Archive for the ‘Personal Finance’ Category

What’s Hotter Than Summertime Tax Prep?!

Tuesday, July 12th, 2016

You don’t have to answer that. And also don’t be fooled into believing the the famous Porgy and Bess lyric: “Summertime and the living is easy.”  In fact, can we all just agree that summer can be just as hectic (if not more so) as the other three seasons. But in your hurry to balance kids, vacation planning and your other daily responsibilities, try to make time get your finances in order and prepare for the upcoming tax season.

No, we are not delirious from too much sun. Summertime tax prep can actually save you a ton of work later on while effectively easing your tax burden. Don’t believe me? Here are four posts that might make summertime living a little less stressful!

  1. The Do’s and Don’ts of Summertime Tax Prep: Frankly, who has time to think about itemized deductions and tax-free distributions when you would rather be grilling out, soaking in the sun, or enjoying your family vacation? But now is a great time to look at your taxes and make necessary adjustments to effectively sidestep any potential problems that might cause problems when tax season does arrive.
  2. School’s Out For Summer, But Tax Credits Are Still In: Summer is an exciting time for families. It’s a time to get outside and have fun hanging out by the pool or to catch fireflies in a jar at the end of a long day. For many parents though, the summer holiday is overshadowed by the need to find affordable childcare during your work hours. The good news is that your opportunity to claim the Child and Dependent Care Tax Credit doesn’t end at the last day of school.
  3. Does Your Vacation Home Provide Tax Relief? Oftentimes, successful business owners choose to acquire real estate, which serves as a tangible representation of their success. For many, the prospect of buying a second home is a desirable investment, not just because it’s useful, but because it can bring added tax benefits.
  4. Business Travel or Personal Vacation? So you decided to attend that business convention in California over the summer and are rounding up your expenses to turn in to your tax preparer. Oh, you decided to take the entire family along? Here’s a quick guide to help you determine what is a tax deduction and what is not.

Contact the tax team at Rea & Associates for even more tips to help you ease your tax burden all year long.

Share Button

Escape The Summertime Lull Will Expert Business Advice

Tuesday, July 5th, 2016

Top 5 Blog Posts In June

Just because the temperatures are higher and the days are longer doesn’t mean the team at Rea & Associates is taking a break from providing you with the latest financial and business advice.

In June we brought you tips about tax savings, advice on starting your own business, standing out against your competition and so much more. But which blog posts tickled your fancy? The following posts had more clicks than there were fireflies flitting across an open meadow during the summer solstice. Which post was your favorite?

  1. How To Become A Millionaire: The odds of winning Powerball are 1 in 292 million. The odds of winning Mega Millions are 1 in 259 million. The odds of winning Ohio’s Classic Lotto are 1 in 14 million. But if you were to invest the money you would normally spend the lottery into a 401(k) plan, your chances of winning big are all but guaranteed! Keep reading to learn how.
  2. How Are You Different From The Competition?: You have the opportunity to go above and beyond the call of duty every time you engage with a client. And don’t think that your superior work and insight will go unnoticed! Click here to find out why.
  3. Looking to Start a Business? Do It the Right Way: Starting a new business is a brave and exciting endeavor. Avoid common slip-ups by following the advice found in this post and you’ll be well on your way to a successful start.
  4. How Can You Track Use Tax in QuickBooks?:  Now that you have filed for use tax amnesty and are all set up with an account, how are you going to track it daily going forward? If you use QuickBooks, the answer is as simple as 1-2-3.
  5. Do You Know The Best Way To Buy A Business?:  Generally speaking, relationships are easier to develop and maintain when you work with the other person. The same is true in business, especially when you’re considering the relationship between a business owner and an advisor.

Do you have a question for our team of business experts? Is there a topic you are just dying to learn more about? Send me a message and put the Rea team to work helping you take control of your success this summer!

Share Button

Work or Pleasure?

Thursday, June 30th, 2016

Make Traveling for Charity Part Of Your Summertime Tax Savings Strategy

Travelling for Charity - Ohio CPA Firm

Transportation to and from the job site via plane, train or automobile are deductible on your next tax return if you will be volunteering your time and talents this summer. This includes any transportation costs accrued for travel between the airport or train station and your hotel. Read on to learn more!

In addition to planning a fun family get-away this summer, you might want to carve out some time to donate your services to a noble cause as well. For all of you summertime volunteers, listen up and make plans to use some of your travel expenses to help lower your tax bill. Here’s how.

Read Also: Can My Summer Daycare Expenses Earn A Tax Credit?

  • Make sure you are volunteering your services to qualified charities. If you want to deduct your expenses, the IRS needs to know that the charity you are working with is legit. There are several great online resources that can help you determine if the organization you are helping out is qualified. The IRS’s EO Select Check tool and Guidestar are two of my favorites.
  • Track all out-of-pocket expenses. If you are making necessary purchases that are not directly connected with the services you are performing and are not considered personal living or family expenses; and these expenses were directly result of the volunteerism opportunity, then you may be able take a deduction on your tax return. Keep in mind that you also can’t receive reimbursement by any other means. The ability to deduct out-of-pocket expenses, particularly travel expenses, has huge savings implications. Some of the types of expenses you can deduct include:
    • Lodging
    • Meals
    • Transportation to and from the job site via plane, train or automobile. This includes any transportation costs accrued for travel between the airport or train station and your hotel.
  • Roll up your sleeves and make a big impact. If you are only tagging along or if your duties are minimal, you are not going to be able to make a claim on your tax return. According to the IRS, your charity work must be “real and substantial throughout the trip.” In other words, don’t dillydally!

Now that you know what to do to, let’s take a look at what not to do – or rather, what is not tax deductible.

  • Travel expenses for tagalongs are not deductible. Meaning, only the expenses for the individual(s) volunteering their services can be written off at tax time. For example, if you decided to take your children along on the trip but they will not be logging volunteer hours, you cannot deduct their portion of the travel expenses.
  • Your time and services are valuable, but you can’t deduct the value of your time and services. This is particularly true for those who are donating professional services, including medical, financial and legal. You also can’t deduct the income you may have lost while you were working as an unpaid volunteer for a qualified charity.
  • You cannot package work and play into a single deductible expense. That’s not to say that you can’t enjoy yourself or go out to the beach after a long day of building schools in a third-world country; but if a significant part of your trip is reserved solely for recreational purposes or a vacation, your claim will be denied.

For more information about potential summertime tax savings, email Rea & Associates. You may be surprised by how much you can save when you’re on a mission to do work for those in need!

By Maribeth Wright, CPA (Cambridge office)

Check out these articles for more summertime tax strategies:

School’s Out For Summer, But Tax Credits Are Still In

The Do’s And Don’ts Of Summertime Tax Prep

How To Become A Millionaire

Share Button

Brush Up On These New Tax Form Due Dates

Wednesday, June 29th, 2016
Tax Form Due Dates - Ohio CPA Firm

Want a tip to help you stay out of trouble with the IRS? Start studying up on the new tax form due dates.

Did you know that the IRS has changed the due dates for many of your tax return forms? These changes will be effective for taxable years starting after Dec. 31, 2015, meaning your 2016 tax returns filed next year (2017) will be impacted. Since some due dates have been altered quite a bit and others have not even been touched, it’s incredibly important to pay attention to the changes.

Read Also: Join The Fight Against Identity Theft & Income Tax Fraud

Stay out of trouble with the IRS. Start studying up on the new tax form due dates, below.

  • Form 1065 pertaining to partnerships operating on a calendar year are now due March 15. A six-month extension from that date is allowable. Previously, the due date was April 15. According to the new law, partnership returns are now due on the 15th day of the third month after the year end.
  • Form 1041, which refers to trust and estate taxes, gained a 5½-month extension from the original filing date of April 15. This was an increase of half a month.
  • Your 2016 C Corp tax returns for returns that impact businesses with traditional Dec. 31 and June 30 year-end deadlines will be due on the 15th of the fourth month after the year end. A six-month extension from that date will be allowed.

o   If your year-end is before Jan. 1, 2016, your due date is April 15, with a Sept. 15, extension.

o   If your year-end is after Dec. 31, 2015, your new due date is April 15 with an Oct. 15, extension.

  • For C Corps operating outside a traditional fiscal year end (with fiscal years other than Dec. 31 and June 30), the new due date for your tax return forms is the 15th day of the 4th month after year end and the 15th day of the 10th month after year end.
  • A special rule for C Corps with a June 30 fiscal year end was established and will impact the due date for Form 1120. The new due date will go into effect for returns with taxable years beginning after Dec. 31, 2015 for the 2017 filing season.

o   Before Jan. 1, 2016, Form 1120 is due Sept. 15 with an April 15 extension.

o   After Dec. 31, 2015, the due date for this form is Oct. 15. The April 15 extension date will not change.

  • For exempt organizations required to file Form 990, the new extension date becomes a single, automatic 6-month extension. This eliminates the need to process the current first 90-day extension.
  • Those filing the Foreign Bank and Financial Accounts Report (FBAR) will have to adhere to a new April 15 due date. An Oct. 15 extension date was also established. This report was previously due on June 30.
  • All W-2 and certain 1099-MISC forms are now due to the IRS/SSA no later than Jan. 31, which is the same day they are due to the taxpayer. All other Forms 1099 are due Feb. 28 or, if filed electronically, March 31. This is a change from the Feb. 28 due date (and March 31 date if filed electronically) for all W-2 and 1099 forms that was previously enforced.

For all the changes outlined above, there are a few rules that will remain unchanged. Below are four due dates that will not change in 2017.

  • Form 1120S – These forms are due on March 15 with a six-month extension from the due date.
  • Form 1040 – The individual tax form will continue to be due on April 15 with an Oct. 15 extension date.
  • The due date for Form 5500, concerning employee benefit plans, will not change as a federal law that was enacted in December 2015 effectively repealed a previously enacted extension. These forms are due on July 31 with an Oct. 15 extension due date.
  • Form 3520-A for foreign trusts with a U.S. owner will not be changing. These forms will continue to be due on March 15 with a Sept. 15 extension due date.

Check with your tax advisor to find out if you will be ready to comply with these changes and to ask any tax planning questions you might have. Believe it or not, tax season is closer than you think. Be a proactive business owner. With enough lead time, you can implement a tax savings strategy capable of delivering amazing results. Email Rea & Associates to learn more.

By Lisa Beamer, CPA (New Philadelphia office)

Are you looking for more tax insight? Check out these articles?

Can The IRS Collect Back Taxes 10-Years After The Organization?

Environmentally Friendly Tax Savings

Don’t Miss Out! Claim The Work Opportunity Tax Credit

Share Button

Looking to Start a Business? Do It the Right Way

Monday, June 20th, 2016
Starting new Ohio Business - Ohio CPA Firm

Starting a new business is a brave and exciting endeavor. Avoid common slip-ups by following the advice found in this post and you’ll be well on your way to a successful start.

Starting your own business and becoming a small business owner is part of many Americans’ dreams. For some though, it can become a nightmare. There are definitely some right ways and wrong ways to approach starting your own business. Over my tenure as an experienced business advisor, I have seen plenty of heartache and additional expense along the way. Here are some of Do’s and Don’ts to consider if you want to start your own business:

Read Also: Dream Big: Considerations For The Aspiring Business Owner

  • Do: Go simple – Unless someone besides your spouse will own the business with you, you don’t need anything other than a simple limited liability company. It offers you liability protection while minimizing your tax filing requirements. Being the sole owner and having this sort of entity allows you to file you business’s activity on a Schedule C on your Form 1040. Until the business grows and is successful, this entity type will likely be sufficient for your small start-up.
  • Don’t: Go cheap – Small business owners tend to think they can or should do everything themselves. A lot of sweat equity goes into starting a new business, but be smart and humble enough to know the difference between what you can do and what you should do. It’s OK to ask for help!
  • Do: Involve professionals – This is an area where new business owners tend to want to go cheap. No one likes paying attorneys and folks don’t know they need a tax professional sometimes until it’s too late. Getting set up with the proper legal documents is a critical first step, and it’s one that new business owners like to try to tackle on their own. I know from experience that a good attorney is worth the expense. Don’t know who to ask? Start asking other established business owners who they use.
  • Don’t: Do payroll yourself (unless you have experience) – Some of the heftiest penalties the IRS assesses involves payroll taxes. They don’t mess around when it comes to properly assessing and remitting payroll taxes and paying your employees. Even one slip up can set a business back several thousand dollars. The issues continue to compound if they are not properly taken care of, so don’t ignore this extremely important aspect of your business. Unless you have prior experience with payroll or you hire someone with experience, this is an area where you should seek professional help.
  • Do: Consult your local Chamber of Commerce – Chambers of Commerce exist to assist businesses in a multitude of ways. Our local Chamber offers Small Business Counseling classes that are meant for new business owners who are just starting up a business. These classes include counseling, training and assistance for start-up businesses. This local resource can be invaluable if you choose to utilize it.

Starting a new business is a brave and exciting endeavor. Avoid common slip-ups by following the advice above and you’ll be well on your way to a successful start.

Around the same time you start your business, you’ll also want to consider your business’s growth strategy. Lee Beall, CPA, CEO at Rea & Associates, covered this topic in a podcast episode on unsuitable on Rea Radio. Check it out to learn what you need to do to establish or strengthen your business’s strategic plan.

By Lesley Mast, CPA, MAcc – Taxation (Wooster office)

Share Button

How Are You Different From The Competition?

Wednesday, June 8th, 2016
Competitive Advantage - Ohio CPA Firm

Every time I climb into my stylist’s chair my hair is trimmed – regardless of its condition. This helps maintain a fresh look while preventing additional breakage. It also gives her an opportunity to assess the state of my hair and make recommendations to help keep it looking its best! From helping a client monitor their cash flow to updating a buy-sell agreement, a lot of preventive maintenance can be done at a regular meeting with your financial advisor, too. You never know when a simple lunch meeting could reveal an underlying problem that, if left to fester, could be damaging to your business.

Superior Service Doesn’t Have To Be Hairy Business

You have the opportunity to go above and beyond the call of duty every time you engage with a client. And don’t think that your superior work and insight will go unnoticed! Before long, you will find that they will go out of their way in search of your insight and advice. Regardless of your profession, the potential is there for you to become a trusted advisor. We strive to reach this standard here at Rea, but I know of others who I would consider to be trusted advisors in a variety of other professions.

My Hair Stylist Is A Trusted Advisor

After attending my last meeting of the day, I gathered my things, left the conference room, walked to my car and sat down in the driver’s seat ready to depart for my regularly scheduled hair appointment. As I turned the engine, I started thinking the meeting I just left, during which we spent a lot of time discussing the succession plan of an existing client and what we could do to deliver the best experience (and outcome) possible. Then my thoughts drifted to the task at hand – my hair appointment and how I truly consider Aaren, my stylist, to be a trusted advisor in my life. Here’s why:

Superior Efficiency

Before busy season starts (January-April in our industry) Aaren will style my hair in a way that helps facilitate a faster dry time each morning. Being the numbers addict I am I have estimated that I can save about 6.5 hours if I opt for a shorter hairstyle. This is similar to how Rea is dedicated to delivering superior efficiency. For example, we have integrated Lean Six Sigma into our culture as a means to deliver efficient, cost effective service. We use it. We know it works. And we have helped other businesses implement their own Lean initiatives as well.

The Best Ideas You Weren’t Expecting

Not only does Aaren understand how to encourage her clients how to care for their hair during the best of times, she’s mindful of changes that could occur as a result of environmental factors and makes recommendations accordingly. This is what happened when I told her I was going on vacation to the ocean. This seemingly casual conversation revealed an opportunity to warn me about the dangers of saltwater on hair; she recommended a product to help prevent damage while I was on vacation. The great thing about developing a relationship with a trusted advisor is that they genuinely care! Are your children gearing up for graduation? Are you eyeballing retirement? Are you looking to invest in a summer home? A trusted advisor might be able to help you seize an opportunity that you would otherwise miss.

Sound Advice In Advance

I have found that Aaren is most effective when I keep her in the loop. I let her know when I have a vacation or a wedding many months in advance. This way she can help me get the results I want without unpleasant side effects. For example, rather than dye my hair right before a major wedding that was taking place in our family, Aaren encouraged me to change the color over a six-month period. By making the changes gradually and planned out we were to prevent my hair becoming damaged due to the chemicals.

Your advisors are also most effective when they are able to get in front of an issue. For example, if a client wanted to pass their business on to the next generation, an advisor could help you identify your succession plan, help you prepare for the changeover, identify financing solutions for your own retirement and help establish a cash flow strategy for the incoming management.

Preventive Maintenance

Every time I climb into Aaren’s chair my hair is trimmed – regardless of its condition. This helps maintain a fresh look while preventing additional breakage. It also gives her an opportunity to assess the state of my hair and make recommendations to help keep it looking its best! From helping a client monitor their cash flow to updating a buy-sell agreement, a lot of preventive maintenance can be done at a regular meeting with your financial advisor, too. You never know when a simple lunch meeting could reveal an underlying problem that, if left to fester, could be damaging to your business.

When it comes to the management of my hair, Aaren is a trusted advisor. She continues to demonstrate her expertise and always goes above and beyond my expectations, which is why I will drive two hours to keep my hair appointments!

What do you do to set yourself apart from the competition? Why would a client drive two hours to buy your products or services? How can you be a trusted advisor to the clients you serve? Mike Taylor, a CPA and executive principal here at Rea, did a great job talking about the advisory role on an episode of unsuitable on Rea Radio. You can listen to the podcast below or click here to learn more about this particular episode. You can also email Rea & Associates to speak with one of our industry professionals to find out how you can take your business to the next level.

By Katie Snyder, CPA (Wooster office)

Check out these articles for additional insight into the benefits of working with a trusted advisor:

Getting By With A Little Help From Your Friends

5 Financial Secrets Of Successful Business Owners

This Is An Intervention – Step Away From Your Business

Share Button

Do You Know The Best Way To Buy A Business?

Thursday, June 2nd, 2016
Business Acquistions - Ohio CPA Firm

Ryan Dumermuth, principal at Rea & Associates, and Kirk Spillman, president and CEO of Eagle Machinery in Sugarcreek, Ohio, join Mark Van Benschoten on episode 34 of unsuitable on Rea Radio.

Generally speaking, relationships are easier to develop and maintain when you work with the other person. The same is true in business, especially when you’re considering the relationship between a business owner and an advisor. I had a chance to be a guest on an episode of unsuitable on Rea Radio with Kirk Spillman, president and CEO of Eagle Machinery, a manufacturing company located in Sugarcreek, Ohio, to talk about what goes into developing a strong business advisory relationship – particularly when buying a business. Bottom line, a successful relationship with your advisor goes far beyond any monetary transaction; it’s rooted in mutual trust and respect. And, if nurtured, a relationship with your advisor can last a lifetime and can help drive long-term business success.


Listen to episode 34: the best way to buy a business, build a relationship that matters, on unsuitable on Rea Radio, Rea & Associates’ financial services and business advisory podcast.


How Well Do They Know Business & Can You Trust Them?

Before you decide who you should work with from an advisory perspective, you need to consider what kind of assistance you’re looking for. Remember that while it’s not always necessary for your advisor to have expertise specific to your industry (although that is undoubtedly helpful), it is critical for your advisor to be a business expert who can effortlessly apply general business tactics, strategies and best practices to address your specific needs and drive results. Don’t miss out on an opportunity to work with the best advisor in the market simply because they don’t market themselves as an expert in construction or healthcare. Call them up and get to know them before making a decision. Your choice should ultimately hinge on the advisor’s business prowess and out-of-the-box thinking.

When You Don’t Know, Ask An Advisor

We hear a lot about the importance of bringing an advisor on to assist with succession, but there are important considerations an advisor should be privy to when buying a business as well. Over the course of my career, I’ve learned that a person looking to buy a business needs just as much help, if not more, than the tenured business owner seeking to embark on retirement.

Those who are new to business ownership are trying to overcome a variety of obstacles, not to mention the difficulty associated with managing a smaller budget. And while it may not seem to make much sense to “splurge” on advice from a professional business consultant when there are other bills to be paid, the best way to navigate this unknown territory is to turn to a trusted advisor who has seen the situation you are facing.

“I learned very quickly how much I did not know about business,” said Kirk, during the podcast. “I thought I knew enough about operations and customer service and marketing all of those things that I could just step into this business and be very successful. [Before long] I recognized that there were going to be things that I would need that I didn’t have experience or resources for … [like] the entity itself. How do we set this entity up? I knew nothing about that.”

Your business advisor will be able to shine light on the areas you know nothing about, such as how to structure your business entity, how to determine the true value of the business, setting up payroll, managing inventory, etc. There’s a lot of risk involved in buying a business because, particularly for owners who are new to entrepreneurship, there are so many unknowns. Your team of advisors will help take the guess work out of business ownership.

I invite you to learn a little bit more about Kirk’s experience and to learn how a business advisor can help you establish, manage and grow your business until you decide it’s time for you to move on. Click on the media player below or visit www.reacpa.com/podcast to learn more about the best way to buy a business.

By Ryan Dumermuth, CPA, CFP (Mentor office)

Want to learn more tips to help you succeed in business, check out the following articles for additional insight.

Dream Big: Considerations For The Aspiring Business Owner

So You Want To Buy A Business: Now What

Getting By With A Little Help From Your Friends

Share Button

How To Become A Millionaire

Thursday, May 26th, 2016

Kick Your Lottery Ticket Habit

Your Money Multiplied - Ohio CPA Firm

PHOTO CREDIT: Akron Beacon Journal
The odds of winning Powerball are 1 in 292 million. The odds of winning Mega Millions are 1 in 259 million. The odds of winning Ohio’s Classic Lotto are 1 in 14 million. But if you were to invest the money you would normally spend the lottery into a 401(k) plan, your chances of winning big are all but guaranteed!

I recently found myself standing in line at a local convenience store behind a guy who was in the process of redeeming his winning $2 scratch-off lottery ticket for another chance to uncover his fortune. My mind started to wander and it wasn’t long before I starting wondering how much the Ohio lottery takes in every year and how a person’s lottery habit could be transformed into a pretty substantial retirement plan.

According to the annual report from the Ohio Lottery Commission, about $2.8 billion was collected by the Ohio Lottery between July 1, 2014 and June 30, 2015. Perhaps even more shocking is that more than half of these funds, or $1.55 billion, was a direct result of instant ticket sales – the scratch-offs! Since we know that Ohio has about 9 million residents who are 18-years-old and legally permitted to play the lottery, we can conclude that the average Ohioan is spending $323 annually on the lottery. (And since I know that I spend $0, I can only assume that there are men and women out there spending $600 or more on lottery tickets every year!)

Read Also: Don’t Get Blown Away By A Cash Windfall

For Fun or For Money?

Whether you view the lottery as a form of inexpensive entertainment or “a convenient and accessible tool for radically altering [your] standard of living,” if your objective is to obtain financial security … there’s a better way.

Countless studies have been conducted in order to explain why those with lower incomes tend to spend more of their income on the lottery. Some of the reports are simply astounding. Just a decade ago 21 percent of those who played believed that the lottery was the most practical path to wealth. It’s this skewed thought process that continues to drive lower income residents in particular to spend a significant portion of their income on these tactics rather than invest in more effective wealth enhancement solutions.

  • The odds of winning Powerball are 1 in 292 million.
  • The odds of winning Mega Millions are 1 in 259 million.
  • The odds of winning Ohio’s Classic Lotto are 1 in 14 million.
  • The odds of winning Ohio Rolling Cash 5 are 1 in 575,757.
  • And if you want to know how many prizes are left for the popular scratch-off games in Ohio on any given day you can find that out here.
  • But if you were to invest the money you would normally spend the lottery into a 401(k) plan, your chances of winning big are all but guaranteed!

Your Money Multiplied

Let’s assume a 30-year-old who normally spends $25 a week on the lottery (or $100 a month) decides to invest these funds into a 401(k). What would happen to the investment if we were to assume the following conditions?

  • The employer matches 50 cents on each dollar, bringing the total monthly investment to $150.
  • We assume an 8% average annual return on the investment.

In 35 years, the $100 he previously spent on the lottery plus the $50 his employer is kicking in would come to around $344,000 when you factor in the 8% average annual return. What’s incredible to consider is that over the course of 35 years, this individual will have only invested $1,200 per year of personal income (or $42,000 total).

Now, what if the employee decided to kick their monthly $100 lottery habit earlier at the age of 21?  If we were to apply the same conditions outlined above, in 44 years (when the employee reaches age 65), the same investment and company match would result in a 401(k) plan worth $1,457,677. Over the course of this 44-year career only $52,800 in personal funds would be contributed to the plan, but with the company match and 8% average annual return, the funds would continue to multiply – 27 times to be exact!

Don’t pass up on an opportunity to facilitate a discussion about retirement savings and the big impact even a few dollars can make over time. If you have questions about how you can make the most of your retirement saving strategy, email Rea’s retirement plan services team for more information.

By Steve Renner, QKA (New Philadelphia office)

For more insight into our retirement plan services, check out these articles:

Don’t Let These Common Retirement Plan Mistakes Hurt Your Business

How Your Plan Design Can Help Improve Your Retirement Plan Participation

Retirement Plan Participants Are Content To Watch Their Savings Simmer

Share Button

Can The IRS Collect Back Taxes 10-Years After The Original Date Of Assessment?

Wednesday, May 11th, 2016

Greetings Drebit! Please excuse my ignorance when it comes to IRS matters. I read your article about finding the date of assessment on my IRS Transcript. My transcript code is 150-5/29/2006. When can I exercise my right under the 10-year Statutes of Limitations? Thank you. – Wendy


Click here to read the original article


Dear Wendy,

Thank you for taking the time to send in your question. You correctly identified the date of assessment on your account transcript by zeroing in on the “150” Transaction Code. Based on this date, I can determine that your tax return was assessed on “5/29/2006.” Because the statute of limitations almost always begins the day after the taxpayer files their income tax return, the simple answer to your question is that the 10-year statute is set to expire on May 30, 2016.

However, there may be other factors to consider. For example, if you entered into an installment agreement with the IRS to pay any amount that was owed, as identified on your 2005 tax return, it’s highly likely that the 10-year statute of limitations date would have been extended to a date ending after May 29, 2016. While we have no way to know for certain if your assessment date was adjusted, I can tell you that, in this scenario, it is common practice for the IRS to extend the timeline to accommodate their ability to collect taxes owed – particularly if the installment payment period extends beyond the original expiration date.

I recommend that you speak with your financial advisor about this matter or email Rea & Associates to speak with a member of our team’s tax experts. You also might find value in the following articles.

Good luck!

By Christopher Axene, CPA (Dublin office)

Check out these articles for more helpful tax advice:

IRS Says You Owe More? Don’t Write That Check Yet!

How Far Back Can The IRS Go For Tax Auditing

When You Make A Mistake On Your Tax Return

Share Button

Celebrate Six Years’ Worth Of Business Tips With Drebit

Thursday, April 28th, 2016
Print

Today Drebit is turning six! Check out his top posts from over the years.

Drebit turns six today and we couldn’t be more excited. Over the years the Rea team has helped this intuitive frog provide readers with a wide variety of helpful business tips designed to help drive results in your organization as well as current business and financial news and we have certainly enjoyed the journey! This birthday isn’t about Drebit, it’s about you, our readers, for spending a few minutes with us each week or for checking in for answers that will help you confront a challenge facing your business. You are the reason Drebit continues today!

To celebrate, we are going to list Dear Drebit’s top six blog posts. Which one did you find to be the most useful? Let us know in the comment section!

Drebit’s Top 6 Blog Posts

  1. How Far Back Can The IRS Go For Tax Auditing? Taxes can be scary word and accountants are often asked, “How far back can the IRS audit tax returns?” Before you start to panic, rest assured that the IRS has a statute of limitations in place that generally puts a limit on the time allowed to audit you and assess additional tax. Keep reading to learn what those limitations are.
  2. How will selling a house from an estate impact my taxes? My mother passed away Oct. 30, 2009. She left my brother and me her house, which has just been released from probate court. We have someone wanting to buy it and we would split around $140,000. What kind of taxes do we face? Find out the answer in this blog post.
  3. Theft Safeguards To Cause Tax Return Delays In Ohio If time is money then the new security measures to protect Ohio taxpayer’s returns and prevent identity theft comes at a price. The Ohio Department of Taxation (ODT) said that in an effort to boost security and prevent tax-fraud in the state, Ohio will implement an “up-front filter to all tax-refund requests to analyze the demographic information reported on the return.”
  4. Do You Need to Send an Annual Notice to Your 401k Participants? If your company sponsors a calendar year 401k plan, don’t forget about participant notice requirements. They must be furnished by Dec.1, and may impact the operation or qualification of your plan. Here is a checklist that may be helpful, but check with us if you are not certain which of these requirements apply to your plan.
  5. What Happens if My 401(k) Plan is Out of Compliance with an IRS or DOL Rule? In this article we will explain the statute of limitations if your 401(k) plan is out of compliance with an IRS or DOL rule and how you can work to rectify any issues you may have with your business’s retirement plan.
  6. How Can You Track Use Tax in QuickBooks? Now that you have filed for use tax amnesty and are all set up with an account, how are you going to track it daily going forward? If you use QuickBooks, the answer is as simple as 1-2-3.

Is there a financial or business question you need the answer to? Let us know by contacting the Rea team today! We would love to answer it!

Share Button

Did Prince Forfeit Control Over His Multimillion Dollar Estate?

Wednesday, April 27th, 2016

Learn How A Will Protects Your Fortune After Death

Did Prince Have A Will | Why A Will Matters | Ohio CPA Firm

PHOTO CREDIT: www.Billboard.com
According to Prince’s sister, Tyka Nelson, the music legend neglected to draw up a will before he died. Regardless of how large (or how small) your fortune is, estate planning is essential and drawing up a will is a critical component of the plan – one you literally can’t afford to ignore. Keep reading to find out why a will is one of the most important documents you will ever have drawn up.

While driving my sons to school this morning, we heard on the radio that, according to his sister, Tyka Nelson, music legend Prince died without having a will in place. This means, if the reports are true, Prince’s estate will be managed by a Minnesota probate court and will likely come with a large tax bill.

Naturally, this story has already generated national attention concerning the future of Prince’s multimillion dollar estate. What is certain, however, is that if Prince did die without having a will, his sister and five other half-siblings would stand to acquire a significant inheritance – after taxes, of course.

Read Also: You Can Still Have The Final Say After Death

Who Will Inherit Your Fortune?

I know that my sons truly love each other but, like most siblings, they fight like cats and dogs. So I decided to use the drive to school as a teachable moment.

Because both of my sons dream of becoming professional sports stars (let them dream), I advised them to heed the warning tucked within the morning’s news report. If you don’t want your brother to inherit your fortune when you pass away, you need to have a will in place that will determine where your millions go. Otherwise, the state will give everything to your next of kin.

