. Some companies won’t deliver to a P.O. box — and some customers won’t buy if you use one.

Keep contact links easy to find. No one wants to search all over a site looking for a way to get in touch with someone at the business. Include at least one contact link on every page.

Mind the details

Everyone makes mistakes, but typos and inaccuracies on a website can send many users to the “close tab” button. Remember, one of the hallmarks of many Internet trolls and scamsters is ineffective or even nonsensical use of the English language.

Check and doublecheck the spelling and grammar used on your site. Bear in mind that spellcheck programs look only for misspelled words. If you have correctly spelled a word but it’s misused — for example, “to” instead of “two” — spellcheck won’t catch it.

Also, regularly check all links. Nothing sends a customer off to a competitor more quickly than the frustration of encountering nonfunctioning links. Such problems may also lead visitors to think they’ve been hacked. Link-checker software can automatically find broken links within your site and links to other sites.

Construct good content

Obviously, there are many more technical ways to secure your website. It goes without saying that cyber security measures such as encryption software and firewalls must be maintained to the fullest. But, from a content perspective, your site should be constructed first and foremost on a foundation of trust. Our firm can provide other ideas and further information.

September 05, 2017

IRS Provides Penalty Relief for Partnerships that Filed Late Returns in 2017

IRS Provides Penalty Relief for Partnerships that Filed Late Returns in 2017
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The Internal Revenue Service today issued guidance providing penalty relief for certain partnerships that did not file the required returns by the new due date for tax years beginning in 2016. Partnerships file Form 1065 or Form 1065-B or request an automatic extension by filing Form 7004.

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 changed the date by which a partnership must file its annual return. For calendar year partnerships, the due date for filing the annual return or request for an extension changed from April 15 (April 18 in 2017) to March 15.

Many partnerships filed their returns or their extension requests for tax year 2016 by the April deadline, and if not for the Surface Transportation Act, these returns and requests for extension of time to file would have been on time.

Notice 2017-47 provides penalty abatement for these partnerships, provided:
(1) the partnership filed the returns with the IRS and furnished copies to the recipients (as appropriate) by the date that would have been timely, or
(2) the partnership filed Form 7004 to request an extension of time to file by the date that would have been timely.

Taxpayers who qualify for relief under Notice 2017-47 will not be treated as having received a first-time abatement under the IRS’s administrative penalty waiver program. Additional details are available in Notice 2017-47.

The new deadlines were provided in the instructions for Form 1065 and the instructions for Form 1065-B.

For calendar year partnerships, the due date for filing a return after receiving an extension is Sept 15. The IRS projected that corporations and partnerships will file almost 6.9 million extension requests during 2017 The IRS expects to receive more than 4 million partnership returns during 2017.

IRS Newswire – September 1, 2017

August 22, 2017

Back-to-School Marketing Ideas for Savvy Business Owners

Back-to-School Marketing Ideas for Savvy Business Owners
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August is back-to-school time across the country. Whether the school buses are already rumbling down your block, or will be soon, the start of the school year brings marketing opportunities for savvy business owners. Here are some examples of ways companies can promote themselves.

A virtual “brag book”
A creative agency posts on social media a vibrant photographic slideshow of employees and their children on the first day of school. It gives the parents an opportunity to show off their kids — and creates a buzz on the agency’s Facebook page.

The brag book’s innovative design also demonstrates the agency’s creative skills in a fun, personal way. And it helps attract talent by showcasing the company’s fun, family-friendly atmosphere.

Promos for parents
In August, many parents are in the midst of desperately trying to complete checklists of required school supply purchases. To help them cope, a home remodeling / landscape business offers free school supplies with every estimate completed during the month.

Customers receive colorful bags containing relatively inexpensive items such as pencils, pens, pads of paper and glue sticks all stamped with the company’s logo. And even though every estimate won’t result in a new job, completing more estimates helps create an uptick in fall projects.

Freebies for students
During the first week of school, a suburban burger joint offers students a free milkshake with the purchase of a burger. Kids love milkshakes and, because the freebie is associated with a purchase, the business preserves its profitability.

Meanwhile, the promotion brings entire families into the restaurant — widening the customer base and adding revenue. The campaign creates goodwill in the community by nurturing students’ enthusiasm for the beginning of the school year, too.

Determine what’s right for you
Obviously, these examples are industry-specific. But we hope you find them informative and inspirational. We can help you leverage smart marketing moves to strengthen profitability and add long-term value to your business.

August 17, 2017

How to Determine if You Need to Worry About Estate Taxes

How to Determine if You Need to Worry About Estate Taxes
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Among the taxes that are being considered for repeal as part of tax reform legislation is the estate tax. This tax applies to transfers of wealth at death, hence why it’s commonly referred to as the “death tax.” Its sibling, the gift tax — also being considered for repeal — applies to transfers during life. Yet most taxpayers won’t face these taxes even if the taxes remain in place.

Exclusions and exemptions
For 2017, the lifetime gift and estate tax exemption is $5.49 million per taxpayer. (The exemption is annually indexed for inflation.) If your estate doesn’t exceed your available exemption at your death, then no federal estate tax will be due.

Any gift tax exemption you use during life does reduce the amount of estate tax exemption available at your death. But every gift you make won’t use up part of your lifetime exemption. For example:

  • Gifts to your U.S. citizen spouse are tax-free under the marital deduction. (So are transfers at death — that is, bequests.)
  • Gifts and bequests to qualified charities aren’t subject to gift and estate taxes.
  • Payments of another person’s health care or tuition expenses aren’t subject to gift tax if paid directly to the provider.
  • Each year you can make gifts up to the annual exclusion amount ($14,000 per recipient for 2017) tax-free without using up any of your lifetime exemption.

What’s your estate tax exposure?
Here’s a simplified way to project your estate tax exposure. Take the value of your estate, net of any debts. Also subtract any assets that will pass to charity on your death.

Then, if you’re married and your spouse is a U.S. citizen, subtract any assets you’ll pass to him or her. (But keep in mind that there could be estate tax exposure on your surviving spouse’s death, depending on the size of his or her estate.) The net number represents your taxable estate.

You can then apply the exemption amount you expect to have available at death. Remember, any gift tax exemption amount you use during your life must be subtracted. But if your spouse predeceases you, then his or her unused estate tax exemption, if any, may be added to yours (provided the applicable requirements are met).

If your taxable estate is equal to or less than your available estate tax exemption, no federal estate tax will be due at your death. But if your taxable estate exceeds this amount, the excess will be subject to federal estate tax.

Be aware that many states impose estate tax at a lower threshold than the federal government does. So you could have state estate tax exposure even if you don’t need to worry about federal estate tax.

If you’re not sure whether you’re at risk for the estate tax or if you’d like to learn about gift and estate planning strategies to reduce your potential liability, please contact us. We also can keep you up to date on any estate tax law changes.

August 10, 2017

Will Congress Revive Expired Tax Breaks?

Will Congress Revive Expired Tax Breaks?
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Most of the talk about possible tax legislation this year has focused on either wide-sweeping tax reform or taxes that are part of the Affordable Care Act. But there are a few other potential tax developments for individuals to keep an eye on.

Back in December of 2015, Congress passed the PATH Act, which made a multitude of tax breaks permanent. However, there were a few valuable breaks for individuals that it extended only through 2016. The question now is whether Congress will extend them for 2017.

