28 Jun 2019
0

Chances of IRS Audit are Down

Roger Rossmeisl, CPA
Individual Tax Briefs
Chances of IRS Audit are Down

The IRS just released its audit statistics for the 2018 fiscal year, and the chances of IRS audit are down.  Fewer taxpayers had their returns examined as compared with prior years. Even though less returns are being audited, that will be little consolation if yours is one of them. Chances of IRS audit are down: latest statistics Overall, just 0.59% of individual tax returns were audited in 2018, as compared with 0.62% in 2017. This was the lowest percentage of audits conducted since 2002. However, as in the past, those with very high incomes face greater odds. For example, in 2018, 2.21% of taxpayers with AGIs of between $1 million and $5 million were audited.  That's down from 3.52% in 2017. The richest taxpayers, those with AGIs of $10...

28 Jun 2019
0

Consider a Roth 401(k) Plan

Roger Rossmeisl, CPA
Small Business Tax Briefs
Consider a Roth 401(k) Plan

Roth 401(k) accounts have been around for 13 years now. Studies show that more employers are offering them each year. A recent study by the Plan Sponsor Council of America (PSCA) found that Roth 401(k) Plans are now available at 70% of employer plans, up from 55.6% of plans in 2016. However, despite the prevalence of employers offering Roth 401(k)s, most employees aren’t choosing to contribute to them. The PSCA found that only 20% of participants who have access to a Roth 401(k) made contributions to one in 2017. Perhaps it’s because they don’t understand them. If you offer a Roth 401(k) Plan or you’re considering one, educate your employees about the accounts to boost participation. Roth 401(k) Plans: a 401(k) with a twist As the name implies, these...

27 Jun 2019
0

Employee Conflicts of Interest

Roger Rossmeisl, CPA
Fraud Briefs
Employee Conflicts of Interest

One of the governing principles of the employee/employer relationship is that employees have a fiduciary duty to act in their employer’s interests. Undisclosed employee conflicts of interest can be a serious breach of this duty. In fact, when employees aren't on your side, companies often suffer financial consequences. Employee conflicts of interest: ignorance isn’t bliss Here’s a fictional example of a common conflict of interest: Matt is the manager of a manufacturing company’s purchasing department. He’s also part owner of a business that sells supplies to the manufacturer — a fact Matt hasn’t disclosed to his employer. And, in fact, Matt has personally profited from the business’s lucrative long-term contract with his employer. What makes this scenario a conflict of interest isn’t so much that Matt has profited...

27 Jun 2019
0

Construction Company Anti-Fraud Checklist

Roger Rossmeisl, CPA
Fraud Briefs
Construction Company Anti-Fraud Checklist

According to the Association of Certified Fraud Examiners’ Report to the Nations: 2018 Global Study on Occupational Fraud and Abuse, organizations victimized by fraud lose a median $130,000. But construction companies, in particular, are even harder hit, with a median loss of $227,000. What can you do to protect your construction business? Adopt this construction company anti-fraud checklist. Construction Company Anti-Fraud Checklist: Ways to Tighten Controls An effective strategy for minimizing fraud is to tighten your internal controls. Make sure the following are part of your policies and procedures: Surprise audits and jobsite visits. These visits can not only help detect fraud, but also send a strong message that combating fraud is a priority — which is a powerful deterrent. Segregation of duties. Avoid situations in which one person...

26 Jun 2019
0

Combining Business with Pleasure Travel

Roger Rossmeisl, CPA
Small Business Tax Briefs
Combining Business with Pleasure Travel

Summer is here, so you might be thinking about getting some vacation time. If you’re self-employed or a business owner, you have a golden opportunity for combining business with pleasure travel for a few extra days and offset some of the cost with a tax deduction. But be careful, or you might not qualify for the write-offs you’re expecting. Combining business with pleasure travel: basic rules Business travel expenses can potentially be deducted if the travel is within the United States and the expenses are: “Ordinary and necessary” and Directly related to the business. Note: The tax rules for foreign business travel are different from those for domestic travel. Business owners and the self-employed are generally eligible to deduct business travel expenses if they meet the tests described...

