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CPAs & Profitability Consultants

CPAs & Profitability Consultants. We do More T han J ust Accounting . . . We Increase O ur Clients’ Income and Improve Their Quality of Life! Daniel P. Vigilante CPAs & Profitability Consultants 999 Tabor Rd., Morris Plains, NJ, 07950. You know Dan always starts with a joke. 2.

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CPAs & Profitability Consultants

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  1. CPAs & Profitability Consultants We do More Than Just Accounting . . .We Increase Our Clients’ Income and Improve Their Quality of Life! Daniel P. Vigilante CPAs & Profitability Consultants999 Tabor Rd., Morris Plains, NJ, 07950

  2. You know Dan always starts with a joke . . . 2

  3. Now What? • The year 2013 is over. Did you miss the boat and is there anything you can do now to save money for 2013? Where are you? • There is nothing I can do. Just file taxes 4-15 and hope for the best. I will take my chances! • There is still time to do tax planning for 2013 and I can still save money! I want to get a jump on 2014 and start the ball rolling early. • Below are 7 things that DPV would like you to do: • Be the model client. • Create a tax file for each year’s tax return and start at beginning of each year. • Don’t give your tax preparer a shoebox of receipts. • Give all of your paperwork to your tax preparer at one time. • Talk to your tax preparer throughout the year. • Talk to your tax preparer before signing contracts. • If there is a potential problem with the IRS, tell your preparer immediately. • Get your paperwork to your preparer early (February) 3

  4. What You Should Pay Your CPA • Dec 12, 2013 - Annual Survey by National Society of Accountants • Fees are going up this year – The average return 1040 taxes 4 hours to complete. • Average fees are as follows: • 218 for a Schedule C( business ) • 142 for a Schedule D (capital gains and losses) • 165 for Schedule E ( rental ) • 196 for Schedule F ( farm) • 274 for 1040 Federal and State with Schedule A ( itemized deductions) • ***You have all of the above and your 1040 will costs $995. • Remember – It’s not what you pay your CPA that counts, it’s what you pay the IRS and CPA combined. • If your AGI is 250,000 or higher, I have to do three tax returns for you: • Your regular tax return • Your amt - tax return • Your net investment income tax return (new affordable care taxes ) • ***Naturally, your return will cost more than the above averages if your adjusted gross income exceeds $250,000. 4

  5. The IRS:What Does It Stand For? Below are some audit stats that you need to be aware of for 2012: 237,000,000 million returns filed in USA 7, 373,000 in NJ 76,000 c corps 124,000 s corps 161,000 partnerships 4,319,000 individual returns % of returns audited: USA: 143 million 1040-individual returns - 1% audited - 359,000 field and 1,122,000 correspondence Corp Returns: 2 million returns – 1.6% audited - 31,705 field and 996 correspondence Partnership Returns: 3.5 million returns - .5% audited - 11,852 field and 4,839 correspondence S-Corp Returns: 4,469 million returns - .5% audited - 20,234 field and 1,424 correspondence Individual Returns: with 200,000 of positive income – with business included - 3.7% audited; with 200k of positive income - Non business returns - 2.8% audited; individual returns with 1 million of positive income - 12.1% audited 5

  6. Changes in Tax Rates (2013) 6

  7. Higher Income Taxpayers • Additional Medical Payroll Tax started in 2013 and is applicable to earned incomes over: • Single: $200,000 • Married: $250,000 • Provision • Imposes an additional 0.9% on earned income. Increase from 1.45% to 2.35% (just the Employee portion) • Employer’s rate remains the same. Thus, for SE individuals the additional 0.9% is not deductible. • Employer to withhold on Employee as single and only income is what they earn from them – married couple, both earning $200K, will not have withholding, but will owe $1,350 • (0.9% - (400-250)=1,350 7

