How Will Tax Reform Affect You?

President Trump’s recently released one-page tax reform proposal, linked here from the Journal of Accountancy, suggests sweeping changes to current tax codes intended to “grow the economy and create millions of jobs.” From dramatic simplifications of income tax brackets to a possible repeal of the estate tax, these shifts could have major implications for you and your business.

While an overview of proposed changes can help clarify how proposed reforms may affect your personal and corporate tax responsibilities, it’s best to speak with an experienced accountant who is familiar with your specific goals. Working with a Long Island CPA with a thorough understanding of federal, state, and local tax law is vital to preserving your wealth and building capital for new growth. Continue reading

Is Your Online Business Ready for Tax Season?

NY Tax Season

Thanks to technology, telecommuting, and the internet, office life has been transformed. Remote staffers work from anywhere in the world, your workspace has expanded into the cloud, and contractors contribute their unique expertise to your organization. While many of these changes make business easier to conduct than ever, they present unique challenges during tax season. A New York CPA with thorough knowledge of state and federal law can help you manage the new complexity of your organization’s online activity. Continue reading

Should You Choose a Roth IRA or a Traditional IRA?

Whether retirement is decades away or a few years off, the changes you make to your investment plans can have a significant impact on your post-retirement lifestyle. One big question many investors have is about Roth IRAs and traditional IRAs. Specific state and local regulations can also affect your saving strategy, so choose a New York accountant with a thorough understanding of how state laws intersect with your investment strategy. It’s best to seek the input of a qualified financial adviser before making investment decisions, but this quick guide will give you useful suggestions to discuss with your CPA. Continue reading

What You Need to Know about Social Security Benefits for 2017

For the nearly 90 percent of Americans over the age of 65 who collect some or all of their retirement benefits through Social Security, 2017 could be a year of changes. For those who are planning to retire within the next five years, current changes to Social Security could have a lasting impact on their benefits too. While the best guide to maximizing your benefits and protecting your wealth is a knowledgeable CPA who can personalize your retirement planning, reading up can help you know which questions to ask when talking to your accountant or financial planner. Continue reading

The Biggest Tax Mistakes Businesses Make – And How You Can Avoid Them

The Biggest Tax Mistakes Businesses Make – And How You Can Avoid Them

The Biggest Tax Mistakes Businesses Make – And How You Can Avoid Them

Individual tax returns can become complicated enough, but businesses face even greater challenges. For an organization, a small mistake at tax time could spell significant fines and penalties down the line – costs that could limit your company’s growth for years to come. The good news is that most such mistakes are easily avoidable. Here are some of the most common tax mistakes and how to protect your company from making them.
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Take Charge of Your Company’s Year-End Taxes Today

Take Charge of Your Company’s Year-End Taxes Today

Take Charge of Your Company’s Year-End Taxes Today

When it comes to the little things, procrastination has its rewards. Sleeping in an extra few minutes or putting off errands until after your alma mater’s big game can feel good. When talking about your business’ 2017 taxes, though, it’s never too early to start. Every year brings new changes to tax laws, and organizations that prepare to implement next year’s tax strategy early gain a significant chance to make the most of what’s new. With the help of a New York accountant who has already done the necessary homework on local, state, and federal tax law for the coming year, you ensure your company benefits from every deduction and credit you’re owed. Continue reading

Retirement Planning at Any Age

How much do you need to save for retirement? What’s the safest plan for your retirement savings today, and will that change as you get closer to retiring? How can small changes now add up to meaningful retirement income in the future? People are right to ask these and other important questions about retirement. It’s easy to think about retirement savings as a future problem, but the solution happens now. Whether you’re founding a start-up, building a family, or building on a lifetime of career successes, this is the right time to think about your long-term financial security. Your CPA is your most valuable financial planning resource, and here are some points to discuss with your accountant.

Getting Started: Retirement Planning in Your 20s

Do you have a retirement plan?

Do you have a retirement plan?

There’s no such thing as “too early” when it comes to long-range financial planning. People in their 20s today may not be retiring until the 2050s and 2060s, but a small investment now pays significant dividends that far into the future. Depending on your income and your goals, retirement planning can take a back seat to building up savings or gearing up to start a business today, but with help from an experienced accountant, it’s usually possible to find something to set aside for retirement.

Investing in a 401(k) plan, especially if you work with an employer who matches funds, is often an excellent way to shelter current income for tomorrow’s use. This is also the best age at which to invest in a portfolio that’s more volatile in the short term; with more time to cushion you from risk, your chances of seeing greater growth in your retirement savings increases.

Becoming Established: Financial Planning for Your 30s

For many people, the 30s are a decade of personal as well as professional change. Starting a family, launching a business, buying a home, investing in property – these and other major milestones mark this decade. Even with a higher income than you enjoyed in your 20s, you may find saving a greater challenge as changes to insurance, increases in your emergency fund, and mortgage payments rise. Your tax returns also become more complex, particularly if you’re starting a business or setting aside savings for your family.

