Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

Taxes may not be on the top of most new couples, but there are some important tax issues that you should be aware.  

• New names? Whether one of you takes the other’s name or not, the names and Social Securities on your tax return must match the Social Security Administration records – so if any names are changed, you will need to report it to the SSA with Form SS-5, Application for a Social Security Card. The form is available on www.ssa.gov, or by calling (800) 772-1213.
• Congratulations – you’re in a new bracket! Your new marital status needs to be reported to your employers on a new Form W-4, Employee's Withholding Allowance Certificate.   Your new combined income may move into a higher tax bracket.  It is good to speak to a CPA to project out your tax liability. 
• Yes, there’s an Obamacare angle. If either of you bought a Health Insurance Marketplace plan and received an Advanced Premium Tax Credit this year, you will need to report any changes in circumstance, like income or family size. 
• Crossing the threshold. If either of you are moving, you will want to let the IRS know, with Form 8822, Change of Address. (You should probably also let the Post Office know, too.) Don’t make them come looking.
• Married? Filing jointly? If you are married as of December 31, that’s your marital status for the whole year for tax purposes – and that means you need to decide whether to file jointly or separately. Which one is better depends on your individual circumstances, so you will want to check out both possibilities.
• New forms. Combined financial lives may mean a higher tax bracket, but they can also mean more benefits from itemizing – which would mean claiming those deductions on a Form 1040, as opposed to a 1040A or 1040EZ.

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

Tax concerns aren’t at the top of anyone’s agenda when they’re dealing with a divorce or separation, but we can offer personalized advice that will help minimize the stress of dealing with tax issues in the midst of significant change. Be sure to call our office with all your questions on the tax effects of divorce or separation.

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

Do you contribute to a health savings account, or HSA, to help you cover your medical expenses? Taxpayers are allowed to make tax-deductible contributions to HSAs if they have health plans that have high deductibles, based on Internal Revenue Service guidelines. If you have an HSA, you’ll be happy to hear that the annual deductible contribution limit certain coverage has been raised for 2017. For individuals (with self-only coverage), it will be increased by $50 from 2016 to $3,400. The limit for family coverage will be unchanged at $6,750.

If you’re uncertain whether you are eligible for an HSA, or how these plans can fit into your overall financial and tax planning strategy, be sure to call our office today. We can explain your options and offer the advice you need to make smart financial decisions.   

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

Did you know that small businesses that fail to file their annual retirement plan returns can face hefty fines of up to $15,000 per return? Fortunately, the Internal Revenue Service recognizes that some businesses may not even realize that this requirement applies to them. As a result, a tax penalty relief program allows them to pay $500 per return for late filings, up to a maximum of $1,500. The relief is aimed at small businesses whose plans cover a 100% owner or partners in a business partnership, and their spouses. The U.S. Department of Labor also has a relief program for businesses that have employees. 

If you’re not sure whether the requirements—or the relief programs—apply to you, be sure to contact us. We can offer advice on how to remain in compliance with critical regulations and minimize your tax outlays.  

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

If your business falls behind in paying its payroll taxes, you may be contacted sooner rather than later by an Internal Revenue Service revenue officer. This may even be the case if you are using a third-party payroll service or if the deposits you are making have simply decreased over time. The contacts, which may include visits to your business, are part of the IRS Federal Tax Deposit Alert process, which aims to spot payroll tax problems before they become insurmountable—and incur significant interest and penalties. 

If you do receive an IRS contact, be sure to get in touch with our office. We can help you understand what prompted the contact, explain your possible responses and work with you in your communications with the IRS. No matter what tax issues you’re facing, be sure to turn to us for the advice you need.

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

Normally, when companies sell properties, they must pay taxes on any gain they receive. Like-kind exchanges, transactions in which companies trade properties, may be carried out without any immediate tax consequences. They must satisfy IRS rules, however, which include: 

• The properties must have the same “nature or character,” as set forth in IRS guidance.
  • The exchanges can be business or investment properties put to a productive use.
  • The exchanges can’t involve inventory, most securities and some other assets.
  • Taxes must be paid on any cash or non-similar property that is part of the deal. 

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

You spend years building a family business, but when it’s time to turn it over to the next generation there can be squabbles over company value and succession that cause turmoil, while gift and estate taxes eat away at company coffers. As the baby boomers head into retirement, they are expected to hand over control of companies worth trillions of dollars in the aggregate. A significant number of those businesses may not be prepared for a smooth transition into new ownership or a second generation of leadership, are you?  We can help ensure that the transfer goes smoothly and create a plan that helps minimize related taxes and enhance your retirement nest egg. Every day, our experts offer customized advice to companies like yours. Contact our office today for more information and insights on all your family business concerns.  