Still Not Sure If A Will Is Necessary?

Regardless of how large (or how small) your fortune is, estate planning is essential and drawing up a will is a critical component of the plan – one you literally can’t afford to ignore. Among the many benefits of establishing a will, this document will:

  • Give you the final say over how your finances will be distributed.
  • Establish who will be legally responsible for caring for your minor children.
  • Help you avoid a drawn-out probate process.
  • Provide you with an opportunity to minimize your tax burden.
  • Let you determine who will be responsible for managing the affairs of your estate.

Lesson Learned?

You don’t have to be a teacher to pass along a few solid words of wisdom to your children. You just need seize teachable moments when they present themselves – even if all you can do is begin laying the groundwork for an even bigger lesson. Here’s what we accomplished on this morning’s drive:

  • I’m certain my boys now agree on one thing – that when they become professional sports stars (or whatever profession they choose), a will is a must have.
  • They now know who Prince is and that he acquired a lot of money over the course of his career.
  • Hopefully, they now have a basic understanding of the importance of a will. (I’m probably going to have to have a follow-up conversation about this one.)

Eh, I tried.

Would you like to learn more about estate planning and how to ensure your assets are distributed in accordance with your wishes after you die? Listen to episode 6 of unsuitable on Rea Radio with Dave McCarthy – The Grim Reaper Is Coming And He Wants Your Money. You can also email Rea & Associates to learn more.

By Inez Bowie, CPA, CSEP (Marietta office)

The following articles offer some more great advice about the importance of drawing up a will.

How Do You Value Property For An Estate In Ohio?

Why Should Your Digital Assets Be Part Of Your Estate Plan?

What Tax Liabilities Accompany Inherited Real Estate?

Share Button

Protect Yourself From Fake Charity Scams

Wednesday, April 20th, 2016

Questions to Ask Yourself Before Making A Donation

Charity Scams - Ohio CP A Firm

Would you be able to spot the charity scam? Even if you are 99 percent certain the check you are about to write will go to a well-respected nonprofit organization, it makes since to ask yourself a few questions. Read on to find out which ones.

From identity theft and tax fraud to criminals finding ways to hack into your company’s network, we are learning every day that it’s simply not safe to let your guard down – for anyone or anything. Unfortunately, that mindset should apply when you are considering gifting a charitable donation as well.

Some fraudsters, in an attempt to prey on the generosity of strangers, have begun to solicit funds for fake charities particularly during and immediately after tax season. But you can shut down these scams by asking yourself these critical questions.

Read also: Join The Fight Against Identity Theft & Income Tax Fraud

Is this the charity I know and love or is it a spin off?

We are a sucker for the brands we know and love, and criminals will invoke similar names, attributes, branding to trip you up and get you to write that check. Even if you are 99 percent certain the check you are about to write will go to a well-respected nonprofit organization, it makes since to conduct a quick search online to remove all doubt. Two resources to consider are:

  • The Exempt Organization Select Check Tool – this search tool is designed to help you determine the legitimacy of the not-for-profit in question by providing users with information about the organization’s federal tax status and filings.
  • Guidestar – this online resource is great for users who want to find out about the validity of tax-exempt organizations as well as other faith-based nonprofits, community foundations and other groups that are typically not required to register with the IRS.

Do nonprofit organizations ask for personal information?

Don’t make it easy for a fraudster to steal your identity by willingly providing them with your Social Security Number. Legitimate nonprofit organizations will never need your SSN to complete a transaction and they should never need to retain any of your personal information for their records – this includes passwords.

Should my donation be in the form of a check or is it OK to give cash?

Yes! For your own security, and tax purposes, be sure to establish a paper trail. The best way to do this is to avoid making any type of cash donations. Instead, every time you give money to a charity, consider using a check or credit card to establish proof of the transaction. Not only is it important to establish a paper trail as a safety measure, it will help you when to go to claim the contribution on next year’s tax return.

I’m still not sure if it’s a valid nonprofit organization?

If the questions above don’t provide you with the reassurance you need, reach out to a trusted advisor who can help you identify whether a particular charitable organization is reputable or not while giving you pointers to help you protect your hard-earned dollars as well as your identity.

 By Maribeth Wright, CPA (Cambridge office)

Check out these articles to learn to learn about other fraud scenarios taxpayers should know about.

Stop Criminals From Hijacking Your Identity With These Top 5 ID Theft Prevention Posts

Then & Now: Data Security In America Since The Target Breach

Malware Threat Spreads To Smart Phones

Share Button

There’s Nothing Wrong With 3-Year-Old Money

Friday, April 8th, 2016

Time’s Running Out To Claim 2012 Refund Checks

Unclaimed Tax Refunds  - Ohio CPA Firm

Grab your unclaimed cash before it’s too late! The IRS owes taxpayers about $950 million of unclaimed tax refunds from 2012. But the deadline to file your late return is April 18, 2016. Read on to learn more.

If you are one of the nearly one million taxpayers who didn’t file a tax return in 2012, you may be eligible to receive an additional refund check from Uncle Sam. But if you don’t act fast you will miss your chance to claim your portion of the $950 million.

Funds that are not claimed by April 18, 2016 will become the property of the U.S. Treasury.

Were you a student in 2012 or was your income such that you weren’t legally required to file a 2012 tax return? It’s possible that, at that time, you had too much withheld from your wages (or paid higher quarterly estimated payments) than was actually necessary. And now the government owes you a refund. Additionally, depending on your particular circumstances, you could have also been eligible to claim certain tax credits, which are also just sitting there … waiting for somebody to claim them.

Read Also: From Toddler To Teen And Beyond: Tax Breaks For Families

According to IRS estimates, half the potential refunds are for more than $715. Unfortunately, if you don’t claim this money now, you never will. Taxpayers have three years to file a claim for a tax refund. Funds not claimed in time will become government property.

Here are a few other points to remember if you plan on claiming your share of unclaimed funds.

  • You must file a 2012 federal income tax return to claim your refund. The IRS needs to make sure you don’t owe any federal or state taxes for 2013 or 2014 as well, so if you haven’t filed those returns yet, the IRS may hold your refund to satisfy any tax debts that are owed as well as any past due child support or federal debts, such as student loans.
  • To claim your refund, you must properly address, mail and postmark your tax return no later than this year’s tax deadline (April 18, 2016).
  • Be sure to collect any and all necessary forms and include them with your return, including Forms W-2, 1098, 1099 or 5498. If you are missing a form or two, you can request copies from your employer (current and/or previous), your bank or another payer.

If you didn’t file a 2012 tax return and think the government owes you money, you have no time to waste. The IRS provides taxpayers with current and prior year tax forms and instructions on its website or by calling 1-800-TAX-FORM (1-800-829-3676). You can find additional help, such as tax calculators, refund tracker, record retention schedule and more in the financial resources section of the Rea & Associates website. Check it out!

By Lesley Mast, CPA, MAcc-Taxation (Wooster office)

Check out these articles for more last-minute tax help?

How To Trigger An IRS Audit

How To Make Dealing With The IRS Less Stressful

Join The Fight Against Identity Theft & Income Tax Fraud

Share Button

Business Leaders Turned To Drebit For Fool-Proof Tax Tips

Friday, April 1st, 2016

When it comes to providing readers with top-notch tips and expert financial advice, we take our job very seriously. That’s why our top blog posts in March were related to tax, compliance and general financial wellness topics. Take a look this month’s top five blog posts for business owners.

1. Does The IRS Care About Your Fantasy Football Team?

Fantasy Football | Tax Guidance | Ohio CPA Firm

When you sit down with your CPA to go over last year’s taxable income and they ask you how your fantasy football team did this year, they aren’t just looking to engage you in casual conversation. In fact, how well (or how poorly) you did over the last year might make a difference in the size of your tax bill. Read on to learn more.

 

 

2. Payroll, HR Departments Targeted By Cyber Criminals

paper dollsOver the last few years, the threat of refund fraud and identity theft has become a very real concern, and criminals have proven that they will go to great lengths to get the information they need to complete their scams. This recent phishing scam is no exception.

 

 

 

 

3. The ACA: Small Businesses Are Also At Risk

Small Business Penalties | ACA | Ohio CPA Firm

Thinking the provisions outlined in the Affordable Care Act doesn’t apply to your business because you are “under the threshold of 50 employees” is a very dangerous assumption to make. Keep reading to find out why.

 

 

 

4. Don’t Miss Out! Claim The Work Opportunity Tax Credit

2016 individual mandate penaltiesThe IRS has finally issued guidance on how to deal with the retroactive extension of the Work Opportunity Tax Credit (WOTC) for 2015. In short, it’s an opportunity you don’t want to pass up.

 

 

 

 

 

5. Can You Afford To Lose Them?

Recruitment & Staffing Strategy | Ohio CPA Firm

When you lose a member of your team, regardless of their position, you can expect their departure to impact your organization’s bottom line. That’s why it’s so important to take a proactive stance with regard to staffing and minimizing your financial burden.

 

 

 

 

 

April brings an end to the 2016 tax season. Don’t forget that the tax deadline is April 18 this year. Looking ahead, you can expect to see some great tips from our business experts as well as some fantastic spring cleaning advice that can be used to prepare for tax season 2017. And, as always, if you have a question for one of our financial experts or business consultants fill out the Ask Drebit a Question form. We are always happy to provide you with responses to your specific questions.

Happy Spring!

Share Button

Phishing Scam Is A Threat To Ohio Businesses

Monday, March 28th, 2016
IRS Phishing Scam - Ohio CPA Firm

You can take a proactive stance when it comes to protecting your company from these scams by encouraging your employees to pay close attention to emails that request sensitive information, such as the names of employees, Social Security numbers, dates of birth, addresses and/or salary information or copies of employee’s W-2 information.

The Ohio Department of Taxation (ODT) is echoing phishing scam alerts made by the IRS earlier this month in an effort to protect businesses and employees state-wide from identity theft and tax fraud.

Read Also: Payroll, HR Departments Targeted By Cyber Criminals

According to ODT, payroll and human resources offices at companies nationwide – including some in Ohio – reportedly received emailed requests that appear to be sent from a high ranking member of the company’s management team requesting confidential payroll data. While the emails appear to be legitimate, they are actually being sent by cybercriminals who are looking to fool employees into sending them detailed payroll and W-2 information. The imposters then use the information to file fraudulent tax returns.

“The scam has worked on more than 30 companies resulting in the theft of W-2 tax information for thousands of current and former employees,” ODT’s news release states. “The W-2 form contains an employee’s Social Security number, salary and other confidential data. This information enables thieves to create a realistic looking, but fraudulent tax return requesting a tax refund that is then filed with Ohio or other states, and the IRS.”

The frequency of tax fraud and identity theft continues to increase at an alarming rate. This tax season alone, the IRS reported an approximate 400 percent increase in phishing and malware incidents – a surge that was addressed back in February.

“If your CEO appears to be emailing you for a list of company employees, check it out before you respond,” said IRS Commissioner John Koskinen. “Everybody has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”

You can take a proactive stance when it comes to protecting your company from these scams by encouraging your employees to pay close attention to emails that request sensitive information, such as the names of employees, Social Security numbers, dates of birth, addresses and/or salary information or copies of employee’s W-2 information. You can also let them know that they should never send sensitive information until a conversation takes place, either in-person or over the phone, with the member of management seeking the information. You can also check out the information provided here for general insight from ODT that could be used to help your employees identify phishing attempts and email scams.

If your Ohio business has been the victim of or experienced this or any other type of email phishing scheme, contact ODT immediately at 800.282.1780 to protect against potential tax fraud and safeguard Ohio taxpayer dollars.

Those who are interested in learning more about the increasing threat of cybercrime should check out The Columbus Cybersecurity Series. Presentations are scheduled to take place throughout the year and will focus on ways to help business owners learn more about cyber threats. The first installment is scheduled for Wednesday, April 6. The event is free but registration is required to attend. Attendees will walk away with new insight into these attacks as well as tips and advice that will help you protect your business.

By Lisa Beamer, CPA (New Philadelphia office)

Want to protect your employees from identity theft and tax fraud or need help recovering? Check out these articles:

How Can You Protect Yourself From Tax Fraud

Identity Theft Prevention: Tips To Reduce Your Risk of Becoming a Victim

How To Recover From Identity Theft & Refund Fraud

Share Button

How To Trigger An IRS Audit

Friday, March 25th, 2016
How To Trigger An IRS Audit - Ohio CPA

When was the last time you were happy – jubilant even – after receiving a letter from the IRS ? Exactly … Keep reading to learn how to keep the tax man out of your mailbox.

Only .84 percent of the 146.9 million individual tax returns filed in 2015 were audited by the IRS. The last time the audit rate was that low it was 2004 and most of us were walking around in Uggs. And even though the IRS says it expects to see even fewer audits in 2016, your chance of being audited tends to increase when:

You fail to report all taxable income

You will be notified if the IRS notices any inconsistencies between the taxable income reported on your tax return and the combined amount reported on your 1099s and W2s. Be sure to make the issuer of your 1099 aware of any mistakes, including incorrect income reported or receiving a form that is not yours.

You own a cash-intensive business

If you operate a taxi, car wash, bar, hair salon, restaurant or any other cash-intensive business, the IRS will be watching your tax return closely. Historically, cash-intensive businesses have been less accurate in reporting all taxable income. In response, agents are using special techniques to interview business owners and audit for unreported income.

Read Also: What’s Worse: An IRS Audit Or A Root Canal?

You claim large charitable deductions

IRS agents don’t have a problem with you philanthropic behavior, it’s the people abuse this tax deduction they have a problem with. This is another area the agency has had problems with in the past, which is why agents pay special attention to these types of deductions – especially if the deduction is disproportionately large in relation to your taxable income. So, if you are going to make a gift to a nonprofit organization, make sure to do it the right way. Keep your receipts, document everything and obtain an appraisal if the donation is for property worth more than $500 (and be sure to file Form 8283 with your return). It’s also important to note that donated cars, boats and planes continue to draw special attention.

You claim home office deductions

If you can claim the home office deduction – great! However, many are often unsuccessful because they ultimately realize that they don’t meet the strict requirements. Or, if they do successfully claim it, they overstate the deduction. For this reason, this is another area the IRS tends to scrutinize. Remember, if home office space must be used exclusively and on a regular basis as your primary place of business in order to claim a percentage of the rent, real estate taxes, utilities, phone bills, insurance and other costs.

Your claim for meals, travel and entertainment is disproportionately high

This is another area where taxpayers have made excessive claims in the past, causing the IRS to look closely at meal, travel and entertainment deductions for self-employed taxpayers. When the deduction appears too large for the business, agents look for detailed documentation including the amount, place, persons attending, business purpose and nature of the discussion or meeting.

You claimed 100% business use of a vehicle

It’s very rare that a taxpayer actually uses vehicle exclusively for business, especially if no other vehicle is available for personal use. If an IRS agent sees this type of claim, they won’t just see red flags, they will hear sirens. If you are planning to claim a percentage of your vehicle usage on your tax return, be sure to keep detailed mileage logs and precise calendar entries for the purpose of every road trip.

The best way to guard against an IRS audit is to have your business and personal tax returns prepared correctly every year by a team of tax specialists. Email Rea & Associates to learn what other red flags the IRS is looking for.

By Chad Bice, CPA (Zanesville office)

Check out these articles for even more popular tax tips:

How To Make Dealing With The IRS Less Stressful

How Far Back Can The IRS Go For Tax Auditing?

A Use Tax Audit Could Cost You

Share Button

Protect Yourself From Identity Theft & Refund Fraud

Wednesday, March 16th, 2016

It’s unfortunate that identity theft and refund fraud have become commonplace in our society, especially during tax season. On the other hand, it’s reassuring to see our government agencies stepping up to protect taxpayers from this threat.

In Ohio, the Identification Confirmation Quiz has been especially successful. Last year, the quiz helped prevent an estimated $259.1 million from going to fraudsters. At a federal level, during the 2013 filing season, the IRS launched a number of counter attacks to prevent around $24.2 billion from being claimed as the result of bogus income tax returns.

Read Also: How To Recover From Identity Theft & Refund Fraud

Even though identity theft and refund fraud show no signs of slowing down, in addition to the state-wide and federal efforts to protect taxpayers, there are ways you can help protect yourself. During tax season, take care when choosing your tax preparer. It’s important to be sure that they take their responsibility to safeguard your information very seriously. And, all year long, take common-sense precautionary measures that include:

  • Keeping your computer secure.
  • Avoiding phishing email and malware.
  • Protecting your personal information on and offline.

Few things are worse than suspecting, and then confirming, that you have had your identity stolen. Recovering from such a violation can be overwhelming. The good news is that you don’t have to go through it alone. Your tax preparer can help you along the way. Email Rea & Associates to learn more.

This article was originally published in the March 2016 edition of Consult The Expert column published in Columbus Business First.

By Ashley Matthews, CPA (Dublin office)

Want to learn more about the refund fraud epidemic? These articles will help.

Join The Fight Against Identity Theft & Income Tax Fraud

Should I still Be Concerned About Identity Theft And Tax Fraud?

Quiz Results Are In – And The News Is Good

Share Button

Does The IRS Care About Your Fantasy Football Team?

Monday, February 29th, 2016

What to know when reporting your fantasy football winnings – or losses

Fantasy Football Tax Guidance - Ohio CPA Firm

How your fantasy sports activity is classified will affect how your income – or lack thereof – is reported. Specifically, taxpayers need to know whether or not the IRS considers their fantasy football activity to be gambling and whether “the activity is not engaged in for profit (i.e., a hobby activity, if it is not gambling, or casual gambling, if it is gambling) or if the activity rises to the level of being a trade or business.” Read on to learn more.

When you sit down with your CPA to go over last year’s taxable income and they ask you how your fantasy football team did this year, they aren’t just looking to engage you in casual conversation. In fact, how well (or how poorly) you did over the last year might make a difference in the size of your tax bill.

According to the Fantasy Sports Trade Association (FSTA), about 56.8 million people spent their time and money on fantasy sports in 2015 – 73 percent of them were fantasy football players.  And, on average, over a 12-month period, players spent about $465 on league-related costs, single-player challenge games and league-related material. In short – fantasy sports has become a serious business and, as with most business matters, you should be prepared to report your fantasy sports winnings (or losses) to the IRS on Form 1040.

Read Also: Are You Missing Out On Tax Incentives?

Fantasy Money Spends The Same As Real Money

Just because your football team is fantasy doesn’t mean your money is, and when real money is being exchanged, you have an obligation to report it on your tax forms. However, because the IRS has yet to identify proper treatment of fantasy sport income and losses, the jury is still out on the “proper” way to report these fantasy winnings/losses on tax returns. And, from a state perspective, while most departments of taxation are struggling to identify the proper treatment of these funds, a few have issued guidance focused on fantasy sports operators.

Not Just A Hobby?

How your fantasy sports activity is classified will affect how your income – or lack thereof – is reported. Specifically, taxpayers need to know whether or not the IRS considers their fantasy football activity to be gambling and whether “the activity is not engaged in for profit (i.e., a hobby activity, if it is not gambling, or casual gambling, if it is gambling) or if the activity rises to the level of being a trade or business.”

In the article, “How to report clients’ fantasy football winnings,” that appeared in the February edition of the Journal of Accountancy, David Baldwin, CPA/PFS and Donald J. Zidik, CPA, provided some excellent insight into the 4 primary types of activity your fantasy football pastime could be classified as. Below is a brief synopsis.

Ultimately, at this time, how your CPA will classify your fantasy football activity depends on your own facts and circumstances. While you may consider fantasy football to be a hobby, someone else may be using it has a significant source of income.

  • A hobby activity

For most people, fantasy football would be classified as a hobby – meaning that it does not receive the level of activity required to qualify as a trade or business. In this case, your reporting would be guided by hobby loss rules and reported on line 21 of your IRS Form 1040. Deductions are generally allowed only up to the amount of income you secured as a result of the activity and only if you itemize your deductions. Your expenses, which are reported as miscellaneous itemized deductions, are subject to the 2 percent-of-adjusted-gross-income (AGI) floor and disallowed for alternative minimum tax (AMT) purposes. Your expenses would include your entrance fees for losing contests and other expenses you incurred as a result of the activity.

  • A nongambling activity – trade or business

Do you keep accurate books and records and conduct your fantasy football activity in a businesslike manner? Then it may qualify as a trade or business. Final judgment, however, is left to the IRS, which will determine if the activity contains elements of personal pleasure or recreation. If you do qualify for this classification though, your ordinary and necessary expenses could be deductible and your net income would be subject to self-employment tax. Your activity will be reported to the IRS on Schedule C.

  • Casual gambling activity

Would you consider your fantasy football gambling? If so, then you will need to refer to the usual rules governing gambling activities, which means that your entrance fees for losing contests should be reported as gambling losses and allowable only if you itemize your deductions. Different from hobby activity, your losses (to the extent of your winnings) are considered miscellaneous itemized deductions and are not subject to the 2 percent-of-AGI floor and, therefore, are not disallowed for AMT purposes and excess losses cannot be carried over to another year. Your winnings, on the other hand, will need to be reported as income – even if your losses exceed your winnings.

  • Professional gambling activity – trade or business

If you consider your fantasy football activity to be gambling, and you consider you level of involvement to be “full-time,” and as a means for producing income to sustain a livelihood, you could be considered a professional gambler in the grade or business of gambling. This means that your gambling losses can only be deducted to the extent of your gains and your losses in excess of your gains cannot be carried over to another year. That being said, ordinary and necessary business expenses you incur to engage in the gambling activity are deductible. You will need to report your winnings and losses on Form Schedule C.

For more tax tips, listen to episode 9: taxes are like fishing, of unsuitable on Rea Radio to learn more about strategic tax preparation with Melane Howell, CPA, a tax manager with Rea.

By Wendy Shick, CPA, CFP (Mentor office)

Are you looking for more helpful articles to help you with your tax preparation? These should help:

10 Reasons Why You Could Be Audited

Hobby Losses Versus Business Expenses

What Are The Tax Rules For Gamblers?

Share Button

Five Reasons To Fall In Love With Your Financial Advisor

Friday, February 12th, 2016

While your financial advisor is probably the last person you are thinking about during those romantic holidays, you may want to reconsider and here’s why …

You share the same financial goals.

Whether the topic of conversation is on your personal finances or your business’s financial wellbeing, your financial advisor genuinely cares about your current and future economic security. That’s why they are always looking for ways to save you money – not just during tax season, all year long. Read “Don’t Miss Your Chance to Secure Tax-Free Wealth” to learn about five tax savings strategies you may have missed.


5 reasons to fall in love with your financial advisor from Rea & Associates

They are not afraid to ask for help.

Because they want your future to be financially sound, your financial advisor is not only happy to call in outside reinforcements and other industry experts to weigh in on key financial decisions, they insist on it. It’s just not realistic for one person to have all the answers, especially in business matters, which is why your financial advisor likely has a contact list full of bankers, lawyers, real estate brokers, city officials and many other industry leaders and business experts. Read “Getting by with A Little Help from Your Friends” for tips to help you identify the right advisors to help you overcome your unique challenges.

They have your back.

From helping you identify ways to protect your business against fraud to helping you avoid spending more money than is necessary during large negotiations, your financial advisor is always looking out for your best interest. Are you looking for ways to prevent occupational fraud in your business or do you need to know the true value of a property you are interested in purchasing? Either way, your financial advisor has the expertise and experience needed to keep you from being taken advantage of. Check out the article “Are Your Employees Skimming from the Top?” and “How to Make Your Building Work for You with a Cost Segregation Study” for more insight into these topics.

They always have good advice.

It should go without saying that your financial advisor has worked with their fair share of business owners. So, when it comes to knowing the ins and outs of running a business, they have a lot of good advice and can give you some great insight into techniques that have worked as well as warning you about others that may have fallen short of meeting expectations. Your financial advisor may not always provide you with the answer you were looking for, but if you bring them into the conversation they will always be there to give you the sound advice you need. Listen to episode 18 of unsuitable on Rea Radio to hear a veteran financial advisor talk about the positive psychology of having hard conversations.”

Help is always right around the corner.

If you have a personal finance question or are in need of expert business advice, email Rea & Associates to speak with one of our expert financial advisors today.

By Denell Skelton, CPA (Coshocton office)

Are you looking for more business tips and insight? Subscribe to unsuitable on Rea Radio on SoundCloud or iTunes and listen to new podcast episodes every week. Listen to these episodes to learn more:

Stuck on $5 million

Outsourcing: Quite Possibly Your Most Powerful Resource

The Revenue Sin

Share Button

Protect Your Business With These 6 Tips

Wednesday, February 10th, 2016
Protect Your Business - Ohio CPA Firm

Do you know that most of your net worth is tied up in your business. That means, if you don’t adequately protect it, you could stand to lose nearly everything you’ve spent your life working for. Read on for some great tips to help you protect your business.

It’s human nature to do everything we can to protect the people we love and the property we value. From drawing up legal documents to purchasing the newest safety products on the market – we are always looking for ways to protect what’s ours. Hopefully, this same mindset governs your business’s risk-management strategy as well.

Do you know that most of your net worth is tied up in your business. That means, if you don’t adequately protect it, you could stand to lose nearly everything you’ve spent your life working for.

Columbus Business First recently published my six tips to help business owners protect their most valuable asset. I encourage you to check them out here as well.

  • Draw up a buy-sell agreement.
    Why: As the last will and testament of your business, your buy-sell agreement dictates will happen if a shareholder dies, becomes incapacitated, retires or is fired from the business.
  • Secure contracts for all key employees.
    Why: What would you do if one of your key employees left and took your customers and other employees with them? Before your worse-case-scenario has a chance to materialize, address your concerns in the form of a contract.
  • Have a succession plan.
    Why: Your company’s value could take a hit if you were to unexpectedly be absent from the business. Select and train your replacement sooner rather than later.
  • Comply with government regulations.
    Why: Some violations could cost your business hundreds of thousands of dollars – or more.
  • Protect your intellectual property.
    Why: Your ideas are valuable, especially if your ideas form the foundation of your business. When you protect your intellectual property with patents, copyrights and other legal agreements, you are protecting your business’s value.
  • Secure proper insurance coverage.
    Why: Without the right coverage, a single lawsuit, accident or natural disaster could take your business’s value to zero.

Want to learn more about how a business valuation can help you grow and protect your business? Check out my website at www.knowandgrow.com. You can also follow me on Twitter for helpful business tips throughout the day.

By Tim McDaniel, CPA/ABV, ASA, CBA (Dublin office)

Are you looking for more ways to protect your business? These articles could help!

Are Your Employees Skimming From The Top?

Businesses Beware: Sloppy Data Security Could Cost You

Can Your Business Survive An Employee Exodus?

Share Button

Join The Fight Against Identity Theft & Income Tax Fraud

Friday, January 29th, 2016

Income tax identity theft and refund fraud has become a huge problem over the last few years; and while billions of dollars are finding their way into the pockets of fraudsters, the IRS is working hard to shut down these schemes.

The IRS paid roughly $5.8 billion dollars in fraudulent refunds to identity thieves over the course of the 2013 filing season. While that is a huge number, it could have been a lot worse. During the same time period, the amount the IRS successfully prevented or recovered totaled around $24.2 billion. But these statistics only take into consideration the fraud we know about.

Identity theft isn’t just a threat during tax season, scammers are exploiting a lot of cracks in your armor. Listen to episode 12: the great data saver on unsuitable on Rea Radio for insight from Joe Welker, CISA, Rea’s IT Audit Manager

The Unknown Number

While it is nice to know that the IRS is working hard to prevent identity theft and refund fraud, the truth is that we don’t yet have all the information to determine how bad the income tax fraud epidemic really is. This means that we continue to be at risk of becoming a fraud victim again this tax season. Perhaps if we knew how many fraudulent tax returns went on to be processed and how many billions of dollars were paid out to scammers looking to make a quick buck we could finally make some educated assumptions about the likelihood of being defrauded out of your refund check.

I don’t like not having all the necessary information.

Read Also: Ohio Department of Taxation Stops Thieves From Stealing Millions

This year, income tax fraud is expected to be higher than ever. This video, produced by abc6 out of Columbus, Ohio, shines more light on the topic of identity theft in Ohio.

Calling In Reinforcements

The IRS has realized that identity theft and refund fraud are threats that are showing no signs of going away. So the agency has requested help. The Internal Revenue Service, in cooperation with state tax administrators and tax industry leaders, has formed a public-private sector partnership to identify and test more than 20 new data elements on tax return submissions that will be shared with the IRS to detect and prevent fraudulent filings. The software industry is doing its part by putting enhanced identity validation requirements in place to protect customers and their personal information from identity thieves.

As of October 2015, 34 state departments of revenue and 20 tax industry members have signed memorandums of understanding regarding coalition’s roles, responsibilities and information sharing measures. More states are expected to sign on later.

Taxpayers Are Encouraged To Fight Back Against Fraud

Over the last 3 years, the IRS has initiated more than 3,000 fraud investigations. Those investigations have gone forward to convict and sentence close to 2,000 thieves to around 40 months in prison apiece. But there is still much to be done. They are doing their part.  We as taxpayers have to do ours.

In January, the IRS launched the “Taxes. Security. Together.” initiative to educate taxpayers on income tax identity theft and ways they can safeguard their information and protect themselves. According to the agency, there are several ways you can protect yourself from identity theft – especially during tax season:

  • Keep your computer secure
  • Avoid phishing email and malware
  • Protect your personal information

Above all, choose your tax preparer wisely and make sure they take their responsibility to safeguard your information very seriously. A tax preparer can also help if you do encounter a situation in which your information could be compromised.

By Ashley Matthews, CPA (Dublin office)

Want to take steps to ensure that you won’t be a fraud victim this year? These articles feature information that can help.

Should I still be concerned about identity theft and tax fraud?

How can you protect yourself from tax fraud

Identity Theft Prevention: Tips To Reduce Your Risk of Becoming a Victim

How To Recover From Identity Theft & Refund Fraud

Share Button

Don’t Forget Your Health Coverage

Wednesday, January 27th, 2016

2016 individual mandate penaltiesIt’s getting expensive to not have health insurance and I’m pretty sure there are a lot of people out there who are not prepared to pay the  $700 flat fee for 2016 (or 2.5 percent of your income if greater). The break even is $28,000 income for single, so a great majority of people will likely pay the higher fee based on percentage of income.

If you don’t have insurance, or if you know somebody who has neglected to purchase insurance, time’s running out. The deadline to enroll on healthcare.gov is Jan. 31.

Just look at how much penalties have increased over the years!

