Tax Alert: Tax Increase Prevention Act of 2014

On Dec. 16, 2014, Congress passed the “Tax Increase Prevention Act of 2014,” (TIPA, or “the Act”), which the President has signed into law. In the recently enacted “Tax Increase Prevention Act of 2014,” Congress has once again extended a package of expired or expiring individual, business, and energy provisions known as “extenders.” The extenders are a varied assortment of more than 50 individual and business tax deductions, tax credits, and other tax-saving laws which have been on the books for years but which technically are temporary because they have a specific end date. Congress has repeatedly extended the tax breaks for short periods of time (e.g., one or two years), which is why they are referred to as “extenders.” The new legislation generally extends the tax breaks retroactively, most of which expired at the end of 2013, for one year through 2014.

Capitol Hill

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Client Update: Winter 2014

This issue’s topics include:

  • Should you treat your home as an investment?
  • Last-minute tax savers for 2014
  • To grow or not to grow?
  • Lending money to family members could be taxing
  • Inform your employees about their total pay package
  • IRS posts taxpayer “Bill of Rights”
  • 2015 HSA limits announced

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Insero & Company understands that when it comes to your business there is no one-size-fits-all formula to success – and your relationship with your CPA should be just as unique. That’s why we promise to deliver The Highest Standard of client service built on a foundation of frequent communication.
This newsletter is just one of the ways we help you stay up-to-date on tax and financial issues that impact small business owners. From year-round tax planning to tips on how to maximize profits, this valuable resource is a must read.

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Year-End Accounting Advice for Small Businesses

Can you believe that the end of 2014 is quickly approaching? Before you know it, it will be time to close your books once again and prepare for year end and the next tax filing season. Instead of waiting for the year to close, here are some tips and strategies to think about now that might make the process easier.

Physical Inventory Count

Schedule a date for a physical inventory count. If you carry some type of inventory, scheduling a date at year-end to take a physical inventory count is essential. Many owners rely on their computer generated reports for an ending inventory balance, but the balance on the report may not be accurate or may require adjustments due to obsolescence or quantity and costing modifications

Auto Usage

Do you use your personal automobile for business? This is the time to update and/or prepare your auto mileage logs to document your business usage.

Bottom Line

Take some time to review and manage your bottom line. It’s easy to get busy with the daily demands of running a business. Often times business owners don’t take the time to step back and look at the overall picture. Has your business had significant changes from the prior year? Has your income changed substantially? What impact could these changes have on your tax liability?

Taxes

It may seem like the distant future, but planning ahead – before year-end – can minimize surprises and allow for proactive measures to be taken. Our small business team will work with you to ensure your bookkeeping is in order, understand your overall tax situation, and identify your priorities.

Software

Are you getting what you need from your accounting software? Selecting and implementing the best system for your business is hardly a one-size-fits-all affair. If you have questions about reporting or if you are considering making a switch, give us a call. We have a team of Certified QuickBooks ProAdvisors® who provide assistance and training to our clients from full scale implementations to daily activities. We have extensive expertise with Quickbooks Enterprise, Enterprise Advanced Inventory, Enterprise Advanced Pricing, as well as Quickbooks Premier and Quickbooks Pro.

Our team has systems experience including Sage 50, Sage 300 (formally Timberline), Microsoft Dynamics, Yardi, Macola, MRI, and Intacct.

Staffing

Are you and your staff struggling to cover basic accounting functions or do you occasionally need higher level expertise? Does your team have the right technical knowledge to identify potential issues and/or recommend solutions? Are you spending too much time supervising your accounting functions?

Our experienced team of outsource CFOs, Controllers, Accountants, and Bookkeepers can help provide your business with quality service. We specialize in providing our clients with  the right person in the right position, whether it be a short term, transitional position or a long term arrangement.

Are you ready?

If you answered yes to any of the questions above or have any additional accounting concerns as year-end approaches, reach out to a professional for advice and assistance. Spending less time on your accounting and knowing you’ll have the information you need, when you need it, enables you to focus your attention on the other critical aspects of your business.

To learn more about Insero & Company’s Small Business and Outsource Accounting Services Group and how we can assist you, please contact me at 585-697-9643.

Krucher Authors Chapter in International Taxation Guide

Richard A. Krucher, CPA, a Partner in the Tax Department at Insero & Company CPAs, P.C., has authored a chapter in a new e-book published by the International Taxation Committee of New York State Society of Certified Public Accountants (NYSSCPA).

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The Kindle edition is available to purchase at Amazon.com. Amazon’s book description is as follows:

The New York State Society of Certified Public Accountants Guide to International Taxation provides practitioners with the building blocks they need to develop this burgeoning area of their practice, while also providing guidance on international tax regimes that have stymied the most seasoned tax pro. The Guide to International Taxation allows some of the most respected New York licensed certified public accountants practicing in this increasingly complex area of taxation today to share their decades of combined knowledge and experience with their fellow practitioners.

Starting with the basics, practitioners will learn the essential areas of cross-border taxation and the various U.S. tax forms that have to be filed. Other chapters are dedicated to various U.S. income tax issues practitioners should know, such as the foreign-earned income exclusion, the rental and sale of foreign property, controlled foreign corporations and subpart F income, and the taxation of foreign pension plans.

There was a time when a tax practitioner’s only concern was whether a client had a foreign bank account or was a beneficiary of a foreign trust. Those days are gone. This reference tool will answer the day-to-day questions confronting today’s practitioners with clients who live or work abroad. The Guide to International Taxation will most likely become one of the most important professional reference guides in your library.