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

Many people make donations to charities whose work they support, but if you are planning to take a tax deduction for your gift, you must have the proper paperwork. Assembling the right documentation can also be tricky because the requirements vary based on whether the donation is cash and on the value of your gift. If you donate less than $250 in cash, for example, a canceled check, credit card statement or similar record may be sufficient, but if you give more, you will need a written acknowledgement from the charity. An additional tax form—and possibly an appraisal—may be needed for non-cash donations, depending on their value. Of course, the organization itself must also qualify as a charity under IRS rules. 

We can offer advice that will make it possible for you to fund the causes you believe in and qualify for the deductions you deserve. We can also help you incorporate charitable giving into your long-term tax and estate planning. Be sure to contact us with all of your questions on charitable giving or any other financial concern.

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

Do you receive your health insurance coverage through the government’s Health Insurance Marketplace? Many who do also qualify for a premium tax credit, which those with moderate incomes can use to help pay for coverage. You can choose to get the credit immediately or to receive it as a refund later when you file your tax return. 

Taking the credit up front can help you defray the costs of coverage, but remember that the amount you’re eligible for may be affected by changes in your circumstances during the year. You may end up qualifying for a higher or lower credit depending on changes in your income or the size of your family, so it’s important to report those changes to the Marketplace when they occur. If you have questions about the tax consequences of your health insurance plan or any other tax-related issues, please contact our office today. 

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions

If you’ve done some gambling, you may need to know about the applicable federal income tax rules. They can be summarized as follows.

You must report 100% of your wagering winnings on page 1 of Form 1040. They are subject to your regular federal income tax rate, which can be as high as 39.6%. If you itemize deductions, you can write off wagering losses on Schedule A of Form 1040. However, allowable wagering losses are limited to your winnings for the year, and any excess losses cannot be carried over to future years.

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions

You may have noticed articles about donor-advised charitable funds in the financial press. Also, some of the big investment houses promote affiliated donor-advised funds. Because they provide an alternative means for contributing funds to charity, we thought you might be interested in the concept.

A major disadvantage of donations made to public charities is your lack of control over when and how your contributions will be spent. Donor-advised funds address this concern by allowing you to set up your own charitable giving fund (“The [Your Name] Charitable Fund”) in the form of an account. You can then recommend how the money in your account should be spent by designating your favorite tax exempt public charities, how much they should receive, and when. (The fund legally can reject your recommendation, but rarely will unless you name a charity that is not qualified to receive tax deductible charitable contributions.)

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions

If you have a teenage child who works, consider encouraging the child to use some of the earnings for Roth IRA contributions. All that’s required to make a Roth IRA contribution is having some earned income for the year. Age is completely irrelevant. Specifically, for both the 2014 and 2015 tax years, your child can contribute the lesser of: (1) earned income or (2) $5,500.

Modest Contributions at an Early Age Can Amount to Big Bucks by Retirement Age

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

This article outlines some important considerations and suggestions to help avoid an inadvertent loss of the company’s qualification to be treated as an S corporation.

100-Shareholder Limitation. The S election will terminate if the number of S corporation shareholders is more than 100 at any time during any year. Therefore, it is important to monitor future stock issues so that the 100 shareholder limitation will not be exceeded. A shareholder agreement can help avoid termination of the S election by prohibiting the transfer of shares that would result in more than 100 shareholders.

2015 IRA Deadlines Are Approaching

Here is what you need to know. 

Provided by Gaurangkumar Patel, CPA/PFS

Financially, many of us associate April with taxes – but we should also associate April with important IRA deadlines.    

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

Health savings accounts (HSAs) are tax-exempt trusts or custodial accounts created exclusively to pay for the qualified medical expenses of the account holder and his or her spouse and dependents. Contributions to an HSA can be made by "eligible individuals" or their employers or both. Within limits, contributions to HSAs are deductible above-the-line when determining AGI if made by individuals and are excludable from gross income and taxable wages if made by their employers. Distributions from HSAs for qualified medical expenses are not includible in gross income. The cost incurred for a medicine or drug will be treated as a qualified medical expense for purposes of a distribution from an HSA only if the medicine is a prescription drug or insulin. Distributions from HSAs to pay for over-the-counter medicines are not excluded from the gross income of the employee and will be subject to a penalty.