An education break
One break the PATH Act extended through 2016 was the above-the-line deduction for qualified tuition and related expenses for higher education. The deduction was capped at $4,000 for taxpayers whose adjusted gross income (AGI) didn’t exceed $65,000 ($130,000 for joint filers) or, for those beyond those amounts, $2,000 for taxpayers whose AGI didn’t exceed $80,000 ($160,000 for joint filers).

You couldn’t take the American Opportunity credit, its cousin the Lifetime Learning credit and the tuition deduction in the same year for the same student. If you were eligible for all three breaks, the American Opportunity credit would typically be the most valuable in terms of tax savings.
But in some situations, the AGI reduction from the tuition deduction might prove more beneficial than taking the Lifetime Learning credit. For example, a lower AGI might help avoid having other tax breaks reduced or eliminated due to AGI-based phaseouts.

Mortgage-related tax breaks
Under the PATH Act, through 2016 you could treat qualified mortgage insurance premiums as interest for purposes of the mortgage interest deduction. The deduction phased out for taxpayers with AGI of $100,000 to $110,000.

The PATH Act likewise extended through 2016 the exclusion from gross income for mortgage loan forgiveness. It also modified the exclusion to apply to mortgage forgiveness that occurs in 2017 as long as it’s granted pursuant to a written agreement entered into in 2016. So even if this break isn’t extended, you might still be able to benefit from it on your 2017 income tax return.

Act now
Please check back with us for the latest information. In the meantime, keep in mind that, if you qualify and you haven’t filed your 2016 income tax return yet, you can take advantage of these breaks on that tax return. The deadline for individual extended returns is October 16, 2017.

July 17, 2017

3 Midyear Tax Planning Strategies for Business

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Tax reform has been a major topic of discussion in Washington, but it’s still unclear exactly what such legislation will include and whether it will be signed into law this year. However, the last major tax legislation that was signed into law — back in December of 2015 — still has a significant impact on tax planning for businesses. Let’s look at three midyear tax strategies inspired by the Protecting Americans from Tax Hikes (PATH) Act:

1. Buy equipment. The PATH Act preserved both the generous limits for the Section 179 expensing election and the availability of bonus depreciation. These breaks generally apply to qualified fixed assets, including equipment or machinery, placed in service during the year. For 2017, the maximum Sec. 179 deduction is $510,000, subject to a $2,030,000 phaseout threshold. Without the PATH Act, the 2017 limits would have been $25,000 and $200,000, respectively. Higher limits are now permanent and subject to inflation indexing.

Additionally, for 2017, your business may be able to claim 50% bonus depreciation for qualified costs in excess of what you expense under Sec. 179. Bonus depreciation is scheduled to be reduced to 40% in 2018 and 30% in 2019 before it’s set to expire on December 31, 2019.

2. Ramp up research. After years of uncertainty, the PATH Act made the research credit permanent. For qualified research expenses, the credit is generally equal to 20% of expenses over a base amount that’s essentially determined using a historical average of research expenses as a percentage of revenues. There’s also an alternative computation for companies that haven’t increased their research expenses substantially over their historical base amounts.

In addition, a small business with $50 million or less in gross receipts may claim the credit against its alternative minimum tax (AMT) liability. And, a start-up company with less than $5 million in gross receipts may claim the credit against up to $250,000 in employer Federal Insurance Contributions Act (FICA) taxes.

3. Hire workers from “target groups.” Your business may claim the Work Opportunity credit for hiring a worker from one of several “target groups,” such as food stamp recipients and certain veterans. The PATH Act extended the credit through 2019. It also added a new target group: long-term unemployment recipients.

Generally, the maximum Work Opportunity credit is $2,400 per worker. But it’s higher for workers from certain target groups, such as disabled veterans.

One last thing to keep in mind is that, in terms of tax breaks, “permanent” only means that there’s no scheduled expiration date. Congress could still pass legislation that changes or eliminates “permanent” breaks. But it’s unlikely any of the breaks discussed here would be eliminated or reduced for 2017. To keep up to date on tax law changes and get a jump start on your 2017 tax planning, contact us.

July 11, 2017

Own a vacation home? Adjusting rental vs. personal use might save taxes

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Now that we’ve hit midsummer, if you own a vacation home that you both rent out and use personally, it’s a good time to review the potential tax consequences:

If you rent it out for less than 15 days: You don’t have to report the income. But expenses associated with the rental (such as advertising and cleaning) won’t be deductible.

If you rent it out for 15 days or more: You must report the income. But what expenses you can deduct depends on how the home is classified for tax purposes, based on the amount of personal vs. rental use:

  • Rental property. If you (or your immediate family) use the home for 14 days or less, or under 10% of the days you rent out the property, whichever is greater, the IRS will classify the home as a rental property. You can deduct rental expenses, including losses, subject to the real estate activity rules. You can’t deduct any interest that’s attributable to your personal use of the home, but you can take the personal portion of property tax as an itemized deduction.
  • Nonrental property. If you (or your immediate family) use the home for more than 14 days or 10% of the days you rent out the property, whichever is greater, the IRS will classify the home as a personal residence, but you will still have to report the rental income. You can deduct rental expenses only to the extent of your rental income. Any excess can be carried forward to offset rental income in future years. You also can take an itemized deduction for the personal portion of both mortgage interest and property tax.

Look at the use of your vacation home year-to-date to project how it will be classified for tax purposes. Adjusting the number of days you rent it out and/or use it personally between now and year end might allow the home to be classified in a more beneficial way.

For assistance, please contact us. We’d be pleased to help.

June 28, 2017

Why Business Owners Should Regularly Upgrade Their Accounting Software

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Many business owners buy accounting software and, even if the installation goes well, eventually grow frustrated when they don’t get the return on investment they’d expected. There’s a simple reason for this: Stuff changes.
Technological improvements are occurring at a breakneck speed. So yesterday’s cutting-edge system can quickly become today’s sluggishly performing albatross. And this isn’t the only reason to regularly upgrade your accounting software. Here are two more to consider.

1. Cleaning up
You’ve probably heard that old tech adage, “garbage in, garbage out.” The “garbage” referred to is bad data. If inaccurate or garbled information goes into your system, the reports coming out of it will be flawed. And this is a particular danger as software ages.
For example, you may be working off of inaccurate inventory counts or struggling with duplicate vendor entries. On a more serious level, your database may store information that reflects improperly closed quarters or unbalanced accounts because of data entry errors.
A regular implementation of upgraded software should uncover some or, one hopes, all of such problems. You can then clean up the bad data and adjust entries to tighten the accuracy of your accounting records and, thereby, improve your financial reporting.

2. Getting better
Neglecting to regularly upgrade or even replace your accounting software can also put you at risk of missing a major business-improvement opportunity. When implementing a new system, you’ll have the chance to enhance your accounting procedures. You may be able to, for instance, add new code groups that allow you to manage expenses much more efficiently and closely.
Other opportunities for improvement include optimizing your chart of accounts and strengthening your internal controls. Again, to obtain these benefits, you’ll need to take a slow, patient approach to the software implementation and do it often enough to prevent outdated ways of doing things from getting the better of your company.

Choosing the best
These days, every business bigger than a lemonade stand needs the best accounting software it can afford to buy. We can help you set a budget and choose the product that best fits your current needs.