  8. Tax Impact on Medicare Tax Increase • Medicare Tax on Unearned Income • Adjusted Gross Income over: • Single: $200,000 • Married: $250,000 • Excludes – IRA or Pension Distributions COULD NOT READ THE NUMBERS AND THE TEXT YOU WROTE ON THE BOTTOM OF THE PDF FOR THIS SLIDE. PLEASE FILL IN OR SEND ME THESE ITEMS FOR ME TO FILL IN. 8

  9. Example – Medicare Tax/Unearned Married Taxpayers have: • AGI of $300K • Interest income of $150K less investment expenses of $25K or net investment income of $125K • Tax will be paid on the lesser of $50K (excess AGI over $250K) or $125K (net investment income) In this case, $50K * 3.8% = $1,900 9

  10. Individual Tax Rates • Personal Exemptions • Deduction for each taxpayer, spouse, and dependent) • 2013: $3,900(subject to phase out - $250,000 – single, $300,000 - MFJ) • Gift tax annual exclusion: • 2012: $13,000 • 2013: $14,000 SHOULD THE 2012 ITEM BE ERASED? 10

  11. Individual Tax Rates • Medical Expense Deduction • 2012: Must exceed 7.5% of AGI to be fully deductible on Schedule A • - (AMT – must exceed 10% of AGI) • 2013: Must exceed 10% of AGI to be fully deductible on Schedule A • - (AMT – remains at 10% of AGI) • 2013-2016: If 65 years old by end of tax year, AGI threshold will remain at 7.5% for regular tax purposes SHOULD THE 2012 ITEM BE ERASED? 11

  12. Individual Tax Changes 2013 Mileage Rates (per mile driven) • 2013 • Business: 56.5 cents • Charitable purposes: 14 cents • Moving expenses: 24 cents • Medical purposes: 24 cents 12

  13. Individual Tax Changes Retirement Plans – 2013 Contribution Limits • IRA contribution limit (Roth/Traditional): $5,500 • $6,500 for age 50 and over ($1,000 catch-up) • 401k or SAR-SEP’s contribution limit: $17,500 • $23,000 for age 50 and over ($5,500 catch-up) • Total $23,000 • Tax Free IRA distributions for charitable purposes • Extended through 2013 • Defined contribution plan limit: $51,000 • SEP IRA Contribution Limit $51,000 • Single IRA $12,000 max with $2,500 _____ Total $14,500 WHAT IS THE TEXT FOR THIS LAST BULLET? 13

  14. Individual Tax Changes FBAR Requirement Form TD F 90-22.1, Report of Foreign Bank & Financial Accounts • A U.S. citizen or resident, as well as other U.S. persons, must file an FBAR if: • The U.S. person had a financial interest in or signature authority over at least one financial account located outside of the U.S. and • The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported. 14

  15. Individual Tax Changes FBAR Requirement (continued) Form TD F 90-22.1, Report of Foreign Bank & Financial Accounts • Filing deadline is June 30 of the succeeding year. (Must be received by June 30th with no extensions.) • Penalties for non-willful violation can be as high as $10,000 • Penalties for willful violation are the greater of $100,000 or 50% of the total in the foreign account. • On July 18, 2011, FinCEN (Financial Crimes Enforcement Network) announced the development of e-filing system to accept FBAR E-filings – FinCEN can only accept filings when one signature is required (not available with tax preparation software). • http://www.fincen.gov/news_room/nr/html/20110717.html 15

  16. Individual Tax Changes • Form 8938Statement of Specified Foreign Financial Assets • Specified individuals (including U.S. citizens, resident aliens, and certain non-resident aliens) that have an interest in specified foreign financial assets meeting the threshold must file if: • Total value of assets = $50,000 on last day of tax year or $75,000 at any time during tax year • If any income, gains, losses, deductions, credits, gross proceeds, or distributions from holding or disposing of the account or asset would be required to be reported on income tax return • Due by due date, including extension, for income tax return • Penalties up to $10k for failure to disclose and additional $10k for each 30 days of non-filing, up to maximum of $60k 16

