Thursday, December 29, 2016

Know when to sell

Know when to sell

Deciding when to buy a stock is often easier than determining when to sell. As you're reviewing your portfolio at year-end, consider these situations that may indicate the right time to sell.
When there are no tax consequences. If you hold stock in a retirement fund, you may want to reap gains with no tax impact.
To take money off the table. If a stock has had a nice run, you could sell a portion to recoup part of your investment. You can continue to invest in the stock but with locked-in gains.
A shift in fundamentals. Consider selling if the economy changes or an entire industry becomes vulnerable due to negative news.
When you've given up on a stock. If a stock has been declining or flat-lining for an extended period, selling low now can save you from having to sell even lower later on.
To take a contrarian position. If the market has gotten frothy and all the news is optimistic, choosing to harvest your gains could be a wise move.
When cash becomes attractive. A gloomy economic outlook could be reason to increase your cash reserves.
Having a disciplined selling strategy means giving as much thought to the sale of a stock as to the purchase. Contact us. We're here to help.

Tuesday, December 27, 2016

How social security benefits are taxed

How social security benefits are taxed

Are you wondering if your social security retirement, survivor, and disability benefits will be subject to federal income tax on your 2016 return? Generally, when these benefits are taxed is determined by your "provisional income."
Provisional income (PI) is the product of a formula used for no other purpose than figuring out the taxable percentage of social security benefits. To compute your provisional income, total your adjusted gross income, any tax-exempt interest or similar nontaxable revenue, and one-half of your social security retirement benefits for the year. How much of your benefits are taxed depends on this "base amount."
– Joint filers with PI below $32,000 ($25,000 for single filers) owe no tax on benefits.
– Joint filers with PI between $32,000 and $44,000 ($25,000 and $34,000 for single filers) are taxed on a sliding scale that tops out at 50% of benefits received.
– Joint filers with PI over $44,000 ($34,000 for single filers) are taxed on more than 50% and up to 85% of benefits.
Note that supplemental security income payments (SSI) are not taxable. For answers to questions about your benefits, contact us.

Friday, December 23, 2016

Avoid hiring mistakes in your start-up

Avoid hiring mistakes in your start-up

Staffing errors can spell disaster for your start-up. Here are three to watch out for.
1. Staffing the firm with friends and family. While this strategy may work in some circumstances, hiring pals and relatives often spells trouble. For one thing, friends and family members often expect – even subconsciously – to be treated differently from other employees. A double standard, whether real or perceived, can hurt morale and productivity. As a general rule, focus hiring decisions solely on the needs of your firm and applicant qualifications.
2. Trusting in a handshake. Spell out employee arrangements in writing. This can be as simple as drafting employee offer letters that cover compensation, rights to intellectual property, and bonus arrangements. Employee handbooks are also a good way to spell out the responsibilities of your firm and staff.
3. Bringing in a partner for the wrong reasons. Downside risks of bringing in a partner include surrendering a portion of your company and control over important management decisions to someone else. Before selling part of your company, ask yourself what the partner will contribute besides money. Can you find other ways to fill gaps in your team? Choosing wisely can help you avoid ending up in the business equivalent of divorce court.
For assistance with issues facing your start-up business, give us a call.

Monday, December 19, 2016

Don't include the IRS on your gift list

Don't include the IRS on your gift list

Suppose a relative gives you an expensive painting. Several years later, your relative dies and you decide to sell the painting. Your accountant says you'll owe capital gain tax on the sale, and asks for your basis in order to reduce the amount on which you'll pay tax. What's your answer?
When you sell property received as a gift, the general rule is that your basis is the donor's cost basis. If you sell at a loss, your basis is the lower of the donor's basis or the fair market value on the date you received the gift. These numbers are adjusted in some cases. But without cost records, you have no way of proving the donor's basis and no way of saving yourself tax dollars.
If asking for records of the cost when you receive a gift seems inappropriate, explain why you want to know to help make the conversation less awkward. No one likes to pay unnecessary taxes. Having the same conversation about the cost of valuable gifts you received in prior-years is also worthwhile.
If you're the gift-giver, offer the additional gift of presenting the cost records to the recipient at the same time. Otherwise, you may end up giving an unintended gift to the IRS in the form of unnecessary taxes.

Thursday, December 15, 2016

Having problems keeping employees?

Having problems keeping employees?

Is retention of good employees a priority for your business? Consider conducting "stay" interviews. These meetings between managers and valued employees can provide insight into why your employees like their jobs, which in turn lets you know how to retain the employees. Conducted on a regular basis, generally more than once a year, stay interviews tell employees you're serious about accepting feedback and keeping them on the job.