April 27, 2017 — BY Yosef Klein, CPA

President Trump’s Tax Plan Unveiled

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On April 26th, the White House released the Presidents tax reform plan. The plans goal and key feature include slashed corporate tax rates, flattened individual marginal income tax brackets, and the repeal of the estate and alternative minimum taxes.

What should you do now?
• Sit tight and wait. The plan was just released and has not yet been proposed in Congress and made its way thru the legislative process. There will be many changes and adjustment before the law is enacted.
• Keep yourself informed. Stay up to date with the changes as the proposals make their way thru the legislative process.

Key Facts:
• The plan is a one-page sheet of bullet points headed “2017 Tax Reform for Economic Growth and American Jobs” and “The Biggest Individual and Business Tax Cut in American History.
• Most of the items on the plan closely follow the presidents campaign promises.
• In order to understand the proposal one needs to rely on various details that were released during the elections campaign.

How does this affect individuals?
• Currently, individuals are taxed seven graduated tiers of marginal rates: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The proposal replaces them with three tiers: 10%, 25%, and 35%
• Retains the deduction for:
o Charity
o Home mortgage interest expense
• Elimination of the
o 3.8% net investment income tax.
o Alternative minimum tax.
o Estate tax.
o Medical expenses deduction
o Personal exemptions
o Most other deductions

How does this affect businesses
• Currently, C corporation are taxed at 35%, the proposal lowers the rate to 15%.
• Pass-through entities. It is expected that partnerships, S corporations and limited liability companies owners will also be taxed at the 15% for their share of income.
• Establish a territorial system of taxation, which generally would exclude from taxation foreign earned income.
• Impose a “one-time tax” on corporate earnings realized and held overseas.
• Eliminate “special interest” tax breaks.

March 21, 2017

Amazon Will Collect Every State Sales Tax by April 1

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For decades, Amazon.com helped its customers dodge the sales taxes they owed to gain an advantage over its competitors. But as the company’s business strategy has changed, so have its tax collection practices. As recently as 2011, the nation’s largest e-retailer was collecting sales tax in just 5 states, home to 11 percent of the country’s population. Starting next month, when the company begins collection in Hawaii, Idaho, Maine, and New Mexico, it will officially collect every state-level sales tax in the nation on its direct sales.

Despite this progress, the company’s sales tax collection practices are still not comprehensive. It appears that Amazon is not collecting some local-level sales taxes in states such as Alaska, for instance. And Amazon refuses to require sales tax collection by many third-party sellers using its website, meaning that companies with names such as “Buy Tax Free” are using Amazon.com as a way to allow their customers to evade their sales tax responsibilities. Notably, New York Gov. Andrew Cuomo has proposed fixing this problem by requiring “marketplaces” with more than $100 million in annual sales to collect sales taxes on sales made by third-party retailers.

But despite its shortcomings, this expansion in Amazon’s tax collection practices represents a step forward for rational sales tax policy. It is therefore worth taking a look at the variety of factors that led to this reversal.

First, and perhaps most important, is that Amazon’s effort to shorten delivery times caused it to open distribution centers around the country. Whenever a retailer establishes a physical presence in a state, it comes within reach of that state’s sales tax collection laws.

Second, state lawmakers have become increasingly frustrated by the sales tax revenue gap created by e-retail and some have taken matters into their own hands by enacting laws expanding their sales tax collection requirements. The U.S. Supreme Court has placed limits on states’ authority in this area, but creative lawmakers have found ways to encourage some e-retailers to collect nonetheless.

Third and finally, it appears that Amazon’s pivot away from facilitating sales tax evasion may be helpful in building goodwill with lawmakers from whom it is asking for subsidies. Good Jobs First estimates that Amazon could soon surpass Wal-Mart as the largest retail-sector recipient of state and local government aid, meaning that it would have received over $1.2 billion in public subsidies.

While the nature of the debate surrounding Amazon and state and local tax policy may be changing, it’s certainly not coming to an end.

http://www.taxjusticeblog.org/archive/2017/03/amazon_will_collect_every_stat.php#.WNFpGvnyuUk

February 14, 2017

Updated Income Tax Due Date Chart

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Updated Income Tax Due Date Chart, including Calendar-Year C Corps

December 20, 2016

Roth&Co Privacy Policy

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December 13, 2016

Why You Should Increase Charitable Giving Before the End of 2016

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If you think president-elect Donald Trump will be able to enact his proposed tax cuts in 2017, you should increase your charitable contributions before the end of 2016.

You can accomplish this by making contributions to:
• A private foundation
• A donor-advised fund
• A charitable lead annuity trust, also known as a CLAT, or
• Making outright cash gifts to charities

What are the tax benefits for this extra charitable giving?
President-elect Donald Trump’s proposed income tax changes include reducing the top current rate of more than 43% to 33% for 2017. This means that charitable contributions made during 2016 are more valuable than charitable contributions made during 2017 (the higher the tax rate, the more valuable the deduction). In addition, there has been discussion of new limits on itemized deductions that could impose a significant restriction on the use of the charitable deduction.

If you choose to increase your charitable giving, be aware of the overall contribution limits and rules that limit itemized deductions. You can contribute cash to a private foundation and deduct up to 30% of your adjusted gross income and (you can deduct the full fair market value of appreciated marketable stock, up to 20% of your adjusted gross income). For donor-advised funds, which are public charities the limits are less restrictive. Contributions of cash are deductible up to 50% of AGI, and contributions of appreciated assets—including privately-held stock–are deductible up to 30% of AGI.

If you have any questions about whether and how this will impact you, please speak with a Roth & Co professional, who will be able to guide you with any changes that may be necessary.

July 13, 2016

Understanding Funding Options

Understanding Funding Options
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There are many types of financing, each with their own costs and benefits. So business owners must assess what kind of capital is right for them. Loans that are secured—that is, that are backed by collateral of some sort—are often the lowest cost. That includes SBA loans and mortgages. Other asset-backed loans, such as factoring or purchase order financing, advance funds based upon your accounts receivable. These types of money lenders may take a really hefty chunk of your receivables, in some cases up to 40 percent, says Kramlich. But the trade-off might be worth it for business owners who need cash quickly. Debt can be valuable, says Kramlich, but sometimes it’s not enough to fuel a growing company. In that case, entrepreneurs may want to consider equity. Equity, or selling shares in your company, can be a great source of long-term capital, she says. That includes investments from friends and family, crowdfunding, angel investors, accelerator programs and venture capitalists. But you will give up some ownership of your company. The outside ownership, or dilution, is typically lowest with friends and family, but increases with angel and venture investors. A hybrid option is to invest in convertible debt, an interest-bearing loan that converts to stock over time. But Kramlich warns entrepreneurs to read the fine print closely and make sure they understand the terms, including how much of their company they are giving up.

