Category Archives: Blog

Blog

Free 2019 Tax Update & Planning Seminar

We have been making a list and checking it twice, tryTax planning white boarding to separate the naughty tax changes for those that are nice. Join us for a tax update that will help you focus on the that changes that will allow you to reduce your tax bill this year. This free seminar will not only help you understand the many changes to the tax laws that have taken place it is all filled with tax planning tips designed to help you take the actions necessary to reduce your tax bill and keep more of your hard earned money in your pocket.

The seminar will take place at 2319 N Andrews, Fort Lauderdale FL 33311, beginning promptly at 6:00 PM and last for 2 hours. There will be plenty of time for questions and a handout to make sure you have a list of actions you can take before year end.

For reservations call 954-563-1269

Just who is a real estate professional when it comes to tax filing?

Real Estate Professionals

Real estate professionals must treat rental real estate activities in which they materially participate as nonpassive activities. Therefore, they can deduct these rental real estate losses from other nonpassive income. The $25,000 special allowance does not apply to these taxpayers.

Real estate professionals are individuals who meet both of these conditions:

  1. More than 50% of their personal services during the tax year are performed in real property trades or businesses in which they materially participate and
  2. They spend more than 750 hours of service during the year in real property trades or businesses in which they materially participate. Depending on the facts and circumstances, a real property trade or business for this test may consist of one or more of the trades or businesses listed at Real property trades or businesses below. [Reg. 1.469-9(d)]

Real property trades or businesses. Any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing or brokerage trade or business.

5 Ways to Increase Profits

Eliminating unnecessary expenses can be one of the fastest ways to add profits to the bottom line.  This is because while only a percentage of any additional sales is available to increase the bottom line, depending on the direct costs of the services or products you sell, every dollar of any reduction or elimination of an expense goes right to the bottom-line — increasing profits. 

For example, if you sell an additional product for $100.00 and have a margin of 50%, then $50.00 is the most that can go to the bottom line. But reduce your monthly bills by $100.00 and $100.00 goes to the bottom-line month after month.

Here are 5 things you can do to increase your bottom line.

1) Review your bank and credit card statements to ensure there are no recurring payments for services you are no longer using.

2) Review the fees being charged by your business account; if they seem out of line check with your bank on ways to reduce your bank charges. If your bank will not work with you shop other banks.

3) Review credit card processing fees and other charges. Are you paying to rent a credit card processing terminal you could easily buy for a fraction on the annual rent you are paying?

4) Eliminate unnecessary overtime. Getting on top of your payroll and employee hours worked to ensure that unnecessarily clocking in early and out late don’t result in a few hours of overtime each week.

5) Review pricing of your products or services. Small increases can often have large results as the additional revenue feeds right in to the bottom line.

Need help finding additional way to increase your profitability? We can help, just give us a call.

Do You Know Where Your Accountant Hangs Out?

It has happened again; I got a call from someone that wanted to know if we could get their S-Corporate return done by Monday, as the “person I have been working with just stopped returning my calls and emails.”  When I asked if they went by the person’s office to ask what was going on, they said: “as far as I know they, don’t have an office, and the only time I met them it was at Denny’s.”

It’s never a good idea to do business with an accountant, or any other business, that does not have or will not tell you where their business office is located. This sounds like another case of somebody doing accounting and tax work while they are looking for a job, and leaving their clients high and dry when that job comes along.

This “cheap” tax return is now going to cost a lot more – as it’s a rush job, that is, IF we can get all the information, and complete it by close of business on Monday.

Don’t be fooled into using an accountant that has no office so he comes to you and works out of his home or a PO box, in the end, cheap services always end up costing more than using a true professional.

Illinois Passes New Law Changing State Income Tax Withholding Requirement For Nonresidents.

The state of Illinois signed SB 1515 into law on August 26, 2019. It repeals the previous law pertaining to state individual income tax withholding requirements for out-of-state residents. Now, nonresidents who spend 30 days or more working in Illinois during the calendar year are considered to have been compensated in the state and are subject to Illinois income tax.