26 Jun 2019
0

Key Q3 2019 Deadlines for Businesses

Roger Rossmeisl, CPA
Small Business Tax Briefs
KeyQ3 2019 Deadlines for Businesses

Here are some of the key Q3 2019 deadlines for businesses and other employers that are tax related. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. July 31 Report income tax withholding and FICA taxes for the second quarter of 2019 (Form 941) and pay any tax due. (See the exception below, under “August 12.”) File a 2018 calendar-year retirement plan report (Form 5500 or Form 5500-EZ) or request an extension. August 12 Report income tax withholding and FICA taxes for the second quarter of 2019 (Form 941), if you deposited on time and in full all of the associated taxes due. September 16 If a calendar-year C corporation, pay the third installment of 2019...

26 Jun 2019
0

Leaving Specific Assets to Specific Heirs

Roger Rossmeisl, CPA
Estate Planning Briefs
Estate Plans That Leave Specific Assets to Specific Heirs

Planning your estate around specific assets is risky and, in most cases, should be avoided. If you are leaving specific assets to specific heirs (such as homes, cars or stock), you may inadvertently disinherit them. Leaving specific assets to specific heirs: Illustrating the problem Let’s say Debbie has three children — Abbie, Mary Kate and Lizzie.  Debbie wishes to treat them equally in her estate plan. In her will, Debbie leaves a $500,000 mutual fund to Abbie and her home valued at $500,000 to Mary Kate. She also names Lizzie as beneficiary of a $500,000 life insurance policy. Now consider this scenario when Debbie dies years later: the mutual fund balance has grown to $750,000, Debbie had sold the home for $750,000, invested the proceeds in the mutual...

22 Jun 2019
0

Tax Implications of Selling Your Home

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax Implications of Home Sales

Spring and summer are the optimum seasons for selling a home. And interest rates are currently attractive, so buyers may be out in full force in your area. Freddie Mac reports that the average 30-year fixed mortgage rate was 4.14% during the week of May 2, 2019, while the 15-year mortgage rate was 3.6%. This is down 0.41 and 0.43%, respectively, from a year earlier. But before you contact a realtor, you should review the tax implications of selling your home. Sellers can exclude some gain If you’re selling your principal residence, and you meet certain requirements, you can exclude up to $250,000 ($500,000 for joint filers) of gain. Gain that qualifies for the exclusion is also excluded from the 3.8% net investment income tax. To qualify for...

22 Jun 2019
0

Formula Funding Clause in Older Estate Plans

Roger Rossmeisl, CPA
Estate Planning Briefs
Formula Funding Clause

The gift and estate tax exemption is higher than it’s ever been.  You can thank the Tax Cuts and Jobs Act (TCJA) for that.  TCJA temporarily doubled the exemption to an inflation-adjusted $10 million. $20 million for married couples who design their estate plans properly. This year, the exemption amount is $11.4 million ($22.8 million for married couples).  Because of this, estate plans containing a formula funding clause (FFC) should be reviewed. If you’re married and you executed your estate planning documents years ago, when the exemption was substantially lower, review your plan to ensure that the increased exemption doesn’t trigger unintended results. It’s not unusual for older estate planning documents to include a FFC.  FFCs split assets between a credit shelter trust and the surviving...

22 Jun 2019
0

Consider Checking Your Payroll Withholding

Roger Rossmeisl, CPA
Individual Tax Briefs
Consider Checking Your Payroll Withholding

Due to the massive changes in the Tax Cuts and Jobs Act (TCJA), the 2019 filing season resulted in surprises. Some filers who have gotten a refund in past years wound up owing money. The IRS reports that the number of refunds paid this year is down from last year — and the average refund is lower. As of May 10, 2019, the IRS paid out 101,590,000 refunds averaging $2,868. This compares with 102,582,000 refunds paid out in 2018 with an average amount of $2,940. Of course, receiving a tax refund shouldn’t necessarily be your goal. It essentially means you’re giving the government an interest-free loan. Law changes and withholding Last year, the IRS updated the withholding tables that indicate how much employers should hold back from their...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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