This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” newsletter (Winter 2015). Copyright © 2015 BDO USA, LLP. All rights reserved. www.bdo.com

February 05, 2016

Understanding Funding Options

Understanding Funding Options
Back to industry updates

There are many types of financing, each with their own costs and benefits. So business owners must assess what kind of capital is right for them. Loans that are secured—that is, that are backed by collateral of some sort—are often the lowest cost. That includes SBA loans and mortgages. Other asset-backed loans, such as factoring or purchase order financing, advance funds based upon your accounts receivable. These types of money lenders may take a really hefty chunk of your receivables, in some cases up to 40 percent, says Kramlich. But the trade-off might be worth it for business owners who need cash quickly. Debt can be valuable, says Kramlich, but sometimes it’s not enough to fuel a growing company. In that case, entrepreneurs may want to consider equity. Equity, or selling shares in your company, can be a great source of long-term capital, she says. That includes investments from friends and family, crowdfunding, angel investors, accelerator programs and venture capitalists. But you will give up some ownership of your company. The outside ownership, or dilution, is typically lowest with friends and family, but increases with angel and venture investors. A hybrid option is to invest in convertible debt, an interest-bearing loan that converts to stock over time. But Kramlich warns entrepreneurs to read the fine print closely and make sure they understand the terms, including how much of their company they are giving up.

This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” newsletter (Winter 2015). Copyright © 2015 BDO USA, LLP. All rights reserved. www.bdo.com

December 09, 2018

2018 Year-End Tax Planning for Individuals

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Please download our complimentary year end tax planning guide for individuals

July 30, 2018

Why the “kiddie tax” is more dangerous than ever

Why the “kiddie tax” is more dangerous than ever
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Once upon a time, some parents and grandparents would attempt to save tax by putting investments in the names of their young children or grandchildren in lower income tax brackets. To discourage such strategies, Congress created the “kiddie” tax back in 1986. Since then, this tax has gradually become more far-reaching. Now, under the Tax Cuts and Jobs Act (TCJA), the kiddie tax has become more dangerous than ever.   (more…)

July 25, 2018

When it comes to revenue, nonprofits need to think like auditors

When it comes to revenue, nonprofits need to think like auditors
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Auditors examining a not-for-profit’s financial statements spend considerable time on the revenue figures. They look at the accounting methods used to record revenues and perform a detailed income analysis. You can use the same techniques to increase your understanding of your organization’s revenue profile.  (more…)

July 24, 2018

How are my gambling winnings taxed?

How are my gambling winnings taxed?
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Taxes are not generally at the forefront of people’s minds when entering a casino or a racetrack. However, gambling winnings or losses can carry significant tax implications. Any money you win gambling is considered taxable income by the IRS.

Gambling income has its own set of rules, and is subject to strict recordkeeping requirements.

Here are 4 key tips about gambling and taxes: (more…)

July 24, 2018

States enact laws requiring remote sellers to collect sales taxes

States enact laws requiring remote sellers to collect sales taxes
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The following states have already implemented rules to require remote sellers exceeding certain thresholds to register in their states and start collecting sales tax. However, we advise you to discuss this with your trusted CPA adviser before you register. Also, please visit our website for frequent updates as other states begin enforcing the new supreme court ruling. (more…)

July 24, 2018

Business deductions for meal, vehicle and travel expenses: Document, document, document

Business deductions for meal, vehicle and travel expenses: Document, document, document
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Meal, vehicle and travel expenses are common deductions for businesses. But if you don’t properly document these expenses, you could find your deductions denied by the IRS.  (more…)

July 23, 2018

New Jersey overhauls its tax laws

New Jersey overhauls its tax laws
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Recently, Governor Phil Murphy signed into law various tax bills that will have an immediate and significant impact on taxpayers in New Jersey. The new tax laws make sweeping changes to the state’s Corporation Business Tax (CBT) Act and results in possibly the most significant overhaul of the CBT since it was first enacted in 1945.

They new tax laws are intended to increase revenue, and to raise the highest rate for individual gross income tax purposes. Below is a summary of these changes. (more…)

July 19, 2018

3 traditional midyear tax planning strategies for individuals that hold up post-TCJA

3 traditional midyear tax planning strategies for individuals that hold up post-TCJA
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With its many changes to individual tax rates, brackets and breaks, the Tax Cuts and Jobs Act (TCJA) means taxpayers need to revisit their tax planning strategies. Certain strategies that were once tried-and-true will no longer save or defer tax. But there are some that will hold up for many taxpayers. And they’ll be more effective if you begin implementing them this summer, rather than waiting until year end. Take a look at these three ideas, and contact us to discuss what midyear strategies make sense for you.  (more…)

July 16, 2018

3 keys to a successful accounting system upgrade

3 keys to a successful accounting system upgrade
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Technology is tricky. Much of today’s software is engineered so well that it will perform adequately for years. But new and better features are being created all the time. And if you’re not getting as much out of your financial data as your competitors are, you could be at a disadvantage.

For these reasons, it can be hard to decide when to upgrade your company’s accounting software. Here are three keys to consider: (more…)

August 15, 2018

UPDATED: E-Commerce Tax Law Change by State

UPDATED: E-Commerce Tax Law Change by State
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You’ve probably heard about the recent U.S. Supreme Court decision allowing state and local governments to impose sales taxes on more out-of-state online sales. The ruling in South Dakota v. Wayfair, Inc. is welcome news for brick-and-mortar retailers, who felt previous rulings gave an unfair advantage to their online competitors., and state and local governments are pleased to potentially be able to collect more sales tax.

Below please find an up to date list on current rulings by state:

Hover over your state for current updated tax change information, and click a state to be directed to their website for more information (when available)

[us_map]

July 11, 2018

How to avoid getting hit with payroll tax penalties

How to avoid getting hit with payroll tax penalties
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For small businesses, managing payroll can be one of the most arduous tasks. Adding to the burden earlier this year was adjusting income tax withholding based on the new tables issued by the IRS. (Those tables account for changes under the Tax Cuts and Jobs Act.) But it’s crucial not only to withhold the appropriate taxes — including both income tax and employment taxes — but also to remit them on time to the federal government.  (more…)

July 10, 2018

Home green home: Save tax by saving energy

Home green home: Save tax by saving energy
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“Going green” at home — whether it’s your principal residence or a second home — can reduce your tax bill in addition to your energy bill, all while helping the environment, too. The catch is that, to reap all three benefits, you need to buy and install certain types of renewable energy equipment in the home.
(more…)

July 05, 2018

Does your business have to begin collecting sales tax on all out-of-state online sales?

Does your business have to begin collecting sales tax on all out-of-state online sales?
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You’ve probably heard about the recent U.S. Supreme Court decision allowing state and local governments to impose sales taxes on more out-of-state online sales. The ruling in South Dakota v. Wayfair, Inc. is welcome news for brick-and-mortar retailers, who felt previous rulings gave an unfair advantage to their online competitors. And state and local governments are pleased to potentially be able to collect more sales tax.

But for businesses with out-of-state online sales that haven’t had to collect sales tax from out-of-state customers in the past, the decision brings many questions and concerns. (more…)

July 03, 2018

Surviving the Storm

Surviving the Storm
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If you see four possible ways for something to go wrong, and circumvent them all- a fifth way promptly develops. Which is why any plan not amenable to change…is a bad plan.
Strong businesses must be prepared to weather the storms that will inevitably come. A company like Coca Cola Co has, which has been in business over 130 years, has seen many such downs turns, but perhaps none quite as precarious as the negative PR campaign against sugar, that in 2004 set the industry on a downward spiral that continues to this day. The recent sugar tax being imposed across the country is the latest crushing hit in a long battle that shows no sign of letting up. (more…)

July 02, 2018

Finding a 401(k) that’s right for your business

Finding a 401(k) that’s right for your business
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By and large, today’s employees expect employers to offer a tax-advantaged retirement plan. A 401(k) is an obvious choice to consider, but you may not be aware that there are a variety of types to choose from. Let’s check out some of the most popular options: (more…)

June 28, 2018

UPDATE: States Can Force Online Retailers to Collect Sales Tax

UPDATE: States Can Force Online Retailers to Collect Sales Tax
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The US Supreme Court overturned over a half century of precedent last Thursday, ruling that a state may reasonably impose sales tax collection obligations on out-of-state retailers with no physical presence in the state based on a certain threshold of in-state sales.