Tuesday, December 13, 2016

Complete these retirement plan steps before year-end

Complete these retirement plan steps before year-end

December 31 is the last day you can benefit from certain retirement tax breaks. For example, if you haven't put the maximum amount allowed in your 401(k) – $18,000 in 2016 – increasing your contributions can save you money. If you're over age 50, you can make a catch-up contribution to a 401(k) of an additional $6,000. If you're age 70½ or older, remember to take required minimum distributions from retirement plans to avoid a penalty. For more tips on managing your retirement plans, contact us.

Friday, December 9, 2016

Are you part of the "sharing" economy?

Are you part of the "sharing" economy?

The IRS defines the "sharing" economy as economic activity generated through the use of technology that lets you earn money from your assets, such as a car. Income from these activities, including room rentals and car rides, is taxable, and you may be able to deduct related expenses. Depending on the work you do, special tax rules can apply. Contact us for information about how to report your sharing activity income.

Wednesday, December 7, 2016

Your suddenly dead mobile phone may be a sign of fraud

Your suddenly dead mobile phone may be a sign of fraud


According to the Federal Trade Commission, in a growing type of fraud known as a "SIM swap" scam, fraudsters take over your mobile account in order to steal your identity. The SIM, or subscriber identity module, card in your phone is the memory chip that stores information identifying the phone to a network. Thieves contact your phone company, claiming to be you, and request activation of a new SIM card with your existing phone number. Your phone goes dead, and the thief can then intercept phone calls and text messages that allow access to financial accounts. As a safeguard, consider adding a password that must be activated before your phone account can be changed.

Monday, December 5, 2016

Clean your financial house for the New Year

Clean your financial house for the New Year


Out with the old, in with the new. No matter whether you apply the expression to changes in attitude or to life adjustments, the end of the year is a great time to assess your household finances and prepare for new opportunities. Here are suggestions.
Review your credit report. Request a free copy of your credit report from each of the three major credit bureaus. If the reports contain errors, get them corrected.
Make or update your home inventory. Go through your house and make a video describing what you see, along with information such as purchase dates, prices, and estimated values. Your home inventory can be vital for getting insurance claims approved in case of disaster.
Calculate your net worth. Your net worth is the value of your assets, including your house, personal property, bank accounts, car, and investments, minus liabilities such as your mortgage, credit card balances, and loans. This is a great yardstick for measuring your household's financial growth (or shrinkage) from year to year.
Increase your savings. If you get a year-end raise, consider contributing a portion of the extra money to your 401(k) plan or other savings account.
Purge financial records. If you're a financial packrat with stacks of old cancelled checks and bank statements that are no longer needed for an IRS audit or your own use, shred them.

Need help? Contact our office.

Do you need to bunch your medical deductions?

Do you need to bunch your medical deductions?

Bunching deductions means timing the payments between years to get the best tax deduction. Since 2016 is the last tax year that taxpayers age 65 or older can use the 7.5% of adjusted gross income (AGI) deduction floor, you may want to consider bunching medical deductions this year. Starting in 2017, the deduction floor for medical expenses for this age group rises to 10% of your AGI. Allowable expenses include long-term care premiums, prescription drugs, mileage or transportation costs, and home improvements that accommodate a disability or medical condition. Nondeductible items include funeral expenses, nutritional supplements, and nonprescription drugs. Contact us for assistance.

Thursday, December 1, 2016

S corporation loss for 2016? Check your basis

S corporation loss for 2016? Check your basis

Typically, stock basis in an S corporation begins with the capital contribution you make to get the company started. At the end of each taxable year, your stock basis is adjusted to reflect your business's operating results. After your stock basis reaches zero, you may be able to deduct additional losses, up to the extent of your debt basis. However, once your stock and debt basis are both reduced to zero, losses incurred are suspended, and you get no current tax benefit. Contact us if you're in this situation. We can provide a sol
ution and guide you through the rules.

Tuesday, November 29, 2016

Downtime is not wasted time

Downtime is not wasted time

Does a suggestion to boost productivity with time off sound counterintuitive? Research has shown that giving workers – and perhaps yourself, as a business owner – time off to recuperate from work demands can be energizing. Here are three ways your business can benefit.
1.                  Health and customer service benefits. When combined with a sick leave policy, paid time off can help persuade employees with contagious illnesses to stay home. What's more, if your workers have a high level of contact with the public, paid time off can be a marketing tool to help assure your customer base that your company takes safety and health issues seriously.

2.                  Attract higher quality workers. In studies, paid time off ranks high on the wish-list of potential job candidates, especially young parents. One preference is for combining separate benefits, such as vacation, sick time, and personal days, into a single "bank" of benefits. Without a time off policy, you may be at a disadvantage when competing with larger firms for employees.