2014, 2015 and 2016 Annual Payment Amounts

Year 2014 Year 2015 Year 2016
Percentage amount

1% of income
above filing threshold*

2% of income
above filing threshold*
2.5% of income
above filing threshold*

Flat dollar amount**

$95 per adult
$47.50 per child
$325 per adult
$162.50 per child

$695 per adult
$347.50 per child

Employees: Do you know how the new IRS Form 1095-C filing requirements impact you? Click here to find out.

By Joseph Popp, JD, LLM (Dublin office)

Want to learn more about your healthcare options? Check out these articles:

The Cost Of Reimbursing Employees For Health Care
Obamacare Is Here … Now What?
Know Your Health Insurance Options

Share Button

IRS Gives Business Owners The Gift Of More Time

Monday, January 4th, 2016
Form 1095 Deadline Extended - Ohio CPA Firm

Failure to comply with provisions set forth in the ACA can lead to catastrophic penalties, which is why we have actively sought to inform business owners of their responsibility to file Form 1095-C. Unfortunately, we knew that while we could successfully inform many businesses in advance of the original deadline – some were going to be left behind. Time, it seemed, just wasn’t on our side. But the IRS saw this threat and, as 2015 came to a close, took action to delay the 1095-C reporting deadline - (hopefully) keeping many small businesses intact.

While some taxpayers may be rejoicing after learning that the IRS has delayed 1095-C reporting deadline, it’s important to remember that this late Christmas gift may not be as great as it seems - especially when it comes to meeting the deadline to file your individual tax return.

Read Also: Make BIG Changes Or Face BIG Fines

1095-C Reporting Deadline Postponed

As you may already know, failure to comply with provisions set forth in the Affordable Care Act can lead to catastrophic penalties, which is why we have actively sought to inform business owners of their responsibility to file Form 1095-C. Unfortunately, we knew that while we could successfully inform many businesses in advance of the original Jan. 31 deadline – some were going to be left behind. Time, it seemed, just wasn’t on our side. But the IRS saw this threat and, as 2015 came to a close, took action to delay the 1095-C reporting deadline - (hopefully) keeping many small businesses in tact.

Employers now have until March 31 to provide employees with Form 1095-C and the deadline to file the form electronically with the IRS was moved to June 30. The IRS also extended the deadlines for 1095-Bs to these new dates as well.

Remember, all 2014 large employers are required to file these forms, based on 2015 data. Per employee penalties will accrue for those who file late or fail to file. Some businesses may be considered large employers under the ACA, and not even know it; but there are ways to determine your employer status before it’s too late.

That Sounds Great, Except …

Now for the bad news – there will be some individual tax payers who may not get these forms to us until the first week of April. For most taxpayers, this will simply require some additional due diligence with no delay to filing their tax return. However, there will be some individuals who will likely have to file an extension if they do not get their forms in time. Don’t be afraid of tax extensions. As long as you work proactively with your tax advisor, there is absolutely nothing to worry about. In fact, filing a tax extension could be very helpful. Click here to get “The Truth About Tax Extensions”

You Do Not Have Permission To Do Nothing

You’ve been given extra time. Now let’s make the most of it. Rea & Associates is still accepting new clients for 1095-C Form preparation projects, And, as we have previously stated, the top payroll companies are already booked to capacity with wait lists growing by the day. If you haven’t started on this project yet and know that you should, take advantage of this delay and email me for help. My team here at Rea can also help you determine if your business is considered a large employer – which can keep you from being blindsided when the IRS determines that you do, indeed meet the large employer qualifications.

By Joe Popp, JD, LLM (Dublin office)

Want to learn more about your responsibilities under the ACA? These articles will provide you with more insight:

The Cost Of Reimbursing Employees For Health Care

Obamacare: Discrimination Is Not An Option

Secure Form 1095-C Help Now And Avoid Penalties

 

Share Button

Business Leaders Were Reading What?!

Monday, December 28th, 2015

2015′s Most Popular Blog Posts

Best Business Blog Posts 2015- Ohio CPA FirmIf you take a moment to scroll through the list of categories, authors and archives on the right-hand side of this page, it’s pretty clear to see just how active Rea’s team of experts are when it comes to providing leaders in the business community with accurate, timely and easy to digest content. We are fortunate to have so much experience and expertise on our staff, and their eagerness to serve you better has allowed us to maintain a bi-weekly electronic newsletter, a quarterly print newsletter, three blogs and a handful of electronic segment specific newsletters. That’s a lot of content – but we are not even thinking about slowing down! I hope you hang around my lily pad for awhile. I’m pretty sure you’ll find a lot of great little tidbits to read about in 2016 too. Until then, I want to invite you to take a look at some of our most popular blog posts and articles. And, if you haven’t already, take a moment to look through the newsletters we offer and sign up to have news, tips and valuable information delivered to your inbox all year long!

Top 5 Dear Drebit Posts In 2015

Dear Drebit is updated every few days with timely information and advice. In addition to covering current trends and issues, readers are also invited to ask financial and business questions on the page, which will be answered by one of Rea’s industry experts. Here are last year’s top posts:

  1. How Far Back Can The IRS Go For Auditing?
  2. Theft Safeguards To Cause Tax Return Delays In Ohio
  3. Six Things 401K Plan Sponsors Need To Do Now
  4. New Adjustments Will Affect Your 2015 Tax Return
  5. File Faster With This Tax Prep Checklist

5 Most Popular Posts On Brushing Up Blog

Brushing Up: The Dental Accounting Blog features a variety of finance and business advice specifically tailored to dental professionals. From purchasing a practice, knowing what to expect from a career in dentistry and hiring the best staff for your practice to general accounting advice, tips for cashing out at retirement and tax tips, this blog is a valuable tool for dental professionals who are looking for ways to secure long-term success in their career. The year’s most-read blog posts are:

  1. How Sales & Use Taxes Apply To Ohio Dental Practices
  2. 6 QuickBooks Tips Every Dentist Should Know
  3. Could A Crown Be A Tax Deduction?
  4. 10 Year-End Tax Planning Strategies For Dentists
  5. Buying An Established Dental Practice? Master The Changeover 

Cultivating Your Business Readers Choose Top 5 2015 Posts

The Cultivating Your Business blog is a resource provided to clients and visitors on the firm’s Know & Grow website. Updated a few times per month, business owners have access to advice, tips and general insight into how to grow their businesses and realize an optimal return on their investment upon retirement. Here are the top blog posts from last year:

  1. Bad Buy-Sell Agreement Claims Another Family Dinner
  2. Will Your Summer Reading List Make You A Better Business Owner?
  3. WARNING: Free Business Valuation Offer Is Unbelievable
  4. Uncover The Secrets To Cashing In On Your Business
  5. How To Communicate To Your Employees That You’re Selling Your Business

Top 10 Articles In Rea’s Library In 2015

In addition to our blogs, the Rea team publishes a lot of other valuable content in print and electronic newsletters. We make sure that all these articles are easily accessible in our article library. This is where you will find many of our niche pieces as well as a lot of general accounting tips and insights. Take a look at some of our most popular posts over the last year.

  1. What Is The Mid-Quarter Convention?
  2. Dangers Of Paying Under The Table
  3. Revenue Recognition Changes Are Coming
  4. Football Ticket Deductions
  5. 401K Loans And Keeping Your Plan In Compliance
  6. Take Control Of Your Vendor Master In Nine Steps
  7. Why Your Traditional Employee Management Method Is Failing
  8. The Birth Of The Taxpayer’s Estate
  9. Parting Is Such Sweet Sorrow: But What About Your 401K?
  10. Purchasing Cards Compromise Business Security
Share Button

National ID Theft Awareness Month: Get in the Know

Saturday, December 26th, 2015

Stop Criminals From Hijacking Your Identity With These Top 5 ID Theft Prevention Posts

ID Theft Awareness | Rea & Associates | Ohio CPA Firm

Identity theft is a scary thing and you don’t want to become a victim. Take some steps now to protect yourself in the future.

December is National ID Theft Awareness Month and the fraud prevention team at Rea is a wealth of information when it comes to sharing great tips to help taxpayers protect their identities from fraudsters. Instead of scrolling past posts in our expansive article library or award-winning blog, we’ve compiled this Top 5 list to make your search for information easier. Read on to discover how you can prevent cyber criminals from hijacking your identity all year long.

Read Also: Let’s Talk About The F-Word

  1. WARNING: Tis The Season To Practice Safe Online Shopping Habits: While it may be the most wonderful time of the year, cyber criminals are looking for ways to stuff their own stockings – at your expense. The holiday season is also a busy time of the year for scammers because, in general, more money is being spent and more people are clicking through cyberspace for the best deals and tracking their purchases. Find out what you can do to keep your identity safe this Holiday season.
  2. Cyber Crime: It Can Happen To You: Fraudsters don’t take holidays. In fact, they tend to be more active this time of year because they believe we are more likely to let our guards down. I don’t intend on falling for any of their traps, and I encourage you to do the same.
  3. Malware Threat Spreads To Smart Phones: Researchers and IT security experts from ESET, a global IT security company, recently announced that they had discovered a malware application that is designed to encrypt files and change PINs on Android devices in the United States. In return, victims are demanded to pay up to the tune of $500. Only then will hackers provide users with the recover key. Keep reading to learn how you can protect yourself.
  4. Should I Still Be Concerned About Identity Theft And Tax Fraud?: Identity theft and tax fraud are problems that show no signs of stopping. In 2015, in an attempt to provide an added layer of protection, taxpayers in Ohio had the opportunity to get up close and personal with the Ohio Department of Taxation’s (ODT) newest fraud safety measure – the Identification Confirmation Quiz. Read on to see how this quiz has helped reduce fraud in Ohio.
  5. How To Recover From Identity Theft & Refund Fraud: Suspecting, and then confirming, that you’ve had your identity stolen is a nightmarish scenario. It combines one of your worst fears, losing your wallet or purse, with all of the work of replacing the things that were lost. It can be so overwhelming you might be wondering: “Where do I even start?” We can help you answer that question.

Identity theft is a scary thing and you don’t want to become a victim. Take some steps now to protect yourself in the future.

Want to learn more about keeping your identity safe? Email the team at Rea & Associates, our fraud prevention specialists can be an important of keeping your information protected.

By Joe Welker, CISA (New Philadelphia office)

Looking for tips to secure your business from fraudsters? Check out these posts:

Fraudulent Credit Card Transactions Will Become Merchant’s Problem On Oct. 1

Who Is That Email Really From?

Businesses Beware: Sloppy Data Security Could Cost You

Share Button

Congress Gives Taxpayers An Early Christmas Present

Monday, December 21st, 2015

PATH Act Makes Several Key Tax Provisions Permanent

PATH Act Makes Several Key Tax Provisions Permanent | Rea & Associates | Ohio CPA Firm

Congress finally made good on its promise to make take a more definitive stance on the future of many popular tax provisions last week when members voted in favor of making many of them permanent. Other tax provisions received a temporary extension. Read on to learn more.

There is nothing like waiting until the last minute to complete a task. We’ve all been there and we all promise we’ll never do it again. Unfortunately (especially when it comes to determining the future of several valuable tax provisions) our government has fallen victim to the same bad habit.

Year after year, Congress promises to address the future of many expired tax provisions, and year after year they fail to make a definitive decision – opting only to pass legislation that extends the provisions for another year. In the meantime, taxpayers are expected to take on the impossible task of navigating the terrain amidst legislative uncertainty. Happily, things are about to change.

Listen To Our Podcast Taxes Are Like Fishing To Learn More About Tax Strategy

Congress finally made good on its promise to make take a more definitive stance on the future of many popular tax provisions last week when members voted in favor of making many of them permanent. Other tax provisions received a temporary extension. The legislation, Protecting Americans From Tax Hikes Act of 2015 (PATH Act), is retroactive to Jan. 1, 2015, and provides taxpayers a level of certainty that they have been without for quite some time.

This legislation offers a lot of relief to individuals and businesses, alike. Here’s an overview of what you can expect moving forward.

Key Tax Provisions Made Permanent By The PATH Act:

  • 15-year recovery period for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • Extension and modification of the research & development credit, including allowing certain small businesses to claim the credit against AMT liability and employer’s payroll (ie: FICA) liability
  • 179 expensing limitations and phase out increased to $500,000 and $2 million respectively
  • Exclusion of 100 percent of gain on certain small business stock
  • Extension of tax-free distributions from IRAs for charitable purposes
  • Earned income tax credit
  • Child tax credit

Key Provisions Extended Through 2019

  • Extension of the new markets tax credit in which Congress authorized $3.5 billion allocation of credits each year from 2015 until 2019
  • Extension and expansion of the work opportunity tax credit
  • Bonus depreciation is extended at 50 percent for 2015 through 2017, 40 percent for 2018, and 30 percent for 2019

Key Provisions Extended Through 2016

  • Extension and expansion of empowerment zone tax incentives
  • Two-year moratorium on the 2.3 percent medical excise tax imposed on the sale of medical devices
  • Extension of energy efficient commercial buildings deduction

In addition to the extension of key tax provisions, the PATH act also puts more scrutiny on the operations of the IRS. IRS agents will be held accountable for knowing and acting in accordance with the taxpayer bill of rights and prohibits the use of IRS business for political gain.

The passage of the PATH act is a huge victory for American taxpayers, and will allow them to partner more efficiently and effectively with their tax advisors on key issues in years to come without the uncertainty that has plagued them for many years.

Be sure to set up an appointment to speak with your tax advisor or financial planner to talk about how the PATH act will impact your ability to take advantage of tax planning strategies. Do you have questions about specific aspects of the PATH act? Fill out the form on the top, right side of this page to submit your question to Dear Drebit.

By Ashley Matthews (Dublin office)

Are you looking for more ways to save on your tax bill? These articles can help:

Year-End Tax Tips For Business Owners

Dos & Don’ts of Gifting Donations

Should I Make A Big Purchase To Cut Taxes?

Share Button

Then And Now: Data Security In America Since The Target Breach

Wednesday, December 16th, 2015
Data Breach - Ohio CPA Firm

The Target breach symbolizes the moment when the threat of personal data security violations became mainstream in America; and today, we don’t think about fraud in terms of if it will happen – it’s when it will happen.

It’s hard to remember a time when reports of data breaches, ransomware attacks and business email compromises (BEC) weren’t part of our daily lives. In fact, not so long ago we were pretty content to believe that the controls companies had in place were enough to protect us from the invisible threat of hackers and cyber criminals. But that was just a dream – and it wasn’t long before that dream manifested into a nightmarish scenario for one of the nation’s largest retailers.

Read Also: Businesses Beware: Sloppy Data Security Could Cost You

Two years ago, cyber criminals gained access to the point-of-sale systems belonging to Target. Authorities later learned that the hacker(s) gained access to about 11 GB worth of data (including highly-sensitive personal and credit card information). When the dust settled, about 70 million consumers nationwide were left vulnerable to identity theft and credit card fraud. This magnitude of this breach was huge and, as a result, companies everywhere made an effort to buckle down and implement a slew of “best practices.” But what has really changed since December 2013?

What Have We Learned From Target?

The Target breach symbolizes the moment when the threat of personal data security violations became mainstream in America; and today, we don’t think about fraud in terms of if it will happen – it’s when it will happen. But instead of becoming more vigilant about data security practices, it appears as though consumers have chosen a more desensitized reaction. These days we are content with trusting the credit card companies to notify us of any suspicious activity occurring on our account rather than implementing safer payment practices in our daily lives.

Retailers and credit card companies, on the other hand, have worked hard to make it more difficult for hackers to access their customer data. Since the breach, Target has:

  • Installed EMV compliant point-of-sale (POS) terminals in all stores to allow for transactions to be processed using a token instead of actual credit card numbers.
  • Joined two cybersecurity threat-sharing organizations in order to share and retrieve valuable information concerning data breaches and the source of those breaches.
  • Implemented more stringent firewall rules and governance procedures.
  • Constantly monitors and logs system activity.
  • Applied whitelisting technology, an administrative process that allows only preapproved applications to execute in a system, on the store’s POS systems.
  • Disabled or placed limited access on vendor accounts.
  • Deployed 2-factor authentication.
  • Established password vaults and required the use of more complex passwords.
  • Thoroughly reviewed and revised its process on how to determine which employees and contractors would have access to consumer data.

With the exception of the first two points, the measures Target has taken since its 2013 data breach are considered best practices, which means that if your business doesn’t have these security measures in place, you shouldn’t wait any longer. And, with regard to EMV technology, most businesses were expected to install and activate the new technology before Oct. 1, 2015 to avoid liability for losses resulting from fraudulent transactions.

A Moving Target

As long as there are fraudsters willing to pay for stolen names, addresses, credit card numbers and expiration dates, phone numbers, email addresses, dates of birth, Social Security numbers, etc., there will be cyber criminals looking for a way to hack into your company’s system to gain access to your consumer data or intellectual property. But if you are really serious about keeping your data safe, there are additional measures you can take.

1. Reinforce Your Firewall

Firewalls should be securely configured and continuously monitored. There are many providers that perform 24-7 firewall monitoring services to protect your company from attacks and or to alert you to signs of a possible breach. Moreover, providers are also coupling these services with the use of whitelists or blacklists, which triggers an immediate response if a potential threat is identified. Another great reinforcement for companies with experienced IT staff, would be the implementation of SIEM (Security Information and Event Management) or IDS (Intrusion Detection System) software.

2. Take Your VIP List Seriously

Not everybody should have access to your company’s domain – especially outside groups, and you should take care to review your employee and vendor access accounts routinely. The 2013 Target breach was a result of a breach that was intended for one of Target’s vendors. But, once in, the hacker was able to work his way into the Target Vendor Portal and infiltrate the Target POS systems.

3. Don’t Take Your Passwords For Granted

While doing so, be sure to verify that these credentials, in particular, require complex passwords, a limit on the number of attempts allowed before automatically disabling the account, and that they are required to be changed regularly. (Believe it or not, the most common password continues to be “123456” – proving that we are still not learning from past mistakes.)

By: Joe Welker, CISA (New Philadelphia office)

Check out these articles for more data security best practices

Malware Threat Spreads To Smart Phones

Who Is That Email Really From?

Could Your Company Be Ransomware’s Next Victim?

Share Button

Dos and Don’ts of Gifting & Donations

Thursday, December 10th, 2015

Is it just me, or can you feel the magic in the air this time of year? Even though the days are colder and the nights are longer, the holidays seem to bring out the best of humanity; and, having worked with many not-for-profit organizations over the course of my career, I have the pleasure of seeing some of the best of humanity first hand.

Listen now: The Warm Glowing of Giving

People choose to make donations to organizations and initiatives for many reasons. We learned in episode 11 of our podcast: “The Warm Glow of Giving,” that charitable donations are primarily guided by the heart and that 87 percent of all donations are made by individuals. That being the case, I still believe individuals – as well as businesses – should embrace strategy (the head) when it comes to writing checks to a worthy cause.  Here are some do’s and don’ts to keep in mind when writing your check to charity.

Gifting Donations - Ohio Accounting Firm

Looking to make a donation this holiday season to your favorite charity? Keep these dos and don’ts in mind before making that donation.

Do

  1. Do your research. Make sure you learn all you can about the organization you are donating to. You want to make sure you are donating to a worthy cause and not a fake charity.
  2. Know where your money is going. Find out how the organization will use your donation. It is OK to ask prior to your donation.
  3. Understand how this will affect your taxes. Most people know that making a donation can lead to a tax deduction, but do you know how much you can claim? If not, this is something your Rea advisor can help you understand.
  4. Get documentation. Any donation of $250 or more requires documentation if you are going to use it as a tax deduction. A cancelled check, receipt, etc. all work as documentation to include with your tax return.
  5. Give away appreciated assets, such as stocks. When doing this you get a deduction for the full value in most cases and you escape  the capital gains on the appreciation.

Don’t

  1. Expect a gift in return for your donation. That’s not the true meaning of a donation. Also, to be deductible, a gift cannot be received when making the donation, including a meal. If the donation was made at a dinner event, the cost of the meal must be subtracted from the donation amount.
  2. Pay with cash. For tracking and to prevent fraudulent activity, paying by check or credit card is usually the best option.
  3. Give randomly. Do your homework when donating, you won’t regret it. Make sure your money is going to a good cause and being used properly.
  4. Give more than you can afford. We all want to help, but donating more money than you can afford just creates more problems for you. Don’t put yourself in a situation where you are giving away more money than you can afford.
  5. Give away assets that have declined in value. Doing this will waster the capital loss opportunity for you.

Around 358 billion dollars are donated to not-for-profit organizations every year and these organizations turn around and do amazing things with your gift. From feeding the hungry, providing support to veterans and ensuring that others get the health, monetary or education assistance they need, nonprofits are an critical component of our society and you can be sure that the money you donate to any one of these types of organizations is appreciated. But you should still make sure you are using your head when making a donation to ensure that your money is being used in the best way possible. Want to learn more about how to choose the right not-for-profit organization for your tax-deductible donation? Listen to episode 11 of our podcast, Unsuitable on Rea Radio. You can also email Rea & Associates to get answers to your specific questions..

By Lesley Mast, CPA (Wooster office)

Learn more about the benefits of donating to charity. Check out these blogs posts:

Is It A Charity Or A Scam?

Tis The Season: Charitable Giving Through A Donor-Advised Fund

Charitable Giving Is Good For The Heart, The Soul And The Tax Return

Share Button

Move Over Santa, This List Is What Business Leaders are Checking

Thursday, December 3rd, 2015

Top 5 Dear Drebit Post for the Month of November

November is over and the Holiday season is in full swing. But even though we are busy practicing our caroling and searching for the best online bargains, we still have time to share the latest in business and financial news.

From filling you in about some of the topics we have covered in our weekly podcast to providing you with information and updates about unclaimed funds in Ohio and the Affordable Care Act – we were providing you with posts designed to help protect your finances, your identity and so much more.

Take a look to find out what our top 5 blog posts were in November and read up on anything you may have missed.

  1. How Do I Avoid Obamacare Penalties? The Affordable Care Act (ACA) has put a lot of stress on business owners over the last couple years, and 2016 will be no exception. However, if you look closely, you might be able to uncover areas of opportunity. There are three points all business owners should know to avoid penalties, read on to find out what they are.
  2. WARNING: Tis The Season To Practice Safe Online Shopping Habits — While it may be the most wonderful time of the year, cyber criminals are looking for ways to stuff their own stockings – at your expense. The holiday season is also a busy time of the year for scammers because, in general, more money is being spent and more people are clicking through cyberspace for the best deals and tracking their purchases. KnowBe4 recently published a blog about the top five scams shoppers should be on the lookout for, and we wanted to pass these on to our readers. Consider the following information to be an early gift from us to you, and hopefully your bank account can welcome the New Year unscathed.
  3. File and Suspend Strategy Suspended Deciding when to claim your Social Security benefits is often one of the most significant financial decisions older Americans must make today because, for many, Social Security benefits make up a substantial portion of their retirement income. Unfortunately, Congress recently passed legislation that will put an end to two popular strategies being used to maximize benefits married couples receive in their golden years.
  4. Do You Need to Send an Annual Notice to Your 401k Participants?As we begin the last quarter of the year, if your company sponsors a calendar year 401k plan, don’t forget about participant notice requirements.  They must be furnished by December 1 and may impact the operation or qualification of your plan.  Here is a checklist that may be helpful, but check with us if you are not certain which of these requirements apply to your plan.
  5. New Payment Option Available To Ohio Pass Through Entities Do you currently enjoy the benefits associated with owning a pass through entity (PTE) in Ohio, including better tax treatment and limited liability protection? Well, earlier this month the Department of Taxation announced another little perk – online payments! According to the release, the Treasurer of Ohio is now accepting tax payments per its Electronic Funds Transfer (EFT) program on its website.

We hope you enjoy the top five posts from November. We are always updating this page, so be sure to subscribe to Dear Drebit – or you can subscribe to our bi-weekly electronic newsletter – and never miss the critical information we provide to readers. You are also welcome to ask us a specific question about, well … just about anything finance or business related and one of our subject matter experts will provide you with a response. Just scroll up to the top of the page and fill out the form on the top, right corner.

Finally, don’t forget, you that you can always email Rea & Associates to have an in depth conversation about your existing personal or professional challenges. Our CPAs and business advisors are always happy to speak with you.

Share Button

Cyber Crime: It Can Happen To You

Tuesday, December 1st, 2015

Phishing Scam Targets Tax Preparers To Get To Taxpayers

IRS Phishing Scams - Ohio CPA Firm

One thing you can do to help protect yourself from cyber criminals is to make sure your address bar reads “https” and NOT like the one pictured above. Read on for additional tips.

Fraudsters don’t take holidays. In fact, they tend to be more active this time of year because they believe we are more likely to let our guards down. Instead, I don’t intend on falling for any of their traps, and I encourage you to do the same.

It’s A Trap

We recently published a blog post with tips to help online shoppers protect themselves against some of the more common tactics used by cyber criminals. From click bait to phishing emails, every link, sponsored post and flashing banner ad is a potential threat and we encourage you to protect yourself at all costs.

For example, you likely receive regular electronic correspondence from companies, organizations, groups and other reputable groups. In fact, you probably willingly provided them with your email address. You may even trust these contacts so much that you never thinking twice about whether their email is valid, and that’s what criminals are counting on. Nobody is immune.

Read Also: Who Is That Email Really From?

A current scam finding its way into inboxes across the country is targeting tax preparers. The email, which is supposedly being sent by the IRS, looks legit and includes the agency’s letterhead, logo and copyright language, among other information designed to add credibility to the piece. But there’s a problem – this email is not official IRS correspondence. Instead, it’s being sent by cyber criminals who are looking to capture usernames and passwords to gain access to taxpayers’ sensitive data.

We’re Not Falling For It

The American Institute of CPAs reached out to the IRS to verify whether the email in question is, indeed, a phishing scam. The government agency confirmed that the email was a scam and were quick to advise recipients to delete the message immediately.

This is just one example of a phishing scam in action. Emails like these are distributed every day and, oftentimes, they come from trusted businesses, organizations or people. As cyber threats continue to be rampant in our society, we must never allow ourselves to become complacent.

What You Can Do

Here are some tips to help keep you safe.

  1. Do It Yourself – Never click on hyperlinks found within the body text of the email – especially if you received the message from an unknown sender. If you do want to check the validity of an offer or content, manually type the URL into your web browser. Same results, less risk.
  2. ‘S’ For Safety – If confidential information is being traded, take a look at your address bar to make sure it reads “https” rather than the standard “http” to be sure the web page you are visiting is, indeed, secure.
  3. If It Pops, Run – Sometimes, the best and easiest strategy you can take to protect yourself from scammers is to configure your computer’s settings and buy and install the proper tools. We recommend disabling all popups, keeping an updated antivirus, use anti-spam and anti-spy software and install and maintain a firewall. Cyber criminals are always looking for ways to get around these measures, but they still provide you with a great first defense.
  4. Watch Your Back With A Backup – We keep a lot of irreplaceable items on our computers and, to many, the thought of permanently losing their data, photos and other documents is terrifying. One way to take the power away from the scammers is to create and maintain a backup of your data – especially when considering the very real threat of ransomware. That way, if something were to happen, you wouldn’t lose these vital items.
  5. Education Is Power – These criminals are slick and they are always finding new ways to take what belongs to you. So, one of the absolute best ways to guard against an attack is to educate yourself on current cybercrimes, identity theft trends and tactics being used by fraudsters.

By Lesley Mast, CPA (Wooster Office)

Want to know more about what other threats are out there? Check out these articles:

Malware Threat Spreads To Smart Phones

Fraudulent Credit Card Transactions Will Become Merchant’s Problem On Oct. 1

How Much Is Your Data Worth To Criminals?

Share Button

Found: Your Unclaimed Funds

Monday, November 30th, 2015

Ohio Reports $2.8B In Unclaimed Funds

Unclaimed Funds - Ohio CPA firmBusinesses are required to report unclaimed funds to the state of Ohio every year. Oftentimes, these unclaimed funds could be in the form of uncashed checks, rent or utility deposits that were never deposited or savings accounts that may have been forgotten, for example.

Read Also: Is There A More Customer-Friendly OUF-8 Notice?

Businesses are responsible for notifying account holders of their unclaimed funds by using the official Notice of Unclaimed Funds form (also known as the OUF-8), though it’s not uncommon for these notices to fall through the cracks.

In 2015, Ohio is reporting that there is $2.3 billion in unclaimed funds to be collected in 2015. So far this year, Ohioans have received $34.4 million with an average claim of $2,100. In 2015, Ohio citizens claimed about $76 million in unclaimed funds.

Not sure if you have a forgotten checking account? Or was there a deposit that never made it to the bank? Check to see if you can make a claim for some of these unclaimed dollars, visit the Department of Commerce website or call the state agency.

By Joseph Popp, JD, LLM (Dublin office)

Want to learn more about unclaimed funds? Check out these posts:

Free Money May Be Waiting For You!

What Do I Need To Know About Unclaimed Property in Ohio?

Dear Drebit: Is There A More Customer-Friendly OUF-8 Notice?

Share Button

File and Suspend Strategy Suspended

Wednesday, November 18th, 2015
File Suspend Strategy - Ohio CPA Firm

President Barack Obama signed legislation on Nov. 2 to put an end to the file and suspend strategy. But, that doesn’t necessarily mean it’s too late to act. There is a six-month window of opportunity, as long as both spouses were born on or before April 30, 1950. Keep in mind that you are up against a May 1, 2016, deadline.

Deciding when to claim your Social Security benefits is often one of the most significant financial decisions older Americans must make today because, for many, Social Security benefits make up a substantial portion of their retirement income. Unfortunately, Congress recently passed legislation that will put an end to two popular strategies being used to maximize benefits married couples receive in their golden years.

Read Also: Retirement Is Knocking … Are You Ready To Answer The Door?

The strategies that are scheduled to be phased out are commonly known as “File and Suspend” and the Restricted Application for Spousal Benefits. These strategies have made it possible for couples to delay laying claim to their individual benefits based on their earnings while still claiming a spousal benefit based on the other’s earnings – as long as both are 66 or older.

How Does File And Suspend Work?

To receive the spousal benefit, one individual would file for their Social Security benefits – then immediately suspend them. The other spouse would then file a restricted application to collect only the spousal benefit rather than the benefit they earned as an individual, even if their individual would have been higher. By employing this strategy, both could increase their earned benefits by taking advantage of the option to delay retirement credits, which would increase their earned benefit by up to 8 percent for each year the benefit is delayed until the individual reaches 70 years of age.

Is It Too Late To Take Advantage Of This Strategy?

President Barack Obama signed legislation on Nov. 2 to put an end to the file and suspend strategy. But, that doesn’t necessarily mean it’s too late to act. There is a six-month window of opportunity, as long as both spouses were born on or before April 30, 1950. Keep in mind that you are up against a May 1, 2016, deadline.

What About The Couples Who Are Already Receiving Benefits?