SB 1515 requires employers with nonresident employees working in the state to:

  • Maintain record of the number of days worked in-state by their nonresident employees, or
  • Have the nonresident employees submit a written statement that includes the number of days that they reasonably expect to spend working in the state during the year.

This law will be applicable to tax years ending on or after December 31, 2020.

Quotes & Media

Media Quotes &  Recent Press

LifeLock – Tax Fraud: What You Need to Know 08/10/17

GoBankingRates – Know Before You File: Tax Breaks for 2017  01/17

Senior Outlook Today – Tax Strategies with Retirement in Mind 12/01/16

National Financial Educators Council – Teaching Children Personal Finance 01/16

CNBC – Smart ways to gift money during the holidays 12/14/15

MainStreet 02/09/15

FoxBusiness Web Site 02/11/15

Retailmenot Blog 02/19/15

Learnvest Web Site 04/14/15

SELFLENDER 09/28/15

New Economy

CHANGING BUSINESS MODELS AND METHODS

COMPLICATE 2016 TAX RETURNS

Bob Dylan said it best:  “The Times They Are a-Changin”!

In the business world, things are changing, sometimes faster than rules can be written.  Asked about what they do for a living, we hear from many clients that they are part of the new economy.  This new economy is ever changing and includes things like driving for Uber, renting out rooms or entire homes through Airbnb, buying and selling bitcoins and funding businesses using a crowdfunding site. Add to this sales made through eBay or Amazon.

While these new-economy income generators often provide extra income, they are also complicating the tax returns of those involved. Once popular multi-level marketing plans are being replaced by a number of income-stream possibilities. They help people make up for hours lost to employer cutbacks as well as a job market that is just not what it used to be.

It’s important to consider the tax consequences of these activities. Since many are so new, not every taxpayer or even every tax professional understands them. To make matters worse, the tax consequences can vary from person to person.

For example, if you rent out your home with Airbnb for 14 days or less during the year, the rent is tax free, and the expenses are not deductible. If you rent it out for 15 days, you must Airbnbreport all rent collected and provide services with the rental (such as cleaning, breakfast, et al.). The rental gets reported on Schedule C, making any profit subject to self-employment tax.  If the rental has losses, hobby loss rules may apply. Moving income off of Schedule C to the front of your 1040 and moving the expenses to Schedule A makes them (along with other miscellaneous deductions) subject to a reduction equal to 2% of your adjusted gross income. All this makes record keeping more important than ever and means that having a knowledgeable and qualified tax pro is imperative.

Enjoy driving and like to make a few extra dollars doing it?  Uber or Lyft might be good options for some extra income, but you will want to keep records of not only the miles you Logo Uberare paid for but also those you put on the vehicle while driving around between pick-ups and drop offs trying to get additional fares. You should also keep track of the hours spent so that you can show that you had a profit motive even if you don’t actually earn a profit.  You also need to track personal use vs. business use of your vehicle. One of the questions we are always asked is, “Which is better, the standard mileage rate or actual expenses?” The truthful answer is that we won’t know until we add up both and see which is best for you. This is why it’s so important to keep good records of all your expenses.

Many people are using a crowdfunding application to raise money for all manner of things, such as business start-ups, arts projects, presales of new products or services and even to Crowdfunding logohelp out someone who has suffered a medical or financial setback. What the money is raised for can have a huge impact on how it’s being taxed or even if it is taxed at all. Funds might be considered current taxable income, investment capital or even tax-free gifts. It all depends on how the money is raised and what is promised to those doing the actual funding in return for the funds received.

Bitcoins are a new digital currency based on a very complicated and involved system. Transactions are made with no middlemen – meaning, no banks! Their appeal is that Bit Coinsthere are no transaction fees and no need to give your real name. They may be virtual, but they are not tax free. They are taxable income at the time received if they are received from the sale of property or as payment for services, based on their fair market value (FMV) when received. Later, when converted to dollars or used for a purchase, there could be a taxable gain or loss depending on their FMV when exchanged.

At the very least the new economy brings new changes to both taxpayers and accountants. It requires complex choices and requires careful planning. It also requires a knowledgeable professional who understands the tax laws and as well as the activity you are participating in.