3.                  Fraud detection. Do you rely on a small cadre of trusted workers performing critical tasks to keep your business going? Over time, these employees might end up working long hours with little oversight. This scenario is ripe for fraud, and one of the best antidotes is to require workers to take a vacation – at least five consecutive days – to allow someone else to perform those duties. Making paid vacation a requirement and not just a benefit is a good internal control, and might save your company from a disastrous theft.

Downtime is not wasted time if it is part of a thoughtful plan. Contact our office for more suggestions on employee benefit issues.

Friday, November 25, 2016

Higher self-employment taxes coming in 2017

Higher self-employment taxes coming in 2017

Did you know the national average wage index went up? You might have missed the news, but it's likely you will notice one impact: higher self-employment taxes.
How are the two related? The index is used to calculate the social security wage base, which is the amount of income subject to the 12.4% social security portion of the self-employment tax. When the index goes up, the wage base does too, and more of your income is taxed.
The wage base does not affect the 2.9% Medicare portion of the self-employment tax. Medicare tax is assessed on all net income from self-employment, including amounts above the base. The 0.9% Additional Medicare Tax is not affected either. That tax applies to your compensation in excess of $250,000 when you're married filing jointly ($200,000 when you're single).
For 2016, the wage base was $118,500. For 2017, the wage base will be $127,200. That means an additional $8,700 of the net profit from your business is subject to social security tax in 2017. The effect is an increase in the amount you pay, even though the total self-employment tax rate of 15.3% remains unchanged.
Please contact us for more information.

Wednesday, November 23, 2016

Teach your kids that credit cards are useful but not free

Teach your kids that credit cards are useful but not free

While credit cards can be very useful financial tools, the borrowed money is not "free." Here are two opportunities to share that lesson with your kids.
When choosing a card. Show your kids the entire credit card lifecycle. Explain that when evaluating credit cards, a comparison of benefits is crucial. For example, although choosing a credit card that offers a large signing bonus may be tempting, an annual fee associated with the card can mean the benefit is not worth the cost.
When making payments. Have your kids review the monthly statement with you. Let them see the time lapse between the date a purchase is charged to when the bill is due, and mention how quickly the balance can add up over time if good spending habits are not followed. Explain the consequences of paying only the minimum required amount each month versus the entire amount due.

You don't have to have all the answers when teaching your kids good credit card skills. Learning together gives you an opportunity to strengthen your understanding of card features and terms, as well as your child's understanding. Let us know if you have questions. We're happy to help.

Monday, November 21, 2016

Prepare in advance for required IRA distributions

Prepare in advance for required IRA distributions

Once you reach age 70½, the required minimum distribution (RMD) rules say you have to withdraw at least a minimum amount from your retirement plans each year. Since the withdrawals are considered ordinary income, planning in advance can help you prepare for the impact on your federal income tax return. Here are two suggestions.

  Make a list of your accounts. The rules require an RMD calculation for each plan. With traditional IRAs, including SEP and SIMPLE plans, you can take the total distribution from one or more accounts, in any amount you choose. You can also take more than the minimum. However, withdrawals from different types of retirement plans can't be combined. Say for instance, you have one 401(k) and one IRA. You have to figure the RMD for each and take separate distributions. Failing to take distributions, or taking less than is required, could result in a penalty of 50% of the shortfall.

  Plan your required beginning date. The general rule says you're required to withdraw your RMD by December 31, starting in the year you turn 70½. The rules provide one exception: You have the option of postponing your first withdrawal until April 1 of the following year.

Delaying income can be a sound tax move. But because you'll still have to take your second distribution by December 31, you'll receive two distributions in the same year, which can increase your taxes.


Contact us before year-end to discuss your retirement plan distributions. We can help you create a sound plan.

Thursday, November 17, 2016

Ready to start year-end planning? Focus on the big picture

Ready to start year-end planning? Focus on the big picture

Some tax-cutting strategies make good financial sense. Others are simply bad ideas, often because tax considerations are allowed to override basic economics.

Here's one example of the tax tail wagging the economic dog. Let's say that you operate an unincorporated consulting business. You want an additional tax write-off, so you decide to buy $10,000 of office furniture that you don't really need. If you're in the 28% tax bracket and you deduct the entire cost, this purchase will trim your tax bill by $2,800 (28% of $10,000). But even after the tax break, you'll still be out of pocket $7,200 ($10,000 minus $2,800) – and stuc
k with furniture that you don't really need.

Other situations in which the focus on tax considerations ignores the bigger financial picture include:

  Increasing the size of a home mortgage, solely to get a larger tax deduction for mortgage interest.