Fortunately, the couples already using these strategies will be grandfathered in under the new law and will not be asked to pay back any of the benefits they have received to date. Furthermore, they will continue to receive the benefits they have already been granted. The new law will not impact their current Social Security income, which is why it’s so important for eligible couples to take advantage of this 6-month window.

What Happens After The 6-Month Window Closes?

Moving forward, under the new law, individuals will still have the ability to suspend their benefits, but the Social Security Administration will not allow spousal or dependent child benefits based on the earnings of someone who has suspended their own benefits. In other words, to claim a spousal benefit, the earned benefits have to be paid out as well.

When filing for retirement benefits (other than with a restricted application), spouses will effectively claim their earned benefit and their spousal benefit. They will then receive the greater amount.

Fortunately, there are still opportunities to maximize your Social Security benefits. A financial advisor can you help navigate the terrain. There are also free tools available to help you find out how much you can expect to collect from Social Security when you finally decide to claim the benefit. The Social Security calculator is located here. You can also visit the Social Security website to view your Social Security Account Statement. To discover more retirement strategies, check out one of the articles below or email Rea & Associates and ask to speak with a retirement planning expert.

By David Shallenberger, CPA (Wooster office)

Check out these articles to learn more about the importance of planning for your retirement:

Planning For Uncertainty In Retirement

Five Financial Considerations For Every Age Group

How Can I Make The Most Of My Retirement?

Share Button

WARNING: Tis The Season To Practice Safe Online Shopping Habits

Tuesday, November 17th, 2015
Cyber Security - Ohio CPA Firm

Keep your online Holiday shopping secure with these five tips from KnowBe4.

While it may be the most wonderful time of the year, cyber criminals are looking for ways to stuff their own stockings – at your expense. The holiday season is also a busy time of the year for scammers because, in general, more money is being spent and more people are clicking through cyberspace for the best deals and tracking their purchases. KnowBe4 recently published a blog about the top five scams shoppers should be on the lookout for, and I wanted to pass these on to our readers. Consider the following information to be an early gift from me to you, and hopefully your bank account can welcome the New Year unscathed.

Read Also: Malware Threat Spreads To Smart Phones

1. Post-Thanksgiving Madness (otherwise known as Black Friday and Cyber Monday)

Thanksgiving is just around the corner, which means shoppers are already planning their early-morning shopping strategies. Sure there are great deals up for grabs, but there are also scammers looking forward to feeding on the hype in the hopes that you will let your guard down. Believe it or not, it can be pretty easy to mistakenly fall for those offers that appear to be too good to be true simply because we have become conditioned to believe that these deals are part of the overall allure. Tip: Before completing the transaction, visit the retailer’s actual website to make sure the deal is valid. 

2. Don’t Miss This Deal – Your Facebook Friend Didn’t

Just because one of your friends shared a coupon or voucher on Facebook or another social media site, doesn’t mean it’s legit. In fact, hacked social media accounts are pretty common. Scammers like this approach because they know that you are more willing to take the bait if the scam comes from somebody you trust. If one of your friends is guilty of passing along some of these not-so-helpful posts, give them a call or send them a text to find out more. Chances are, you will be the one helping them out by letting them know that their account has been compromised. 

3. What Do You Mean ‘There’s A Problem’?! 

You’ve shopped, dropped and paid for two-day shipping and it looks like you will have your gifts in time for the next family gathering. But then your inbox gets hit with an urgent message from UPS or FedEx notifying you that there may be a problem with the delivery of your package. Fortunately, the email includes a link for you to click on to get the issue resolved. STOP! This is a common phishing scam. Scammers will often use this tactic in the hopes that you will click on the link. Before you know it, your computer has been infected with a virus … or worse – ransomware.

4. Click Here For A Refund 

Similar to the UPS/FedEx scam identified above, this tactic is another attempt to get the unsuspecting consumer to click on an infected link. In this scenario, you might receive an email from a major online retailer – Amazon, eBay, etc. – with the message that there’s a “wrong transaction,” which requires you to click on a link to secure your refund. Instead of a refund, when you click on the link you will receive the gift of a security breech instead. Clicking on these links simply opens the door for scammers to access to your personal information, which will then be sold to the highest bidder and used against you later.  

5. Use The Force Against Phishing Scams 

Wouldn’t it be nice to win tickets to see Star Wars: The Force Awakens when it is released on Dec. 18? Sure, but given what you know now, would you be willing to take the risk and click on the link in your email to find out if the offer is real? Scammers use a variety of tactics to get you to make a mistake. This scam, for example, is another way popular culture is being used against unsuspecting victims. 

Remember, whether it’s a deal, contest, sale, or any other type of offer, if it looks unbelievable or questionable (even if it appears to have been sent from a trusted source), don’t click on the link or open an attachment. If you have doubt, delete! KnowBe4 also offers readers two other great tips to keep your private information and your bank account safe 365 days a year:

  1. Never use a debit card online. Cyber criminals can (and will) wipe out your bank account in seconds once they gain access. You can protect yourself by using a credit card.
  2. Never use your credit card to shop when your computer is connected to an insecure public Wi-Fi. All online shopping should always be done on over a secure, private internet connection.

By Steve Roth, IT Director (New Philadelphia office)

Want to learn more ways to keep your computer and personal information safe? Check out these articles:

Who Is That Email Really From?

Who’s Phishing Your Data Today?

How Much Is Your Data Worth To Criminals?

Share Button

You Can Still Have The Final Say After Death

Friday, October 23rd, 2015
Estate Planning - Ohio CPA Firm

It doesn’t matter if you have a lot of assets to pass on or very few, estate planning is one of the best things you can do for yourself and for those you love.

Life is full of enjoyable experiences. Spending time with family and friends, hiking through the woods, spending the afternoon on the lake, immersing yourself in a hobby – these are the moments we live for. What if you could give yourself the opportunity to make those moments more enjoyable? Would you take that opportunity?

Click To Listen To Episode 6 of Unsuitable on Rea Radio: The Grim Reaper Is Coming … And He Wants Your Money

Every time you avoid the conversation about estate planning you miss out on a chance to make this period of your life even more enjoyable – for you, and for your loved ones. Once you have made your plans with regard to what you want to happen after your death, those thoughts are no longer in the back of your mind. They are decided and you can truly enjoy the moment with your friends and family.

Three Things Everybody Should Know About Estate Planning

  1. Estate planning is for everybody. Estate planning isn’t just dependent on your assets; it’s about identifying what you want to happen after you pass away. Who do you want to take care of your children, for example, and do you want that person to be financially responsible for them as well – they don’t necessarily have to be the same people. When you take control of your estate planning, you are effectively helping to ease the burden that is already felt by your loved ones. Not only will you have already made the difficult decisions, but you can do so in a way that provides additional benefits for your heirs while securing your legacy.
  2. If you have an IRA, don’t forget to name your contingent beneficiary.  It’s common to have an IRA through your employer, but oftentimes naming the IRA’s contingent beneficiary is forgotten. Usually it’s your spouse, but if your spouse has already passed away, you need to make sure to name a new contingent beneficiary. This is just one simple way to plan ahead, but it’s frequently overlooked.
  3. Probate Court isn’t always a bad thing. You hear people say things like: “You want to avoid probate at all costs.” But that’s not necessarily the case. For example, imagine that you’ve made plans to have all your assets go directly to your three children – avoiding the probate process altogether. When it comes time to pay for your funeral, you would hope that your three children would split the cost three ways without much ado. But, without Probate Court to mediate the situation, one child could decide that they don’t want to pay their portion, which would leave the other two children with the bill. When you bring probate into the equation, you help ensure that there is enough money available to cover these necessary funeral expenses.

Find Time To Enjoy More

It doesn’t matter if you have a lot of assets to pass on or very few, estate planning is one of the best things you can do for yourself and for those you love. The sooner you start planning yours, the sooner you can get back to enjoying the moments that truly make life worth living.

By Dave McCarthy, CPA, CSEP (Medina office)

Dave McCarthy Discusses Estate Planning during Unsuitable on Rea RadioLearn more about the importance of estate planning. Listen to “The Grim Reaper Is Coming … And He Wants Your Money” podcast on Unsuitable on Rea Radio at www.reacpa.com/podcast or on iTunes or SoundCloud.

Share Button

Debt vs. Taxes: Should You Pay Off Your Loan

Friday, October 9th, 2015
Loan Repayment - Ohio CPA Firm

Without the tax deduction, you will pay a little more in income taxes but you will be left with more money in your bank account at the end of the day.

Have you ever heard someone say they couldn’t afford to pay off their loan because they would lose the interest deduction on their tax return?

Although it’s true that the taxpayer will be able to deduct their loan interest at tax time, there’s a lot more to consider – read on to learn more about the tax treatment of loans and interest to identify a repayment strategy that works best for you.

Read Also: Don’t Let Tax Incentives Determine How You Donate

It Is Worth It To Be In Debt?

Let’s assume that you are in the 25 percent tax bracket, which means that for every dollar you pay the bank in interest, the government will give you 25 cents back in tax savings. BUT – you have to remember that you are still out of pocket 75 cents of every dollar you pay the bank in interest. From an overall cash flow standpoint, that doesn’t really sound like a winning strategy to me.

Even though it would be nice to have a tax break to look forward to in the spring, you will ultimately end up paying more over the duration of your repayment period if you choose not to pay your loan off. That being said, if you have the funds available to pay off the principal loan balance you will save yourself the cost of the interest you are being charged by the bank.

Without the tax deduction, you will pay a little more in income taxes but you will be left with more money in your bank account at the end of the day.

Possible Reasons to Hold On To Your Loan

  • Investment Opportunities

Let’s say your loan balance is $50,000. If you have $50,000 of excess funds available to pay off your loan, you may also want to consider what your investment options are if you didn’t pay that loan off. Could you earn a rate of return greater than the interest rate you are paying on your loan? If so, then you may be better off keeping the loan and investing your excess funds.

  • Liquidity

Another consideration is the liquidity. You may have the funds to pay off the loan but you may want to keep a reserve of funds for an emergency or unknown need that may arise. Everyone has their own comfort level when it comes to maintaining an excess supply of cash reserves and your decision may vary whether you are holding on to a home mortgage loan or a business loan. As a business owner, for example, you might find it to be more beneficial to keep the borrowed money readily available to cover any fluctuations pertaining to your company’s equipment or inventory needs. Or you may want to keep a reserve of funds to get through your slow season.

Depending on where you are with your business or personal finances, you’ll want to consider various factors when deciding if you should pay off your mortgage or business loan. If you are only looking at the tax savings, then paying off the loan is likely your best option. However, it may also be important to consider other factors such as alternative investment options and liquidity. If you have questions about paying off your loan, email your Rea advisor.

By Mark Fearon, CPA (New Philadelphia office)

Are you looking for more tips and tax breaks to maintain your financial security? Check out these articles for more tips and advice.

Become A Brank Reconciliation Warrior

Does Your Vacation Home Provide Tax Relief?

The Birth Of The Taxpayer’s Estate

Share Button

Stop The Family Drama With A Buy-Sell Agreement

Thursday, October 8th, 2015
Take control of your future with a buy-sell agreement - Unsuitable on Rea Radio

You don’t know what the future holds, but if you don’t take steps to prepare for the unknown you are leaving your business and your family vulnerable. Click here to listen to How To Ruin Thanksgiving Dinner on Unsuitable on Rea Radio, a new finance and business management podcast.

It seems like when the holiday season comes around everybody does their best to put their best foot forward and to portray the image of “the flawless family.” From the turkey dinner on Thanksgiving, to the Christmas cards featuring happy, loving families – we do all we can just to make sure everything is … perfect.

Listen to the podcast: How To Ruin Thanksgiving Dinner

The holiday season is also notorious for other less-than-perfect qualities, such as family fights, holiday shopping stress and, ultimately, increased depression and anxiety.

Now imagine you are battling the normal holiday stressors while trying to manage a family business. And what if your business is in crisis mode and your life, the future of your family members and the sustainability of your company hangs in the balance?

When you own a business with family or friends you already run the risk of business matters spilling over into your personal affairs. But when you haven’t invested the time and resources needed to plan ahead, you are leaving your business and your family vulnerable. Take control of the future of your business and the general well-being of your family all year long by knowing the true value of your business and investing in a proper buy-sell agreement.

Click here to read the full article.

By Tim McDaniel, CPA/ABV, ASA, CBA (Dublin office)

Business Valuations - Ohio CPA firmLearn more about the importance of securing a custom business valuation and buy-sell agreement. Listen to the How To Ruin Thanksgiving Dinner” podcast on Unsuitable on Rea Radio at www.reacpa.com/podcast or on iTunes or SoundCloud.

Share Button

Why would I want to listen to a podcast from an accounting firm?

Wednesday, October 7th, 2015
Unsuitable Podcast - Ohio CPA Firm

Mark Van Benschoten (left) talks with Doug Feller, a principal and financial advisor with Investment Partners, talks about wealth enhancement and investment tactics for an upcoming episode of Unsuitable on Rea Radio, a new financial and business advisory podcast from Rea & Associates. Click here to learn more about Unsuitable on Rea Radio.

I know what you’re thinking – listening to a podcast from an accounting firm is probably about as entertaining and insightful as watching paint dry. But Unsuitable on Rea Radio isn’t your typical accounting podcast, and here’s why.

Real, Simple Solutions

Who doesn’t like a good story? What about one that leaves you with greater insight into the financial wellness of your own company? And if you had a better idea of how other successful entrepreneurs manage their wealth, wouldn’t you try to follow their lead?

The professionals at Rea have seen a lot over the last several decades and they are willing to open the curtain just enough to provide you with the information to forge your own success. And on Unsuitable, they do just that.

An Effective Kick In The Pants

Unsuitable offers a little something for everybody and I am confident that this is a show that will not only help provide you with more clarity, but will motivate you to take the next step as a professional and as a business leader.

Look at what has already been discussed in the first four episodes:

And this is just the beginning. Look for episodes highlighting investment strategies, Affordable Care Act compliance and retirement preparedness – just to name a few.

Accountants Like To Laugh Too

This may come as a surprise to many since those in the accounting profession tend to be thought of as dry, stuffy, number-crunching fanatics, but that’s just not true – well, most of the time. The Rea team consists of some pretty humorous, outgoing folks and I think that the diverse sense of humor of our team shines through. Mark Van Benschoten, the host of the show, helps a lot, of course. He does an excellent job addressing each guest and makes them feel comfortable … then the show gets really good.

Just The Right Length

Our firm has 11 offices throughout Ohio, which means I do a lot of driving. When I’m on the road I like to listen to podcasts – and there are a lot of them out there! What I really like about Unsuitable, is that it’s long enough to be really informative and wraps up nicely before it reaches the point where I am wishing it would end. In fact, when it does end I find myself wanting to start the next one. Mark and his guests get right to the point of the show, provide examples and offer hard-hitting advice in a concise, enjoyable format – all while having a great time and avoiding stuffy accounting jargon.

Go to www.reacpa.com/podcast now and start listening or subscribe to Unsuitable on Rea Radio on iTunes or SoundCloud. I also want to encourage you to use #ReaRadio to join the conversation on Twitter and Facebook.

By Lee Beall, CPA (Dublin office)

Click here and start listening to Unsuitable on Rea Radio now!

 

Share Button

Don’t Get Blown Away By A Cash Windfall

Monday, September 28th, 2015

4 Tips for Managing Sudden Wealth

Manage Sudden Wealth -  Ohio CPA Firm

Before you make a move with your money, take a little time to think about you want to do with your cash and consider getting some advice from a financial professional and review these four tips for managing sudden wealth.

Congratulations – you just won the lottery! Or, in a more realistic scenario, a significant amount of money has landed in your lap through an inheritance or the sale of property.

Now what?

As many who have been in your shoes will attest, it’s important to pause, take a step back, and evaluate your options before making any big financial decisions. Sure, that brand new sports car would look
great in your driveway, but will you regret spending the money down the road? Significant money creates many opportunities. Some? Wonderful. Others? Money pits.

Read Also: Considering Gifting Your Family Owned Business?

Before you make a move with your money, think it through and talk to a pro. The truth is, there’s no right answer, as no two financial situations are exactly alike. But these four steps will help you decide what’s best for you.

  1. SLOW DOWN. It’s easy to get caught up in the excitement of new wealth, and the tailspin that can ensue. But don’t allow yourself to lose your footing and don’t be tempted to make excuses for reckless spending.

    Avoid making any significant or impulsive purchases for at least a month or two. Take a step back from the moment and think long-term … what sort of financial goals do you have for the future? How do you really want to spend this money?

    Begin thinking about this and write down your thoughts. Writing down goals and thoughts is a proven method of helping you achieve your goals. It’s also helpful to have these things in writing when you meet with your advisors.

  2. FAIL FORWARD. Think about some of your past financial blunders. We’ve all made mistakes – but they’re only truly mistakes if you don’t learn something and prevent them from happening again. You know yourself better than anyone, and you owe yourself this honest examination. Use your missteps to your advantage.
  3. DO YOUR HOMEWORK. If your decisions affect others, talk with them before acting. If someone has an investment idea, consider whether it’s too good to be true.

    If you are approached to help a charitable cause, ask yourself if it’s something you’re passionate about. And make sure you have an understanding of the organization. You should also find out if they will publicize your contribution.

  4. CONSULT WITH A PRO. Navigating new wealth is complicated, and it’s imperative you find experts to help guide you through the process.

    Talk with a few people you trust and respect. If an advisor’s name is mentioned more than once, it’s probably someone you should talk to. If you already have an advisor, consider whether or not they are up to the task at hand.

    You’ll want to work with a CPA, attorney and investment advisor. Be prepared to invest some time meeting with each advisor in an effort to decide who to hire. Each one will play a different, but valuable role.

    Depending on your situation, you could lose a chunk of your newfound wealth to income taxes, so be sure to talk to a CPA with a specialty in income tax. You will want to know what you owe and when you owe it. More importantly, you’ll want to learn if you can avoid, reduce or defer any of the tax.

Finally, before selecting the advisors you want to work with be sure you understand all of the fees involved with their services up-front. Be prepared to get what you pay for.

 

Whatever the reason for your windfall, make sure you take the time to respect it – and your financial future. Email Rea & Associates to learn more about managing sudden wealth.

By Ryan Dumermuth, CPA, CFP (Mentor office)

Want to learn more about managing your sudden wealth? You may like these articles:

Can Your Charity Profit From Instant Bingo?
How Can I Make The Most Of My Retirement?
Estate And Gift Tax Exemptions: New Wealth Transfer Rules

Share Button

Like Losing Your Wallet – Only Worse

Friday, July 31st, 2015
Retirement Plan Returns- Ohio CPA Firm

Typically, owners of businesses and their spouses who fail to file their annual retirement plan returns are in full-scale crisis mode – and rightfully so, since missing this deadline results in a penalty that’s about the size of a small fortune.

For most of us, misplacing our keys, losing sight of our shoes and occasionally forgetting to pay the phone bill on time is not a catastrophic phenomenon. It happens; and most likely we will freak out for a minute, find what we were looking for and move on – only to repeat our dysfunctional routine countless times over the course of a lifetime. Forgetting to file your retirement plan returns on the other hand … well, let’s just say that’s typically not a stress-free event.

Read Also: Do You Know What Your Retirement Plan Is Costing You?

Typically, owners of businesses and their spouses who fail to file their annual retirement plan returns (Form 5500-EZ) are in full-scale crisis mode – and rightfully so, since missing this deadline results in a penalty that’s about the size of a small fortune. To be more precise, in years past, those who failed to meet their filing obligation could face a penalty totaling up to $15,000 per return. Fortunately, the IRS recently announced that instead of facing such an extreme late fee, eligible business owners can take advantage of a “low-cost penalty relief program.”

How Much Would You Pay?

The relief initiative, which started as a one-year pilot program in 2014, was tremendously successful, resulting in the collection of about 12,000 late returns. Because of this success, the program secured it’s permanency in May of this year. According to the news release, the program allows eligible business owners and their spouses to file late returns and only pay a $500 penalty for each return submitted with a maximum of $1,500 per plan. Because the IRS caps the maximum penalty at $1,500, applicants are encouraged to include multiple late returns in a single submission.

Eligibility

The IRS says that businesses with plans that cover the owner or the business’s partners (depending on how the business is set up) and their spouses are eligible to take advantage of this low-cost plan. Complete information about the program can be found by clicking here.

Learn More

Remember, your return must be filed annually no later than the end of the seventh month following the close of your plan year. So, for example, if your plan is governed by the calendar-year, as most are, your 2014 return was due today (Friday, July 31, 2015). Did you fail to file your small business’s annual retirement plan returns? Would you like to find out if you qualify for this program? Email a retirement plan expert at Rea & Associates and take control of your IRS debt now.

By Andrea McLane, QKA (Dublin office)

Want to read more about the importance of Retirement Plan Compliance?
Check out these articles:

401(k) Loans and Keeping Your Plan In Compliance
Retirement Roulette
The ‘Van Halen Philosophy’ of Retirement Plan Compliance

Share Button

A Fair Assessment?

Tuesday, July 21st, 2015
Back taxes - Ohio CPA Firm

When a taxpayer files a false or fraudulent return, the taxpayer waves their right to statute of limitations protection. And if a taxpayer fails to file their income tax return, the IRS is allowed to undertake collection proceedings at any time and without assessment.

Bob recently received a copy of his account transcripts from the IRS. Upon reviewing the paperwork, he noticed that the government agency made note of a “date of assessment,” which prompted him to wonder how the date of assessment was determined? Moreover, he wanted to know what role one’s date of assessment plays with regard to the time frame the government has to collect back taxes.

If you ever find yourself in a situation similar to Bob’s, with questions about your tax history, in addition to speaking with your tax advisor, you can request that a copy of your tax return transcript and tax account transcript be mailed to you. Fill out the online form here, but make sure you are making the request for the current tax year’s transcript or transcripts for three years prior.

If you are requesting transcripts for older tax years or you need a wage and income transcript or verification of non-filing letter, you’ll need to complete Form 4506-T and send it to the address listed on the form’s instructions. Due to a recent security breach, your transcripts will not be sent electronically.

How Far Back Can The IRS Go To Collect Back Taxes?

If the IRS is attempting to collect past due taxes, the agency will assign a date of assessment to your IRS account transcript.

Read Also: IRS Says You Owe More? Don’t Write That Check Yet!

Like many of the invoices you see every day, every item on your transcript will be assigned a code. Your date of assessment is no different. To identify the date of assessment on your account transcript for the tax year in question, look for Transaction Code “150.”

As a general rule, the IRS must assess tax, or file suit against the taxpayer to collect the back taxes, within three years after the original tax return was filed. This three-year period of limitation on assessments also applies to penalties. In fact, this rule continues to apply regardless of whether the return was filed on time or not. In general, the statute of limitations will almost always begin the day after the taxpayer files their income tax return.

The Rules May Not Apply

It seems as though there are always exceptions to the rules we work so hard to uphold – taxes are not excluded from this trend. For instance, when a taxpayer files a false or fraudulent return, the taxpayer waves their right to statute of limitations protection. And if a taxpayer fails to file their income tax return, the IRS is allowed to undertake collection proceedings at any time and without assessment.

Parting Shots

While the statute of limitations for assessment is three years after your return has been filed, the IRS still has 10 years to actually collect the assessed tax. Below is an example of the assessment process in action:

  • April 15, 2015 – you filed your 2014 tax return with the IRS
  • March 31, 2018 – the IRS assesses additional taxes on your 2014 tax return
  • The IRS has until March 31, 2028, to collect the additional tax or file suit against you.

While this information may help to shine some light on IRS assessments and statute of limitations rules, every situation is unique and hinges on several specific variables. Your tax advisor can help you sort through codes and details to get you back on the right track. Email Rea & Associates to learn more.

By Christopher Axene, CPA (Dublin office)

Check out these articles to learn more about your responsibilities as a taxpayer:

How Far Back Can The IRS Go For Tax Auditing?

The Truth About Tax Extensions

If Something Happens To me, What Will Happen With My Financial Matters?

Share Button

Should I still be concerned about identity theft and tax fraud?

Thursday, July 9th, 2015

This article was published in the July 2015 issue of Columbus Business First – Ask The Expert.

Identity theft and tax fraud are problems that show no signs of stopping. This year, in an attempt to provide an added layer of protection, taxpayers in Ohio had the opportunity to get up close and personal with the Ohio Department of Taxation’s (ODT) newest fraud safety measure – the Identification Confirmation Quiz.

fraud_small

We hear about cases of fraud every week, but steps are being taken to slow it down and ultimately stop it.

While you may have heard your friends and family comment (perhaps unfavorably) about this added step, government officials have said that the quiz helped thwart countless attempts to steal refund checks from Ohio taxpayers this year. During the 2014 tax season, fraudsters pocketed more than $250 million worth of taxpayer refunds, prompting the need for additional safety measures. Due to its success, the ODT expects the quiz to become a mainstay of your tax prep routine.

But just because tax season is over, doesn’t mean you should let your guard down – quite the contrary. When it comes to protecting your identity, you must remain vigilant. Whether you are aware of it or not, criminals are still looking for ways to steal your personal identification information for a myriad of uses.

Do you know what to do if your ID is compromised? Visit www.reacpa.com and click on the “Tools” button in the top navigation bar. From there, you can read our compilation piece How to Recover from Identity Theft & Refund Fraud for more insight and information that can help you recover from identity theft and tax fraud.

Share Button

Could Your Company Be Ransomware’s Next Victim?

Wednesday, July 8th, 2015
Preempt A Crisis - Rea & Associates - Ohio CPA Firm

While there is no surefire way to prevent a Ransomware attack on your data, it’s wise to implement the following best practices to reduce the possibility of infection or reinfection.

The malware known as CryptoLocker or CryptoWall continues to be a major concern for individuals and companies alike. So much so, that the FBI saw fit to issue a warning just last month and help raise further awareness about the threat.

According to the FBI, this Ransomware continues to evolve, which helps it avoid user’s virus detection software applications – even if they are current. Since April 2014, reported the FBI, there have been 992 incidents of CryptoLocker reported. These occurrences have resulted in the loss of around $18 million.

Read Also: How Much Is Your Data Worth To Criminals?

The Threat Is Real

Ransomware is a computer infection that’s been programmed to encrypt all files of known file types on your local computer and your server’s shared drives. Once it takes hold, it’s all but impossible for you to regain access to the data that’s been infected. Once this happens, you have one of two choices. You can:

  1. Restore their machine by using backup media, or
  2. Accommodate the hacker’s demands and pay up.

As a direct result of my experience as an IT audit manager, I have been made aware of several situations in which businesses were left with no choice but to succumb to the demands of malicious cybercriminals carrying out Ransomware attacks. And while the companies I have worked with were finally able to obtain their assailant’s encryption key code to unencrypt and regain access to their data after the ransom was paid, others are not as lucky – after all, the FBI has reported $18 million worth of losses in just over a year. Furthermore, there are no guarantees that you won’t be targeted again in the future.

Preempt A Crisis

While there is no surefire way to prevent a Ransomware attack on your data, it’s wise to implement the following best practices to reduce the possibility of infection or reinfection.

  • Implement mandatory computer safety training for all employees and implement and test an IT Disaster Recovery Plan in place.
  • Always use reputable antivirus software and a firewall and be sure to keep both up to date.
  • Put your popup blockers to good use. Doing so will help remove the temptation to click on an ad that could infect your computer.
  • Limit access to company’s data by ensuring that only a few employees have access to certain folders and data. You can facilitate this type of action by conducting annual reviews of your company’s employee access rights.
  • Backup all company-owned content. Then if you do become infected, instead of paying the ransom, you can simply have the Ransomware wiped from your system and then reinstall your files once it’s safe again to do so.
  • Never click on suspicious emails or attachments, especially if they come from an email address you don’t recognize. And actively avoid websites that raise suspicion.

Shut Down The Attack

If you are surfing the Web and a popup ad or message appears to alert you that a Ransomware attack is in progress, disconnect from the Internet immediately. Breaking the connection between the hacker and your data could help stop the spread of additional infections or data losses. In addition to informing your company’s IT department about the threat or occurrence, be sure to file a complaint with your local law enforcement agency.

Email Rea & Associates to learn more about the importance of your company’s online security.

By Joe Welker, CISA (New Philadelphia office)

 

Related Articles

Beware Of The Small Business Wire Transfer Scam
Could A Cyber-Attack Cripple Your Business In 2015?
8 Tips For Crafting A Strong Password

Share Button

The Plight of the Snowbird

Friday, June 19th, 2015

It’s warm and muggy now, but once winter blankets the Buckeye State with record snowfall and subzero temperatures again, you will likely be kicking yourself for not having hightailed it to Florida after last year’s bitter cold snap. Sure, it’s easy to say that you would like to pack up and head for a warmer climate during a seemingly endless freeze, but once the icicles melt and the flowers bloom, you begin to remember why you’ve stayed around for so long in the first place. Maybe the fact that your family and friends still call Ohio home is enough to convince you to stay put. Or perhaps its memories of your own childhood that are keeping you tethered to the state. Either way, now that it’s summer – the need doesn’t seem so intense anymore … that is, unless you are considering taking advantage of possible tax savings.

Will Taxes Influence Your Decision To Fly South This Winter?

The Plight of the Snowbird - Rea & Associates - Ohio CPA Firm

Now that you have settled on whether or not you will be packing up and moving for tax and/or weather reasons, make sure you know what’s involved when it comes to changing your state of domicile.

What if I told you that the State of Ohio has made it a little easier for you to escape the winter chill, spend more time in the nation’s heartland during the seasons you love and save on your tax bill? Would you consider making the move then? If so, you’re in luck!

Read: How Can I Make The Most Of My Retirement?

Which State Do I Call Home?

For some, it’s relatively easy to buy and maintain several homes across state lines. The hard part comes when the Internal Revenue Service wants you to decide which home should be considered your primary residence based on how much time you spend in each state. These are the facts that will ultimately influence whether you pay taxes or not. If you are a snowbird who flocks back and forth between Ohio and Florida, for example, to avoid reporting your income to Ohio for tax purposes, it’s up to you to prove that you have spent no more than seven months (or fewer than 212 contact periods) in the Buckeye State. That compares to the 182 contact sessions (or six months) snowbirds were allowed to remain in Ohio under prior rules. The rules were changed in March.

How Do I Change My Residence For Tax Purposes?

Now that you have settled on whether or not you will be packing up and moving for tax and/or weather reasons, make sure you know what’s involved when it comes to changing your state of domicile. Some states, such as Florida, require basic documentation to establish your change of domicile. Therefore, you should make sure all your paperwork is in order, including your Declaration of Domicile. And while you are filing paper work to establish your new residence for tax purposes, keep in mind that some states, including Ohio, require documentation in order to relinquish your residency. Ohioans looking to relocate must complete and sign an Affidavit of Non-Ohio Residency/Domicile. This document helps establish your desire to establish nonresidency within the state. But keep in mind that there are there are other bright line tests the State of Ohio may look at to help determine whether you are actually domiciled in another state. For example, the State may look for information that indicates where you are registered to vote, which state issued your driver’s license, where your vehicles are titled and what address is listed on your tax return.

