CPA Services Blog

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. Continue reading

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. Continue reading

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. Continue reading

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.

When to Create a Family Trust

Creating a Family Trust

Creating a Family Trust

Proper wealth management is not just a concern for individuals; it benefits families for generations. With financial advice from a qualified accountant, you’re able to protect the privacy of your assets, provide for your children, and ensure that family members with special needs are cared for by creating a family trust. A trust is a legal entity that lets you control distribution of your financial assets during your life and assure continuity afterward. The first step in setting up a family trust is making an appointment with your Certified Public Accountant. Services also include defining a trustee and beneficiaries for the trust.

Here are some other important facts to know so you can decide if a family trust is right for you.

Why a Trust?

There are many reasons you might choose to set up a trust, but the common denominator in most of them is control. A trust provides continuity of care for minor children or relatives with special needs, ensures responsible spending in adult children, and lets you maintain the privacy of your assets instead of making them a matter of public record. With a trust, there is often no need to go through probate court, which can be time-consuming and expensive.

Although they are often part of sound financial planning for families with significant wealth, trusts can also make sense for other families too. If a family member with special needs has access to government benefits or services, setting up a trust can help maintain those benefits after you are gone. A New York accountant with a thorough understanding of state law as well as federal law can also maintain continuity of care for state services.

Other reasons to set up a trust can include protection of assets from former spouses or creditors, facilitation of charitable donations, inheritance tax management, and easier administration of financial affairs for yourself and your heirs.

Types of Trusts

Trusts typically fall into one of two categories: irrevocable trusts and revocable, or living trusts. An irrevocable trust places some of your wealth outside your estate, sheltering it from inheritance taxes, and cannot readily be amended. As its name suggests, a revocable trust is one that allows the creator of the trust to change the provisions in it. When the creator of the trust is disabled or deceased, this kind of trust reverts to an irrevocable trust.

One specific form of trust merits discussion for families with significant wealth. A generational trust allows you to provide assets to grandchildren directly, and it may be either a living trust or an irrevocable one. This trust lets families avoid double taxation – once when children inherit and again when the wealth passes to the third generation – and can be the cornerstone for building lasting familial wealth.

Do You Need a Family Trust?

Although a trust confers significant benefits, it’s best to talk with a CPA who’s knowledgeable about estate finance and personal wealth management before deciding whether a trust is right for you. Creating a trust does come with associated costs that include attorney’s fees and retitling charges, and although these fees are typically low compared to the value of the trust, they do factor into the decision for some families. Irrevocable trusts are challenging to change once they are put in place, so working with an accountant who understands the process is vital.

Your accountant can guide you through the process of deciding which type of trust might be best for your family and how a trust can fit into your overall wealth management strategy.

Copyright © 2016 CPA Services. All Rights Reserved.

Busting Myths about Household Employment

In many cases, the divide between business and home life is clear-cut, but what happens when the home is also the place of employment as it is for household workers? Families that also become employers have numerous federal and state labor laws and tax requirements to follow – often more than they know. Few families have extensive experience in the area of household employment, which is why a Long Island accountant who knows federal, state, and local tax law thoroughly is a wise investment.

Household Employment

Household Employment

Hearsay from others who have hired household workers isn’t always accurate. Learn about some of the most common myths about hiring workers in the home and use them as starting points for your conversation with your financial advisor or CPA before tax day.

Myth: Families Can Consider Employees as Independent Contractors

According to the IRS, household workers are expressly identified as employees when the household controls the nature of the work. If you govern who works in your home, what they do, when they work, and how the work is performed, you are an employer – which makes your household workers your employees. Classifying household employees correctly is critical to tax compliance. The Department of Labor has also upheld this distinction, noting that economic dependence on employment and the permanence of the work are also factors in how home workers are categorized.

Myth: Salaried Household Workers Do Not Receive Overtime

The Fair Labor Standards Act, or FLSA, requires that all non-exempt workers receive overtime pay for any hours worked over 40 in a standard 7-day week, including household employees. Like employees in an office, they are generally entitled to a minimum of 1.5 times their usual pay rate for overtime hours. These FLSA guidelines become more complex when household workers live within the home. Some live-in caregivers and nannies are exempt workers, while others remain non-exempt; working with an accountant familiar with employment laws can help you make the right decisions here.

Myth: Household Employees Can Appear on the Family Business’ Payroll

Household workers contribute a great deal to a smoothly running home, and that can make a big difference in the workplace indirectly. According to the IRS, however, they are not direct contributors to the company’s success and cannot be placed on a family-owned business’ payroll. They remain employees of the household, not the business. Expenses and dependent-care tax exemptions related to home workers must go on your personal tax return, not your company’s.

Myth: There Is No Rush to Handle Household Employment Taxes

Tax time is invariably busy for your CPA. Services related to household workers take time to sort out, so work with your accountant as soon as possible to ensure that you make all filing deadlines and comply with labor laws. By speaking to your tax professional sooner rather than later, you ensure that your tax process goes smoothly and make tax season easier on your household personnel too.

Myth: Compliance Is Expensive

For some households, the additional layer of complexity that being an employer adds might be daunting enough to reconsider hiring home workers. Your accountant can map out where hiring workers for home employment and complying with federal and state laws can help offset your liability through tax breaks. Setting up a Dependent Care Account saves money for families that have home healthcare needs. Coordinating with your CPA to establish your family’s employer/employee relationship with home workers also lets your household staff get the full complement of benefits to which they are entitled, including Social Security and unemployment insurance.

By blasting the myths surrounding household employment and ensuring compliance on your personal tax return, you and your accountant offer better financial care to the people who help take care of your household.

Copyright © 2016 CPA Services. All Rights Reserved.