What does this mean for online or out-of-state retailers? (more…)

June 27, 2018

Do you know the ABCs of HSAs, FSAs and HRAs?

Do you know the ABCs of HSAs, FSAs and HRAs?
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There continues to be much uncertainty about the Affordable Care Act and how such uncertainty will impact health care costs. So it’s critical to leverage all tax-advantaged ways to fund these expenses, including HSAs, FSAs and HRAs. Here’s how to make sense of this alphabet soup of health care accounts.  (more…)

June 26, 2018

Choosing the best business entity structure post-TCJA

Choosing the best business entity structure post-TCJA
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For tax years beginning in 2018 and beyond, the Tax Cuts and Jobs Act (TCJA) created a flat 21% federal income tax rate for C corporations. Under prior law, C corporations were taxed at rates as high as 35%. The TCJA also reduced individual income tax rates, which apply to sole proprietorships and pass-through entities, including partnerships, S corporations, and, typically, limited liability companies (LLCs). The top rate, however, dropped only slightly, from 39.6% to 37%.  (more…)

June 25, 2018

Consider the tax advantages of investing in qualified small business stock

Consider the tax advantages of investing in qualified small business stock
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While the Tax Cuts and Jobs Act (TCJA) reduced most ordinary-income tax rates for individuals, it didn’t change long-term capital gains rates. They remain at 0%, 15% and 20%.  (more…)

June 21, 2018

BREAKING: Supreme Court Rules States Can Force Online Retailers to Collect Sales Tax

BREAKING: Supreme Court Rules States Can Force Online Retailers to Collect Sales Tax
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Internet retailers can now be required to collect sales and use tax even in states in which they lack a physical presence, after the U.S. Supreme Court overturned a 1992 ruling that enabled much of e-commerce to be a tax-free zone. (more…)

June 21, 2018

2018 Q3 tax calendar: Key deadlines for businesses and other employers

2018 Q3 tax calendar: Key deadlines for businesses and other employers
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Here are some of the key tax-related deadlines affecting businesses and other employers during the third quarter of 2018. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.  (more…)

June 19, 2018

Make the most of your fundraising with simple metrics

Make the most of your fundraising with simple metrics
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The amount of money your not-for-profit raises in fundraising campaigns is meaningful, but so is how efficiently you’re able to raise it. Such costs can be measured using two metrics: Cost ratio and return on investment (ROI). Let’s take a look. (more…)

June 18, 2018

2 tax law changes that may affect your business’s 401(k) plan

2 tax law changes that may affect your business’s 401(k) plan
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When you think about recent tax law changes and your business, you’re probably thinking about the new 20% pass-through deduction for qualified business income or the enhancements to depreciation-related breaks. Or you may be contemplating the reduction or elimination of certain business expense deductions. But there are also a couple of recent tax law changes that you need to be aware of if your business sponsors a 401(k) plan.  (more…)

June 13, 2018

The tax impact of the TCJA on estate planning

The tax impact of the TCJA on estate planning
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The massive changes the Tax Cuts and Jobs Act (TCJA) made to income taxes have garnered the most attention. But the new law also made major changes to gift and estate taxes. While the TCJA didn’t repeal these taxes, it did significantly reduce the number of taxpayers who’ll be subject to them, at least for the next several years. Nevertheless, factoring taxes into your estate planning is still important.  (more…)

June 12, 2018

Should your business be an S Corp or an LLC?

Should your business be an S Corp or an LLC?
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Congratulations! You have finally decided to start your own business.

Or maybe you have been operating as a sole proprietor and have decided it is time to protect your personal assets from those involved with your growing business.

You now face the choice of whether to structure your business as an S corporation (S corp), or a limited liability corporation (LLC).

(more…)

June 11, 2018

Factor in state and local taxes when deciding where to live in retirement

Factor in state and local taxes when deciding where to live in retirement
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Many Americans relocate to another state when they retire. If you’re thinking about such a move, state and local taxes should factor into your decision.   (more…)

June 07, 2018

Could a long-term deal ease your succession planning woes?

Could a long-term deal ease your succession planning woes?
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Some business owners — particularly those who founded their companies — may find it hard to give up control to a successor. Maybe you just can’t identify the right person internally to fill your shoes. While retirement isn’t in your immediate future, you know you must eventually step down.  (more…)

June 06, 2018

Tax Accounting Methods Modified under the Tax Reform Bill

Tax Accounting Methods Modified under the Tax Reform Bill
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The Tax Cuts & Jobs Act (TCJA) involves several changes to the rules governing choice of accounting method for businesses.

Specifically the gross receipts threshold for Cash Basis Accounting has been raised. The details and qualifications for this law change are outlined below. (more…)

June 05, 2018

Failing to Prepare or Preparing to Fail

Failing to Prepare or Preparing to Fail
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Plan B is never best planned while plagued by panic and the frenzied fear of Plan A’s imminent failure- though it often is.

Business owners study the market and the competition with a growth mindset. The goal is always to stay ahead of the pack by managing risk and leveraging strengths, but managing risk in a disaster is often where the boys are separated from the men.

(more…)

June 05, 2018

What businesses need to know about the tax treatment of bitcoin and other virtual currencies

What businesses need to know about the tax treatment of bitcoin and other virtual currencies
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Over the last several years, virtual currency has become increasingly popular. Bitcoin is the most widely recognized form of virtual currency, also commonly referred to as digital, electronic or crypto currency.

While most smaller businesses aren’t yet accepting bitcoin or other virtual currency payments from their customers, more and more larger businesses are. And the trend may trickle down to smaller businesses. Businesses also can pay employees or independent contractors with virtual currency. But what are the tax consequences of these transactions? (more…)

June 04, 2018

Bookings vs. shippings: A sales flash report primer

Bookings vs. shippings: A sales flash report primer
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Do bad sales months often take you by surprise? If so, don’t forget the power of flash reports — that is, snapshots of critical data for quick, timely viewing every day or week.

One specific way to use them is to track bookings vs. shippings. Doing so can help you determine what percentage of volume for certain months should be booked by specific dates. These reports are particularly useful if more than 30 days elapse between these activities. (more…)

May 31, 2018

Effects of Tax Reform on Taxation Related To Foreign Subsidiary Income

Effects of Tax Reform on Taxation Related To Foreign Subsidiary Income
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Prior to the Tax Cuts and Jobs Act (TCJA), income earned by U.S. shareholders of a foreign corporation has generally not been subject to U.S. tax until the income is distributed as a dividend to U.S. shareholders.

The TCJA however, has introduced two significant changes to the taxation of income earned by a foreign corporation owned by U.S. shareholders.