  Hesitating to pay off a mortgage, just to keep the interest deduction.

  Turning down extra income, due to worries about being "pushed into a higher tax bracket."

  Holding an appreciated asset indefinitely, solely to avoid paying the capital gains tax.

Tax-cutting strategies are part of a bigger financial picture. If you're contemplating year-end tax-related moves, we can help make sure that everything stays in focus.

Tuesday, November 15, 2016

Do you track your spending?

Do you track your spending?

A 2016 Financial Literacy Survey conducted by Harris Poll concluded that 40% of Americans track spending with a budget. That number has been pretty much the same for the past decade. Are you one of those 40%? Or are you one of the majority – the 60% who do not have a budget? If you don't currently have a budget, you may also be part of the 32% of Americans who say creating a budget is a top financial goal. Contact us if you need help with financial management questions.

Friday, November 11, 2016

Prepaid cards get a bit safer

Prepaid cards get a bit safer

Do you have a prepaid card in your wallet? They're popular because they're convenient. You, your employer, or someone you know loads money onto the card, and you use it in a manner similar to a credit or debit card. In the past, prepaid cards lacked some consumer protections. Now, the Consumer Financial Protection Bureau has finalized rules that limit your liability for unauthorized charges to $50, as long as you notify the card issuer promptly. The new rules also include requirements for clear explanations about fees, and free access to account information.

Wednesday, November 9, 2016

Get ready for a higher social security wage base

Get ready for a higher social security wage base

If you're an employer, you'll need to withhold social security tax from a higher amount of your employees' wages in 2017. The wage base for withholding social security tax from wages has increased to $127,200, up from $118,500 in 2016. The federal payroll tax rate remains 7.65%, a combination of social security tax withheld at 6.2%, and Medicare tax withheld at 1.45%. There is no wage base for the 1.45% Medicare tax. You'll withhold that percentage on all wages you pay your employees.

Monday, November 7, 2016

Are you prepared for this year's ACA reporting?

Are you prepared for this year's ACA reporting?

A recent survey by a professional services firm indicates that 49% of employers plan to use the same approach to filing Affordable Care Act (ACA) forms as they used last year. If you're required to file health care information returns for 2016, be sure to review your recordkeeping system. You'll need to give the forms to your employees by January 31, 2017. Paper forms are due to the IRS by February 28, 2017. When you file electronically, the due date for ACA forms is March 31, 2017.



Thursday, November 3, 2016

Use this annual exclusion by December 31

Use this annual exclusion by December 31

Under current federal tax law, in 2016, you can take advantage of an annual exclusion to give up to $14,000 to as many individuals as you want without paying gift tax. If you're married and your spouse joins in the gift, you can, as a couple, elect to give $28,000 to each person with no gift tax liability. If you plan to make gifts this year, remember that your gifts must be completed by December 31.

Tuesday, November 1, 2016

Remember tax breaks as you recover from a natural disaster

Remember tax breaks as you recover from a natural disaster

If you live in a federally declared disaster area, you may qualify for extended due dates for filing returns and paying certain taxes. Under new rules, you also have more time to decide whether to claim a loss from a disaster on your prior-year federal income tax return. In addition, businesses may be able to allow employees to take hardship distributions from retirement plans, and participate in leave-sharing programs. Individuals, businesses, and estates and trusts who are affected by natural disasters such as hurricanes, floods, and other storms are generally eligible for disaster relief. Contact us for more information

Monday, October 31, 2016

Keep an eye on your company's cash

Keep an eye on your company's cash
Do you regularly monitor your company's cash accounts? Being aware of where your cash is going can help prevent theft or improper expenditures, which are among the chief sources of loss for small companies.
What can you do to reduce the risk of losses? The textbook answer is to implement "internal controls." Internal controls are standard procedures for assuring the integrity of your financial processes. For example, segregation of duties, such as having more than one person involved in preparing, signing, and reconciling checks, is an internal control.
Here are suggestions for safeguarding your company's cash.
    Make sure all invoices have an approval signature before being paid.
    Personally verify that new vendors exist.
    Require sign-off of employee expense reports by a higher-level employee.
    Don't permit the person who prepares a company check to sign that check.
    Consider requiring two signatures on checks.
    Maintain a list of void checks and compare them to your bank statement.
    Use a bank stamp to endorse checks immediately upon receipt.
    Personally open bank statements and other mailings from the bank.
    Review and reconcile your bank statement regularly.
    Monitor online access to your business account.
Please contact our office for details or for assistance in improving controls over your company's cash.