Email Rea & Associates to learn more about the tax benefits some snowbirds enjoy and whether migration is right for you.

By Trista Acker, CPA, CFP (Dublin office)

 

Related Articles

How To Avoid The Retirement Culture Shock
Save More For Retirement in 2015
Retirees Get Cranky Over Tax Returns

Share Button

Managing Wealth In A Volatile Industry

Thursday, June 4th, 2015
Navigate The Busts and Booms of Business - Rea & Associates - Ohio CPA Firm

Owning a business in a volatile industry can be a big gamble, but if you strategically manage your assets, your odds of success become much greater. Be prepared for outside factors that may force your business to go lean by preparing early and creating a solid, sustainable financial management strategy.

The oil & gas industry has long been known to experience regular cycles of booms and busts. One of the most recent examples occurred only a few months ago, when Organization of the Petroleum Exporting Countries (OPEC) made the decision to maintain its current level of production levels in an attempt to capture greater market share. This decision caused the price of oil to tank. By the time the dust settled, oil prices dipped 60 percent and the ripple effect had already begun to take a toll on companies throughout the industry.

Read: This Is An Intervention – Step Away From Your Business

This is just one example of how the market can change overnight, but this type of volatility is not exclusive to the oil & gas industry, which is why all business owners throughout all industries should consider taking the steps necessary to guard against a bust – even if you are still riding high on a boom.

3 Tips To Help You Navigate Your Industry’s Busts – And The Booms

  1. Take Good Care Of Your Assets – Successful navigation of a finicky industry depends on how well you manage your assets. For example, when times are good, take the necessary steps to manage your cash flow and consult with an advisor who can help you make wise, sustainable financial decisions. When it comes to investments made outside the volatility of your business, consider giving your blood pressure a break and make it a priority to first seek the preservation of your capital over your rate of return. Emphasizing capital preservation can better prepare you for those unexpected downturns.
  2. Live Frugally (Even When You Don’t Have To) – Don’t buy that new car unless you are absolutely sure that you will have the funds needed to cover the payments, and any other unexpected expenses, later on. Setting goals for your spending and saving habits, for example, can help keep your finances in line – helping you to keep your head above water when your business, or the industry, takes unexpected downturn. Instead of driving off the lot in that brand-new car, start by putting some money aside to make a nice down payment. Even though you may have to postpone the purchase for a few months or so, when you are finally able to put the money down you will also be able to significantly reduce your monthly payments – putting you in an even better long-term financial position.
  3. Choose To Play The Long Game – It may seem hard to diversify your business when so many others appear to be doing pretty good for themselves by chasing the quick rewards. But by operating your business and managing your personal finances more conservatively, you stand a better chance of securing long-term wealth – not to mention a comfortable retirement. In other words, when you diversify your assets, you are able to protect yourself and your business from a sudden and complete collapse.

Owning a business in a volatile industry can be a big gamble, but if you strategically manage your assets, your odds of success become much greater. Be prepared for outside factors that may force your business to go lean by preparing early and creating a solid, sustainable financial management strategy. Take a look at your current operations and consider what changes you can make today to help protect your business from a possible financial catastrophe tomorrow.

Email Rea & Associates to discover more ways to protect your business.

By David Shallenberger, CPA (Wooster office)

 

Related Articles

Don’t Shy Away From Business Debt
Investing In Your Business’s Immortality
Why It’s Important To Have A Good Banker As Part Of Your Business Advisory Team

Share Button

What’s That ‘New’ Charge On Your Amazon Bill?

Tuesday, June 2nd, 2015
Amazon Looks To Drone Delivery - Rea & Associates - Ohio CPA Firm

Amazon appears to be unaffected by the possible repercussions of adding sales tax to customer’s invoices as its focus seems to have shifted from a superior price point strategy to high efficiency and extra speedy service. According to reports, the online giant continues to move forward with initiatives that promise even speedier delivery – further cutting the time it takes for a product to hit the customer’s front porch after the order was placed.

If you aren’t already aware, Amazon is in the process of bringing three of its data centers and a distribution center to Ohio. And yes, the company’s decision to open up shop in the Buckeye State is expected to boost the state-wide economy and add about 1,000 jobs to the ranks. But what is generating the most excitement these days (at least throughout Ohio’s retail industry) is the company’s new responsibility to collect sales tax from our state’s shoppers.

Read: If You Buy Online You Might Owe Use Tax

Traditional retailers anticipate this move will effectively level the playing field, helping encourage the growth of the state’s locally-owned businesses. Amazon, however, appears to be unaffected by the possible repercussions of adding sales tax to customer’s invoices as its focus seems to have shifted from a superior price point strategy to high efficiency and extra speedy service. [SPOILER ALERT: Drone delivery appears to be imminent!] According to reports, the online giant continues to move forward with initiatives that promise even speedier delivery – further cutting the time it takes for a product to hit the customer’s front porch after the order was placed. The company is also exploring ways to keep the cost associated with such speed minimal – information from the US Patent and Trademark Office reveals the company’s desire to “dominate the skies.”

Ohio-Based Amazon Shoppers Begin Paying Sales Tax

Paying taxes on your purchased items is not a new phenomenon. In fact, you’re probably not too shocked to see the roughly 7 percent (based on your county) charge permanently affixed to the bottom portion your receipts whenever your purchase a variety of products from a local brick-and-mortar shop. Until June 1 though, Ohio residents didn’t see this charge when purchasing products from Amazon, simply because the online retailer wasn’t required to make those living in the Buckeye State pay these taxes.

In Ohio, only vendors with a physical presence in the state, such as a storefront, warehouse, factory or call center, must charge sales tax to in-state customers. Otherwise, it’s up to individual taxpayers to report and pay the taxes when filing their annual tax returns, which is a relatively uncommon practice.

“The Ohio Department of Taxation has estimated that Ohio will lose out on about $400 million in unpaid sales or use tax on unpaid sales or use tax on so-called remote sales this year,” reported The Columbus Dispatch. “More than 5 million Ohioans filed tax returns for 2012. Of those, a little more than 50,000 paid a total of $3 million in taxes due on Internet or mail-order purchases. Retail groups and analysts welcomed the news that Amazon will start collecting taxes.”

Ohio Taxpayers Still On The Hook For Other Purchases

It may seem like it’s too soon to start thinking about your 2015 tax return, it’s actually a great time to start collecting information you will need to complete your paperwork early next year. For example, while you won’t need to collect your Amazon receipts anymore, you may have to keep tabs of your Etsy habit (for example) to help make calculating your 2015 use tax as simple as possible.

Email Rea & Associates to learn more about use tax.

By Joe Popp, JD, LLM (Dublin office)

 

Related Articles

A Use Tax Audit Could Cost You Big
Do You Have Ohio Use Tax Exposure?
Is It Fair To Require Online Retailers To Collect And Remit State Sales Tax?

Share Button

Hackers Target IRS – 100,000 Taxpayer Accounts Breached

Wednesday, May 27th, 2015
Hackers Target IRS – 100,000 Taxpayer Accounts Breached  - Rea & Associates - Ohio CPA Firm

Reports state that cyber-criminals were able to gain access to taxpayer accounts by obtaining specific, personal information, which allowed them to navigate the Get Transcript authentication process. The IRS said, since February, there have been about 200,000 attempts to access taxpayer’s Get Transcript accounts from “questionable email domains – of which, about 100,000 were successful.

Just when you thought it was safe to let your guard down, cyber-criminals have blindsided us again. This time they’ve used the Internal Revenue Service’s “Get Transcript” application to gain access to approximately 100,000 taxpayer accounts.

Read: Could A Cyber-Attack Cripple Your Business In 2015?

The IRS released a statement Tuesday stating the government agency is “working aggressively to protect affected taxpayers and strengthen [their] protocols even further going forward,” after learning that hackers used “non-IRS sources” to access data, including Social Security information, dates of birth and street addresses associated with the accounts of nearly 100,000 taxpayers. The IRS said the security breach occurred when criminals gained access to its online Get Transcript application, which has since been shut down pending a full investigation by the Treasury Inspector General for Tax Administration.

According to the IRS, “the online application will remain disabled until the IRS makes modifications and further strengthens security for it.”

The data breach was limited to the Get Transcript application, said an IRS representative. The main IRS computer system that manages tax filing submissions was not affected and remains secure.

Reports state that the criminals were able to gain access to the accounts by obtaining information specific to the certain taxpayers, which allowed them to navigate the Get Transcript authentication process, which includes asking the user to answer several personal questions to confirm their identity. The IRS said, since February, there have been about 200,000 attempts to access taxpayer’s Get Transcript accounts from “questionable email domains – of which, about 100,000 were successful.

Expect to receive a letter in the mail if your account was one of the 200,000 accounts targeted. And if your account was one of those that were compromised, your letter will provide additional information, including specific instructions to access free credit monitoring services that will be provided by the IRS to ensure your data is not being used in other financially damaging ways. According to the IRS, the letters started going out this week.

Concerned about identity theft as a result of this breach? Click here to learn what to do if your identity is stolen or if your personal information is compromised.

If you are a business owner, do you have protocols in place to protect your business from a cybercriminal?Email Rea & Associates to learn how you can protect your business from a cyberattack. You can also get some useful tips and information in the related articles below.

By Lesley Mast, CPA (Wooster office)

 

Related Articles 

How Much Is Your Data Worth To Criminals?
When Scammers Demand That You Pay Up, IRS Says You Should Hang Up
8 Tips For Crafting A Strong Password
How Do You Protect Yourself From Identity Theft?

Share Button

School’s Out For Summer, But Tax Credits Are Still In

Tuesday, May 26th, 2015

Summer is an exciting time for families. It’s a time to get outside and have fun hanging out by the pool or to catch fireflies in a jar at the end of a long day. For many parents though, the summer holiday is overshadowed by the need to find affordable childcare during your work hours. The good news is that your opportunity to claim the Child and Dependent Care Tax Credit doesn’t end at the last day of school. In fact, you may be able to claim a variety of summertime childcare expenses when tax season rolls around again. Check out the list below to familiarize yourself with this credit.

Read: Can My Summer Day Care Expenses Earn A Tax Credit?

8 Tips To Help You Claim The Child Care Tax Credit

  1. Child care must have been provided so that you (and your spouse if filing jointly) can work or actively look for work. Your spouse must also meet this obligation during any month in which the child was a full-time student or was physically and/or mentally incapable of self-care.
  2. You must have earned income. Earned income includes earnings such as wages and self-employment. If you are married filing jointly, your spouse must also have earned income. There’s an exception to this rule for a spouse who is a full-time student or who is physically and/or mentally incapable of self-care.
  3. Care must have been provided for dependent(s) younger than 13 years old. Your spouse or another dependent qualifies if they lived with you for more than have the year and are physically and/or mentally incapable of self-care.
  4. Qualifying child care expenses include those that are used to secure enrollment at a daycare facility outside the home or at a day camp. Expenses for overnight camps or summer school tutoring do not qualify. NOTE: If you pay someone to come to your home to care for your child or children, you may be a household employer. For more information, see IRS Household Employer’s Tax Guide.
  5. If your employer provides dependent care benefits, special rules apply. See Form 2441, Child and Dependent Care Expenses.
  6. The credit is a percentage of the qualified expenses you pay for the care of a qualifying person and can be up to 35 percent of your expenses, depending on your income.
  7. You can claim up to $3,000 of your total unreimbursed expenses you pay in a year for one qualifying person or $6,000 for two or more qualifying persons.
  8. Keep your receipts and records to use when you file your 2015 tax return next year.  Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your return.

Email Rea & Associates to learn more about the Child and Dependent Care Tax Credit or other tax incentives you may qualify for.

By Denell Skelton, CPA (Coshocton office)

 

Related Articles

The Do’s And Don’ts Of Summertime Tax Prep
From Toddler To Teen And Beyond: Tax Breaks For Families
Three College Savings Account Tips You Can’t Afford To Ignore

Share Button

Investing In Your Business’s Immortality

Monday, May 11th, 2015
Business Teamwork - Rea & Associates - Ohio CPA Firm

Ensuring that you have the right team in place – from the ground floor to upper management – is a solid, common sense strategy for business owners who are looking to add short-term and long-term value to their business. Not only are customers and clients more likely to equate your team’s passion with quality, which helps secure new business and develop long-term relationships, but the strength and self-sufficiency of your team is a major incentive to investors.

Go ahead. Take pride in all that you’ve accomplished. Relive the moment you decided to go into business and reflect on your trials and triumphs. And as you reminisce, identify everyone who helped you achieve your vision – because chances are you didn’t get where you are by yourself.

Make no mistake. In business, the strength of your team directly impacts your company’s success and overall val­ue. Therefore, it’s never been more im­portant to ensure that your exit from the company doesn’t lead to a “going out of business” sale.

Read: This Is An Intervention – Step Away From Your Business

Your Company’s Longevity

As a business owner, it’s your responsibility to continually evaluate your busi­ness. Part of the evaluation process is ensuring that the right people are in the right place to help guide and grow your company – even when you’re not around.

Whether they move on or retire, eventually every person on your leadership team will leave, including you. You must decide what kind of impact this will have on your company when it happens.

One of the best strategies you can em­brace is to become obsolete. That’s not to say that your work is not important, it just means that your team, your business, does not depend on you for its survival.

Every time you recruit an employee, you have an opportunity to reinforce your company’s mission. Do your due diligence to make sure the people you hire are on board with the company’s vision. They will continue to set the tone after you leave, which is why the qualities you consider when hiring a candidate should go beyond their education and experi­ence. Anyone you hire must have the passion to succeed, the capacity to learn and a personality that helps them easily overcome complicated situations. From entry-level to leadership positions, your ability to maintain a strong team ensures the longevity of your business.

Is Your Team Valuable?

Ensuring that you have the right team in place – from the ground floor to up­per management – is a solid, common sense strategy for business owners who are looking to add short- and long-term value to their business. Not only are customers and clients more likely to equate your team’s passion with quality, which helps secure new business and develop long-term relationships, but the strength and self-sufficiency of your team is a major incentive to investors.

Email Rea & Associates to learn more.

By Don McIntosh, CPA, CGFM, CFE (New Philadelphia office) and Tim McDaniel, CPA/ABV, ASA, CBA (Dublin office)

 

Related Articles

When Should You Start Thinking About Succession Planning?

How Do You Choose A Business Exit Strategy?

How Do I Keep My Succession Plan On Course? 

Share Button

Retirement Plan Design: One Size Does Not Fit All

Monday, May 11th, 2015
Planning Ahead for Retirement Makes All The Difference - Rea & Associates - Ohio CPA Firm

When it comes to your retirement plan, planning ahead can mean the difference between sipping tropical drinks on a beach to taking on a part-time job at 75 to make ends meet. Is your retirement plan advisor working in your best interest?

Do your employees dream of spending their golden years on a sun-drenched beach, sipping tropical drinks from a coconut shell? Or do you think they’re looking forward to taking on a part-time job at age 70 to pay medical bills and their mortgage? Like you, they’re probably expecting an R&R-fueled retirement – but they need your help getting there.

Read Retirement Roulette

An employer-sponsored retirement plan is a great tool for business owners. Not only do retirement plans provide businesses with leverage when it comes to attracting and retaining a skilled workforce, employers that make contributions to their employee’s accounts are entitled to tax incentives – which gives you more control over your company’s cash flow.

From Business Strategy To Retirement Planning

Whether your company presently offers a retirement plan or is planning to beef up its benefits package, work with a retirement plan advisor who can review your options and identify the plan that best addresses your company’s unique challenges. You’ll need to:

  1. Identify The Primary Purpose Of Your Retirement Plan
    Will your retirement plan be used as a recruitment tool or as a tax shelter? While all plans accomplish a little of both, make sure your plan design meets your needs. For example, when a closely held business offers a retirement plan, its primary goal is to provide maximum retirement benefits and income tax deferral to the owners, while minimizing the cost of benefits to the employees. Incorporating a retirement plan into your existing benefit package is also an opportunity to diversify your assets away from the reach of creditors – making you less dependent on the value of your company to provide an income stream in retirement.
  2. Get To Know Your Team
    Does your company hire younger workers? Do you have an established workforce that will retire from your company? Do you have high turnover? What does your projected workforce growth look like? Your plan design should consider your demographic information – and promote the short- and long-term financial wellness of your employees and your business.
  3. Put Your Own Retirement Goals In Perspective
    Your employees aren’t the only ones looking at your employer-sponsored retirement plan as a dependable source of retirement income. You and other key employees will likely use the plan as well. That’s why, during the design phase, your advisor will take a look at the current and projected profitability of your company alongside the ratio of key employees and the company’s other employees.

When all is said and done, your plan design could be the thing that stands between your employees and a comfortable retirement – or it could be what lets them reap the benefits of all their years of hard work.

This is a great time of year to explore your options. Email Rea & Associates to learn more.

By Paul McEwan, CPA, MT, AIFA (New Philadelphia office)

 

Related Articles: 

Retirement Is Knocking … Are You Ready To Answer The Door?

What Are Ways You Can Ensure You’re Ready For Retirement? 

Will You Be Ready For Retirement? 

Share Button

Cash Continues To Flow From Ohio’s Shale Industry

Thursday, April 23rd, 2015
Companies Eye Mercer County For Fossil Fuel

Current news reports suggest that oil and gas companies will continue to invest in Ohio’s shale industry which could provide more opportunities for land owners.

For many of us, the future of Ohio’s shale industry has become a regular topic of conversation. And as a landowner in the state’s Marcellus and Utica shale regions, you’ve probably wondered what (if any) effect current events, such as the state budget and plunging energy prices, will have on your financial well-being. While nobody can predict the future, I’m optimistic we won’t see any major slowdowns over the next few years. Here are a few reasons why:

Severance Tax Sees The Cutting Room Floor

We recently learned that Gov. Kasich’s plan to increase the state’s severance tax on horizontal drilling to pay for the plan to cut income taxes was removed in the newest rendition of the state’s proposed budget bill.

The governor’s original two-year budget plan called for oil and gas produced by horizontal wells to be taxed at a 6.5 percent tax rate for product sold at the wellhead – while 4.5 percent tax would have been applied to product sold downstream. Earlier this year, Ohio Tax Commissioner Joe Testa told the media that the governor’s proposed tax hike was because Ohio’s horizontal drilling industry has become more developed and that drilling has proved to be less expensive than anticipated. In response, American Petroleum Institute’s Executive Director, Chris Zeigler, argued that the original budget proposal placed the “future development of Ohio Shale at serious risk.”

Now that the proposed tax increase in question has been removed, one could assume that drilling companies are breathing a sigh of relief. However, while there appears to be no new initiatives in play to raise the existing severance tax rate at the moment, the new budget proposal still has a long legislative journey to make before the June 30 deadline.

Shale Investment Appears To Be Untouched By Low Energy Prices

Lower prices at the pump might be a bit unnerving if you are, for example, in the process of finalizing a mineral lease agreement. But have no fear, even though new drilling initiatives in Ohio’s shale regions are slowing, according to Business Journal Daily, “oil and gas exploration continues to have positive ramifications across the region.”

As Ohio’s oil and gas industry matures, it continues to become more efficient, which has helped it persevere at a time when oil producers in the Middle East and elsewhere appear to be maintaining higher production quotas in an effort to price horizontal drillers out of the market. For example, the practice of “super fracking,” by which producers pump higher quantities of sand into the wells they fracture, has increased productivity from 400 barrels a day to 600. The result is a lower break-even cost for producers and, in general, more staying power than experts had initially thought.

To date, Energy In Depth, an oil and gas trade organization, estimates that Ohio’s shale industry has grown to $22.3 billion, and expects it to grow by another $8.1 billion by 2016, with the construction or extension of additional pipeline infrastructure, power plants and processing plants. In other words – don’t expect the Ohio’s oil and gas industry to slow down any time soon. In fact, it could be expanding as landowners from other parts of the state appear to have been approached by companies looking to increase their reserves.

Companies Eye Mercer County For Fossil Fuel

About 10,000 acres of farmland located in the Mercer County area, about 60 miles southwest of Lima, has been leased for 3D seismic oil and gas exploration according to The Daily Standard, a local news publication. The leased property, which is primarily farmland, will be subjected to noninvasive 3D seismic tests that will identify whether “significant amounts of oil and/or gas” are present. The results are expected to be available by June.

The newspaper reports that “[more] than 90 land leases involving thousands of acres have been filed in Mercer County since 2013 between various companies and property owners … the legal documents give companies access to test, drill or perform other action on the land as stipulated in each agreement.” Mercer County Commissioners agreed to test some government-owned property as well.

This news is not only important to the residents of Mercer County, but to residents throughout Ohio. The fact that companies are actively seeking to further their investment within the state is promising for all landowners. And at the very least, this recent move signifies that these companies have no plans packing up and shipping out anytime in the near future.

Email Rea & Associates if you have questions about how current events could affect your leasing options or if you are considering entering into a lease agreement for drilling or exploratory purposes.

By David Shallenberger, CPA (Wooster office)

 

Related Articles

What To Do If You Strike Oil Or Gas?

How Can Your Ohio Business Benefit From The Utica Shale Play?

Put Your Property Easement Agreement To Work

Share Button

Retirement Roulette

Wednesday, April 22nd, 2015
Retirement Roulette - Rea & Associates - Ohio CPA Firm

The retirement savings provision outlined in the 2016 Budget Proposal not only provides individual Americans with an opportunity to save, it seeks to provide financial incentives to eligible companies that establish their own 401(k), auto-IRA or that offer another similar retirement plan to their employees by expanding the small business tax credit.

It’s difficult to paint a picture that adequately portrays the retirement readiness of the American people. How prepared the average person is for this phase of their life greatly depends on which report you are reading today. As a whole, however, credible sources indicate that as a population we are simply not prepared to take on the financial responsibility of supporting ourselves later in life, which is a problem that has received a lot of attention from our nation’s leaders.

Last year marked the introduction of myRA, a retirement account program that encourages individuals without access to an employer-sponsored retirement plan to save for their retirement. Developed by the United States Department of the Treasury, myRA seeks to offer a solution to those who “face barriers to saving for retirement.” But that’s not the only chatter heard on Capitol Hill these days, with regard to the retirement savings habits of Americans. Members of Congress have proposed other solutions that they hope will make the retirement picture a little bit brighter.

Read:  Retirement Is Knocking … Are You Ready To Answer The Door?

2016 Budget Proposal Addresses Retirement Savings

The U.S. government’s 2016 Budget Proposal includes provisions that target the promotion of retirement goals.

“Millions of working Americans lack access to a retirement savings plan at work. Fewer than 10 percent of those without plans at work save in a retirement account on their own. In 2015, retirement security will be one of the key topics of the White House Conference on Aging. The Budget would make it easy and automatic for workers to save for retirement through their employer – giving 30 million more workers access to a workplace savings opportunity. The Budget also ensures that long-term part-time employees can participate in their employers’ retirement plans and provides tax incentives to offset administrative expenses for small businesses that adopt retirement plans.”

What is important to note is that, in addition to retirement security, the Proposal focuses on generating government revenue, which would (in part) go toward the creation of new tax benefit programs. The impact, according to the Whitehouse, would result in savings for as many as 30 million American taxpayers.

Today, nearly 78 million working Americans are unable to save for retirement simply because they are not eligible to enroll or because their employer doesn’t offer the opportunity to save for retirement. This Proposal introduces a solution for those who would like to begin saving for their golden years.

For example, one possible scenario outlined within the budget calls for all part time workers (those who have worked for their current employer at least 3 consecutive years and who have worked at least 500 hours during each year of their employment), who are not currently contributing to a retirement plan, to be allowed to contribute to the company’s existing retirement plan without requiring the plan sponsor to add matching contributions for such individuals.

Another is for those who do not have access to an employer-based retirement plan, however, would be automatically enrolled in a separate IRA program, which would be funded by payroll withholdings. Of course, the taxpayer would have the option to opt out of the program.

What’s In It for the Employer?

The retirement savings provision outlined in the 2016 Budget Proposal not only provides individual Americans with an opportunity to save, it seeks to provide financial incentives to eligible companies that establish their own 401(k), auto-IRA or that offer another similar retirement plan to their employees by expanding the small business tax credit.

This provision would also include an additional credit for small businesses that currently offer retirement plans to include an automatic enrollment feature within their plans.

Employees who are still unable to save for retirement will have a third option available. The Budget Proposal calls for the allocation of $6.5 million to the Department of Labor, which would allow a limited number of states to implement state-based auto enroll IRAs or 401(K)-type programs.

Mind the Cap

President Barack Obama’s 2016 Budget Proposal, while ambitious in its initiative to strengthen Social Security and incentivize retirement savings programs for Americans, also includes a provision that had been proposed (and rejected) before. The additional provision seeks to cap (prohibit additional contributions) on IRAs and other tax-preferred retirement plans once they reach a balance of $3.4 million.

According to the president, this step ensures that the individual secures sufficient annual income in retirement while preventing the “overuse” of existing tax advantages by those who are able to contribute additional funds, creating higher balance accounts. The cap would also help the government generate additional revenue because the funds that exceed the $3.4 million cap would now be taxable under this provision.

As always, when it comes to the future of Social Security and the overall retirement readiness of the American people a lot can change in a short amount of time. The 2016 Budget Proposal still has a long way to go before any of the provisions outlined within become reality. It’s important for you to be aware of these provisions and how they could change our current retirement plan landscape.

In the meantime, don’t just wait for changes to happen. Take steps today that will maintain the flexibility of your existing benefit plan while optimizing your company’s current and future ROI. Email the Benefit Plan Audit team at Rea & Associates to learn more.

By Darlene Finzer, CPA, QKA, CSA (New Philadelphia office)

 

Related Articles

How Can I Make My Benefit Plan Audit A Smoother Process?

What Are The Responsibilities of a Fiduciary?

Why Is The Timeliness Of Employee Contributions Under Scrutiny?

Share Button

Six Things You Can Do Now To Protect Your Loved Ones’ Assets

Tuesday, April 14th, 2015
Making Moments Count: Family Financial Challenges

Bright Idea: Make sure everyone in your family has their financial information organized in one place. The organizer you’ll find in the financial resources section of our website is a great place to start. Click here to view our Personal Financial Records Document and get started today.

The value of our existence is measured by an infinite collection of meaningful moments that have shaped our lives and the lives of those around us. Perhaps our most precious moments occur when we positively impact the lives of our loved ones. We are all capable of initiating these moments and, sometimes, a simple conversation is all that is needed to provide insurmountable relief – now and for years to come.

Find out what else you can do now to improve your personal and financial well-being.
Read: Take Control Of Your Financial Wellness In 2015.

Even if they have never expressed their concern about the realities of aging before, it is almost certain that your parents are worried about their own mortality. Because this topic doesn’t typically find its way into casual conversation, it is your responsibility to broach the subject. Your parents will be grateful you did.

Here are five things you can do now to actively protect your loved one’s assets:

1. Overcome Your Discomfort

The first conversation about your loved ones’ finances is probably the most uncomfortable one, but it’s also the most important. It’s uncomfortable to talk to our parents about their death. Mom and Dad don’t find it thrilling either because they don’t want to be a burden. But as awkward as it is to discuss, you may eventually be shouldered with responsibility of managing the affairs your parents leave behind.

2. Set Up A Power Of Attorney

In order for you to assume this important role, you must be named as your parents’ power of attorney. This step gives you legal authority to pay their bills, maintain their residence, complete tax returns and review their financial investments.

If your power of attorney was established more than two years ago, verify that it was issued properly by today’s standards. Even though powers of attorney never expire, some have reported having problems with establishments that have updated their forms. The new forms no longer identify powers of attorney that were named several years ago.

Your parents can name multiple powers of attorney. But to avoid possible disputes, make sure that you and your siblings have your own, clearly defined responsibilities. Also, if your parents have decided to name a power of attorney, and it’s not you, make a point to respect their decision – even if you don’t agree with it. As long as a plan is in place, you and your family are on the right track.

3. Understand Your Responsibilities

Being a power of attorney is a big responsibility. Not only are you empowered to make tough decisions, your actions are now able to be scrutinized by everybody from the IRS to other family members. To avoid problems, carefully track how much money is coming in and going out and maintain thorough records. And call in the professionals if you feel like you’re in over your head.

4. Send In The Team

In the past, did your parents work with a team of professionals to manage their finances, legal affairs or anything else? If so, make it a priority to talk to them before moving any money or assets around. You will need to know if your parents set up a will, trusts, or anything else over the course of their lives. This team will not only be able to compile the information you need, they can answer your technical questions, which will make the entire process go smoother.

5. Compile An Inventory

To manage anything well you must have a clear picture of what it is you are managing. To that end, make it a point to compile a complete inventory of your parent’s assets and liabilities to create a clearer plan of action.

Do you know how the value of real property is determined?
Read: How Do You Value Property For An Estate In Ohio to learn more.

6. Simplify, Simplify, Simplify

Once you understand your responsibilities, simplify everything. For example, if your parents have seven or eight open bank accounts throughout the county or state, consolidate them into one – and don’t stop there. From assets to investments, consolidating these affairs will make your job easier and less confusing as you try to track expenses.

It’s not easy to manage your loved ones finances, but with the right approach, plan and team of advisors, you can do it – and do it well. Once you get your ducks in a row, you can focus on other, more important things – like making every moment with your loved ones count.

By: David K. McCarthy, CPA, CSEP (Medina office) and Frank L. Festi, Jr. CPA, CFP (Medina office)

This article was originally published in The Rea Report, a Rea & Associates print publication, Winter 2015. If you don’t already receive The Rea Report, our quarterly print newsletter, in your mailbox, click here and start your subscription today!

 

Related Articles

Why Should Digital Assets Be Part Of Your Estate Plan?

Manage Your Business’s Ethical Framework After You’re Gone

When Should You Start Thinking About Succession Planning?

Share Button

The Truth About Tax Extensions

Friday, April 10th, 2015

We find ourselves, once again, at the end of another income tax season. A time of year that many American taxpayers (and accountants) hold dear. We, however, know that while tax season may be “officially” over, there is still plenty of tax work to be done.

The first four months of the year is a busy time for accountants and, because we work closely with so many small businesses all year long, we are acutely aware of how much stress you are under to meet your first quarter obligations. This is why, instead of rushing just to get your taxes filed and out the door ahead of the April 15 deadline, we frequently recommend that our clients file for a tax extension.

Unfortunately, there are some pretty nasty rumors going around about tax extensions. Hopefully, I will be able to debunk some common tax extension myths while helping those who opted to extend their deadline sleep a little better tonight. Check out the slideshow and get the facts about tax extensions!