Distributions from an HSA for purposes other than qualified medical expenses are includible in the account holder’s gross income and subject to an additional 20-percent penalty. However, the 20-percent penalty does not apply to distributions made after death, disability, or after the account holder attains age 65. Therefore, an HSA can serve as a tax-deferred retirement savings vehicle to the extent amounts in the account are not needed for current medical expenses.

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

The owner of a closely held corporation is naturally concerned about what will happen to the corporation upon his or her death. Although a corporation may exist in perpetuity, many practical problems must be solved to ensure the continuity of a business. A buy-sell agreement deals with some of the problems.

What financial, business or life priorities do you need to address for 2015? Now is a good time to think about the investing, saving or budgeting methods you could employ toward specific objectives. Some year-end financial moves may prove crucial to the pursuit of those goals as well.

What can you do to lower your 2015 taxes? Before the year fades away, you have plenty of options. Here are a few that may prove convenient:

Make a charitable gift before New Year’s Day. You can claim the deduction on your 2014 return, provided you itemize your 2014 deductions with Schedule A. The paper trail is important here.¹

Many business owners find bookkeeping a tedious task and frustrating, especially when the books don’t balance or match up to the bank statement.  The business owner may hire a secretary or admin person to handle the bookkeeping; however, they may not have the accounting knowledge or experience to get it right and therefore spend more time to fix the problem. 

South Loop CPA offers 2 levels of bookkeeping services; the first level is for the small business owner that has simple bookkeeping needs and simply needs someone to categorize transactions from their bank statements.  The second level is for larger businesses that have more complex needs as they need to maintain accounts receivable, accounts payables and have a larger number of transactions. 

For the small businesses that have simple bookkeeping needs, South Loop CPA uses Quick Books Online to maintain the business financials.  South Loop CPA has a bookkeeper than is Quick Books Certified and will categorize transactions on a daily basis and perform monthly reconciliations.  The business owner can simply login to Quick Books at any time to get a snapshot of how well the business is doing. 

For the larger business with more complex needs, South Loop CPA offers a virtual accounting solution.  The virtual accounting solution entails having a dedicated bookkeeper that will work only on your account and a CPA to review the work.  The process starts off by the CPA understanding your business processes and documenting the process.  Once a documented process is established, the business is set up on a virtual accounting system.  The virtual accounting system is a cloud based platform that allows the business to scan and upload invoices or bills to the bookkeeper.  The bookkeeper will input the information into the accounting system and send the business owner monthly summaries of what needs to be paid or who owes the company money.  As the business grows, the virtual accounting solution allows for more staff to be added.  To learn more about the virtual accounting System click here.

Business owners will find that by outsourcing their bookkeeping they will be able to focus on their core business and concentrate on growing their business.   Contact South Loop CPA to learn more about our bookkeeping solutions.  

Going through a divorce can be stressful as you need to determine who gets the children and what portion of the assets do each person get.  There are additional obstacles that some spouses go through if one spouse is hiding assets, or falsifying financial documents.  To help uncover hidden assets, you should consider hiring a forensic accountant.  When a spouse is considered a breadwinner and controls the majority of the finances, they can hide information about the value of their assets and property to prevent the other from accounting for them in the divorce. 

The forensic accountant can help you identify assets by performing property searches or combing through bank statements to look for possible payments to a secret bank account or transfers to a friend.   This process is called asset tracing, in which they follow the money and determine if one spouse is deliberately concealing assets by transferring them to other people or holding them in an account you didn’t know about.

A forensic accountant can also perform a lifestyle analysis to assist you in determining how much alimony or child support should be granted.  The forensic accountant will reconstruct income and expenses during the marriage and analyze a spouse’s ability to pay monthly support payments.  The forensic accountant will review bank statements, credit card statements and tax returns to calculate the income and expenses.

A forensic accountant can also help you determine the value of a closely held business.  The forensic accountant will perform a valuation of the business to assess its net worth.  An analysis can also be conducted to determine if one spouse has been misappropriating funds from the business or paying fictitious vendors. 

With the help of a forensic accountant you will be able to uncover any hidden financial information and get a fair and equitable portion of the marital assets.   

Please note the information below is intended to provide generalized information that is appropriate in certain situations.  It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer.  The contents of the information provided below should not be acted upon without specific professional guidance.  Please call us if you have any questions.

A regular C corporation (but not an S corporation or partnership) may pay and deduct the cost of tax favored fringe benefits otherwise not deductible, or deductible only to a limited extent under other forms of operation. These benefits include the following:

• The health and accident plan exclusion from income