Thursday, October 27, 2016

"Everyone" is not your customer

"Everyone" is not your customer
Indiscriminately trying to sell to "everyone" can dilute your message, muddy your image, and waste your company's resources. To market effectively, you have to know your customers. Remember: Satisfied customers come back, and they generally refer others. Here's how to get started.
Think about your typical customers: ages, interests, gender, aspirations, and financial and social status. In order of importance, list what customers are looking for when they come to your business. Do they seek selection, quality, price, service, or some combination? Is efficiency, expertise, or willingness to accommodate special requests particularly important to your customers? Do they demand convenience, or are they looking for atmosphere, ambience, or status?
When creating ads or other marketing tools, emphasize what your clients value, and communicate in their manner and style. For instance, low prices may not appeal to those who are more concerned with status, and ads to sell power tools rarely feature people in suits.
Getting to know your customers is mutually beneficial. You provide products and services that customers find valuable while at the same time creating revenue opportunities for your company. And isn't that win-win dynamic the reason you started your business in the first place?

Tuesday, October 25, 2016

Who's on your team?

Who's on your team?

Tough financial decisions can affect both current and future tax bills, and lining up a team of professional
advisors who are ready and willing to help makes a difference. For the most benefit, make sure your advisors know each other and work well together. As you begin your year-end planning, here are three areas where coordinating tax, legal, and financial advice can pay off.

Investments. Capital gains and losses from sales of your securities affect your taxes, of course, but the kind of investments you make can also have an impact. For instance, buying municipal bonds to generate tax-free interest may result in the unintended outcome of creating income subject to the alternative minimum tax.

Insurance. The type of health insurance plan you select can have tax implications. An example: A Health Savings Account (HSA), used in conjunction with a high-deductible health plan, can save premium and tax dollars. You fund an HSA with pre-tax cash and take tax-free withdrawals to pay medical expenses.

Estate planning. Wills, trusts, and beneficiary designations provide the framework for carrying out your wishes after your death. Communication between your tax and legal advisors helps ensure that these documents offer the greatest protection for your heirs while minimizing estate tax consequences.

Please call us to schedule a comprehensive review of your goals. We're delighted to be part of your professional team.

Friday, October 21, 2016

Fight scammers the old-school way

Fight scammers the old-school way

Scam artists are relentless in finding ways to take your money. But some old-school methods are still effective for protecting yourself. Here are suggestions.
 
Fortify your computer and your phone. Install anti-virus and anti-spyware programs and update your protection regularly. Consider firewall software to prevent unauthorized access. Change the password on your computer router from the default, enable and set up the router firewall, and keep your router software up-to-date.

Clean out your wallet. Make sure you're not carrying personal identification numbers for debit or credit cards on a scrap of paper. If you do, anyone stealing your wallet will have open access to your checking account. Sign all your cards. Another old tip also bears repeating: Don't carry your social security card with you.

Delete all spam emails immediately without opening them. Never click on an attachment or follow a link to a web page unless you know the sender. List your telephone number on the national "do not call" list. If a telephone solicitor calls, ask to be put on the company's "do not call" list and then hang up.

Obtain a free copy of your credit report. Go to www.annualcreditreport.com and order a free copy of your credit report from at least one of the three major agencies. Review it for mistakes, accounts you don't recognize, or unknown credit inquiries. If you find something wrong, report it immediately.


For more suggestions, please contact us.

Wednesday, October 19, 2016

Planning a wedding over the holidays? Plan for taxes too

Planning a wedding over the holidays? Plan for taxes too

Will wedding bells be ringing for you along with holiday sleigh bells this year? If so, add tax planning to your to-do list. Here are tax tips for soon-to-be newlyweds.
Check the effect marriage will have on your tax bill. If you both work and earn about the same income, you may need to adjust your tax withholding to avoid an unexpected tax bill next April, as well as potential penalty and interest charges for underpayment of taxes.
Notify your employer. Both you and your spouse will need to file new Forms W-4, Employee's Withholding Allowance Certificate, with your employers to reflect your married status.
Notify the IRS. You can use Form 8822, Change of Address, to update your mailing address if you move to a new home.
Notify the insurance marketplace. If you receive advance payments of the health insurance premium tax credit, marriage may change the amount you can claim.
Update your social security information. You'll need a certified copy of your marriage certificate to accompany Form SS-5, Application for a Social Security Card, if you change your name. Otherwise the IRS won't be able to cross-match your new name and your social security number when you file your return with your spouse.
Review your financial paperwork. Update your estate plan, making appropriate changes to wills, powers-of-attorney, and health care directives. Also review the beneficiary designations on your retirement plans and insurance policies.

Have questions? Contact us. We'll help you get the financial part of your married life off to a great start.