(more…)

May 29, 2018

Financial sustainability and your nonprofit

Financial sustainability and your nonprofit
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If your not-for-profit relies heavily on a few funding sources — for example, an annual government or foundation grant — what happens if you suddenly lose that support? The risk may be compounded if you generally spend every penny that comes in the door and fail to build adequate reserves. Bottom line: If your nonprofit hopes to serve its community many years into the future, you need to think about financial sustainability now.  (more…)

May 24, 2018

Sending your kids to day camp may provide a tax break

Sending your kids to day camp may provide a tax break
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When school lets out, kids participate in a wide variety of summer activities. If one of the activities your child is involved with is day camp, you might be eligible for a tax credit!  (more…)

May 23, 2018

Procurement procedures: Is your nonprofit really in compliance?

Procurement procedures: Is your nonprofit really in compliance?
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The relatively new federal procurement standards significantly alter the way not-for-profits receiving federal funding handle purchasing. And while your organization may have changed its written policies to comply with the revised standards, it may be easier to follow the rules on paper than in practice. (more…)

May 22, 2018

The TCJA changes some rules for deducting pass-through business losses

The TCJA changes some rules for deducting pass-through business losses
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It’s not uncommon for businesses to sometimes generate tax losses. But the losses that can be deducted are limited by tax law in some situations. The Tax Cuts and Jobs Act (TCJA) further restricts the amount of losses that sole proprietors, partners, S corporation shareholders and, typically, limited liability company (LLC) members can currently deduct — beginning in 2018. This could negatively impact owners of start-ups and businesses facing adverse conditions. (more…)

May 17, 2018

Can you deduct business travel when it’s combined with a vacation?

Can you deduct business travel when it’s combined with a vacation?
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At this time of year, a summer vacation is on many people’s minds. If you travel for business, combining a business trip with a vacation to offset some of the cost with a tax deduction can sound appealing. But tread carefully, or you might not be eligible for the deduction you’re expecting. (more…)

May 15, 2018

Update on Tax Reform Act

Update on Tax Reform Act
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By way of introduction, my name is Michael Rabinowitsch, and I am the Senior Tax Manager in Roth&Co’s New York office, leading the Tax Compliance and Consulting division. I’m here to help our clients build efficient tax structures and map out effective tax plans to keep their companies compliant, productive and profitable.

(more…)

May 15, 2018

Cost control takes a total team effort

Cost control takes a total team effort
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“That’s just the cost of doing business.” You’ve probably heard this expression many times. It’s true that, to invoke another cliché, you’ve got to spend money to make money. But that doesn’t mean you have to take rising operational costs sitting down. (more…)

May 10, 2018

Accounting for pledges isn’t as simple as it might seem

Accounting for pledges isn’t as simple as it might seem
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When a donor promises to make a contribution at a later date, your not-for-profit likely welcomes it. But such pledges can come with complicated accounting issues. (more…)

May 09, 2018

Do you need to adjust your withholding?

Do you need to adjust your withholding?
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If you received a large refund after filing your 2017 income tax return, you’re probably enjoying the influx of cash. But a large refund isn’t all positive. It also means you were essentially giving the government an interest-free loan.

That’s why a large refund for the previous tax year would usually indicate that you should consider reducing the amounts you’re having withheld (and/or what estimated tax payments you’re making) for the current year. But 2018 is a little different.

TCJA and withholding

To reflect changes under the Tax Cuts and Jobs Act (TCJA) — such as the increase in the standard deduction, suspension of personal exemptions and changes in tax rates and brackets —the IRS updated the withholding tables that indicate how much employers should hold back from their employees’ paychecks, generally reducing the amount withheld.

The new tables may provide the correct amount of tax withholding for individuals with simple tax situations, but they might cause other taxpayers to not have enough withheld to pay their ultimate tax liabilities under the TCJA. So even if you received a large refund this year, you could end up owing a significant amount of tax when you file your 2018 return next year.

Perils of the new tables

The IRS itself cautions that people with more complex tax situations face the possibility of having their income taxes underwithheld. If, for example, you itemize deductions, have dependents age 17 or older, are in a two-income household or have more than one job, you should review your tax situation and adjust your withholding if appropriate.

The IRS has updated its withholding calculator (available at irs.gov) to assist taxpayers in reviewing their situations. The calculator reflects changes in available itemized deductions, the increased child tax credit, the new dependent credit and repeal of dependent exemptions.

More considerations

Tax law changes aren’t the only reason to check your withholding. Additional reviews during the year are a good idea if:

  • You get married or divorced,
  • You add or lose a dependent,
  • You purchase a home,
  • You start or lose a job, or
  • Your investment income changes significantly.

You can modify your withholding at any time during the year, or even multiple times within a year. To do so, you simply submit a new Form W-4 to your employer. Changes typically will go into effect several weeks after the new Form W-4 is submitted. (For estimated tax payments, you can make adjustments each time quarterly payments are due.)

May 08, 2018

Say, just how competitive is your business anyway?

Say, just how competitive is your business anyway?
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Every business owner launches his or her company wanting to be successful. But once you get out there, it usually becomes apparent that you’re not alone. To reach any level of success, you’ve got to be competitive with other similar businesses in your market.

When strategic planning, one important question to regularly ask is: Just how competitive are we anyway? Objectively making this determination entails scrutinizing key factors that affect profitability, including: (more…)

May 07, 2018

A review of significant TCJA provisions affecting small businesses

A review of significant TCJA provisions affecting small businesses
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Now that small businesses and their owners have filed their 2017 income tax returns (or filed for an extension), it’s a good time to review some of the provisions of the Tax Cuts and Jobs Act (TCJA) that may significantly impact their taxes for 2018 and beyond. Generally, the changes apply to tax years beginning after December 31, 2017, and are permanent, unless otherwise noted.  (more…)

May 02, 2018

Get started on 2018 tax planning now!

Get started on 2018 tax planning now!
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With the April 17 individual income tax filing deadline behind you (or with your 2017 tax return on the back burner if you filed for an extension), you may be hoping to not think about taxes for the next several months. But for maximum tax savings, now is the time to start tax planning for 2018. It’s especially critical to get an early start this year because the Tax Cuts and Jobs Act (TCJA) has substantially changed the tax environment. (more…)

May 02, 2018

Manage health benefits costs with a multipronged approach

Manage health benefits costs with a multipronged approach
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Many companies offer health care benefits to help ensure employee wellness and compete for better job candidates. And the Affordable Care Act has been using both carrots and sticks (depending on employer size) to encourage businesses to offer health coverage. (more…)

April 30, 2018

Quality Control

Quality Control
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They say an important trait for success as an entrepreneur is optimism. The optimist will try far more things and persevere through many more failures because of his unusually positive outlook… there’s also many a pessimist who got that way by financing one. The trick is finding the right balance. Tempered optimism is enthusiastic yet skeptical; passionate about making money and equally so about losing it. (more…)

April 29, 2018

Individual tax calendar: Important deadlines for the remainder of 2018

Individual tax calendar: Important deadlines for the remainder of 2018
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While April 15 (April 18 this year) is the main tax deadline on most individual taxpayers’ minds, there are others through the rest of the year that you also need to be aware of. To help you make sure you don’t miss any important 2018 deadlines, here’s a look at when some key tax-related forms, payments and other actions are due. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you.  (more…)

April 29, 2018

Blockchain may soon drive business worldwide

Blockchain may soon drive business worldwide
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“Blockchain” may sound like something that goes on a vehicle’s tires in icy weather or that perhaps is part of that vehicle’s engine. Indeed it is a type of technology that may help drive business worldwide at some point soon — but digitally, not physically. No matter what your industry, now’s a good time to start learning about blockchain. (more…)