 

 

T & E Deductions

Business Travel, Meals, and Entertainment

A Deduction Checklist

Type of Expense Deductible Percentage

Travel                                                                                              100%    50%    0%

Local business travel…………………………………………………………….X
Out of town business travel and lodging…………….…….………..…………X
Travel as a form of education………………………………………………………..………….X
Investment seminar fees, travel, and meal expenses……….…..……..….…….………….X

Meals 

Business meals for yourself while away from home overnight on business……….X
Meal with employee, colleague, business contact, customer,
or client with business discussed before, during, or after……….……………………X
Meal with employee, colleague, business contact, customer,
or client with no business discussion……………………………..……….………..………….X
Lavish and extravagant portion of a business meal…………………….…………………….X
“Goodwill” or “quiet” business meal with no business discussion………….………………..X

Entertainment

Entertaining a client or customer, with significant business discussion …….……..X
Entertaining a client or customer, with no business discussion…………………………….X
Tickets to sporting or cultural event connected with significant
business discussion…………………………………………….…………………..…….X
Business gifts of no more than $25 per recipient……….…………………….X
Entertaining employees at a company picnic, Christmas party, etc…….….X
Samples and promotional items provided to general public for
business purposes………………………………………………..….…………..X

Reporting Business Travel and Entertainment

Generally, business travel remains fully deductible, but business meals and entertainment are only 50% deductible. Special rules allow workers under DOT hours of service regulations to deduct 80% for 2016.

It is the employer’s reimbursement policy that determines whether it’s the employee or the employer who must reduce meals and entertainment expenses before taking a deduction on the tax return.

If an employee is not reimbursed by his employer for business expenses, the employee must adjust his meal and entertainment expenses for the nondeductible portion. These expenses may be deducted on his tax return only if he itemizes and then only to the extent such expenses along with other miscellaneous itemized deductions exceed 2% of his  adjusted gross income. In this situation the employer gets no deduction.

If the employee is reimbursed by his employer under an “accountable plan,” the employee does not report the reimbursements as income nor does he report the expenses as deductions. The employer in this case deducts reimbursements paid to the employee
after making a reduction for 50% of meals and entertainment.

If the employee is reimbursed by his employer under a “non-accountable plan,” the reimbursements are includible in the employee’s gross income, are reported as wages on his Form W-2, and are subject to withholding and other payroll taxes. Employee business expenses paid under a non-accountable plan are deductible (by the employee) only as a miscellaneous itemized deduction subject to the 2% of adjusted gross income floor (and subject to the limitations on total itemized deductions for higher income tax-payers). Meal and entertainment expenses are subject to the 50% limitation.

A non-accountable plan is any plan that fails to meet the requirements of an accountable plan.

Deductible Travel Expenses

  • Travel by air, bus, taxi, train, or automobile
  • Lodging expenses
  • Baggage charges
  • Cleaning and laundry charges
  • Cost of temporary help during business travel (i.e. secretarial help or telephone answering service)
  • Reasonable tips
  • Expense of transporting sample cases or display materials
  • Telephone calls

Deductible Entertainment Expenses

  • Transportation to or from an entertainment event
  • Tickets for entertainment, such as a sporting event, theater, or concert
  • Nightclub cover charges
  • Catering charges and room rental for entertainment activity
  • Entertaining business clients at home

Deductible Meal Expenses

  • Food, beverages, taxes, and tips
  • Meals on business trips
  • Meals furnished to employees on the employer’s premises
  • Transportation to or from restaurant

Business Gifts

  • Limited to $25 per recipient

Substantiation Requirements

Business travel, meals, and entertainment expenses must be substantiated by adequate records. An account book, diary, log, expense record, or the like should be kept. The expense and the business purpose must be recorded at or near the time of the activity. Information that must be recorded varies with the kind of expenditure but generally includes the following:

  • Amount spent
  • Date, time, and place of expenditure
  • Business purpose of activity
  • Name and business association of individuals involved

In addition, a receipt or other substantiation is required for all lodging.