  17. Same-sex Marriage Act (DOMA) The Supreme Court has held that section 3 of the Defense of Marriage Acct (DOMA) violates the Fifth Amendment of the Constitution. State recognition of same-sex marriage confers on persons affected state benefits reflecting that status. DOMA, in contrast, which precludes federal recognition of same-sex marriage, uses a state-defined class of persons for the opposite purpose, to impose restrictions and disabilities. • Joint Return Status, Because of the Supreme Court’s Windsor decision, same-sex couples who are currently married under state law are presumably now also barred from filing separate returns as single (or as head of household, in some cases), they must file either jointly or married filing separately for 2013, unless they are divorced or have final separation agreement in place by 2013. • Taxpayers who filed their 2012 tax year returns before June 27, 2013, as separate unmarried individual, may not need to change their filing status to married filing joint if it would be less favorable to their overall tax liability. Once a return is filed, a taxpayer is generally under no obligation to file an amended return because of subsequent circumstances. The Supreme Court decision could be viewed as a subsequent circumstance. • On the other hand, taxpayers who were on extension until October 15, 2013 for filing their 2012 tax tear returns were required to file either jointly or married filing separately. 17

  18. What to Expect forthe 2014 Tax Season • Taxpayer refunds if any will be smaller than last year and late. • The CPA will be blamed because refunds are less than last year. • We will have more estimated tax penalties for not paying taxes timely. • Business clients : Service providers other than corps will need to be issued 1099- by 1-31-14. Penalty for not issue 1099 are @250. • FICA limit for 2014 for payroll taxes is $117,000 • Write-offs for business are up to $500,000 for new/used equipment under Section 179. • 50% bonus depreciation for new equipment only. SHOULD THE @ SIGN BE A $ SIGN? 18

  19. The Affordable Care Act • Individual Mandate:Minimum Essential Coverage – Starting 2014 • Non-deductible penalty greater of 95 per year or 1% of your applicable percentage income. • Ramping up in 2016 to 695 per year or 2.5% of income. • For families penalty can not exceed 3 times dollar cap or $285 per year 2014 and 2,085 ( 173.75 per month) in 2016. • The above penalty is calculated monthly, but payable on your 1040 return, payable in early 2015. • Collection efforts only allow offsets to refunds. NO liens or levies of assets and no interest can be charged by the IRS. • But if the CPA does not calculate correctly, we get preparer penalty. SHOULD IT BE “GREATER THAN”? 95 WHAT? 19

  20. Minimum Essential Coverage Mandated for all with Exceptions: • Individuals whose premiums for the lowest cost plan (bronze plan) or employer plan exceeds 8% of their income • Those with income below federal income tax filing threshold • Religious objectors / undocumented aliens / prisoners / Native Americans • Those covered by Medicaid and Medicare • Those without coverage for less than three months (1/yr.) 20

  21. Premium Assist Credit (Tax Credit) Starts 2014 • Single: $45,000 • Family: $90,000 • Federal Gov. Level ??? • The “Hinge” of the Large Employer Mandate • Remember – Cannot qualify if covered by employer plan • COBRA: Employer Plan • Employer must provide Minimum Essential Health Coverage* • The minimum value calculation is available at:http://cciio.cms.gov/resources/files/mv-calculator-final-2-20-2013.xlsm 21

  22. Large Employers Mandate • Starts 2015 – NOT 2014 • Applicable to employers with 50 or more full-time equivalent employees • Full-time equivalent = average of 30 hours per week • Penalty for employers: If no coverage offered, the penalty is $2,000 per year or $167.67 per month, per employee. 22

  23. Small Employers: Small Business Health Insurance Credit • The Small Business tax credit has been heavily promoted by the Obama Administration. • The Government Accountability Office (GAO) has reported that 17,300 small employees claimed the credit in tax year 2010 out of a pool estimated at between 1.4 million and 4 million eligible firms. • One reason given is the perceived complexity of calculating the credit. • This credited is being audited by the IRS and is only available 2013-2015. 23

  24. Contact Us Today!Phone: (973)605-1212Email: Dan@dpvcpa.comAddress: 999 Tabor Rd., Morris Plains, NJ 24

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