The Truth About Tax Extensions – Created with Haiku Deck, presentation software that inspires

Myth 1:

Filing a tax extension increases your chance of an audit.

Truth:

First and foremost, your chance of being audited by the IRS does not increase simply because you chose to file a tax extension. In fact, in the event that you are chosen to undergo an audit, you will be able to go into the process with more confidence. Tax extensions can be great for businesses that were simply overwhelmed by other critical responsibilities during the first quarter of the year. When you give yourself the luxury of filing an extension, you give yourself more time to compile all the files and information necessary to make tax return prep as seamless and thorough as possible.

Myth 2:

Tax extensions burden accountants.

Truth:

On the contrary, fling an extension not only gives your accountant extra time to check and double check the work, it gives them the added time needed to provide better service. For example, we pride ourselves on our work ethic, attention to detail and client service – especially during busy season. However, as trusted financial advisors, we are able to better serve our clients better when we have a chance to help them understand the opportunities they qualify for and how they can use certain tax strategies to help plan for the future. Believe me when I tell you that we do not look at extensions as burdens.

Myth 3:

There is nothing to gain by filing a tax extension; it’s just a way to prolong the inevitable.

Truth:

Filing a tax extension not only gives you more time to file your return with the IRS and the state, it effectively stalls some of your other looming deadlines as well. For example, a tax extension can award you more time pay your profit sharing plan, defined benefit, or your SEP IRA as part of your retirement plan contribution, which is an excellent short- and long-term benefit! Once your extension has been filed, you will have more time to file your retirement plan contribution, all while claiming the deduction in your prior year’s return.

Email Rea & Associates to learn more about the benefits of filing income tax extension with the IRS and the state.

By Joe Popp, LD, LLM (Dublin office)

 

Related Articles:

Didn’t File Your Taxes Or Can’t Pay Them Now? Here’s What To Do

Save More For Retirement In 2015

What If You Can’t Pay Your Taxes?

Share Button

Preserve Ohio History While Filing Your Taxes

Wednesday, April 8th, 2015

We’re down to the wire. Just another week to go before April 15 – Tax Day. If you’re still working on your taxes, and are looking for an opportunity to make a donation on your state tax return – consider supporting the Ohio History Connection’s efforts. Read on to find out how you can support history preservation efforts throughout Ohio and even in your community.

 

Guest blog post by Emmy Beach of the Ohio History Connection:

The Ohio History Connection has developed an innovative way to help Ohioans support history preservation efforts across the state and in their communities. The best part: it can all happen in a matter of seconds.

It’s called the History Fund. The History Fund creates grants to help support local history and preservation-related projects in communities throughout Ohio. The History Fund is supported by Ohio taxpayers that select “Ohio Historical Society” as a donation fund on their state tax returns (the state tax form hasn’t caught up with their recent name change yet.).The entire process takes just seconds to complete.

The impact of donations can last for generations. Over the last three years, the History Fund has received nearly $300,000 in voluntary funding from Ohio taxpayers. This allowed the Ohio History Connection to green light more than 30 historic preservation projects that wouldn’t have received funding otherwise. History organizations have been able to accomplish important projects that have been on their wish-lists for years.

The History Fund impacts organizations big and small. This year, Cleveland’s Rock and Roll Hall of Fame received a grant to preserve the work of Plain Dealer rock and roll reporter Jane Scott; in Athens, the Dairy Barn Arts Center received a grant to repair the structure of their community’s popular arts venue. In each case, the generosity of Ohioans helped preserve a chapter of Ohio’s more than 200-year-old story.

“The History Fund helps us share and preserve Ohio’s story by supporting local projects and programs in communities throughout the state,” said Burt Logan, executive director and CEO for the Ohio History Connection. “The work of local history organizations is helping to strengthen our heritage and ensure Ohio’s story is told for years to come.”

The History Fund needs to receive at least $150,000 this coming tax season to stay on Ohio’s tax forms for the next two years.

The grant program received $165,000 last year, with average donations of around $10.

“Small donations can make a big difference,” said Andy Verhoff, History Fund grants manager. “If every donor who gave last year gives just $10 from their refund, we’ll cross over the $150,000 threshold easily and have even more to grant in the future.”

The tax check-off process is a win-win for taxpayers and the state. History and preservation organizations across Ohio are revitalizing their communities, one project at a time.

To learn more, visit the Ohio History Connection History Fund page. You can also see historic Ohioans Annie Oakley and the Wright Brothers promote the History Fund in public service announcements videos below.

 

Share Button

How To Pay Your Tax Bill In 6 Easy Steps

Wednesday, April 1st, 2015
Pay Your Tax Bill With Direct Pay - Rea & Associates

Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances.

By now, you probably have a good idea whether you have an outstanding tax bill from the government, but did you know you can settle your balance online? Since May 2014, Direct Pay, a free and secure payment option, has provided millions of taxpayers with the option of making payments to the Internal Revenue Service at a time, and in a place that is convenient for them.

Late last year, employers learned that they were expected to file their taxes and make payments exclusively online. Click here to read more.

According to the IRS, four months after the initial launch of the payment program, more than a million payments, totaling more than $1.7 billion, were successfully processed. The web site currently accepts payments for current year tax returns, estimated tax payments, extension payments and prior year balances.

Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances. Those who make payments receive an instant confirmation message that their payment has been submitted. Or, if you need a little more time, you can schedule your payment up to 30 days in advance as well as choose if you would like your payment to be withdrawn directly from a checking or savings account. Making a payment is as easy as following six simple steps.

How To Make An Online Tax Payment

  1. Visit the government website at www.irs.gov/payments
  2. Click on the blue box labeled: “IRS Direct Pay”
  3. Choose the reason for making your payment. Your choices are that you are making an installment agreement payment, a tax return payment, an estimated tax payment, an amended return payment or “other” type of payment. Be sure to choose the applicable year.
  4. Next, verify your identity by confirming your filing status, social security number, address and date of birth. ID verification is required for each payment requested.
  5. Then, you must enter the amount you plan to pay and your bank information. (The IRS does not retain any routing or account numbers.
  6. Finally, you will be directed to a “final authorization” page, which will provide you with an online confirmation.

Once your payment has been submitted using Direct Pay, allow two business days for processing. Note: Payments submitted after 8 p.m. EST will be processed on the next business day. And if you need to make a change to your scheduled payment, you can edit or cancel the payment up to 11:59 p.m. EST two business days before the payment is scheduled payment date.

Ohio Online Tax Payments

If you owe taxes to the State of Ohio, you can make your payments online as well by visiting www.tax.ohio.gov. The state’s online payment system also allows for advance payments and does not require registration.

Online payment options are another way government entities are making an effort to provide more user friendly services. By using Direct Pay, or the state’s web-based payment option, you can avoid a trip to the post office and, better yet, have more control over when your payment is made and received. Your tax preparer can help you determine if online payments make sense for you and can answer any questions you may have. Email Rea & Associates to learn more.

By Wendy Shick, CPA (Mentor office)

 

Related Articles

What If You Can’t Pay Your Taxes?

Ready, Set, Download: IRS2Go Mobile App

The Truth About Tax Extensions

Share Button

How To Avoid The Retirement Culture Shock

Tuesday, March 24th, 2015
Retirement Doesn't Have To Hurt Contact Rea & Associates To Learn More - Ohio CPA Firm

When many of us start thinking about the realities of retirement, it’s already too late. Don’t let the “retirement culture shock” sneak up on you, these three tips will help as you attempt to navigate the road to retirement.

If you’re a newly retired American, then you are embarking on a new, exciting phase of your life. For many of you, increased travel, spending more time with grandchildren or pursuing a new hobby may be ways to enjoy this new journey.

Read: How Can I Make The Most of My Retirement?

But before you pack up your things and hop that next plane to Florida, here are three tips to help you avoid the retirement culture shock.

1. Taxes Don’t Vanish At 65

When you were an employee, your taxes were likely withheld from your paycheck. Today, however, is a new day. As a retiree, you no longer have a paycheck from which taxes can be withheld. But there are a few things you can do to make sure you won’t get hit with a large tax bill in April. For example, if you receive a regular pension payment or an annuity, consider withholding your tax payments from those. You also have the option of simply making quarterly estimated tax payments if withholding is not an option.

2. Transfer Your Pension To Avoid Added Tax Cost

If you do have retirement income from a pension plan, make sure to structure the transfer of your pension into an IRA as a direct rollover to avoid an additional tax. Basically, you want to make sure that the check is made out to your IRA and not directly to you, which will ensure that the funds are deposited into your IRA instead of your personal bank account. If you don’t structure your pension plan to disperse your money in this way, the company responsible for your pension payments is required to withhold 20 percent of the funds for the Internal Revenue Service (IRS). When this happens, the IRS will likely see fit to assess a tax to this 20 percent, effectively shrinking your retirement nest egg.

3. Don’t Miss Exclusive Tax Benefits

Retirees are eligible to receive a few nice tax incentives – perhaps to offset your new responsibility of paying your own quarterly estimated taxes and transferring your pension plan payments. Either way, these tax breaks are nothing to grumble about. Here are three tax facts to get you started:

  • If you turned 65 during 2014, your standard deduction increased by $1,550. This means that you can claim $7,750 instead of the $6,200 standard deduction allowed for those younger than 65.
  • For the next three years, taxpayers older than 65 are eligible to receive a reduced phase out of their medical expenses. Those who are older than 65 can deduct qualifying medical expenses to that exceed 7.5 percent of their adjusted gross income. Those younger than 65 can deduct qualifying medical expenses that exceed 10 percent of their adjusted gross income.
  • Self-employed individuals who have Medicare Part B, Part D or supplemental Medicare policies are eligible to claim an above-the-line deduction for these costs.

You have spent so many years putting in long hours, stressing over money and putting your wants and needs second. Retirement is your time. Make sure you are in control of your finances – and your future. Email Rea & Associates to learn how to make your money go further in retirement.

By Dana Launder, CPA (Cambridge office)

 

Related Articles

What Are Ways You Can Ensure You’re Ready For Retirement?

Retirement Is Knocking … Are You Ready To Answer The Door?

Save More For Retirement in 2015

 

Share Button

How To Recover From Identity Theft & Refund Fraud

Wednesday, March 18th, 2015
How To Recover From Identity Theft & Refund Fraud

Have you been (or suspect you’ve been) a victim of identity theft and refund fraud? Rea & Associates recently compiled a variety of information that will help you recover from this nightmarish scenario.

Suspecting, and then confirming, that you’ve had your identity stolen is a nightmarish scenario. It combines one of your worst fears, losing your wallet or purse, with all of the work of replacing the things that were lost. It can be so overwhelming you might be wondering: “Where do I even start?”

An increasing number of identity thefts are first identified when a thief attempts to file a tax return on your behalf and claim a federal or state tax refund. To help you navigate some of the issues you may be confronted with, we recently released a compilation of documents and resources.

The documents that are included are intended to help you navigate some of the issues you may be confronted with if you find that you’ve been an identity theft and fraudulent tax return victim.

Read “How To Recover From Identity Theft & Refund Fraud

Beat The Identity Thieves

The guidance includes a variety of valuable information for those who have been (or suspect they’ve been) a victim of identity theft and refund fraud. The following is a brief synopsis of information included in this guide.

The IRS has provided a short list of items for you to complete, which is substantially similar to the items the Federal Trade Commission (FTC) covered in its longer, checklist-style guidance.

  • The primary item to complete for the IRS is Form 14039 which initiates the IRS fraud protection procedures.
  • Also included is a form letter, one of several, the IRS may send to a taxpayer if tax return fraud is suspected to be occurring on the account.
  • The IRS has published a number of articles related to identify theft and how to protect yourself. A master page with links to all these topics is included in this packet. You may also check out some of our recent articles on the topic, which can be found in the “Related Articles” portion of this post.

The process of reporting fraud in Ohio is similar to the IRS procedures.

  • Ohio also sends form letters to the taxpayer.
    • Ohio recently added an identity quiz for roughly 50 percent of taxpayers requesting a refund. This letter simply asks the taxpayer to complete a quiz specifically used to prove their identity. Note: This request doesn’t indicate that your identity has been stolen (unless you haven’t filed your tax return for the year yet).
    • If the Ohio Department of Taxation suspects fraudulent activity on the account, the taxpayer will receive a second letter that will indicate these suspicions.
  • Ohio includes an affidavit (Form IT TA) that must be filled out to initiate their protection procedures, similar to Federal.

The FTC is the primary federal government agency dealing with identity theft.

  • The FTC has put together a very detailed, checklist to help you with the identity theft process. The guidance includes information on most forms of identity theft – of which tax identity theft is just one. While this may be more information than you need, if the fraud has gone beyond your tax returns and includes false credit activity (or you are concerned this may happen), this guide will be very useful for you.
    • The guide includes a wealth of information, such as sample letters and a variety of websites and contact information to relevant organizations that can help you. It also guides you through the process of making a police report in response to the theft of your personal information.
  • Note: The IRS and the FTC generally do not share data with each other. Therefore if you have completed the IRS identify theft notification procedures, don’t assume that the FTC, credit bureaus, etc., are also aware of your situation.

Check Your Mail, Not Your Caller ID

Remember, the first contact taxpayers will have with the IRS regarding any issue will be in the form of an official mailed letter – not a phone call. These scammers appear to be determined to steal your money and/or your identity and reports of these types of scams continue to be on the rise. By educating yourself, your friends and your family, you are taking a proactive stance against these criminals.

If you would like to learn more about how you can protect yourself against, and recover, from Identity Theft & Refund Fraud, click here to view our compilation of documents and resources. You may also email Rea & Associates for more information.

By Joe Popp, JD, LLM (Dublin office) and Lesley Mast, CPA (Wooster office)

 

Related Articles

Update: Ohio Tax Quiz Appears To Be Working

When Scammers Demand That You Pay Up, IRS Says You Should Hang Up

Be On Guard For IRS Phone Scams

Share Button

How Much Is Your Data Worth To Criminals?

Friday, March 13th, 2015
Ransomware

There is no way to completely protect yourself and your network, but there are ways to preempt an attack against you and your business.

How much would you pay to regain access to your company’s network if it was compromised and held for ransom? Are you willing to shell hundreds of dollars to take your information back from a cybercriminal, or are you willing (and able) to just walk away and start anew? I wish I were asking hypothetical questions but, unfortunately, the increased popularity of Ransomware has made the risk of such an attack a very, very real possibility.

Sandra Ponczkowski, a manager of the IT security company KnowBe4, recently shared Your Money or Your Life Files, a whitepaper that details the history and real threat of Ransomware, a computer infection that encrypts all files of known file types on your local computer and server shared drives. Once infected, it becomes impossible for you to access your documents or applications that use these encrypted files. The only way to recover from such an infection is to either restore your machine by using backup media, or accommodating the hacker’s demands and paying their ransom.

Unfortunately, I know of several situations where the businesses involved in a Ransomware attack had no choice but to pay ransom demands to the cybercriminal. The silver lining for these companies was that, upon paying the ransom, they were able to obtain the assailant’s encryption key code, which allowed them to unencrypt their data and regain access to their data.

Long-term protection, however, cannot be guaranteed and there is a chance that your data can be held for ransom again.

The literature provided by KnowBe4 details the fluency with which the popular Ransomware infection CryptoLocker changes and adapts once a solution to unencrypt infected data files becomes available. When this happens, the CryptoLocker infection will evolve into a new strain, thus making the previous solution unusable.

While there is no way to completely protect yourself and your network, there are ways to preempt an attack against you and your business. I recommend the following best practices.

  1. Train yourself and your employees about computer safety practices.
  2. Complete a yearly review of your employee’s access rights to company-owned computers, server folders and backup media. For example, only a few, strategic employees should have access to the company’s folders and data. As a general rule, employee access should be restricted to include only the programs and software required for them to do their jobs. This also applies to work-from-home employees who typically attach a USB drive to their machines for backup protection.
  3. If you don’t already, put a disaster recovery in place and test it ever year to ensure accuracy and completeness.

Following these practices should make your business’s Ransomware prevention and recovery much easier. Email Rea & Associates to learn find out more about the importance of protecting your company’s online security.

By Joe Welker, CISA (New Philadelphia office)

 

Related Articles

Who’s Fishing For Your Data Today?

Beware Of Small Business Wire Transfer Scam

Could A Cyber-Attack Cripple Your Business In 2015?

Share Button

Obamacare: Some Taxpayers Get Second Chance To Purchase Health Insurance

Thursday, March 12th, 2015
Special Obamacare Open Enrollment Period

The Centers for Medicare & Medicaid Services (CMS) have taken steps to create a special enrollment period to allow individuals and families to secure 2015 health insurance coverage through the federal marketplace. – Rea & Associates – Ohio CPA Firm

Did you get hit with the “shared responsibility payment” for not carrying health insurance on yourself or your family members in 2014? If so, you’re not alone.

Read: Are You Prepared To Pay? Obamacare’s Shared Responsibility Provision

Americans who were unaware of (or who simply didn’t understand) the fees they would be subjected to as a result of not carrying health insurance coverage may have been equally surprised to learn that the open enrollment period to obtain coverage for 2015 closed last month – meaning that even if they wanted to avoid the fees next year, they were out of luck. Fortunately, the Centers for Medicare & Medicaid Services (CMS) realized this dilemma and took steps to create a special enrollment period to allow individuals and families in this bind to secure 2015 health insurance coverage through the federal marketplace. This will be a big help to those who may have found out that they were eligible for premium subsidies to help pay for insurance – a little too late. The new open enrollment period is March 15, 2015, through April 30, 2015, and is only available for individuals and/or families that:

  • Are not currently enrolled in federally-facilitated coverage for 2015,
  • Had to pay an individual mandate on Form 1040 of their 2014 tax return, and
  • Live in a state with a federally-facilitated exchange (Ohio residents qualify. Those who do not live in Ohio may click here for a full list of other qualified states).

According to CMS, eligible enrollees also must “attest that they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment in connection with preparing their 2014 taxes.” “We recognize that this is the first tax filing season where consumers may have to pay a fee or claim an exemption for not having health insurance coverage,” sad CMS Administrator Marilyn Tavenner in a press release. “Our priority is to make sure consumers understand the new requirement to enroll in health coverage and to provide those who were not aware or did not understand the requirement with an opportunity to enroll in affordable coverage this year.” Note that even if you don’t qualify for this open enrollment, there are a number of qualifying events that let you sign up for coverage on the exchange any time of year. If you want to know whether you qualify for subsidies to help shoulder the burden of health insurance, click here. Or you can email Rea & Associates for any Affordable Care Act questions.

By Joseph Popp, JD, LLM (Dublin office)  

 

Related Articles

Obamacare: Discrimination In Not An Option

Peeling Back The Onion: Answering 3 Popular Obamacare Questions

Health Insurance Options: Shop, Drop, Roll or Self-Insure?

Share Button

Is It A Charity Or A Scam?

Tuesday, February 3rd, 2015

Remember when writing a check to a charity left you with a feeling of satisfaction and accomplishment? Unfortunately that feeling has been replaced with vulnerability and uncertainty as soliciting for fake charities has become a common way for scammers to prey on the generosity of strangers.

Remember when writing a check to a charity left you with a feeling of satisfaction and accomplishment? Unfortunately that feeling has been replaced with vulnerability and uncertainty as soliciting for fake charities has become a common way for scammers to prey on the generosity of strangers. Before you tear that check from your checkbook, take another look at the “Pay to the Order Of” line. That person who just spent the last 15 minutes explaining why your donation is critical to their organization might have less-than-admirable intentions.

Every year the Internal Revenue Service (IRS) warns taxpayers about what it considers to be the “Dirty Dozen” of tax scams. The annual report identifies schemes that appear to be more prevalent during filing season. And while you may be inclined to use some of your refund to help a worthwhile charity, the IRS reminds taxpayers to remain vigilant against scammers “masquerading as a charitable organization to attract donations from unsuspecting contributors” – particularly this time of year when scammers appear to be more active.

If you are approached by somebody who claims to be soliciting money for charity, here are a few tips to ensure that your money will be used for a worthwhile cause.

What’s In A Name?

Sometimes fake charities will adopt a name that’s similar to one you are sure to recognize and consider to be a respected organization within your community or nationwide. Even if you are confident that the not-for-profit you are about to donate to is reputable, a quick online search can remove any doubt. The IRS provides access to a search tool designed to help the public identify valid charitable organizations. You can also find registered 501(c)(3) organizations on Guidestar, an online tool that provides users with data and information about tax-exempt organizations and other faith-based nonprofits, community foundations and other groups typically not required to register with the IRS.

Keep Personal Information Private

Nonprofit organizations do not need your Social Security Number to complete the transaction, nor do they need to retain it for their files. So if someone claims to represent a charity and asks for any of your personal information (including passwords) – don’t give it to them! Scammers use this information to steal their victim’s identity. Protect yourself from fraud and remember to keep your personal information private.

Where’s The Proof?

When you make a decision to donate to a tax-exempt organization, make sure to have proof of the transaction. For your own security – and for tax record purposes – you should never make a cash donation. Use a check or credit card every time you give money to charity. Doing so not only proves that you made the donation; it will help you claim the contribution on next year’s tax return.

Ask An Expert

A trusted advisor can help you identify whether a particular charitable organization is reputable or not and can help you make the most of your donated dollars. Email Rea & Associates for more information.

By Maribeth Wright, CPA (Cambridge office)

 

Related Articles:

Beware Of Small Business Wire Transfer Scam

When Scammers Demand That You Pay Up, IRS Says You Should Hang Up

Theft Safeguards To Cause Tax Return Delays In Ohio

Share Button

From Toddler To Teen And Beyond: Tax Breaks For Families

Monday, February 2nd, 2015
Families of all kinds can take advantage of a variety of tax incentives, which can ease some of the financial burden.

Families of all kinds can take advantage of a variety of tax incentives, which can ease some of the financial burden.

With parenthood comes many rewarding experiences – and expenses. You hear about how expensive it is to raise a child, but you never really know what to expect until that little bundle of joy enters your life. From diapers, pre-school, extracurricular activities and saving for college, the costs of raising kids adds up fast. My wife and I welcomed our daughter into our family last year; and this life-changing event got me thinking: What tax breaks are available to families?

Relief for New Parents

Families of all kinds can take advantage of a variety of tax incentives, which can ease some of the financial burden. From deductions to credits, this list will give you a good idea as to what is available to you.

  • Adoption Credit

-         A credit of up to $13,190 – dollar for dollar of qualified expenses – is available to families who have adopted children.

-         Qualified expenses include adoption fees, attorney fees, court costs, etc.

-         Adopting a child with special needs results in the full credit amount regardless of whether qualifying expenses were made.

  • Child Credit/Additional Child Credit/Dependent

-         Child Credit – This credit applies to up to $1,000 for qualifying children younger than 17. This credit is generally non-refundable, but the taxpayer may be able to qualify for the additional child credit if he/she has enough earned income.

-         Additional Child Credit – Part of the child credit may be refundable for taxpayers with more than $3,000 worth of earned income.

-         Dependent – Each child listed on a tax return may be eligible to be listed as a dependent, which results in an additional $3,950 exemption per dependent.

  • Earned Income Credit

-         This is one of the largest credits available to taxpayers and claiming it can save you thousands of dollars in taxes. Taxpayers with three or more children and who have earned income as high as $52,427 may qualify for the earned income credit. This credit generally decreases with fewer qualifying children or for those with higher income levels.

More To Know As They Grow

In addition to child and earned income credits, here are some additional ways to save on your taxes as your children continue to grow.

  • Dependent Care Credit

-         This non-refundable credit goes toward a portion of a dependent’s child care expenses. Common qualifying expenses include day care, pre-school, day camps and similar programs.

  • Preempting College Costs

-         Education Savings Accounts allow taxpayers to contribute up to $2,000 per year for children younger than 17. While there are no tax benefits for the year of the contribution, distributions toward qualified higher education expenses (including earnings on contributions) are tax-free. Taxes and penalties may apply if the funds are not used for qualified education expenses.

-         State College Savings (529 plans) allow taxpayers to make contributions to an investment account and take a deduction toward their state income tax. (There is no federal income tax deduction available when taking this option.) Similar to education savings accounts, taxes and penalties may apply to funds used on unqualified expenses.

  • Flexible Spending Plans

-         If you have a flexible spending plan through your employer, remember that your child-related medical expenses qualify under the plan too. The funds you already contribute to your plan are deducted pre-tax up to certain thresholds. But don’t forget to use the entire amount withheld in your plan before March 15 of the following year or you will lose it.

The College Years

It probably seems like it was just yesterday that your son or daughter was crawling across the living room floor – now you are preparing to send them off to college. But just because they are all grown up doesn’t mean that the tax incentives end. Here are some tax perks to help during your child’s transition into adulthood:

  • Dependency Extension

-         You can claim your child as a dependent until they are 19-years-old as long as you continue to provide more than half of their support and they lived with you for more than half the year. You may also continue to claim your child if they are younger than 24 and a full-time student.

  • Tax Relief For Education

When it comes to paying for higher education, there are a few opportunities for tax relief. Below are a few of your options. Remember that you may only claim one of these options. A financial advisor can help you determine which option is right for you.

-         You can claim the American Opportunity Credit for up to $2,500 (100 percent of the first $2,000 and 25 percent of next $2,000) for qualified education expenses. This tax credit is only available for undergraduate students. Qualified expenses include tuition, fees, books, supplies, etc. This credit is also 40 percent refundable.

-         Qualified education expenses, such as tuition, fees, books, etc., qualify you to claim the Lifetime Learning Credit, which could total up to $2,000 (20 percent of up to $10,000). Even though this credit is entirely nonrefundable, it helps reduce your tax bill.

-         If you are paying for tuition, fees, books and other school supplies for your student, you may find this above the line deduction of up to $4,000 for these expenses to be beneficial.

  • Student Loan Relief

-         Help is also available to those making payments on student loans. An above the line deduction of up to $2,500 is available for interest paid on education loans.

In addition to being expensive, taking care of children can be confusing at times. Claiming these tax deductions and tax credits doesn’t have to be. Email Rea & Associates to learn more.

By Jordan Miller, CPA (Millersburg office)

 

Related Articles

College Costs Keeping You Up All Night? Tax Credits Could Offer Some Relief

Do You Have To File Taxes For Your Dependent Children?

So Is It A Tax Credit Or A Tax Deduction?

Share Button

How To Drive For Business And Save On Your Tax Bill

Monday, February 2nd, 2015
Deducting expenses related to your car or truck is an allowable business expense – as long as the vehicle is used for business purposes.

Deducting expenses related to your car or truck is an allowable business expense – as long as the vehicle is used for business purposes.

If you are one of the many men and women who drive their personal vehicles for business, don’t forget to claim the appropriate tax deduction on your tax return – the savings just might help you keep more cash in your bank account and more gas in your tank.

Here’s what you need to know. …

Deducting expenses related to your car or truck is an allowable business expense – as long as the vehicle is used for business purposes. And if you use it exclusively for business purposes, you may be able to deduct the full cost of your vehicle. But before you start claiming deductions on your tax return, make sure you understand what the IRS considers to be a valid business purpose. Hint: Commuting from your home to work is not considered a valid business purpose.

When To Claim A Deduction

Do – claim a deduction if you use your vehicle for travel between two places of business.

Do – claim travel expenses that result from traveling from one job to another, traveling from one customer or client to another and traveling from your office or business location to perform other business tasks.

Do – claim your travel expenses that accrue between your home and a business destination if you have a home office that is considered your primary place of business.

Which Deduction Is Better?

There are many factors to consider when choosing a deduction method that will result in the most tax savings. The two biggest factors are the cost of the vehicle and how many business miles you drive each year. Here are the nuts and bolts of your two options:

  • Standard Mileage Method – If you keep good notes, then you may prefer the standard mileage method to keep track of your deduction. Here’s how it works: Start by keeping a log or a journal of all your business trips – include who, what, when and where. Then add up all the miles you racked up on your trips and multiply that number by the IRS’s standard mileage rate – which currently stands at 57.5 cents per mile. For example: if you were to drive 15,000 business miles over the year, you can multiply that number by 57.5 cents per mile to claim an $8,625 deduction.
  • Actual Costs Method – This method requires that you to keep track of all costs associated with your vehicle, including depreciation, repairs, maintenance, gas, tires, etc. When you have collected all these costs and arrived at a total, multiply this number by the percentage of time the vehicle is used for business purposes. Your deduction is limited to the percentage of time the vehicle was used for business purposes.

So, which deduction method is better?

Say you purchased a car for $30,000 and you use it exclusively for business purposes. You have figured that you drive about 10,000 miles for business each year. If you use the standard mileage method, you could claim a $5,750 deduction each year. But if you were to use the actual costs method, instead you would find that during the first five years of owning the car the actual vehicle expenses significantly add up to a larger tax deduction.

If you use your vehicle for business purposes, a financial advisor can help you identify the best route to maximize your tax savings. Email Rea & Associates to learn more.

By Tom Jeffries, CPA (Millersburg office)

 

Related Articles

New Year, New Mileage Rates

What Red Flags Might Get Your Audited?

How Can A Small Business Owner Keep More Money In Their Pocket?

Share Button

Virtual Money Is Real Money – Don’t Forget To Report Your Bitcoin

Monday, February 2nd, 2015
Virtual Money Is Real Money – Don’t Forget To Report Your Bitcoin

Virtual Money Is Real Money – Don’t Forget To Report Your Bitcoin

Now that the official 2015 tax season is upon us, you may be going through the process of checking off the laundry list of forms you need to have on hand to file your 2014 tax return. (If you still aren’t sure what files to gather, you can find a thorough checklist here.) While you’re collecting your W-2s and 1099s, don’t forget Form 1099-MISC, which is the form to use if you have used virtual currency over the last year.

The IRS informed taxpayers of the proper way to report virtual currency such as Bitcoin last year. Because the value of virtual currency is converted to the value of real currency, for tax purposes, Bitcoin and other virtual currencies are considered capital assets by the IRS. Therefore, these forms of currency are subject to capital gains rules for any applicable gains or losses that may accrue.

Capital gains rates are more favorable than normal tax rates. For most taxpayers, the rate will be no more than 15 percent. However, if you are in one of the following categories, you will be taxed at 20 percent:

  • If you earned more than $406,750 in taxable income
  • If you are married and filing jointly and earned more than $457,600
  • If you’re the head of your household and earned more than $432,200
  • If you’re married, but filing separately and earned more than $228,800

Do you treat Bitcoin as an investment?

If you buy and sell virtual currency, the IRS will treat it as if you were buying and selling stock. You will be required to report the cost basis of the transaction, also known as the difference between the cash price and the futures price of stock. In addition to being taxed at a lower capital gains rate, losses can cancel out any gains. And left-over losses can be deducted from your regular income.