Monday, October 17, 2016

Asset recovery can be a do-it-yourself task

Asset recovery can be a do-it-yourself task

The Securities and Exchange Commission and the Financial Industry Regulatory Authority warn investors who may have lost money on a speculative security to be on the alert for "follow-on" frauds. These include being contacted by an official-sounding company promising to help you recover your lost investment, and requesting an up-front fee to do so. Be aware that in most cases, you can attempt to recover your lost investment on your own, at little to no cost.


Thursday, October 13, 2016

Want a happier relationship? Discuss your finances

Want a happier relationship? Discuss your finances


According to a survey by a U.S. national bank, 78% of couples who talk at least once a week about finances are happy or extremely happy with their partners. If making time for the "money talk" could improve your relationship, why not establish a habit of discussing finances and setting financial goals? Contact us for suggestions about how to get started.


Tuesday, October 11, 2016

Consider leave-sharing to help Louisiana storm victims

Consider leave-sharing to help Louisiana storm victims

The IRS approves special tax treatment for leave-sharing programs in the case of donations to victims of certain disasters, such as the Louisiana storms. Under a leave-sharing program, your employees forego accrued paid time off, including vacation or sick days, and your company, as the employer, makes a donation to a charity that is helping the disaster victims. Your company deducts the donation as a business expense, and the amounts are not included on your employees' Forms W-2. Specific rules apply. Contact us for details.

Friday, October 7, 2016

Are you working overtime preparing for the new labor rules?

Are you working overtime preparing for the new labor rules?

The U.S. Department of Labor updated the rules for paying overtime, and the changes take effect December 1, 2016. Under the new rules, salaried employees who earn less than $913 per week ($47,476 per year) will be eligible for overtime pay. That's double the annual exempt amount of $23,660 under current rules. Begin reviewing your payroll policies now to avoid penalties and fines for noncompliance. One important step is to start tracking hours for your salaried employees.

Wednesday, October 5, 2016

Don't get stuck with an underpayment penalty

Don't get stuck with an underpayment penalty

Don't let penalties for underpaid taxes increase your tax bill next April. Check the total you've paid in for 2016 through withholding and/or estimated taxes. If you've underpaid, consider adjusting your withholding for the final months of the year or increasing your remaining quarterly estimate. If you employ household workers, be sure your calculations include the payroll taxes you'll owe for them. Remember to include the 3.8% tax on net investment income in your planning too.

Monday, October 3, 2016

Beware of this fake tax bill scam

Beware of this fake tax bill scam

The IRS has again issued a scam warning. The newest scam involves receiving via email a fake version of an IRS bill related to the Affordable Care Act. The bill requests payment by check or by clicking a link in the email. Remember, genuine IRS notices do not come to your email, and do not request online payment. Email safety tip: Always verify the sender before opening attachments or clicking on links. Whenever you receive communication from the IRS, contact us. We'll help you sort out what you need to do.

Friday, September 30, 2016

A primer of education tax breaks

A primer of education tax breaks
Are your children in college? You may be able to offset some of the costs of their education with tax breaks. Here's a "tax primer."
Education tax credits include the American Opportunity Tax Credit and the Lifetime Learning Credit. The American Opportunity Tax Credit can reduce your tax bill by up to $2,500 per student. Currently, the credit can be claimed for all four years of study, and up to 40% of the credit can be refundable. The maximum Lifetime Learning Credit is $2,000 regardless of the number of college students in your family. Both credits are subject to limits, depending on your income.
The student loan interest deduction is an above-the-line deduction of up to $2,500 a year for interest paid on student loans. The deduction will phase out depending on your income.
Education savings accounts let you set aside up to $2,000 per year per child in a tax-deferred account for elementary, secondary, or higher education expenses at either private or public schools. Phase-outs apply.
Section 529 plans include tax-favored college savings plans and prepaid tuition accounts. Tax-free withdrawals can be used to pay for tuition, fees, supplies, equipment, and certain room and board expenses.
Be sure to keep records of your tuition, fees, and other expenses so you can take advantage of all education tax breaks to which you're entitled. For details and assistance, contact our office.

Wednesday, September 28, 2016

Your business, your salary

Your business, your salary

As the owner of your business, you are the decider of salaries for your staff. That's true for your own salary too. While there is no one-size-fits-all formula for determining how much to pay yourself, here are two factors to consider.
    Profitability. Regularly review and update your firm's cash flow projections to determine the salary level you can sustain while keeping the business profitable. Your compensation may be minimal as you start up your business. However, beware of going too long without paying yourself a salary, and be sure to document that you're in business to make a profit. Why? Otherwise the IRS may view your perpetually unprofitable business as a hobby – a sham enterprise aimed at avoiding taxes. That can lead to unfavorable tax consequences.
    The market. If you were working for someone else, what would they pay for your skills and knowledge? When you've answered that question, discuss salary levels with small business groups and colleagues in your geographic area and industry. Check out the Department of Labor and Small Business Administration websites for salary information and national compensation surveys. In the early stages of your business, you may not be able to afford to pay yourself a salary commensurate with the higher ranges, but you'll learn what's reasonable.