Rochester-based Insero & Company CPAs, P.C. is one of the leading accounting and business advisory practices serving western, upstate, and the southern tier of New York. A full-service public accounting firm with tax, audit, and consulting practices, Insero specializes in working with small businesses and middle market companies, employee benefit plan audits, and outsourced and virtual accounting services. For more information, visit www.inserocpa.com.

5th Annual Tax Update

Join us for the latest IRS and NYS initiatives including an update on IRS audit procedures and current audit focus areas, NYS tax reform (estate tax, credits, etc.), and a few topics relevant to businesses operating in other New England states.

CPE Series

Click Here for More Information and Registration

When: Tuesday, June 17, 2014, 8am-10am
Where: Locust Hill Country Club, 2000 Jefferson Road, Pittsford, NY 14534
Cost: $30 per person
Presented By: Presented by Harlan J. Kwiatek, CPA, JD, LLM, Partner – New York, State and Local Tax, McGladrey LLP

To receive updates on future events, please join our mailing list.

Estate Planning Tip: Grantor Trust Information Reporting Requirements

Trustees of grantor trusts need to be aware of additional expenses associated with meeting information reporting requirements.

Grantor trusts are disregarded for tax purposes and are commonly used in many estate plans, but they can be confusing. Many trustees believe that since the trust is disregarded for tax purposes it does not have any information reporting requirements. However, the trustee is required to report the items of income, expense, and credit to the IRS and to the grantor of the trust.

Man Filling out Tax Form (more…)

Client Update Newsletter: Spring 2014

When it comes to your business there is no one-size-fits-all formula to success – and your relationship with your CPA should be just as unique. That’s why we promise to deliver The Highest Standard of client service built on a foundation of frequent communication.

This newsletter is just one of the ways we help you stay up-to-date on tax and financial issues that impact small business owners. From year-round tax planning to tips on how to maximize profits, this valuable resource is a must read. This quarter’s topics include:

  • IRS Audits: What you need to know
  • IRS issues “repair regulations”
  • What can you deduct when customers don’t pay?
  • 2014 Tax Numbers
  • If you make gifts, you may have to file a gift tax return
  • New rule on tips for 2014
  • FSA rules modified

Click Here to Download the Newsletter

Coffee and Tablet

Use IRS Adjusted Numbers for 2014 Tax Planning

Certain tax numbers are adjusted by the IRS for inflation each year. Here are some of the 2014 tax numbers you’ll need to use as you get started with this year’s tax planning.

Plan Ahead

  • The standard mileage rate for business driving decreases to 56¢ per mile for 2014. The rate for medical and moving mileage decreases from 24¢ per mile to 23.5¢ per mile. The general rate for charitable driving remains at 14¢ per mile.
  • The maximum earnings subject to social security tax in 2014 increases to $117,000. The earnings limit for those under full retirement age is $15,480. For those at full retirement age, there is no earnings limit.
  • The “nanny tax” threshold increases to $1,900 for 2014. If you pay household workers more than this amount during the year, you’re responsible for payroll taxes.
  • The “kiddie tax” threshold for 2014 remains unchanged at $2,000. If your child under age 19 (under age 24 for students) has more than $2,000 of unearned income this year (e.g., dividends and interest income), the excess could be taxed at your highest rate.
  • The maximum individual retirement account (IRA) contribution you can make in 2014 remains at $5,500 if you’re under age 50 and at $6,500 if you are 50 or older.
  • The maximum amount of wages employees can put into a 401(k) plan remains unchanged at $17,500. The 2014 maximum allowed for SIMPLE plans remains at $12,000. If you are 50 or older, you can contribute up to $23,000 to a 401(k) and $14,500 to a SIMPLE plan.
  • For 2014, the maximum amount that can be contributed to a health savings account (HSA) increases to $3,300 for individuals and $6,550 for families. Those 55 and older can contribute an additional $1,000.
  • The alternative minimum tax exemption for 2014 is $52,800 for singles and $82,100 for couples filing joint returns.

Start Planning Now for 2014 Income Taxes

The QBC: QuickBooks® Client Newsletter

You may not have even completed your 2013 taxes yet, but now is an ideal time to start getting ready for your 2014 returns.

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We know that you’re in some stage of preparation for your 2013 income taxes. It may seem odd to start thinking about 2014 taxes just now, but actually, this is the ideal time to start planning and making business decisions with their tax implications always in the back of your mind.

As you look at the data that will be entered in your 2013 tax forms, you’re likely to come across some expenses that you might have handled differently, or some income that should have been deferred. If you begin your planning process for 2014 while 2013 is still in the works, you can start making smarter, more tax-advantageous business decisions now, instead of late in the year when everyone is rushing to take actions necessary to lower their tax obligation.

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For more QuickBooks tips, tricks and info on training from our team of Certified QuickBooks ProAdvisors® subscribe to The QBC.

Estate Planning Tip: Naming Your Spouse as Trustee

When setting up a trust, your first instinct might be to name your spouse as the trustee. Just be aware that without proper planning, naming your spouse as the trustee may cause tax and administration difficulties down the road.

Couple holding hands on beach

If your spouse has broad and/or over-reaching powers over the trust corpus, the fair market value of the trust at his/her death may be pulled into her gross estate for estate tax purposes, resulting in higher death taxes. This result may be contrary to the goals and objectives of your overall estate plan.

Also, if your spouse has strained relationships with the principal beneficiaries of the trust, it may hinder his/her objectivity to comply with the terms of the trust. He/she may have some wiggle-room based upon broad language in the trust instrument to avoid making distributions to beneficiaries which may be contrary to your intentions.

Seeking the advice of a competent estate planning professional will help minimize the above mentioned difficulties.