Make Health Care Decisions

Estate planning isn’t just about what happens to your assets after you die. It’s also about protecting yourself and your loved ones. This includes having a plan for making critical medical decisions in the event you’re unable to make them yourself. And, as with other aspects of your estate plan, the time to act is now, while you’re healthy. If an illness or injury renders you unconscious or otherwise incapacitated, it will be too late. Without a plan that expresses your wishes, your family may have to make health care decisions on your behalf or petition a court for a conservatorship. Either way, there’s no guarantee that these decisions will be made the way you would want, or by the person you would choose. Health Care Decisions:...

Ordinary and Necessary Business Expenses

If you've read the Internal Revenue Code, you may be surprised to find that most business deductions aren’t specifically listed. It doesn’t explicitly state that you can deduct office supplies and certain other expenses. Some expenses are detailed in the tax code, but the general rule is contained in the first sentence of §162.  It states you can write off “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” Ordinary and necessary business expenses basic definitions In general, an expense is ordinary if it’s considered common or customary in the particular trade or business. For example, insurance premiums to protect a store would be an ordinary business expense in the retail industry. A necessary expense is defined as...

Uncover Bogus Résumé Claims

Job applicants aren’t always honest on their résumés. As such, it's critical that you uncover bogus résumé claims.  If you don’t investigate suspicious claims, you might end up hiring an unqualified and unethical employee — which could lead to financial, productivity and legal liability issues. The résumé fibber might also be more likely to commit occupational fraud. But how to uncover bogus résumé claims?  Here are the three most common résumé falsifications. (1) Deceptive dates Whether to gloss over a termination, a period of job hopping or time spent out of the workforce, some job seekers “adjust” dates to make their employment history seem more consistent. Look closely at résumés that state employment dates in years, not months. Say an applicant claims she worked at her last job...

Tax Savings for Electric Vehicles

While the number of plug-in electric vehicles (EVs) is still small compared with other cars on the road, it’s growing.  This is especially true in certain parts of the country. If you’re interested in purchasing an electric or hybrid vehicle, you may be eligible for tax savings for electric vehicles.  A federal income tax credit is available of up to $7,500. (Depending on where you live, there may also be state tax breaks and other incentives.) However, the federal tax credit is subject to a complex phaseout rule that may reduce or eliminate the tax break.  The phaseout is based on how many sales are made by a given manufacturer. The vehicles of two manufacturers have already begun to be phased out.  That means they now...

Employee vs Independent Contractor

Employee vs Independent Contractor is an age old question.  Many employers prefer to classify workers as independent contractors to lower costs, even if it means having less control over a worker’s day-to-day activities. But the government is on the lookout for businesses that classify workers as independent contractors simply to reduce taxes or avoid their employee benefit obligations. Why it matters When your business classifies a worker as an employee, you generally must withhold federal income tax and the employee’s share of Social Security and Medicare taxes from his or her wages. Your business must then pay the employer’s share of these taxes, pay federal unemployment tax, file federal payroll tax returns and follow other burdensome IRS and U.S. Department of Labor rules. You may also have to...

4 Types of Life Insurance Owners

Life insurance has long provided a source of liquidity to pay estate taxes and other expenses. But, with the estate tax exemption currently set at an inflation-adjusted $10 million ($11.40 million for 2019), estate taxes are no longer a concern for many families. Nonetheless, life insurance offers many benefits for nontaxable estates. But who should own the policy?  There are 4 types of life insurance owners. If you own life insurance policies at your death, the proceeds will be included in your taxable estate. Ownership is usually determined by several factors, including who has the right to name the beneficiaries of the proceeds. If estate taxes are a concern, the way around this problem is to not own the policies when you die. However, don’t automatically...

The Forensic Accountants Role in Litigation

When people hear the term “forensic science,” they usually think “CSI.” What comes to mind when you hear the term “forensic accounting”? Similar to forensic scientists offering opinions about scientific matters, forensic accountants may be called on to investigate and serve as financial experts in commercial litigation. Here’s how. Who forensic accountants are Forensic accountants specialize in conducting fraud audits and investigations to detect irregularities and troubling trends, looking for both telltale and subtle signs of white collar crime. Certified fraud examiners (CFEs) are specially trained in fraud discovery, recognition, documentation and prevention. They’re also generally knowledgeable about human behavioral factors and motivations that contribute to the commission of fraud, such as the ability to rationalize fraudulent conduct. Often, forensic accountants are retained to detect misrepresentations of financial...

Preventing Fraud in Auto Dealerships

Preventing fraud in auto dealerships requires a strong internal control system.  This will serve to prevent occupational fraud from cutting into your auto dealership’s profits and generating negative publicity. And effective controls start with current and accurate financial statements. Preventing fraud in auto dealerships starts in accounting One sign of weak internal controls is an accounting department that fails to generate financials until two or more weeks after month’s end. Accounting should post transactions daily, including new and used vehicle sales, repair orders, invoice payments, payroll and cash receipts. By 1 p.m. on any given day, you should have access to real-time checkbook balances and other accounting information effective as of 5 p.m. the day before. That way, you might be able to catch the first signs of...

Tax Treatment of New Business Expenses

Have you recently started a new business? Or are you contemplating starting one? Launching a new venture is a hectic, exciting time. Before you even open the doors, you generally have to spend a lot of money on new business expenses. You may have to train workers and pay for rent, utilities, marketing and more. Entrepreneurs are often unaware that many expenses incurred by start-ups can’t be deducted right away. The way you handle some of your initial expenses can make a large difference in your tax bill. Key points on how new business expenses are handled When starting or planning a new enterprise, keep these factors in mind: Start-up costs include those incurred or paid while creating an active trade or business — or investigating the creation...

Deducting Business Meals

In the course of operating your business, you probably spend time and money “wining and dining” current or potential customers, vendors and employees. Is deducting business meals still possible? The rules changed under the Tax Cuts and Jobs Act (TCJA), but you can still claim some valuable write-offs. No more entertainment deductions One of the biggest changes is that you can no longer deduct most business-related entertainment expenses. Beginning in 2018, the TCJA disallows deductions for entertainment expenses, including those for sports events, theater productions, golf outings and fishing trips. Deducting business meals still allowed You can still deduct 50% of the cost of food and beverages for meals conducted with business associates. However, you need to follow three basic rules in order to prove that your expenses are...