Do you use Bitcoin like cash?

From ordering a pizza to shopping for a new computer, the transactions you make online with Bitcoin may result in gains or losses as well – although determining the value of a particular item or service based on market value is easier said than done. A financial advisor can help you identify whether you have gains and losses to report to the IRS.

Do you get paid in Bitcoin?

For example, for tax purposes, a babysitter who is paid in Bitcoin is the same as a sitter who’s paid in cash and those earnings must go through the same channels to be considered by the IRS. Payments of virtual currency are required to be reported on Form 1099-MISC or a similar form and must be reported using the fair market value of virtual currency, which should be converted to U.S. dollars.

For more information about managing and reporting Bitcoin, email Rea & Associates.

By Lesley Mast, CPA (Wooster office)

 

Related Articles:

Will You Be Paying With Cash, Credit Or Bitcoins?

Is It Fair To Require Online Retailers To Collect And Remit State Sales Tax?

Could A Cyber-Attack Cripple Your Business In 2015?

Share Button

Signing On The Dotted Line

Tuesday, January 20th, 2015

Know What Your Pipeline Easement Agreement Entails Before Signing

For years, state and national economists have pointed to the Marcellus and Utica shale regions as a source of relief for Ohio’s economic well-being. As momentum continues to grow, more and more pipeline infrastructure will be built, providing landowners with an opportunity to enter into a pipeline easement agreement. While you may be handed a contract that looks favorable to you, make sure you completely understand your rights and responsibilities before signing.

6 Things To Know Before You Sign

  1. A pipeline easement grants a pipeline company permission to use your real property to transmit natural gas liquids. This means that your entire property is not affected – just the portion outlined in the contract.
  2. Understand the difference between a temporary easement and a permanent easement. A permanent easement refers to a time period of 30 years or longer and the amount is taxed at capital gains rates. This happens when the amount received exceeds the cost basis of the portion of the property where the permanent pipeline covers. A temporary easement pertains to a shorter amount of time and is taxed at your ordinary tax rate. A permanent easement is normally more favorable to the taxpayer because of the capital gains treatment.
  3. You are eligible to be compensated for anticipatory damages to your property. Anticipatory damages are awarded for damages that have not yet taken place. They are generally negotiated with the easement. There are two types of anticipatory damages; Compensatory and Non-Compensatory damages.
  4. Compensatory damages are linked to items such as crop damages, business income interruption, temporary work site rental and temporary road access. Basically if you are using the property to produce ordinary income or the pipeline company wants to rent a portion of the property while they work, the anticipatory damage income you receive is taxed at your ordinary rate.
    Non-compensatory damages are damages that are not tied to the items listed above and are taxed at capital gains rates.
    As a landowner, you can also receive actual damages after the pipeline easement is complete. Actual damages are taxed at capital gains rates and any amount of the actual damage payment that is invested back into the property is non-taxable.
  5. Pipeline easement payments are not ongoing. You will be compensated once, which will likely be when you sign the contract.
  6. Different opportunities are available for different people. For many, a pipeline easement may be an opportunity to save for retirement. For others, additional economic opportunities may be available. Your CPA is qualified to help individuals identify your best options – those that make financial sense and those that do not alter your lifestyle.

There are many different myths about pipeline easements. Your financial advisor can help you understand the facts, ensure that you get a fair price and manage your tax obligations.

Email Rea & Associates to learn more about how to make the most of your pipeline easement.

By David Shallenberger, CPA (Wooster office) and Scott Moyer, CPA (Zanesville office)

 

Related Articles

Cash Continues To Flow From Ohio’s Shale Industry
Put Your Property Easement Agreement To Work
How Can Lease Holders Benefit From The Utica Shale Play?

Share Button

How To Prepare For A Federal Tax Return Headache

Tuesday, January 20th, 2015

Planning to buy a new big-screen television? Airline tickets for that Caribbean vacation you’ve been looking forward to?  A new car? You might want to wait a little longer.

IRS Commissioner John Koskinen recently warned American taxpayers that some federal refunds could be delayed for a week or more because of recent budget cuts. So, if you file your tax return on paper, before you start spending that income tax refund check, you might want to wait for the cash to actually find its way into your bank account. Expect to feel a little discomfort during this tax season.

Refund Delays

Historically, refunds for electronically filed federal returns were processed within 21 days of the e-filing acceptance date. Paper returns were typically processed within six to eight weeks from the date they were received. Amended tax return refunds take even longer – the turnaround for these returns were typically 12 weeks.

“People who paper file tax returns could wait an extra week – or possibly longer – to see their refund,” said Koskinen in a memo sent to IRS staff. “Taxpayers with errors or questions on their returns that require additional manual review will also face delays.”

In his memo, Koskinen didn’t explicitly address electronically filed returns, but it wouldn’t be a surprise for these refunds to be delayed (at least a little bit) as well.

Phone Jams

Nearly eight out of ten taxpayers receive an average tax refund totaling $2,800, which prompts many taxpayers to check in on the status of their refunds by calling the IRS. The agency is predicting an abysmal connection rate of these calls this year – 43 percent connection rate with a hold time of 30 minutes or more.

Instead, if you would like to track the status of your refund, hang up the phone and log onto the IRS’s website to use its Where’s My Refund feature.

Time will only tell how these budget cuts will impact next year’s tax return process, as well as other services provided by the IRS. In the meantime, start preparing to file your tax return as early as possible to avoid additional delays. Email Rea & Associates to learn more.

By: Trista Acker, CPA, CFP (Dublin office)

 

Related Articles

Too Close For Comfort?

New Year, New Mileage Rates

Retirees Get Cranky Over Tax Returns

Share Button

File Faster With This Tax Prep Checklist

Tuesday, January 20th, 2015

It’s that time of year again – time to gather your information and prepare to file your tax return. If you want the process to go smoothly, make sure to gather and organize your information before sitting down with your tax preparer. You may be surprised how fast the entire filing process goes if you spend a little time preparing!

Here’s a list of some items to compile before you get started.

Personal Information

Hopefully you know YOUR social security number and date of birth by heart. But do you know your spouse’s SSN? Your kids? Make sure you remember to bring the social security numbers and birth dates of everybody who will be claimed on your tax return.

Income Info

While your W-2 is important, there are many other pieces of information you will need to collect before you will be able to get started. Gather the following pieces of relevant information:

  • W-2s for you and your spouse.
  • Investment income: This type of income will be listed on various 1099 forms including –INT, -DIV, -B, etc.). You may also have K-1s and stock option information to provide to your tax preparer.
  • Income received from state and local income tax refunds and/or unemployment. This income can be found on the Form 1099-G.
  • Gather information about any alimony you may have received.
  • If you are a business owner or farmer, don’t forget to provide a profit/loss statement and capital equipment information.  And if you use your home for business, your tax preparer will need to know the size of your house, the size of your office and what you have paid to maintain your home and office.
  • You will need to provide your IRA/pension distributions as well. This information will be provided to you on Forms 1099-R or 8606.
  • If you rent a home or other type of property, be sure to gather that information that proves the profit or losses you realized as a result of the rental.
  • Be sure to claim any Social Security benefits you may have received. This information is found on Form SSA-1099.
  • If you sold your house in 2014, you must provide your tax provider with Form 1099-C, which will include the income you received from the sale of the property. Your preparer will also take the home’s original cost and cost of improvements, the escrow closing statement and cancelled debt information into consideration.
  • Some other information you will need to pass along to your tax preparer includes items such as jury duty, gambling winnings, scholarships, etc..

Adjustments To Your Income

Now that you have collected all the information you can to adequately identify your income in 2014, some adjustments may need to be made. Making the following adjustments to your income may help increase your tax refund or lower the amount you owe to the government. If you have documentation of any of the following information, be sure to bring them to your appointment.

  • IRA contributions
  • Student loan interest
  • Medical Savings Account contributions
  • Moving expenses
  • Self-employed health insurance payments
  • Pension plans such as SEP and SIMPLE
  • Alimony you paid
  • Educator expenses

Itemized tax deductions and credits

This is another way to increase your refund or reduce what you owe. The following deductions and credits help lower the tax burden on individuals. Be sure to collect this information before filing your return.

  • Child care costs – child care provider’s name, address, tax ID number and amount paid
  • Education costs – these can be found on Form 1098-T
  • Adoption costs – the SSN of the child as well as legal, medical and transportation costs associated with the adoption
  • Home mortgage interest and points you paid, which can be found on Form 1098
  • Investment interest expense
  • Charitable donations that were made to not-for-profit organizations. Make sure you have the amounts and value of the donated property, and any out-of-pocket expenses you may have accrued in your effort to make the donation, including transportation costs. Include receipts for any contribution over $250

o   Losses you realized as a result of casualty and loss (the cost of the damage and insurance reimbursements

  • Medical and dental expenses
  • Energy credits
  • Other deductions include items such as union dues, unreimbursed employee expenses, such as unreimbursed employee expenses

New for 2014 returns

For the first time, you will need to provide information about your health insurance coverage to your tax preparer. Be prepared to answer questions such as these:

  • Was everyone claimed on your tax return covered by health insurance?

o   If not, why?

  • Did you or anyone on your return obtain health insurance coverage through Healthcare.gov or through a state run exchange in 2014?

o   If yes, did any of those individuals receive a premium tax subsidy, cost reduction, or premium tax credit? If yes, provide Form 1095-A.

It’s likely that you have already started receiving tax forms in the mail from various places. It’s easy to misplace these documents if you’re not careful. If you haven’t already, set aside a place for these items until you have collected them all. Once you have everything you need, you can set an appointment to file your taxes with your financial advisor or tax preparer. For additional tax information, or to speak with a tax expert, email Rea & Associates.

By Lesley Mast, CPA (Wooster office)

 

Related Articles

Retirees Get Cranky Over Tax Returns

Employers Must File Taxes, Make Payments Electronically

Ready, Set, Download: IRS2Go Mobile App 2014

Share Button

Theft Safeguards To Cause Tax Return Delays In Ohio

Tuesday, January 20th, 2015

If time is money then the new security measures to protect Ohio taxpayer’s returns and prevent identity theft comes at a price. The Ohio Department of Taxation (ODT) said that in an effort to boost security and prevent tax-fraud in the state, Ohio will implement an “up-front filter to all tax-refund requests to analyze the demographic information reported on the return.”

According to Joe Testa, the state’s tax commissioner, the ramped up security is in response to increased fraud attempts. The Columbus Dispatch reports that the state foiled $250 million in attempted tax fraud during the 2014 tax season, which is a significant increase over the foiled tax fraud average of $10 million in previous years. Figures of how much fraud went undetected last year or in previous years are not available.

The Tax-Fraud Quiz

If your tax return is flagged as a result of anomalies in reported demographic information then you will have to complete an Identification Confirmation Quiz, according to Testa. If you are selected to take the quiz, you should expect a delay as to when your funds will be dispersed. Traditionally, it takes up to 15 days to process refunds that will be distributed to the taxpayer via electronic deposit. Those who opt to receive their refunds in check form could wait 30 days to receive their money. This year, those who must take the quiz to validate their identities, may have to wait longer than they have in previous years to receive their refunds.

Which Returns Will Be Flagged?

On its website, the ODT says that tax returns will be analyzed for certain inconsistent data points against public and commercial data sources. For example, in the Dispatch article, taxation spokesman Gary Gudmundson said that “names and Social Security numbers that show up in a different part of the state, or in another state, after being located for years in a specific area of Ohio” may be flagged. This means that if you moved this year, your return may flagged as one that has a higher probability of fraud. The next step is to take the quiz to verify your identity. If the return is flagged, the taxpayer will be required to complete the quiz or prove their identity through documentation before the tax return will be processed.

How To Know If Your Return Was Flagged?

The ODT will send a letter to taxpayers who are required to take the identification quiz. Those who don’t receive a letter will not be able to complete the quiz. Those who are selected will have 60 days to complete the multiple choice quiz. The quiz will be timed and it must be completed online. The state agency has provided answers to Frequently Asked Questions about the quiz on its website.

Contact your financial advisor or seek out a tax professional to help guide you through these security measures. Email Rea & Associates for more information about this and other tax-related concerns.

By Lisa Beamer, CPA (New Philadelphia office)

 

Related Articles

IRS Says You Owe More? Don’t Write That Check Yet!

College Costs Keeping You Up All Night? Tax Credits Could Offer Relief

When Scammers Demand That You Pay Up, IRS Says You Should Hang Up

Share Button

Take Control Of Your Financial Wellness In 2015

Monday, January 5th, 2015

Are you still looking for the perfect New Year’s resolution? What about challenging yourself with one that could put you financially ahead? Here are 15 ways you can start your year off on the right foot.

15 Tips For A Prosperous 2015

Adjust your 401(k) plan contribution.

If you have a 401(k) plan, your contribution limit will increase to $18,000 in 2015, and if you’re 50 years or older, you can contribute an additional $6,000 into your plan. When it comes to retirement savings, every little bit helps, so even if you can’t afford to contribute the maximum, at least consider increasing your contribution a little bit over what you put into it last year.

Pay off your debt.

Make 2015 the year you pay off all debts. Once you settle past debts, it will be easier to save for future expenses and retirement. For example, do you have credit card debt? Pay off the cards with the highest interest rates first. Once you have caught up, make it your goal to pay any outstanding balance monthly.

Set up a budget and follow it.

Review your monthly income and expenses and allocate money toward savings, debt resolution and other financial goals. Once you have a plan in place, stick to it. Try to set aside some time to review your budget to make sure you are on track.

Build a “rainy day” fund.

Some people say that you should have enough money saved to cover your expenses for at least six months to protect you and your family against unforeseen events that could impact your finances. Don’t let the timeline intimidate you, though. Get your rainy day fund up to one month’s worth of expenses and build from there.

Work with your significant other – not against them.

If you are planning to strengthen your financial foothold in 2015, make sure you have support from your significant other. If you and your significant other are on the same page, then you will have a better chance for success. For example, coming to an agreement on how much you each can spend on unnecessary expenses early on can save unnecessary drama in the future – and costs less than a divorce.

Review your company’s Section 125 plan.

If your employer offers a Cafeteria Plan to its employees, make sure you are aware of what benefit options are available to you and your family and that you taking full advantage of the pretax nature of these benefits. Benefits offered as part of your employer’s Section 125 plan could include health savings accounts, dependent care assistance, adoption assistance, group-term life insurance and others. If you are not sure what benefits are available to you or would like to make sure you are receiving the maximum benefit, set aside some time to speak with your company’s human resources department.

Know your credit score – then improve it.

An excellent credit score is one that is between 760 and 850. If you’re not sure what yours is, request your free copy and find out. Companies such as Experian, Transunion and Equifax will provide you with a free copy of your credit score. Once you know your score, work to increase your rating. This can be done any number of ways, but it takes time and hard work. And don’t be discouraged if you don’t see a massive increase over the next year. Even 20 points is considered a significant improvement.

Set up your will and power of attorney.

Don’t put off this critically important responsibility. If you haven’t already, make it a priority to establish your will and power of attorney as soon as possible. Or if you already have one in place, make sure it is not outdated. Set aside some time to review your current documents with your significant other and update it if needed.

Plan for the inevitable.

If something happens to you, will your family be able to carry on? Meet with your HR department to make sure you are taking full advantage of your life insurance options and disability plan.

Schedule a wellness visit for your mortgage.

When was the last time you reviewed your home mortgage? If it’s been awhile, you should review the interest rate and conditions of your loan. If you have been in your home for a while, you may be surprised to learn that there might be options out there that could save you money.

Organize, organize, organize.

Improving organization is one of the more popular resolutions to make. While you may be eying your closets, garage or basement, I suggest taking a look at your mailbox. Resolve to gather and organize your tax information as it is received. Doing so will ensure that you are not wasting time trying to find a piece of mail you misplaced a month ago and it will help you cut down on random clutter.

Review your retirement plan.

A new year means that you have another birthday on the horizon, which also means that you are another year closer to retirement. Schedule a time to meet with your financial advisor to determine if you should rebalance your portfolio to remain in line with your retirement goals.

Set up a 529 plan.

Are you saving for your children’s or grandchildren’s college education? Set up a 529 plan today and contribute to it early in the year to earn a return all year long. Earnings generated as a result of your contributions are not subject to federal or state taxes when used for qualified education expenses.

Find savings around the home.

If you take a hard look at your reoccurring monthly expenses, you may find that you don’t really need a lot of the services and utilities you are paying for. For example, does your home internet really need to be turbo-charged? Do you ever use the call forwarding or call waiting options on your home phone? Do you use your home phone at all? Are you paying for extra insurance to protect against a gas line leak? Depending on your circumstances, you could find significant savings by cutting back on some utilities you barely use.

Pass on the product warranties.

While it may seem like a good idea to pay a little extra for a warranty on that new appliance, a better option might be to put that money toward your rainy day fund instead. Sure, warranties are great for your peace of mind, but so is your rainy day fund. By opting out of the product warranty you will be able to put more money away while maintaining the freedom to spend it a way that makes more sense in the future.

Do you want this year to be filled with prosperity for you and your family? Email Rea & Associates to get more information on how you can succeed financially in 2015.

By Dave McCarthy, CPA, CSEP (Medina office)

 

Related Articles

Retirement Is Knocking … Are You Ready To Answer The Door?

College Costs Keeping You Up All Night? Tax Credits Could Offer Relief

What Should You Ask When Reviewing Your Life Insurance Policy?

Share Button

Put Your Property Easement Agreement To Work

Tuesday, December 16th, 2014

The shale oil and gas play has spurred a significant amount of pipeline and infrastructure activity throughout certain areas of the United States. As a result, many landowners are now being approached by landmen armed with cash offers and easement agreements in the hopes of acquiring the right to use your property to process and transport oil and gas related products. Before you sign on that dotted line, be sure to seek advice from someone well versed in the complexities of property easements.

Be An Informed Property Owner

You probably want to keep as much money in your bank account as possible. So when it comes to paying your taxes, you probably have no intention of giving the government more than its fair share, right? Did you know that when you enter into certain agreements, such as land easements, you may be able to dictate the type of tax treatment your income receives? The trick is to fully understand the tax consequences of language in the agreement.

The tax treatment of a land easement typically is determined (at least in part) by the easement agreement itself. The easement language will either determine if the agreement is for a permanent (or perpetual) easement period, which is exclusive in nature; or if it’s a temporary easement, which will be effective for a finite period of time.

Understand Your Options

If you enter into a permanent easement agreement, the taxable part of the transaction could qualify for capital gains, which may result in an opportunity to save some money during tax season. If you are able to apply the capital gains tax treatment to the income generated from the land easement contract, as opposed to the ordinary income tax rate, you could stand to see your tax rate that is applied to this income drop by almost half.

  • Capital Gains tax rate = 20 percent
  • Regular Income tax rate = 39.6 percent

On the other hand, if you are looking for another option, which could eliminate current payment of tax all together (defer the tax consequence into the future), you might consider the like-kind exchange tax planning strategy. Like-kind exchange rules require the property that is exchanged and the property that is acquired to be held for productive use or investment purposes.

Agreements that receive like-kind treatment under U.S. Code 1031 may result in the deferral of your taxes being due until well into the future or until you dispose of the property acquired in the like-kind exchange. For this to work, the easement agreement must be considered perpetual or permanent and must also involve real estate that is used as part of your trade or business or that is being held for investment purposes.

Don’t Disqualify Yourself

While the thought of exchanging your land easement for other real estate while deferring your taxes may seem attractive, the process of entering into, and maintaining, a like-kind exchange is very complex and must be strictly adhered to. In other words, you will need to seek out help to navigate the waters. If you would like to see if you qualify for a like-kind exchange, email Rea & Associatesfor more information. And remember to always consult your current financial advisor or another professional well versed in like-kind exchange taxation, before signing any land easement contract. Failure to do so may disqualify you from favorable like-kind exchange treatment.

By Jim Fracker, CPA (Zanesville office)

 

Related Articles

Outright Shale Sales Are Another Option For Landowners

What To Do If You Strike Oil of Gas

How Can Your Ohio Business Benefit From The Utica Shale Play?

Share Button

The Tax Professional’s Christmas List

Friday, December 12th, 2014

Move Over Santa, This One’s For Congress

While the holidays typically bring about feelings of joy and comfort, they can also be a time of stress. And as the year comes to a close, many individuals are left to frantically resolve a number of tasks that they had hoped would be completed before the end of 2014 – yet they are still lingering on their to-do lists.

If tax professionals across the country were to compose a letter this holiday season, it wouldn’t be sent to Santa. Instead, it would pass over the North Pole en route to Washington D.C. – and it would be addressed to the members of the United States Congress.

This year, all we want for Christmas is for our congressional leaders to extend the more than 50 tax provisions that were left to expire at the end of 2013 – before the end of the year. Failure to do so could have a negative impact on the 2015 tax season.

While it is possible for Congress to wait until the New Year to enact these provisions next month, a retroactive approach would ultimately hurt the IRS, tax professionals and software providers. This is why it is so important for the provisions to be extended before Dec. 31.

Furthermore, postponing this legislative action could postpone the start of the 2015 tax season, which would delay refunds to millions of American taxpayers.

What tax provisions are at risk?

Individual tax payers are at risk of losing:

  • A $250 above-the-line tuition deduction
  • An election to deduct state and local sales tax
  • Tax-free charitable distributions from individual retirement accounts (IRAs)
  • The private mortgage insurance (PMI) itemized deduction
  • The energy efficient home improvement tax credit

Popular business tax benefits at risk of disappearing include:

  • The work opportunity tax credit
  • A research credit
  • The Section 179 expensing limit
  • Bonus depreciation

This holiday season, it is our hope that Congress will move quickly to resolve this issue in a way that is favorable for American tax payers. Doing so would not only provide the IRS and tax professionals with the time they need to prepare for the 2015 tax season; such legislative action would help promote the financial wellbeing of the American taxpayers.

Would you like to discuss tax planning options for yourself or your business? Email Rea & Associates to speak with a tax professional today. Will you want help filing your 2014 business taxes and/or personal taxes? Would you like a little extra help preparing for the 2015 tax season, our tax experts will work with you to make your experience as worry-free and seamless as possible.

By Lisa Beamer, CPA (New Philadelphia office)

 

Related Articles

Employers Must File Taxes, Make Payments Electronically

New Adjustments Will Affect Your 2015 Tax Return

Retirees Get Cranky Over Tax Returns

Share Button

New Year, New Mileage Rates

Thursday, December 11th, 2014

Every mile you drive for business will be worth a little more next year, according to a recent IRS announcement. Beginning Jan. 1, 2015, the optional standard mileage rate for those calculating the deductible costs of driving for business will be 57.5 cents, which is up from 56 cents.

Based on a study of the fixed and variable costs associated with operating an automobile, the standard mileage rates take into consideration vehicle depreciation, insurance, repairs, maintenance, gas, etc. However, if you don’t intend on tracking your mileage, you also have the option of claiming deductions based on the actual costs of using your own vehicle rather than the standard mileage rates. Just be aware that you will not be allowed to claim both.

For example, if you have plans of claiming an accelerated depreciation on your vehicle, then you will not be able to claim the business standard mileage rate as well. If you are a business owner, you should also note that the standard rate is not available to fleet owners, or those who use more than four vehicles simultaneously. Additional details and rules can be found in Revenue Procedure 2010-51.

While the standard mileage rate for the business miles you drive will increase in 2015, those who use their vehicles for medical or moving purposes will see a reduction of half a cent in their mileage rates. Starting Jan. 1, the miles you drive for medical or moving purposes will be calculated at 23 cents per mile driven. And those driving their vehicles as a service to charitable organizations may calculate their deductions at 14 cents per mile driven.

Also in its announcement, the IRS noted an adjustment to the standard automobile cost allowable under the fixed and variable rate (FAVR) plan, which considers the costs taxpayers incur by driving their own vehicles for work-related purposes. In 2015, standard automobile costs may not exceed $28,200 or $30,800 for trucks and vans.

Do you use your vehicle for business? Make sure you track of your mileage. Every mile you travel is an opportunity to realize real tax savings. Our expert financial advisors can help professionals like you find opportunities you never even knew existed. Email Rea & Associates today and start the New Year out right.

By Lesley Mast, CPA (Wooster office)

 

Related Articles

New Adjustments Will Affect Your 2015 Tax Return

How Can You Best Prepare For The Upcoming Tax Season?

So Is It A Tax Credit Or A Tax Deduction?

Share Button

Save More For Retirement in 2015

Tuesday, December 2nd, 2014

As you work to secure your retirement, you may be pleased to find out about changes to several retirement-related items that may allow you to put a little more cash away in 2015. In October, the IRS announced several adjustments to the limitations previously set on retirement planning tools as a result of an increased cost-of-living. So what does that mean to you and your retirement plan(s) of choice? Take a look:

  • If you contribute to a 401(k), 403(b), 457 plan or a Thrift Savings Plan, the following changes could impact how you contribute:

-        You can now invest up to $18,000 annually – this is an increase up from $17,500.

-        If you’re 50 years old or older and are trying to catch-up on your retirement savings, you may now invest $6,000 annually. The previous catch-up contribution limit was $5,500.

  • If you contribute to an individual retirement account (IRA), you will see the following changes in 2015:

-        The annual limit and additional catch-up contribution limit for an IRA for individuals 50 years old and older will not change in 2015. The annual contribution is $5,500 and the catch-up contribution is $1,000.

-        Single filers and heads of household who are covered by a workplace retirement plan and have adjusted gross incomes (AGI) between $61,000 and $71,000 will no longer be eligible to receive a deduction for contributing to their traditional IRA. This has increased from $60,000 and $70,000 in 2014.

-        Married couples who file jointly, where one spouse makes an IRA contribution that is covered by a workplace retirement plan, will see an increased income phase-out range for taking the deduction as well. The new range is $98,000-$118,000 – up from $96,000-$116,000.

-        If you’re an IRA contributor, not covered by a workplace retirement plan, but are married to someone who is covered, the deduction is phased out if you and your spouse’s income falls between $183,000 and $193,000 – up from $181,000 and $191,000.

-        The phase-out range for a married taxpayer who files a separate return and who is covered by a workplace retirement plan will not change in 2015. The range remains $0 to $10,000.

  • If you make contributions to a Roth IRA, you will see the following changes:

-        The phase-out range for married couples filing jointly is $183,000 to $193,000 – an increase from $181,000 to $191,000.

-        The phase-out range for single filers and heads of household is $116,000 to $131,000 – an increase from $114,000 to $129,000.

-        The phase-out range for a married individual who files a separate return is unchanged.

As we approach the end of the year, there’s not a better time to evaluate your current retirement plan situation and determine if you need to make any changes for 2015. To learn more about how these retirement plan changes could impact your financial situation, email Rea & Associates.

By Paul McEwan, CPA, MT, AIFA (New Philadelphia office)

 

Related Articles

How Can I Make The Most Of My Retirement?

Retirement Is Knocking … Are You Ready To Answer The Door?

What Are Ways You Can Ensure You’re Ready For Retirement? 

Share Button

Manage Your Business’s Ethical Framework After You’re Gone

Tuesday, November 18th, 2014

While the reasons for drafting an ethical will may seem more personal than business-related, an ethical will can be an effective way for business owners to pass along their vision for the future of their company after they are gone.

A properly drafted last will and testament is critical to ensure your estate’s financial well-being. Perhaps equally important is your responsibility to manage your intellectual assets, including knowledge and ethical values. An ethical will, also known as a legacy letter, is a way for you to pass along information to family, friends, colleagues and even communities.

Ethical wills have been around for many centuries. They were very prevalent in Medieval Times, but lost much of their popularity in modern times. Over the past couple of decades, they have regained their popularity.

While a last will and testament details how a person’s possessions will be distributed after death, an ethical will is a way to pass on a person’s values, hopes, dreams and life lessons – among other viewpoints. Though an ethical will is not a legal document, Business Week has described it as an aid to estate planning.

What should I include in my ethical will?

  • Your personal values – the importance of honesty, integrity and personal responsibility.
  • Your views on work ethic, dedication to one’s chosen profession and work-life balance.
  • Your views on charitable giving and community responsibility.
  • How to develop and cultivate personal and business relationships.
  • Your hopes and dreams for your spouse, children and other family members.
  • Anything that you have learned in life and would like to pass on to others.

When should I draft my ethical will?

  • Marriage
  • Birth of a child
  • Children leaving for college
  • When drafting a succession plan for your business
  • End of life
  • Or anytime

An ethical will can be an integral part of your overall estate plan, so consider putting one together today!

By Cathy Troyer, CPA (New Philadelphia office)

 

Related Articles

When Should You Start Thinking About Succession Planning?

Succession Planning: Do You Know Your Options?

How Do You Create A Succession Plan?

 

Share Button

Retirees Get Cranky Over Tax Returns

Tuesday, November 4th, 2014

Tax preparation and tax payments often become MORE complicated in retirement. Why? Because retirement taxation is new for a retiree so there’s a learning curve. Here are a few cliff notes to help new retirees navigate these uncharted waters:

Social Security

The money you receive from Social Security will likely be taxable. Fifteen percent of your Social Security benefit is a return on your lifetime payroll deductions and your employer’s match. Eighty-five percent of your Social Security is the excess benefit payment, or “growth,” in your benefit account and, thus, your untaxed benefit. That 85 percent may be taxable depending on the amount of your other income. This calculation is complex and the tax is difficult to avoid, but it is possible.

IRA Distributions

You must take your IRA distributions when you have reached the age of 70-½. The Required Minimum Distribution (RMD) can be managed and will impact your taxable Social Security. Planning is essential.

Capital Gains

As your lifetime investments are sold to help pay for retirement, capital gains is another obstacle to overcome. Here are a few tips to make them more manageable:

  • It may take a little time, but document when you bought those investments and what you paid for them. Once your record is complete, give the information to your broker to record in your investment account statement.
  • If you own your investments directly, gather them up and put them into an investment account to simplify your tracking, cost barriers, tax preparation and estate administration.

Itemized deductions

The good news is that you have likely paid off your mortgage. The bad news is that you may no longer exceed the standard deduction to itemize. So then why do you keep tracking medical bills if you can’t itemize? “Bunching” deductions may be a planning option. For example, every OTHER year, I have my Mom pay her real estate taxes, Ohio tax estimates and charitable contributions she made during the year. Then I have her prepay next year’s real estate taxes, charitable contributions and Ohio estimated taxes in December. That doubles her itemized expenses and raises her total above the standard deduction. Then, I have her take an additional IRA distribution equal to the excess itemized deductions. That excess distribution equates to a tax-free payment because it is offset by the excess itemized expenses! This option is available to you too!

Estimated tax

You are required to calculate and pay your income tax by managing your social security and IRA retirement tax withholding, along with quarterly tax estimate payments. You must project and declare your taxable income by April 15 in the new-year. And remember, there are NO excuses for not paying them on time.

