Tax Tips

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

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

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.

Finding the Ideal Accountant for Your Business

Few decisions are as critical to an organization’s financial health as choosing the right accountant. It’s more than just a matter of qualifications or cost; a Certified Public Accountant  who fits your company’s needs must also be a good fit with your goals. Here’s an overview of what you need to know to find your ideal accountant.

Certified Public Accountants for Business

Certified Public Accountants for Business

What Do You Need in a CPA?

What is the first thing you need your accountant to do? The answer will tell you a great deal about what sort of CPA you should work with. Your immediate challenge might be assembling accurate, complete financial statements after a recent merger or acquisition. You might need a forensic accountant to spot and explain anomalies in records.

Perhaps you need someone to handle routine accounting duties such as payroll and general ledger maintenance. Maybe you want a Long Island accountant with extensive knowledge of state and federal tax laws. Your ideal accountant might play a key advisory role, helping your organization grow. All of these and more are good reasons to seek a CPA with a specific skill set.

In-House or Outside Accounting Firm?

In the beginning, many business owners and entrepreneurs handle their own accounting using readily available bookkeeping software tools. Successful enterprises quickly grow beyond that point, and then executives face their first major accounting decision: Should they hire a CPA in-house, or should the company work with an outside accounting firm?

For growing businesses, the expense of a full-time accountant may be too great, especially if the company needs experience with a wide range of skills. Hiring CPA services from an outside firm is a smart choice that puts expertise in a variety of areas at a business owner’s fingertips. Large, established businesses face a different challenge: They can afford an in-house accountant, but the volume and scope of their financial transactions may require additional help at times. Turning tax preparation over to an outside CPA relieves pressure on the in-house staff.

Outside accountants are able to handle every aspect of a company’s finances, including:

– Tax compliance
Attestation and assurance
– Forensic accounting
– Audit and review
– Budget and forecast preparation
– Analysis and problem-solving

In-house accountants become familiar with a company’s inner workings and are part of the fabric of the organization. They work with outside CPAs during times of flux such as a merger or sale. Businesses often ask inside accountants to manage:

– General ledger
– Accounts payable and receivable
– Payroll
– Treasury and bank reconciliation
– Daily transactions

Qualifications for Your Company’s Accountant

A larger company has more complex financial needs and requires an accountant with a more extensive skill set than a smaller business. When looking for an accountant, consider these qualifications and areas of expertise.

Certification separates accountants from CPAs and CMAs. Accountants may have either an associate’s or a bachelor’s degree and do not need to pass a qualifying exam. A Certified Public Accountant earns a minimum of a four-year degree and must maintain a schedule of ongoing education to retain certification. They must also take and pass a standardized test to meet state certification requirements. Some accountants focus on the needs of businesses and become Certified Management Accountants, or CMAs. Like their CPA counterparts, CMAs graduate from a four-year program and pass an exam to earn certification.

Aside from certification, experience is another key qualification to examine. CPA services for specific industries may be specialized, and accountants who have experience in those industries are particularly valuable. Accountants familiar with wholesale, retail, services, and other specializations help businesses in these sectors succeed.
When working with an accountant from an outside firm, size matters. A sole practitioner may not offer the versatility of a larger firm, whereas the Big Four may cost more than they save a growing business. Ideally, an accounting firm gives clients versatility and Big Four-quality service at a more accessible price. A mid-sized CPA firm that delivers individualized service is a good starting point for most companies.

References and Interview Tips for CPAs

Some of your most promising leads to find the ideal CPA come from colleagues or vendors. Ask associates within your industry about how they fill their accounting needs; they can often point you in the right direction. Professional associations and industry organizations are also useful when starting your search for the right accountant, so ask around at events and meetings.

A CPA is more than a bookkeeper. A business’ accountant deals with sensitive information, so discretion and availability are vital. CPA firms that instill a company-wide
culture of service ensure you and your firm will be treated as priority clients. Look for firms that offer hours that fit your needs and put you in touch with your accountant, not a voice at a call center.

Whether you want routine bookkeeping, knowledgeable tax preparation, or financial guidance through periods of change in your company’s history, the right accountant plays a crucial role in your business’ success.

Copyright © 2016 CPA Services. All Rights Reserved.

Financial Planning for the Single Senior

Financial Planning for a Single Senior

Financial Planning for a Single Senior

More than half the nation is single, according to U.S. Census data assembled by CityLab. Among that number, many are seniors; it’s the fastest growing group of single people in the nation. Financial planning as a single senior is just as important as it is for married people, yet most of the do-it-yourself financial advice you find is aimed at couples. Here are some key tips to consider when working with your Certified Public Accountant to make the most of your senior status whether you are divorced, a widow or widower, or have never married.