In Your Prime: Retirement Savings for 40-Somethings

The 40s are prime investment years. You typically earn more than you did earlier in your career and may have established your own business, yet retirement is far enough away that you can still incorporate higher-risk, higher-yield investments in your portfolio. Many people find their financial futures are more readily foreseeable, particularly with guidance from your CPA. Services that help you handle personal and professional tax preparation are increasingly important for wealth protection, ensuring tax compliance while preserving your wealth for other goals, including retirement.

Gearing up for Retirement: Saving in Your 50s

You’re still more than a decade away from early or full Social Security retirement eligibility, but for many people, celebrating a 50th birthday marks the starting point for making concrete retirement plans. Family expenses for child care and education are usually past, and earnings are often higher than ever, which makes your 50s an outstanding time to devote more of your income to retirement savings. Although you’re closer to retirement, you still have a cushion of many years, but it’s still a good time to reassess your portfolio in light of how and when you want to retire. Is it time for you to shift your portfolio toward lower-risk investments? Are you saving for a particular personal or professional goal? Talk with your accountant about choices that are right for you.

Retirement Planning in Your 60s and Beyond

As you move into your 60s, retirement may be just around the corner – but increasingly, it isn’t. For many business owners and entrepreneurs, retirement from one career means launching another. Whether you plan to invest in real estate, write the next great American novel, or blog your travels around the world, your financial advisor can help you realize your post-retirement dreams. Speak with your CPA and learn more about planning your financial future for the years and decades still to come.

Copyright © 2016 CPA Services. All Rights Reserved.

Estate Planning for Everyone

Estate Planning For Everyone

Estate Planning For Everyone

Federal estate tax laws have changed recently, reflecting shifts in how families pass along wealth. The current exemption threshold is indexed for annual inflation, and as of this year, that figure is $5.45 million. This higher threshold means that the great majority – more than 98 percent – of a New York CPA’s clients have estates that are exempt from the national gift and estate tax.

That’s good news, but it doesn’t tell the whole story about estate planning and tax preparation. Even if your estate is below the threshold, estate planning for your family’s future is still an important part of their financial security. Together, you and your accountant can map out a plan for generational wealth that you can leave as a lasting gift to those who are most important to you.

Asset Appreciation

Wealth management and asset protection are meaningful whether your estate is worth $50,000 or $5 million. Appreciated assets that are exempt from estate, gift, and transfer taxes may still be subject to net investment income tax and, depending on their value, capital gains taxes as well. Traditionally, your CPA might have recommended an estate planning strategy that minimized the value of these assets as they changed hands to heirs due to tax requirements.

Today, estate planning takes an entirely different approach, one that often maximizes the value of assets. The American Taxpayer Relief Act, or ATRA, of 2012 dramatically changed the landscape for estate planners and financial advisors. Now, valuation discounts are predicated on the maximum value of assets, so it’s in your and your financial planner’s best interests to apply top value to appreciated assets.

Estate Planning for Life

Charting a course between earning your greatest valuation discounts while minimizing possible capital gains and net investment income expenditures is your CPA’s goal. Asset transfers designed to protect wealth from federal estate taxes that are no longer assessed could even be counterproductive. While estate planning resources and property transfer options are available online for the do-it-yourself financial planner, these applications can’t provide insight into which choices are best for reducing capital gains tax burdens while recognizing the full value of the estate and its assets.

Planning your estate is about more than what you leave behind; it’s also about how well you live today. The knowledge and expertise of a CPA can also reveal other options for your estate planning needs, including setting up your IRA and managing retirement funds so you can enjoy your wealth today while saving wealth for future generations. With your CPA, services such as revocable living trusts and trustee bank accounts could provide solutions for your specific needs rather than a one-size solution that may not fit all lifestyles.

The key to estate planning that works for you now and ensures security for your family in the future is communication with a financial planner who can develop a plan for you. Even without a significant tax burden from federal inheritance taxes, your estate deserves careful planning and management.

Copyright © 2016 CPA Services. All Rights Reserved.

Does Your Business Qualify for Research and Development Tax Credits?

Long Island Certified Public Accountants for Business

Long Island Business Tax Credits

Within the administration’s documentation on plans for the coming 2017 fiscal year are provisions that could spell significant tax relief for many organizations. In an effort to stimulate economic growth and reward businesses for investing in research and development, Congress recently expanded the scope and availability of R&D tax credits. While a qualified CPA will give you specific details on how the new legislation affects your business, here’s an overview to show you where your organization may be able to apply these expanded credits.