Complexities You Can Avoid

  1. Watch those managed stock accounts. The amount of programmed buying and selling creates more work for your CPA and will raise your tax preparation fee. Ask yourself if that activity really did make you more money after the incurred income tax and preparation fee. If it didn’t, revisit your managed stock accounts.
  2. Understand the publicly-traded LLCs recommended by your broker and know that you may need to extend your tax return because of the K-1 you will receive to report the income. Your preparation fee will be raised as well. Again, if you didn’t make any money after the incurred taxes and preparation fee, is it really worth it to continue?

The transition into retirement is not easy. Unfortunately, your money management and tax filing won’t be easier either. Our tax experts are always happy to answer any question you may have. Email Rea & Associates to learn more about your options for managing your retirement.

Author: Lee Beall, CPA (Dublin office)

 

Related Articles

How Can I Make The Most Of My Retirement?

Retirement Is Knocking … Are You Ready To Answer The Door?

Why Should You Review Your Retirement Documents Now?

 

Share Button

The Totalization Conundrum: Tax Tips for Employees Abroad

Friday, October 31st, 2014

Taxes are confusing enough when geography isn’t a factor. Now imagine that you are accepting a short-term opportunity as an independent contractor overseas. Do you have any tax obligations while you are away? If so, how should these obligations be managed? Is there a difference between working as an independent contractor overseas versus working as an independent contractor in the United States?

Someone recently reached out to us to find answers to these questions. We researched her question a little further to arrive at the following conclusion: yes – on all counts.

As an independent contractor working overseas for a short period of time you will:

  • Owe self-employment tax
  • Have to pay advanced taxes (i.e. make estimated payments)

In fact, if you are an American citizen, it does not matter if the work you complete is inside or outside the United States, your tax obligations are universal regardless of where in the world you are staying.

That said, the bigger question becomes, will the income you generate be taxed more than once. The answer to this question is: maybe.

For example, if you are working in India, you may be expected to pay into India’s social security program. The good news is that the U.S. has made agreements with many nations to prohibit multiple tax practices from occurring. For income tax purposes, these agreements are called Tax Treaties. When the issue pertains to Social Security purposes, they are called Totalization Agreements.

Why Are Totalization Agreements Important?

A Totalization Agreement is meant to improve Social Security protection for those who have worked (or are working) in multiple countries. The agreement essentially provides a way to manage how taxes are distributed and how workers are credited for the progress made toward their Social Security benefits (or similar programs abroad) between the two or more countries in which the employee has worked.

Again, using India as the example, because no Totalization Agreement exists, a U.S. citizen working in India should be prepared to pay in to each country’s social security program. This isn’t the case in countries where Totalization Agreements are in place.

A U.S. citizen working in the Canadian Province of Quebec, as an independent contractor, for example, would only be obligated to pay U.S. Social Security taxes. In this example, a Totalization Agreement between Quebec and America would also mean:

  • A self-employed American citizen working in Quebec would not have to pay in to Quebec’s social security program.
  • The taxes and Social Security accumulated by an employee of an American company working in Quebec would be distributed by the American company to the U.S. government.

You can learn more about the Totalization Agreement between the United States and Quebec here. Or you can view a list of countries with Totalization Agreements in place with the U.S. here.

Additional Deductions Are Available

Even though Americans working in India may be required to pay into social security programs in both countries, a Tax Treaty protects U.S. citizens from paying income taxes to both countries. Additionally, there are other ways to find tax savings as an employee working overseas.

  • Even though you may be required to pay into the county’s social security program, this cost can likely be deducted per the foreign tax credit, which was established to assist American taxpayers who find themselves working from countries where Totalization Agreements are not in place – such as India.
  • If you are planning a temporary absence from your tax home in the U.S. for business, your away-from-home expenses may also be deductible. So keep track of your travel, meal and lodging costs.

If you are an American working overseas who is struggling with the tax obligations between your country of residence and your country of employment, email Rea & Associates today. Our tax professionals will help you identify your tax obligations while you are abroad and can help you successfully deduct business-related expenses on your next tax return.

Author: Ben Jonard (Dublin office)

 

Related Articles

Getting Back To Business: How Outsourcing May Provide Relief To Your Business

Ready, Set, Download: IRS2Go Mobile App 2014

Do You Export? Lower Your Taxes with IC-DISC

Share Button

Are You Prepared To Pay?: Obamacare’s Shared Responsibility Provision

Tuesday, October 21st, 2014

American businesses have been feeling the push and pull of Obamacare on their bottom lines for a while. Now, it’s time for individuals who chose to forego health insurance coverage to see what the individual shared responsibility provision has in store for them. If you did not have insurance coverage in 2014, you may need to send a little more money to the IRS when you go to file your 2014 federal tax return.

The individual shared responsibility provision became active in 2014 and, absent an exemption, requires individuals to pay a fee into the system if they choose not to carry health care insurance.

An exemption may be granted if:

  • The minimum cost for your premiums totals over 8 percent of your household’s total income.
  • You have had a gap in your health insurance coverage for less than three consecutive months.
  • You have a hardship that prevented you from obtaining coverage.
  • You are a member of certain religious groups (e.g. Amish) and you have Supplemental Security Income (SSI) exemption on file.
  • There are several other criteria and fine print you can see here.

According to the IRS, your shared responsibility payment for 2014 will either be “the greater of one percent of the household’s income above the income filing threshold for your tax filing status, or a flat dollar amount of $95 per adult and $47.50 per child (under the age of 18) – but no more than $285 per family. The individual shared responsibility payment is also capped at the cost of the national average premium for bronze level health plans available through the health insurance marketplace that would cover everyone in your family who does not have minimum essential coverage and does not qualify for an exemption – for example, $12,240 for a family of five.”  This fee will increase in future years.

As you prepare to file your 2014 federal tax return, here are a few things to keep in mind:

  • You must make the IRS aware of whether your household had minimum essential coverage for each month in 2014. This can be done by checking a box identified on your tax return document.
  • If your household qualified for an exemption in 2014, an additional form must be attached to your tax return, which will provide the IRS with the information needed to approve the exemption claim.
  • Those required to make an individual shared responsibility payment, must make the payment when you submit your federal tax return to the IRS.

If you’re unsure whether you qualify for an exemption or need help calculating how much you will owe to the government when making your shared responsibility payment, email Rea & Associates. We can help you determine how the shared responsibility provision will affect you.

Author: Joe Popp, JD, LLM (Dublin)

 

Interested in other Obamacare-related posts? Check these out:

Health Insurance Options: Shop, Drop, Roll, or Self-insure?

How Will ACA Federal Exchange Premiums Affect Ohio Small Businesses And Consumers?

With The Affordable Care Act ‘Pay Or Play’ Provision Delayed, I Don’t Have To Do Anything Until 2015, Right? Wrong!

Share Button

Ready, Set, Download: IRS2Go Mobile App 2014

Monday, October 20th, 2014

In June, the Internal Revenue Service (IRS) made the 2014 version of IRS2Go available to mobile users. This free app can help you stay on top of your federal income tax refund. You can also request your tax return or account transcript or receive tips and updates from the IRS via the app.

Benefits of IRS2GO App

Compatible with Apple and Android devices, the IRS2Go mobile app has been redesigned and includes several new and updated features, such as:

  • IRS2Go makes it easier for individuals to check their refunds at a time that’s convenient for them. To get there, just click on “Refund Status,” enter your Social Security Number (which is masked for security purposes), then select your filing status and the amount of your anticipated refund. The new “status tracker” allows users to identify where their return is in the tax return process. NOTE: Returns filed electronically can be viewed 24 hours after the return was received by the IRS. Paper returns take longer to process and can take up to four weeks before their status is available to view.
  • Another helpful feature is your ability to request your tax records or your account transcript. While, for security reasons, the records cannot be viewed immediately on your Smartphone or device, the request will be processed and your records will be delivered promptly to the address on record.
  • If you need help preparing your tax return, IRS2Go helps users find IRS Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs by simply entering a ZIP code and mileage range.
  • Users also have the opportunity to stay connected, view more content and interact directly with IRS on Twitter, YouTube, Facebook or by signing up for email updates.

To download the IRS2Go app on your Apple iPhone, iPad or iPod Touch device, visit the iTunes app store. To download IRS2Go on your Android devise, visit the Google Play store.
By Kelly Leslie, CPA (Cambridge office)

 

Related Articles

Where’s Your Tax Refund?

What’s The Relationship Between Side-Businesses And Tax Deductions?

Share Button

To Shred Or Not To Shred: That Is The Question … Ask Your Financial Advisor

Monday, October 6th, 2014

Are you wondering what to do with all those tax documents and records you have piling up around your office or in your computer files? Are you thinking about wiping them from your company’s hard drive or sending them to the shredder? Not so fast. The IRS has several rules when it comes to how long your business should keep its records. Make sure you are up to date on the current records retention schedule before you permanently delete something important.

Generally speaking, records that support your income or deduction claims for tax return purposes should be kept until the period of limitations for a particular tax return expires. The “period of limitations” is defined as the period of time the IRS gives you to change information on your return, particularly when the information relates to a refund or credit you have claimed. Also, just because you aren’t planning to make any changes to your tax return doesn’t mean the IRS won’t. Therefore it’s in your best interest to keep your documents until the IRS can no longer assess additional taxes or request additional information from you.

Below is a quick reference guide pertaining to some common records your office has been collecting over the years and how long you should keep them.

Records You Should Keep Permanently:

  • Copyright registration
  • Correspondence (legal and important matters)
  • Deeds, mortgages, bills of sale
  • Depreciation schedules
  • Financial statements (end-of-year)
  • General and private ledgers (and end-of-year trial balances)
  • Insurance records, current accident reports, claims, policies, etc.
  • Minute books for director and stockholder (including bylaws and charter)
  • Property appraisals by outside appraisers
  • Retirement and pension records
  • Tax returns and worksheets, revenue agent’s reports and other documents relating to determination of income tax, sales tax, or payroll tax liability

Records That Should Be Retained For At Least Seven Years:

  • Accident reports and claims (settled cases)
  • Accounts payable/receivable ledgers and schedules
  • Expense analyses and expense distribution schedules
  • Garnishments
  • Inventories of products, materials and supplies
  • Plant cost ledgers
  • Telephone logs/message books
  • Time books/cards
  • Withholding tax statements
  • Employee payroll records (W-2, W-4, annual earnings, etc.)

Records That Can Be Destroyed After Three Years:

  • Bank deposit slips
  • Employment records
  • General correspondence
  • Internal work orders
  • Production and sales reports
  • Sales commission reports

If the records you are looking for aren’t listed above, you can find additional record retention recommendations in our current record retention schedule.

IMPORTANT: The actual amount of time you are required to keep a specific document may be longer depending on your business or what is contained in the document. If you have questions about specific documents or would like some advice on your current record retention practices, email Rea & Associates.

Author: Joe Popp, JD, LLM (Dublin office)

 

Related Articles:

How Do You Keep Your Tax Documents Organized?

Getting Back To Business: How Outsourcing May Provide Relief To Your Business

How Can You Best Prepare For The Upcoming Tax Season?

Share Button

IRS Says You Owe More? Don’t Write That Check Yet!

Tuesday, September 23rd, 2014

Tax season can be rough for any business. Just about the time you allow yourself to move on to something else and breathe a sigh of relief … it happens. You sift through your mail and find yourself staring face-to-face with a letter from the Internal Revenue Service (IRS). In a matter of seconds your adrenaline levels are through the roof. You know that what’s inside the envelope isn’t a simple thank-you note for filing your taxes on time. You carefully tear it open.

Nobody likes to hear that they have to pay more to the IRS than they originally thought. But, before you jump to conclusions and quickly write out a check for the amount the letter says you owe:

  • Stop
  • Take a deep breath
  • Call your financial advisor

4 Tips For Resolving Your Tax Dispute

Believe it or not, the IRS does make mistakes. Agents can accidentally input incorrect information, computers can misread data and tax codes can be inadvertently overlooked or misinterpreted. It happens. If you believe that the IRS was wrong in a decision it made about your business’s tax returns, follow these four steps to reach a resolution.

  1. Follow Instructions. Sometimes the easiest way to resolve the issue is to follow the instructions. Sounds easy enough, but not everybody gets this part right. If the IRS sent you a notice, look for the section that explains what to do if you disagree with their decision and follow directions. Additionally, be sure to attach any supporting documentation and mail it back to the address given by the deadline requested. After the IRS has made its decision, you will be notified via U.S. Mail. When in doubt, opt to send inquiries to the IRS via certified mail and request a receipt.
  2. Make The Call. If your initial challenge was rejected, your next step is to follow up with a phone call. The rejection notice you received should have included another important piece of information: the contact name and number of the IRS employee who rejected your challenge. When you call, in a polite and professional manner, ask to speak to the employee’s manager. Even though you are passing over the employee on the chain of command, take care not to say anything about why you are asking to speak with their supervisor. The last thing you need is to create animosity. When you finally have the opportunity to speak with a supervisor, your case should be laid out in much the same way as your original challenge. You should be clear and concise in your explanation while taking care to address any concerns that were noted by the original employee in their rejection letter. If your letter didn’t include an employee’s name and phone number, send another certified letter to a general supervisor with the agency and request that they reconsider your case.
  3. Appealing To A Higher Office. If you still haven’t convinced the IRS to change its mind, don’t give up – even if you have already mailed several letters and racked up a lot of call time with the agency. Further up the chain of command is the Office of Appeals, an independent office within the IRS. This is just one more step you have to take on your journey to find an IRS employee who agrees with your. To get your case to the Office of Appeals, follow the instructions that were found in the earlier notices. If you are unable to locate these instructions, you can find them on the IRS website.
  4. Welcome to U.S. Tax Court. Sometimes a resolution can’t be achieved in the first three steps of the appeal process. If you find yourself in this situation your final option is to take the case to the U.S. Tax Court. At this point you may be discouraged and may even question whether you should continue on with the fight, but if you still believe that the IRS is wrong it is probably in your best interest to see it out to the end.

If your dispute is less than $50,000 you will have the option to represent yourself. Similar to how a small-claims court operates, there is no jury and the judge will not hold your inexperience against you. Once court is in session you will state your case again, provide evidence and answer any questions a judge may ask about the claim. Be advised, however, that once a decision is made at this phase it is final and cannot be appealed.

Sometimes, even though you have decided that you want to move forward, an IRS attorney may offer to settle out of court for a figure less than what the IRS says you owe. If this happens, you need to decide whether you will accept the settlement or if you will move forward with presenting your case to the judge. The choice is yours.

If you find yourself at odds with the IRS over a tax issue and are not sure how to proceed, email Rea & Associates for more information.

Author: Clayton W. Rose, III, CPA

 

Related Articles:

How Far Back Can The IRS Go For Tax Auditing?

Are You Having Trouble Staying Current With Payroll Taxes?

Does Your Company Have Strong Internal Controls?

Share Button

College Costs Keeping You Up All Night? Tax Credits Could Offer Relief

Tuesday, September 2nd, 2014

As a parent you have spent countless hours preparing your child for adulthood. You have thumbed through your share of board books, mastered the art of singing The ABC Song and Twinkle, Twinkle Little Star on a whim, and have racked up enough mileage driving back and forth from piano lessons, soccer games and summer camps to make a space shuttle cringe. But now it’s here. After nearly 18 years, your son or daughter has become a college student.

Many parents describe this milestone moment as bittersweet; others say they are caught off guard by feelings of anxiety and sadness. And while all parents are proud of their child’s accomplishment, it’s hard not to feel a little buyer’s remorse when you see the statement for the first semester in the mail – especially if you offered to pick up the tab.

College is not cheap, and according to the National Center for Educational Statistics (NCES), it’s only getting more costly. The NCES reported that the prices for an undergraduate to attend college at a public institution rose 40 percent between the 2001-02 and 2011-12 academic years; a student who chose to attend a private nonprofit institution saw a 28 percent increase over the same period. The report found that an average undergraduate student paid $14,300 annually for their tuition, room and board at a public institution while a student attending a private for-profit school paid $23,300 per year. And those numbers don’t include the price of books, meals, transportation, insurance, and extracurricular activities … to name a few.

Consider A Tax Credit

Don’t abandon ship just yet. Here are three tips to help give your bank account a break.

  • Utilize the American Opportunity Tax Credit or the Lifetime Learning Credit. These two tax credits could help take the edge off of your initial statement shock. If you qualify for the American Opportunity Tax Credit, you could save up to $2,500 annually for an eligible student during their first four years of school. Because 40 percent of this credit is refundable, you may be able to get up to $1,000 of the credit as a refund. The Lifetime Learning Credit, on the other hand, gives you the opportunity to claim up to $2,000 on your federal tax return and has no limit on the number of years it can be claimed. If you decide to take a credit, keep in mind that the IRS will only let you claim only one type of education tax credit per student.
  • Claim your qualified education expenses. Be sure to keep track of the expenses you paid toward tuition and student activity fees that were paid to complete enrollment. According to the IRS, you can make a claim if you paid for any of these expenses with cash, check, a credit or debit card or with money secured from a loan. If you will be taking the American Opportunity Tax Credit, expenses for books, supplies and course equipment are also considered a qualified education expense.
  • Don’t forget your 1098-T. This form, in addition to your receipts, is critical to claim a tax credit. Most schools will send this to you in the mail. Don’t be surprised if the amount on your form doesn’t match your numbers. The 1098-T doesn’t include items such as textbooks.

College doesn’t have to break the bank. To learn more about your college saving options, email Rea & Associates. Our team of tax professionals can guide you through the tax credit process and other college savings options.

Author: Brian Kempf, CPA (Millersburg)

 

Related Articles:

Saving For College? Use Sallie Mae’s New Mobile App

What You Should Know Before Dipping Into Your 401(k)

Have You Determined A Beneficiary For Your Retirement Plan?

Share Button

Outright Shale Sales Are Another Option For Landowners

Tuesday, August 26th, 2014

The work to unearth valuable minerals from the Utica and Marcellus shale deposits in Eastern Ohio continues to move forward at full speed. While many of the area’s landowners entered into mineral land leases years ago, some chose to put off the leasing process for later – it is now 2014. Several years have passed and the landowners who chose to wait are now facing a different set of choices and options concerning their land and the minerals found within.

What Has Changed?

If you’re looking to cash in on the shale boom, the traditional land/mineral lease alternative is no longer your only option. Today, some landowners are considering the outright sale of their mineral interests to an acquiring entity. While both options have their merits, this discussion is not intended to weigh the economic consequences when comparing land/mineral leasing versus the outright sale of your mineral interest. You should be aware of a few points surrounding the sale of mineral interests that may help govern your decision.

  • Outright sale agreements typically state that the landowner will agree to sell their mineral interests, specific to formation or generic, to an acquiring entity.
  • Per the agreement, the seller typically relinquishes all incidents of mineral ownership – and usually all rights to any future income streams based on the future production from the minerals in question.
  • If you choose to sell your mineral interest outright, your decision to do so may trigger tax planning opportunities, such as the “like-kind exchange” tax treatment for real estate transactions also known as the IRC1031 exchange. In other words, this particular transaction could qualify your gain from the sale of mineral interests to be deferred into the acquired “like-kind” real property. The acquired real estate must be held for trade, business or for other investment purposes.

Proceed With Caution

Before jumping the gun and making a decision based on the possibility of triggering the like-kind exchange, understand that the rules governing IRC1031 are very complex. The sale of mineral interest just adds to the complexity. It’s important that you speak with an advisor concerning a “like-kind exchange” before closing on the mineral interest sale, or the replacement property.

The like-kind exchange opportunity is not for everyone. For those who qualify, however, a mineral sale scenario with the right fact pattern coupled with a properly executed 1031 exchange could result in a significant tax planning opportunity for landowners who are seeking ways to minimize the current tax consequences.

While it’s great to have a range of choices when dealing with matters such as these, the larger selection has a tendency of making it harder to zero in on the information needed to make an informed decision. If you’re considering a land/mineral lease or an outright sale alternative, email Rea & Associates to get more information about these options.

Author: Jim Fracker, CPA (Zanesville office)

 

Related Stories:

What to do if You Strike Oil or Gas

Reducing Uncle Sam’s Tax Bite on the Sales of Your Business

How Valid Is Your Buy-Sale Agreement

Share Button

When Scammers Demand That You Pay Up, IRS Says You Should Hang Up

Monday, August 18th, 2014

More than 1,000 American taxpayers have collectively lost about $5 million as a result of a recent phone scam that has been reported to be active in virtually every corner of the nation. The Internal Revenue Service (IRS) reminds everybody to be vigilant, to never give personal financial information to anybody over the phone, and to report instances of phone scams to the IRS and/or to the Treasury Inspector General for Tax Administration (TIGTA).

According to IRS Commissioner John Koskinen, “Taxpayers should remember their first contact with the IRS will not be a call from out of the blue, but through official correspondence sent through the mail. A big red flag for these scams are angry, threatening calls from people who say they are from the IRS and urging immediate payment. This is not how we operate. People should hang up immediately and contact TIGTA or the IRS.”

To date, more than 90,000 complaints regarding the scam have been made to the IRS and TIGTA.

Signs of An IRS Phone Scam

A media release, sent Aug. 13, reports that scammers will use fake names and IRS badge numbers, are able to recite the last four digits of a victim’s social security number, and spoof the IRS’ toll-free number on caller IDs so that the calls appear legitimate. Victims reported that they were threatened with jail time or driver’s license revocation if they refused to comply with demands. After hanging up, scammers call back claiming to be local law enforcement or a DMV representative. The second phone call is supposed to reinforce their original claim and demands.

Don’t Be An IRS Phone Scam Victim

  • If you think you might owe taxes or that there may be an issue with your taxes, call the IRS directly at (800) 829-1040. An authorized IRS representative can help you determine if you have a payment due.
  • If you get a suspicious call from someone claiming to be from the IRS and you know that you have no IRS issues, report the incident to TIGTA at (800) 366-4484. You should also contact the Federal Trade Commission and use its “FTC Complaint Assistant” at FTC.gov. Be sure to add “IRS Telephone Scam” to the comments of your complaint.
  • Don’t let scammers catch you off your guard with questions about your tax history. Call your CPA and be confident about whether you owe money to the IRS or not. When it comes to your financial security, take a proactive approach.

Email Rea & Associates if you’re ever unsure about anything you received from the IRS, whether it is a letter, a phone call or an email. We can help you determine if the inquiry is legitimate.

By Maribeth Wright, CPA (Cambridge office)

 

Looking for other articles on how you can protect yourself and your business? We recommend these:

How Can I Protect My Business From A Data Security Breach?

Are You Secure? Cyber Security Targets Employee Benefit Accounts

How Do You Protect Yourself From Identity Theft?

 

Share Button

Were You Overcharged By The Ohio BWC?

Wednesday, July 30th, 2014

Countless small businesses soon may find that they have money coming back to them. The Ohio Bureau of Workers’ Compensation (BWC) has decided to settle a class action lawsuit alleging that the BWC, over the course of many years, had a system of group rating in place that improperly overcharged many Ohio businesses. A lower trial court originally ruled in favor of the plaintiffs with possible damages exceeding $800 million. While the ruling was upheld on appeal, the appeals court sent the decision back to the initial court to better address the issue of damages.

Now the BWC has agreed to pay out $420 million to those affected by the state agency’s practice of overcharging for workers’ compensation premiums between the years of 2001 and 2008.

To fulfill its obligation under the settlement agreement, the BWC said it will create a fund that will be specifically used to pay: claims made by employers found to be participants in the class action lawsuit, attorney fees, court costs, and costs associated with administering the fund. According to the settlement agreement, any unclaimed money will be returned to the bureau.

Can You Make An Ohio BWC Claim?

In order to make a claim, you must have been a private, non-group rated employer at some point during 2001-2008 who:

  • Subscribed to the state workers’ compensation fund
  • Was not group-rated
  • Reported payroll and paid premiums in a manual classification for which the non-group effective base rate was “inflated” due to application of the group experience rating plan

Employers who were non-group rated for at least one policy year between 2001 and 2008 are eligible to claim a portion of the settlement.  Eligible employers should be receiving a notice that indicated their status as class members and how to make a claim.  A website where claim information can be submitting is currently under development.

Class members are required to submit their claims to Judge Robert McGonagle of the Cuyahoga County Court of Common Pleas. Claims must be postmarked no later than Sept. 22, 2014. More information on this ruling can be found here. More details are coming, so stay tuned!

If you’re entitled to a portion of the BWC settlement, make sure you understand your rights and know how to follow the transaction process. If you’d like more information about how to claim what’s yours, email Rea & Associates and ask for information about this process.

Author: Joseph Popp, JD, LLM (Dublin office)

 

Stay up-to-date on other recent business advice blog posts. Check these out:

Be On Guard For IRS Phone Scams

Is Your Business Running On Microsoft 2003 Servers? It’s Time To Update 

Why It’s Important To Have A Good Banker As Part of Your Business Advisory Team

 

Share Button

Be On Guard For IRS Phone Scams

Thursday, July 17th, 2014

You get a call from a man who said he was from the IRS and was informing you that criminal activity was found after the IRS performed an audit on your past taxes. Then he asks if you had a criminal lawyer to represent you. And as you tried to get a word in edgewise, he told you not to interrupt him because the IRS and local authorities were recording your phone call. Pretty unnerving, right?

Well, unfortunately, this phone call actually took place with a client. And these types of phone calls are happening constantly. Back in April, the IRS issued a warning for consumers about phone scams targeting taxpayers. During the 2013 tax filing season numerous phone scams occurred, but the IRS has seen an increase in these scams since then. Because the IRS believes that these incidents will continue to plague taxpayers, it’s important to be vigilant for these kinds of calls.

The 4-1-1 On These IRS Phone Scams

  • Some taxpayers who received these calls were told they’re entitled to a big tax refund, or that they owe a lot of money to the IRS that needs to be paid immediately. Don’t be fooled. The IRS won’t contact you via phone about these matters. If you ever owe the IRS money, you’ll be sent a written notification via mail.
  • The IRS will never ask you for personal financial information over the phone, such as your credit or debit card information. If you’re asked for this information from someone claiming they’re from the IRS, don’t give it and report the incident immediately to the IRS.
  • Some IRS scammers use fake names/surnames (most of the time these names are common) and IRS badge numbers when they identify themselves.
  • It’s possible that a scammer knows and can tell you the last four digits of your Social Security number.
  • The phone number that a scammer calls you from could look like it’s from the IRS toll-free number.
  • If you take one of these scam calls, you may receive a bogus follow-up email to make it look like it is a legitimate inquiry from the IRS.
  • You may be threatened with jail time or driver’s license suspension from one of these scammers. They may then hang up on you and then call back pretending to be the police or DMV, further trying to prove their claim to you.

What Should You Do If You Get One Of These Calls?

So have you received one of these calls? If so, and you’re not sure the next step, here’s what you should do:

  • If you think you might owe taxes or there may be an issue with your taxes, call the IRS at 1.800.829.1040. Someone at the line can help you determine if you indeed have a payment due.
  • If you feel you received this call unexpectedly and know you have no IRS issues, call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.

In light of these increasing incidents, be on the lookout and don’t fall prey to these scams. Hang up if you’re uncomfortable with the call. And know that the IRS would never ask for personal financial information over the phone or in an email. If you receive any suspicious emails, forward the email to phishing@irs.gov.

Ohio Tax Help

If you’re ever unsure about anything you received from the IRS, whether it be a letter, a phone call or email, contact Rea & Associates. Our team of Ohio tax professionals can help you determine if the inquiry is legitimate, and assist you with responding.

Author: Maribeth Wright, CPA (Cambridge office)

 

Looking for other articles on how to protect you and your business? Check out these articles:

How Can Heartbleed Affect You and Your Business’s Online Identity?

How Can I Protect My Business From A Data Security Breach?

Are You Secure? Cyber Security Targets Employee Benefit Accounts

 

Share Button

What Should You Ask When Reviewing Your Life Insurance Policy?

Wednesday, May 21st, 2014

Throughout the past several months, I have written a couple of articles that explained the importance about why you should review your life insurance policy. It’s one of those things that we get for the “just in case” moment, and then sometimes forget about it. You’d be surprised how often unexpected slip-ups occur with life insurance policies. That’s why it’s so important to review your policy … to ensure that you’re not paying too much or too little for coverage, and to ensure that your policy is working properly for you.

All that said, here are six important questions you should ask when reviewing your life insurance policy:

Has my life situation or needs changed since I purchased my policy

Back in January, I wrote an article that outlined six common life changes that should cause you to stop and review your life insurance policy. These life changes ranged from the purchase of a new home to the changing of your job to the death of your spouse. If your life situation has changed since you originally purchased your policy, you’ll want to evaluate whether you need to increase or decrease coverage.

Have assumptions, such as interest rates, related to my policy change?

When you first purchased your life insurance policy, your insurer made some assumptions based on the market conditions at the time of your policy purchase. But as market conditions change, so can the assumptions your insurer originally made. By reviewing your policy, you’ll be able to determine if you need to make some policy adjustments that will help you receive the best benefits possible for your policy.

Do I have too much or too little life insurance coverage?

When you first took out a life insurance policy, you may have been making a lot less than you’re making now. If you’re making more now, you may find the need to increase your coverage. If you just said “Adios” to your youngest child who left your nest, you may find that you need less life insurance coverage now. It’s important to align your life insurance coverage with your needs and consider whether you’re paying for too much or too little of coverage.

Are my beneficiaries properly identified?

If you were to pass away while your life insurance policy is in effect, do you know who would receive the money? Many individuals name their spouses, children or parents as the beneficiaries. But if it’s been awhile since you purchased your policy, you might want to review it to ensure that your beneficiaries are properly identified. Make sure that your life insurance money will go to the individuals you really want it to go to.

How reliable is my insurer?

When you first purchased your life insurance policy, how well did you research the life insurance company you did business with? If you can’t recall spending a lot of time figuring out whether the company solid and reliable, you may want to evaluate the reliability of your insurer. The industry is rapidly changing, and with industry changes come concerns over whether certain insurers can continue to provide reliable service. If you question or are concerned about this, you’ll want to consider whether you need to change insurers.

Is my life insurance policy aligned with my estate/business plan?

Believe it or not, the lack of alignment between a person’s life insurance policy and their estate/business plan is seen more often than not. There are tax consequences for your beneficiaries if these two items don’t align, so in order to provide your beneficiaries with the maximum amount of money, ensure that your policy aligns with your estate/business plan.   

Life Insurance Review Help

Not sure where you and your life insurance policy stand? Don’t wait any longer. Get a review of your life insurance policy. Contact Rea & Associates, and we can help connect you to individuals who can help you with a life insurance review. You and your family will be glad you did.

Author: Lee Beall, CPA (Dublin office)

Share Button