For assistance with payroll issues or salary concerns, contact our office.

Monday, September 26, 2016

How to be a successful saver

How to be a successful saver

How much money did you save last year? If your savings fell short of your goals, don't give up. You can still take charge of your financial future. Here are tips to become a successful saver.
    Set goals. Give your saving a purpose. Do you want to accumulate an emergency fund with enough cash to cover six months of living expenses? Other saving goals may include a college savings fund, vacation fund, or a fund for major purchases.
    Treat your savings as your most important monthly bill. Write a check to savings first, or have your savings automatically deducted from your checking account or paycheck.
    Take advantage of tax-deferred retirement accounts. If your employer offers a 401(k) or SIMPLE retirement plan, contribute the maximum amount allowed. No employer plan available? Contribute to an individual retirement account. The money you contribute can reduce your taxable income and grow tax-deferred.
    Track your expenses. Highlight and eliminate unnecessary or wasteful spending. Control the use of your credit cards. The amount you pay each month in finance charges could go to savings instead. Get in the habit of giving yourself a regular cash allowance, and try to live with it.

For help in setting financial goals and developing a savings plan, call us.

Thursday, September 22, 2016

Beware of bogus charities

Beware of bogus charities

Times of crisis, when others are suffering and you want to help most, is also when heartless fraudsters tend to strike. If you're planning a donation, watch for these signs that a charity isn't on the up-and-up.
The fly-by-night charity. Every legitimate charitable association had a start date, and some are still being formed. But during a major crisis, such as a natural disaster, donate to charities that you trust, which means those with a proven track record. If you're unsure, check out a charity watchdog group for details.
The evasive caller. If you get a phone call from a charity, don't be afraid to ask direct questions and expect direct answers. A legitimate caller will be upfront about the charity, the percentage of funds allocated to administration and marketing, and what target groups will be helped by your donation. Beware of vague claims such as "educating the public" or "promoting awareness."
The urgent online request. Social media postings, fake websites, and emails brimming with desperate pleas for money may originate from the backroom computer of a scam artist. Never divulge your financial information via email and don't assume that social media messages about a particular charity are legitimate.

You want your donations to provide help where it is most needed, not line a fraudster's pocket. Take time to make sure the charity you're donating to is legitimate. If we can help, let us know.

Tuesday, September 20, 2016

Get the maximum benefit from a casualty loss deduction

Get the maximum benefit from a casualty loss deduction
Violent weather can wreak emotional and financial havoc. If your home, vehicle, or other personal property is damaged or destroyed by a sudden, unexpected casualty, an itemized tax deduction may help ease the financial burden.
In most cases, you claim a casualty loss in the taxable year the calamity strikes. However, if you're in a federally declared disaster area, you have the option of amending your prior year return. Either way, to receive the maximum benefit you'll need to calculate the amount of your loss. Here's how.
File an insurance claim. If your property is insured, file a timely claim.
Get an appraisal. An appraisal determines the decline in fair market value caused by the casualty. Tax rules require that you measure the difference between what your home or property would have sold for before the damage and the probable sales price afterward.
Establish basis. Generally, adjusted basis is what you originally paid for the damaged property, plus improvements. If your records were lost in the casualty, recreate them using reasonable estimates or the best information you have.
Keep receipts for repairs. In some situations, repairs you make to restore your property to pre-casualty condition can be used as an indicator of the decline in the fair market value.
Remember, you're not alone. In the aftermath of a casualty, we're here to help you resolve the tax issues.

Friday, September 16, 2016

Boost productivity by offering feedback

Boost productivity by offering feedback
A research study by a staffing agency reveals that younger workers want to know how the work they do affects the company they work for. If you're a manager, taking time to communicate the ways an employee's work benefits the company can lead to a more involved staff. Looking for additional management tips? We're here with suggestions

Wednesday, September 14, 2016

New relief for 60-day rollover errors

New relief for 60-day rollover errors
One of the pitfalls of receiving a distribution from your IRA with the intention of "rolling it over," or depositing it into another IRA or retirement plan, is the 60-day rule. Under the rule, you're required to complete the rollover within 60 days of receiving the distribution. If you miss the deadline, you have to include the distribution in your income and perhaps pay a penalty. In the past, you generally had to request a special statement from the IRS to avoid that outcome. Now the IRS says you may qualify for a waiver if you meet one of eleven allowable reasons. Contact us for details.