What’s Changed with R&D Tax Credits

Research and development investments have historically earned businesses tax breaks, but the latest round of changes has increased availability to a wider range of industries and included more tech-based activities. Here’s what’s new:

  • The R&D credit has been made a permanent fixture in the tax code; previously, it was provisional and needed regular review along with other extenders.
  • The credit’s usefulness has increased as some small businesses can now apply it toward offsetting alternative minimum taxes and FICA tax.
  • The scope of R&D programs has expanded to include investments in technology such as website design and software.

 

What Qualifies for R&D Tax Credits?

To qualify, activities must meet a four-part standard:

  • The research, development, or experimental activity must seek to create or improve on a business component. Business components, in this case, include products, processes, formulas, and inventions intended for sale or internal use.
  • Businesses must conduct activities designed to reduce uncertainty. Safety testing and reliability/maintainability testing are examples of this standard in action.
  • The R&D process must be systematic. Experimental research only qualifies as research if it follows well-defined and documented procedures.
  • Research also has to relate to science or technology in some way.

While R&D must meet these four standards to qualify for the credit, the tax code also contains exceptions. Your organization’s CPA can review your specific case, but typically, exclusions include reconfiguring existing business components; duplication or reverse-engineering of existing products or processes; market research and sales data collection; software meant solely for internal use; and research that takes place after commercial production begins.

What Types of Businesses Could Qualify for R&D Credits?

Businesses in science and technology sectors clearly have R&D programs that qualify, but they aren’t the only organizations that benefit. Architectural firms, engineering companies, and tech service providers may also have qualifying programs. Manufacturing companies working on new processes or greening their production facilities could qualify for R&D tax credits to cover feasibility research. If your organization is actively engaged in finding more efficient or effective ways to operate, the new R&D tax credits could apply to you.

To learn whether your organization qualifies or to learn about other tax credits that may benefit you, contact your New York CPA. Services such as eligibility reviews from a professional financial consultant ensure you get all the tax breaks and credits your organization is due.

Copyright © 2016 CPA Services. All Rights Reserved.

The New Overtime: What Does It Mean for Your Business?

When the Department of Labor finalized the Fair Labor Standards Act (FLSA), employers with salaried workers had good reason to wonder how it might affect them. According to White House policy analysts, an estimated 4.2 million workers’ salaries could now include overtime pay if they put in more than 40 hours a week on the job. An additional 9 million may also become eligible, depending on their duties and the size of the companies for which they work. With such a significant change set to take effect by December 1, employers are gearing up for the change and talking with their Certified Public Accountants now.

Fair Labor Standards Act

Fair Labor Standards Act

Who Is Eligible for Overtime Pay?

Salaried personnel whose incomes fall below the threshold of $47,476 per year will now be eligible for overtime pay at a minimum of one and a half times their regular wage for any hours worked beyond the first 40 in a week. This rule isn’t entirely new; the previous threshold figure was $23,660, and many employees in management positions were exempt. Currently, about 7 percent of salaried workers are eligible for overtime compensation.

Are Some Salaried Workers Exempt?

To achieve eligibility, employees must not only be paid under $23,600 but also pass the “duties test,” a set of job duties that determine which salaried employees are owed overtime pay. Under current laws governing overtime, many managers and supervisors are exempt, but these exemptions are set to change under the FLSA. Some executives, administrators, and personnel in creative positions and sales will become eligible for overtime. For business owners, classifying personnel accurately will be an essential element of compliance and one you should discuss with your business’ accountant.

What Does the FLSA Mean for Small Businesses and Non-Profits?

According to the Notice of Proposed Rulemaking (NPRM) that the Department of Labor published at the end of last year, regarding the FLSA, businesses grossing more than $500,000 annually are not exempt. This figure includes non-profit organizations, but only applies to “activities performed for a business purpose” and not to charitable activities the organization undertakes.

How Can Businesses Prepare for the FLSA?

– The first step in preparing for the coming changes to compensation is an assessment of current salaried workers’ status and job duties. Job titles alone do not determine eligibility; a review of duties within organizations that have salaried employees currently earning below the threshold and working more than a 40-hour week is essential.

– Talk to your company’s CPA to understand the effects of the new law and plan your strategy for compliance. For some companies, the change may necessitate raises for key employees. For others, hiring more personnel to ensure that workers reduce or eliminate overtime could be the answer. Your financial planner can help you create a roadmap for implementation that puts you where you need to be by the December 1 deadline.

– Work with a New York accountant to determine whether the state’s overtime laws take precedence over the federal regulations. According to the Department of Labor, state laws that uphold a “more protective standard than the provisions of the FLSA” are to be followed first. Exemptions according to job duty, gross income, or industry vary between state and federal regulations, and working with a New York CPA who is aware of these points of variance ensures optimal protection for both employees and employers.

Copyright © 2016 CPA Services. All Rights Reserved.