April 28, 2018

3 ways to supercharge your supervisors

3 ways to supercharge your supervisors
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The attitudes and behaviors of your people managers play a critical role in your company’s success. When your managers are putting forth their best effort, the more likely it is that you’ll, in turn, get the best performances out of the rest of your employees. Here are three ways to supercharge your supervisors: (more…)

April 25, 2018

Tax record retention guidelines for individuals

Tax record retention guidelines for individuals
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What 2017 tax records can you toss once you’ve filed your 2017 return? The answer is simple: none. You need to hold on to all of your 2017 tax records for now. But it’s the perfect time to go through old tax records and see what you can discard. (more…)

April 24, 2018

Taking it to the streets: 7 marketing strategies to consider

Taking it to the streets: 7 marketing strategies to consider
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With such intense focus on digital marketing these days, business owners can overlook the fact that there are actual, physical places to interact with the buying public. Now that spring is here and summer is on the way, it’s a good time to rediscover the possibilities of “street marketing.” Here are seven strategies to consider: (more…)

April 23, 2018

Should your nonprofit have an advisory board?

Should your nonprofit have an advisory board?
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Your not-for-profit is likely governed by a core group of board members. But the addition of an informal advisory board can bring complementary — and valuable — skills and resources to this group.  (more…)

April 18, 2018

4 steps to boosting positive PR for your nonprofit

4 steps to boosting positive PR for your nonprofit
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For most not-for-profits, there’s no such thing as too much good publicity. If you’re struggling to get enough attention from media outlets, follow these steps: (more…)

April 17, 2018

TCJA changes to employee benefits tax breaks: 4 negatives and a positive

TCJA changes to employee benefits tax breaks: 4 negatives and a positive
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The Tax Cuts and Jobs Act (TCJA) includes many changes that affect tax breaks for employee benefits. Among the changes are four negatives and one positive that will impact not only employees but also the businesses providing the benefits. (more…)

April 03, 2018

Should you file Form SS-8 to ask the IRS to determine a worker’s status?

Should you file Form SS-8 to ask the IRS to determine a worker’s status?
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Classifying workers as independent contractors — rather than employees — can save businesses money and provide other benefits. But the IRS is on the lookout for businesses that do this improperly to avoid taxes and employee benefit obligations. (more…)

April 02, 2018

Could your next business loan get “ratio’d”?

Could your next business loan get “ratio’d”?
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We live and work in an era of big data. Banks are active participants, keeping a keen eye on metrics that help them accurately estimate risk of default. (more…)

March 28, 2018

2018 Q2 tax calendar: Key deadlines for businesses and other employers

2018 Q2 tax calendar: Key deadlines for businesses and other employers
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Here are some of the key tax-related deadlines affecting businesses and other employers during the second quarter of 2018. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.  (more…)

March 27, 2018

Home-related tax breaks are valuable on 2017 returns, will be less so for 2018

Home-related tax breaks are valuable on 2017 returns, will be less so for 2018
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Home ownership is a key element of the American dream for many, and the U.S. tax code includes many tax breaks that help support this dream. If you own a home, you may be eligible for several valuable breaks when you file your 2017 return. But under the Tax Cuts and Jobs Act, your home-related breaks may not be as valuable when you file your 2018 return next year.  (more…)

March 22, 2018

Make telecommuting work for your nonprofit

Make telecommuting work for your nonprofit
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Like their for-profit counterparts, not-for-profits are increasingly allowing employees to telecommute. Done right, work-at-home arrangements, either full time or on an occasional basis, can pay off for both employers and employees. But you’ll need to be proactive to avoid some pitfalls. (more…)

March 20, 2018

Spring cleaning: Review your nonprofit’s programs — and possibly replace some

Spring cleaning: Review your nonprofit’s programs — and possibly replace some
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Has your not-for-profit’s program lineup remained unchanged for at least a couple of years? If so, consider using the tradition of spring cleaning to review your offerings. Some of your programs might be due for replacement.  (more…)

March 20, 2018

Defer tax with a Section 1031 exchange, but new limits apply this year

Defer tax with a Section 1031 exchange, but new limits apply this year
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Normally when appreciated business assets such as real estate are sold, tax is owed on the appreciation. But there’s a way to defer this tax: a Section 1031 “like kind” exchange. However, the Tax Cuts and Jobs Act (TCJA) reduces the types of property eligible for this favorable tax treatment. (more…)

March 20, 2018

Is your nonprofit’s board providing adequate fiscal oversight?

Is your nonprofit’s board providing adequate fiscal oversight?
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Nonprofits don’t face the same government regulations or public scrutiny as for-profit public companies do. But that doesn’t mean your board can afford to get slack about financial governance. Donors and watchdog groups pay close attention to organizations’ Forms 990 and the media is quick to pounce on rumors of fraud in the nonprofit sector. That’s why you should regularly evaluate your board’s financial oversight (if you aren’t already doing so) and recruit new members or outside advisors with financial expertise if necessary.  (more…)

March 20, 2018

Building a sales prospect pipeline for your business

Building a sales prospect pipeline for your business
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An old business adage says, “Sales is a numbers game.” In other words, the more potential buyers you face, the better your chances of making sales. This isn’t completely true, of course; success also depends on execution.  (more…)

March 12, 2018

Size of charitable deductions depends on many factors

Size of charitable deductions depends on many factors
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Whether you’re claiming charitable deductions on your 2017 return or planning your donations for 2018, be sure you know how much you’re allowed to deduct. Your deduction depends on more than just the actual amount you donate. (more…)

March 08, 2018

It’s time to get more creative with retirement benefits communications

It’s time to get more creative with retirement benefits communications
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Employees tend not to fully appreciate or use their retirement benefits unless their employer communicates with them about the plan clearly and regularly. But workers may miss or ignore your messaging if it all looks and “sounds” the same. That’s why you might want to consider getting more creative. Consider these ideas: (more…)

March 06, 2018

2017 tax filing deadline for pass-through entities is March 15

2017 tax filing deadline for pass-through entities is March 15
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When it comes to income tax returns, April 15 (actually April 17 this year, because of a weekend and a Washington, D.C., holiday) isn’t the only deadline taxpayers need to think about. The federal income tax filing deadline for calendar-year partnerships, S corporations and limited liability companies (LLCs) treated as partnerships or S corporations for tax purposes is March 15. While this has been the S corporation deadline for a long time, it’s only the second year the partnership deadline has been in March rather than in April.  (more…)

March 05, 2018

It’s time for nonprofits to embrace the cloud

It’s time for nonprofits to embrace the cloud
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Cloud computing promises lower technology costs and greater efficiency and productivity. Yet many nonprofits have yet to move to the cloud, possibly because their staffs are smaller and their IT expertise is limited. Fortunately, cloud computing is a simple concept that’s easy to adopt. (more…)

February 28, 2018

Sec. 179 expensing provides small businesses tax savings on 2017 returns — and more savings in the future

Sec. 179 expensing provides small businesses tax savings on 2017 returns — and more savings in the future
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If you purchased qualifying property by December 31, 2017, you may be able to take advantage of Section 179 expensing on your 2017 tax return. You’ll also want to keep this tax break in mind in your property purchase planning, because the Tax Cuts and Jobs Act (TCJA), signed into law this past December, significantly enhances it beginning in 2018.  (more…)