Widows and Widowers

For those who have lost a spouse, financial planning often includes attention to Social Security benefits. Upon reaching full retirement age, or FRA, surviving spouses who have not remarried before age 60 may be eligible for 100 percent of their partners’ Social Security benefits. These benefits continue to be recalculated to adjust for inflation and may be a better option to claim than your own benefits, particularly if you choose to claim at FRA instead of waiting until age 70 to earn additional benefits by delaying your claim.

Choosing survivor benefits and deferring your own claim can lead to a more comfortable retirement. The specifics of eligibility, when to claim, and which benefits to take can be complex to navigate on your own, however, so it’s best to speak to a CPA with experience in retirement planning who will help you make the right decisions for your financial future.

Divorced Seniors

Financial planning for divorcees brings its own set of challenges depending on your ex-spouse’s financial status, the length of your marriage, and whether your former spouse is still living. You may be able to claim some spousal benefits based on your ex-spouse’s work history. Typically, these benefits amount to no more than 50 percent of the ex-partner’s qualified benefits, and these claims are limited to marriages that lasted at least ten years. As with survivor benefits, making a claim on an ex-partner’s Social Security could allow you to defer your own claim until later in life when your own payments increase to their maximum at age 70.

Those whose former spouses have died may qualify for a full survivor benefit instead of half the spousal benefit. In most cases, this full benefit requires the marriage to have lasted at least ten years, but the law does make some exceptions, such as having a disabled child in the home. Because retirement benefit rules can become quite complicated when divorce and survivor benefits enter the picture, it’s best to speak to a financial advisor and learn about all your options.

Unattached Seniors

Although retirement planning for never-married people is more straightforward when claiming Social Security benefits, single seniors face their own set of challenges. With a single income, maximizing benefits becomes even more important. If you have a partner who is a part of your life and future but not your Social Security status, your CPA can implement a financial plan that includes the people most important to you.

Copyright © 2016 CPA Services. All Rights Reserved.

Is Your Holiday Gift-Giving Creating a Tax Liability?

With the holidays and the start of a new year approaching, it’s natural to start thinking about who’s on your gift list this season. Gifts and charitable contributions given in 2015 can help make your tax burden lighter, which could be an especially important consideration if your year has been a prosperous one. If you’ve given gift or inheritance this year, you need to know whether these assets are taxable.

‘Tis the season to talk to your CPA to learn how gifts affect your tax status and what gifting and donations before year’s end could mean for your 2016 tax return.

Like an inheritance, a gift can count as taxable income. In 2015, the annual exclusion for gifts received is $14,000. In other words, if you make a gift below that amount, you do not need to report the amount on your income tax forms for the year. In the case of a cash gift, figuring the value is straightforward, but for gifts of property, assessing fair market value for tax purposes is vital. Working through a local Long Island CPA firm ensures you won’t face any surprises in 2016.

How are gifts that are more volatile in value such as property or stock estimated for tax purposes? Timing is critical here because the IRS evaluates the gift based on its fair market value at the time it was given. In other words, if you received shares of stock valued at $5,000 in January 2015 and sell them for $10,000 in December, you are responsible for taxes on the $5,000 profit even though the total value of the gift in 2015 did not exceed the $14,000 individual gift limit.

Let’s look at a popular gift for the holidays that will almost certainly exceed the exemption limit: a new car.

That $14,000 2015 limit is not without exceptions, but these are limited to special cases. Some medical expenses, tuition, and other education expenses may be exempt from taxation even if they exceed the cap. In the case of tuition, the gift must be paid directly to the educational institution. If, for example, you were to pay for a semester of college for a child or grandchild, you would need to do so directly to ensure it remained a tax-exempt gift; if the money goes to the student first, it then becomes taxable once it exceeds the individual cap. Similarly, medical expenses can qualify as gifts too, but only if the giver pays the care provider or insurance company directly.

The IRS tracks annual gift-giving because every person has a lifetime exemption amount past which gifts become taxable. Currently, this lifetime limit is $5.43 million per person. If you’re married, you and your spouse can combine to exclude up to $10.86 million from taxes. Gifts of property, businesses, and other highly valuable assets count toward this lifetime sum so the IRS can ensure that owners pay the appropriate taxes on them.

While the IRS takes no notice of the usual cashmere sweaters and colognes that get exchanged as gifts for the holidays, it does require larger gifts to be noted on tax returns. If you have given generous gifts this year, talk to your Long Island accountant to learn more about your tax responsibilities.

Copyright © 2015 CPA Services. All Rights Reserved.

Should You Itemize Your Deductions?

When preparing your taxes, how do you determine whether to use standard deductions or itemize them? Some tax preparers advise itemized deductions for those who are single and own no property, but general rules may not be applicable to your specific situation. Choosing a Long Island CPA who takes each client’s case on an individual basis is the ideal way to get the full value of your deductions, but before tax time, it’s worth looking at factors that influence this important decision.