Monday, September 12, 2016

What's your financial capability?
According to the National Financial Capability Study, key components of financial capability include making ends meet, planning ahead, managing financial products, and financial knowledge and decision making. The study found that 48% of the 27,000 U.S. adults surveyed during 2015 reported no difficulty in covering monthly expenses. In addition, 46% had emergency funds. Are you included in those numbers? If not, contact us for help improving your financial life.

Thursday, September 8, 2016

Use social media envy to your advantage

Use social media envy to your advantage
According to a survey by the American Institute of Certified Public Accountants (AICPA), seeing purchases your friends post on social media can leave you envious – and might also foster a desire to buy a similar item. Instead of spending money on an item you may not need, consider this tip from the AICPA: Transfer the amount you planned to spend to a savings account. Posting your smart financial decision to social media is not required.

Tuesday, September 6, 2016

College students: Be aware of phone scams

College students: Be aware of phone scams
As you settle into your fall semester routine, both the FBI and the IRS want you to be alert for calls from scammers. The calls may spoof a legitimate number on your caller ID, and appear to come from an actual government agency, including the FBI or IRS. The caller will demand immediate payment of delinquent taxes, such as the non-existent "Federal Student Tax," or student loans, dues, or parking tickets. If you receive one of these calls, disconnect. Legitimate government agencies will not ask you for immediate payment, nor request credit or debit card information over the telephone.

Friday, September 2, 2016

Louisiana storm victims get tax relief

Louisiana storm victims get tax relief

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 Victims of the August storms and floods in Louisiana have until January 17, 2017, to file individual and business tax returns with due dates on or after August 11, 2016. Taxpayers in the federally declared disaster area may qualify for loan or hardship distributions from retirement accounts, and can also choose to claim casualty losses on a federal income tax return for the current or prior year. Contact us for details.

Wednesday, August 31, 2016

Watch out for these early warning signs from credit customers

Watch out for these early warning signs from credit customers

Once you have extended credit to a customer, you have a stake in continuing the relationship even if you suspect trouble is brewing. You don't want to crack down on a good customer too hard too soon; yet you don't want to be "taken" by a debtor who has become unable or unwilling to pay. The problem is distinguishing between slow payers and no-payers.

What you need is an early warning system to detect a credit problem in the making so you can stop additional sales to that customer and begin collection procedures in earnest. Here are some telltale signs of an account that is turning sour.

    The debtor has begun paying erratically, settling up on smaller invoices while larger ones get older.

    The debtor fails to return your phone calls or shows unusual annoyance at your inquiries.

    Your requests for information, such as updated financial statements, are ignored.

    The debtor places jumbo orders and presses you for a higher credit limit.

    Despite the problems you are having, the debtor tries to coax you into providing a good credit report to another supplier.


Any one of these hints of trouble can mean it's time to turn up the heat on your collection efforts with this debtor, and make no more sales unless they're cash on delivery. Contact us for more tips.

Monday, August 29, 2016

Designate beneficiaries to avoid unintended consequences

Designate beneficiaries to avoid unintended consequences


After your death, the disposition of retirement accounts, life insurance policies, annuities, and accounts at financial institutions are governed by beneficiary designations. If those designations are outdated, unspecific, or wrong, your assets may not be distributed the way you would like. Here are items to consider.
 
Be specific and stay current. When you name a beneficiary, your assets can pass directly to that person or entity without going through a legal process called probate. Update the designations for life events such as divorce, remarriage, births, deaths, job changes, and retirement account conversions.

Think about unexpected outcomes. Be alert for the effect of taxes and unintended consequences. For example, if the money in your accounts is distributed directly to your heirs, they may be stuck with a large unexpected tax bill. For wealthier heirs, estate tax may also play a role. In 2016, the estate tax exclusion is $5.45 million and the top estate tax rate is 40%. Another concern: If one of your designated beneficiaries is disabled, government benefits may be reduced or eliminated by the transfer of assets. You may want to consult an attorney to establish a special needs trust to ensure your loved one is not adversely affected.

Name contingent beneficiaries. If your primary beneficiary dies or is incapacitated, having a backup, or contingent, selection will ensure that your assets are properly distributed. In some cases, a primary beneficiary may choose to disclaim, or waive, the right to the assets. In that case, contingent beneficiaries can step up to primary position.

Practice good recordkeeping. Keep your beneficiary designation forms in a safe location, and maintain current copies with your financial institution, attorney, or advisor.

Beneficiary designations are an important part of estate planning. Contact us for more information.