February 27, 2018

5 questions to ask yourself about social media

5 questions to ask yourself about social media
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Social media can be an inexpensive, but effective, way to market a company’s products or services. Like most businesses today, you’ve probably at least dipped your toe into its waters. Or perhaps you have a full-blown, ongoing social media strategy involving multiple sites and a variety of content. (more…)

February 26, 2018

Boosting the matching gifts your nonprofit receives

Boosting the matching gifts your nonprofit receives
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Corporate matching can double the value of donors’ gifts — a bonus no not-for-profit organization can afford to pass up. Are you doing everything you can to educate your financial supporters and their employers about matching gifts?  (more…)

February 22, 2018

Making the most of your nonprofit’s internal audit function

Making the most of your nonprofit’s internal audit function
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The key role of a not-for-profit’s internal auditors was once limited largely to testing financial and compliance controls and reporting their findings to the organization’s leadership. But today, with their cross-departmental perspective, internal audit staff (whether employees or outside consultants) can help anticipate and mitigate a variety of risks, improve processes — and even help evaluate your nonprofit’s strategies.  (more…)

February 20, 2018

Turning employee ideas into profitable results

Turning employee ideas into profitable results
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Many businesses train employees how to do their jobs and only their jobs. But amazing things can happen when you also teach staff members to actively involve themselves in a profitability process — that is, an ongoing, idea-generating system aimed at adding value to your company’s bottom line.

Let’s take a closer look at how to get your workforce involved in coming up with profitable ideas and then putting those concepts into action. (more…)

February 19, 2018

Small business owners: A SEP may give you one last 2017 tax and retirement saving opportunity

Small business owners: A SEP may give you one last 2017 tax and retirement saving opportunity
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Are you a high-income small-business owner who doesn’t currently have a tax-advantaged retirement plan set up for yourself? A Simplified Employee Pension (SEP) may be just what you need, and now may be a great time to establish one. A SEP has high contribution limits and is simple to set up. Best of all, there’s still time to establish a SEP for 2017 and make contributions to it that you can deduct on your 2017 income tax return.  (more…)

February 15, 2018

Is your nonprofit ready to hire new staffers?

Is your nonprofit ready to hire new staffers?
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According to the 2017 Nonprofit Employment Practices Survey by human resources consultant Nonprofit HR, charities are hiring at a faster pace than for-profit companies. Of the not-for-profits surveyed, 50% reported that they would add staffers, vs. 40% of for-profit businesses.
Yet plenty of nonprofits are still hesitating to add employees to the payroll. If your organization is on the sidelines but thinking about hiring in the near future, the following three questions can help you decide: (more…)

February 13, 2018

Claiming bonus depreciation on your 2017 tax return may be particularly beneficial

Claiming bonus depreciation on your 2017 tax return may be particularly beneficial
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With bonus depreciation, a business can recover the costs of depreciable property more quickly by claiming additional first-year depreciation for qualified assets. The Tax Cuts and Jobs Act (TCJA), signed into law in December, enhances bonus depreciation.  (more…)

February 12, 2018

TCJA temporarily lowers medical expense deduction threshold

TCJA temporarily lowers medical expense deduction threshold
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With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever. But there’s a threshold for deducting medical expenses that may be hard to meet. Fortunately, the Tax Cuts and Jobs Act (TCJA) has temporarily reduced the threshold. (more…)

February 07, 2018

2 tax credits just for small businesses may reduce your 2017 and 2018 tax bills

2 tax credits just for small businesses may reduce your 2017 and 2018 tax bills
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Tax credits reduce tax liability dollar-for-dollar, potentially making them more valuable than deductions, which reduce only the amount of income subject to tax. Maximizing available credits is especially important now that the Tax Cuts and Jobs Act has reduced or eliminated some tax breaks for businesses. Two still-available tax credits are especially for small businesses that provide certain employee benefits.  (more…)

February 05, 2018

Collaborating for a cause: Nonprofit alliances

Collaborating for a cause: Nonprofit alliances
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Countless nonprofits have partnered up for strength and survival in recent years. But the success of these arrangements depends on careful planning and oversight.  (more…)

February 01, 2018

Meals, entertainment and transportation may cost businesses more under the TCJA

Meals, entertainment and transportation may cost businesses more under the TCJA
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Along with tax rate reductions and a new deduction for pass-through qualified business income, the new tax law brings the reduction or elimination of tax deductions for certain business expenses. Two expense areas where the Tax Cuts and Jobs Act (TCJA) changes the rules — and not to businesses’ benefit — are meals/entertainment and transportation. In effect, the reduced tax benefits will mean these expenses are more costly to a business’s bottom line. (more…)

January 31, 2018

State and local sales tax deduction remains, but subject to a new limit

State and local sales tax deduction remains, but subject to a new limit
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Individual taxpayers who itemize their deductions can deduct either state and local income taxes or state and local sales taxes. The ability to deduct state and local taxes — including income or sales taxes, as well as property taxes — had been on the tax reform chopping block, but it ultimately survived. However, for 2018 through 2025, the Tax Cuts and Jobs Act imposes a new limit on the state and local tax deduction. Will you benefit from the sales tax deduction on your 2017 or 2018 tax return? (more…)

January 25, 2018

What nonprofits need to know about the new tax law

What nonprofits need to know about the new tax law
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The number of taxpayers who itemize deductions on their federal tax return — and, thus, are eligible to deduct charitable contributions — is estimated by the Tax Policy Center to drop from 37% in 2017 to 16% in 2018. That’s because the recently passed Tax Cuts and Jobs Act (TCJA) substantially raises the standard deduction. Many not-for-profit organizations are understandably worried about how this change will affect donations. But this isn’t the only TCJA provision that affects nonprofits.

Donors have fewer incentives

In addition to reducing smaller-scale giving by shrinking the pool of people who itemize, the TCJA might discourage major contributions. The law doubles the estate tax exemption to $10 million (indexed for inflation) through 2025. Some wealthy individuals who make major gifts to shrink their taxable estates won’t need to donate as much to reduce or eliminate their potential estate tax.

UBIT takes a bigger bite

The new law mandates that nonprofits calculate their unrelated business taxable income (UBTI) separately for each unrelated business. As a result, they can’t use a deduction from one unrelated business to offset income from another unrelated business for the same tax year. However, they can generally use one year’s losses on an unrelated business to reduce their taxes for that business in a different year. The TCJA also includes in UBTI expenses used to provide certain transportation-related and other benefits. So, the unrelated business income tax (UBIT) a nonprofit must pay could go up.

High compensation risks new tax

Nonprofits with highly compensated executives may now potentially face a 21% excise tax. The tax applies to the sum of any compensation (including most benefits) in excess of $1 million paid to a covered employee plus certain large payments made to that employee when he or she leaves the organization, known as “parachute” payments. The excise tax applies to the amount of the parachute payment less the average annual compensation.

Bond interest exemption revoked

The TCJA repeals the tax-exempt treatment for interest paid on tax-exempt bonds issued to repay another bond in advance. An advance repayment bond is used to pay principal, interest or redemption price on an earlier bond prior to its redemption date.

Be informed

Note that other rules and limits may apply. We can provide you with a detailed picture of the new tax law and explain how it’s likely to affect your organization.