Itemized deductions are a sound choice for most people who own a home and have a mortgage. Ownership is not the sole determining factor in deciding whether to optimize, though. This list of qualifying expenses will give you an idea of what to ask your accountant about when you set up a meeting. The items here include both limited and unlimited deductions, each of which is noted.

Medical expenses – This limited deduction is crucial for any family that has incurred medical expenses that were not covered or reimbursed by an insurance provider. If you carry a high deductible on your medical insurance, you may be able to claim a significant amount of your medical costs as a deduction.

Taxes – The IRS only expects you to pay taxes once and does not tax other tax payments. The payments you have made toward real estate taxes, property tax, sales tax, business-related taxes, and state income tax are an unlimited deduction on your tax returns.

Mortgage interest – Depending on the size and scope of your mortgage, you may be able to claim interest paid on it as a deduction. This category also includes interest you may have paid to buy your home as well as any interest on mortgage payments.

Investment interest – As with mortgage interest, the interest you pay to invest in financial investment property may be worth going through the itemized deduction process. Part of the CPA services an accounting firm offers is going through your investment portfolio to assess whether your interest paid on stocks, bonds, and mutual funds falls into this type of limited deduction.

Charitable contributions – For philanthropic business owners and generous donors, using charitable contributions for itemized deductions is especially important. To qualify, donations must go to a not-for-profit organization, a designation that includes donations to public school systems, many political organizations, religious institutions, and traditional charities.

Estate taxes – Payment of taxes assessed on earned income are not taxable again and should be itemized as a deduction.

Gambling losses – For those who have incurred gambling losses, itemizing these expenses as a deduction can ease financial burdens. Because deducting losses is limited based on money earned from gambling winnings, talk to your Long Island CPA before making any tax decisions.

Job-related expenses – If you have been on the hunt for a new position, you may be able to claim costs related to your job search. While these expenses are limited, they can help defray the cost of job-related education, travel, professional dues, uniforms, and training.

Tax preparation – The expense of having a qualified accountant prepare your taxes is itself a tax-deductible cost.

This list is only a partial one, and it’s always advisable to ask your CPA about specific expenses. Working with a Long Island CPA who is available ensures that you get the most up to date advice on tax deductions, investments, and every aspect of your financial planning.

© CPA Services 2015 All Rights Reserved.

When Does Your Taxable Status Change?

April 15 is the date most people think about taxes, but events that affect your tax status occur throughout the year. What’s more, some events affect only federal taxes, while others impact your state and local status too. A Long Island accountant will tell you more about how your taxable status might change in response to the following life events. With advice from a CPA, you can choose the right time to make planned changes and prepare for the surprises life has in store.

Retirement Planning Changes

Investing in a 401(k), IRA, or other tax-deferred retirement program has immediate effects on your tax status. Because you place some of your taxable income into your retirement plan, you lower your tax obligation at the end of the year. Your CPA is able to help you choose the right time to start investing for retirement to save money today while planning for the future.

Divestment

Whether you sell investments and assets such as stocks to reinvest elsewhere, launch a business, or make your money more agile, these sales change your tax status. Keep more of your wealth invested and working for you until it’s the right time to sell when you have sound financial advice from an experienced CPA.

Interstate Moves

Depending on when and where you move and your employment status, your tax burden could span multiple states. Many states have tax laws that require any person who physically works in that state for even a single day to pay state taxes. Other states are more lenient and invoke 10- or 14-day rules. If you plan a move to or from New York, accountants who are familiar with the state’s tax laws can help you lighten the impact the move could have on your tax obligations.

Life Events

Marriages, births, retirement, and other significant lifetime events can transform your tax status immediately. While few couples are likely to reschedule a wedding to accommodate tax laws, planning for an event that is still distant could mean the difference between a local honeymoon and a dream vacation. Discuss any impending life events with your CPA and talk about plans to help you comply with tax requirements for unforeseen events.

Starting or Selling a Business

The professional equivalent to personal life-changing events, starting your own business or selling the company also triggers a cascade of tax status changes. It is particularly important to plan these major changes with the assistance of a qualified accountant.

Major Income Changes

Lottery winnings, a significant raise at work, a windfall from investments – all are positive changes, yet they wreak havoc on your tax plan for the year. A financial advisor who can help you protect your wealth, safeguard you from risk, and comply with tax law is a must if your fortunes take a sudden turn.

The Internal Revenue Service thinks about taxes throughout the year, not only in April, and so does the New York Department of Revenue. The more you can prepare ahead for your tax obligations by working with a Long Island CPA, the more readily you can protect your wealth and avoid penalties.

© CPA Services 2015 All Rights Reserved.