Mid-Year Tax Update from Bruce Warner, CPA

Mid-Year Tax Update from Bruce Warner, CPA
Bear Lake Tax &Accounting
Warner Financial Group, LLC

Time for a Tax Check-up?

We have reached the middle of the 2015 tax year.  Do you need help estimating your quarterly tax deposits, or help with planning the tax effects of your business transactions?  If so, please call or e-mail us. Now is a good time to do this work, prior to the heavy tax return preparation period from August 15th through October 15th.Some new retirement plans need to be established by December 31st.

We continue to see some situations that have resulted in higher than necessary taxes paid by our clients who did not run their business changes by us.  Please don’t fall into that group.

If 2015 will be a low income year for you, you might want to consider the merits of a traditional IRA to Roth IRA conversion.

Allow Time for Completing 2014 Tax Returns

We have a number of clients who have extended their 2014 business and personal tax returns.  Please provide all of your data to us at least 45 days prior to the extended tax return deadlines of September 15, 2015 for business returns and October 15, 2015 for individual returns. The tax preparation process involves a back and forth exchange of data and corrections that should not be rushed.  We do not guarantee timely preparation if you can’t meet these guidelines.  Please keep in mind that we have a number of clients in this same situation.

New Payroll Solution for Small Businesses

We have installed a new online payroll solution for several clients that takes all the burden out of completing payroll. The cost of preparing payroll is also very reasonable.  This new system includes employee self-onboarding, automating all tax payments, the ability to pay employees by direct deposit and wonderful reporting.  If you are interested in this change, please call us (801-916-6494).

QuickBooks Online and Other Online Accounting Solutions

We are working on implementing QuickBooks online for some clients and for ourselves.  This may be a good product for you to consider. There are several QuickBooks Online product versions, depending on the complexity of your business.

unnamed (1)Among the benefits are the ability to automate some coding of transactions, eliminating much of the data entry tasks, and permitting your accountants to access and help you with your books. You should also feel more secure to let a third party backup your data.

From our reading of industry trends, many accountants and clients are increasingly moving to online payroll and accounting solutions with good results.  Of course, you will want to determine whether this idea fits your business and your cost structure.  If you are still doing bookkeeping on spreadsheets, please consider QuickBooks online or another online bookkeeping software solution as an alternative.

Real Estate Client Notes

We don’t normally recommend web sites, but here are two unusually good ones we have discovered in the course of our own real estate investment business:This is a good screening tool that is helpful in identifying real estate markets with a good relationship between rents and property prices:  https://www.investability.com/

We are aware of several good markets around the US for buy and hold investors.  If you would like to discuss this, please give us a call.

This social network web site provides many good resources and contacts to the real estate investor. http://www.biggerpockets.com/

We are now in the process of becoming a hard money lender and buying our first property (a four plex) with a commercial loan.  After we gain some more experience with these matters, we will let you know how these opportunities have worked out.  We are using a self-directed IRA for this opportunity.

Attached to this newsletter is a write-up on an IRS case that deals with logging your time to prove real estate professional status.  As you know, if you are a real estate professional you can have a high taxable income and offset real estate losses against your other income.

We continue to believe that real estate, properly purchased, is one of the best tax-advantaged ways for our clients to build wealth.  In addition, real estate can help our high tax rate-paying clients to lower their marginal tax rates. Another benefit is the possibility of creating a passive income stream that eventually will eliminate your need to work!

Affordable Care Act

Planning is more important than ever in 2015, as some small business tax benefits have expired and a $100 per-day, per employee tax will be assessed starting July 1 on health care reimbursement plans (HRAs) that do not comply with the Patient Protection and Affordable Care Act of 2010.

Confirm Your HRA Complies with the Law – Avoid a $100 Per Day Penalty

If your company has fewer than 50 full-time employees and you have a healthcare arrangement that reimburses employees for their medical insurance premiums, the Internal Revenue Service has provided some significant relief from a large excise tax that applies to health plans that don’t comply with Affordable Care Act provisions. However, it’s important to be aware that the relief expires June 30. After that date, if you continue to use a health reimbursement arrangement, either pre-tax or after-tax, you could be subject to a penalty of $100 per day, per employee.If you believe you could be subject to the excise tax or if you have questions about IRS relief for S corporations, contact us today for advice that can help you avoid unnecessary penalties.

Confirm Your Obligations under the Affordable Care Act

Reporting of employees’ coverage for 2015 will be due next year for any employer with 50 or more full-time equivalent employees, which is slightly different than full-time employees as it generally includes seasonal workers. Employers should be aware that a number of other provisions will go into effect, such as the 90-day limit on the period before a new hire can become eligible for employer-provided health coverage. Also, all employers who provide self-insured health coverage must file an annual information return to report certain information for individuals they cover.  Be sure to consult with us on what the ACA may mean to your business.

Prevent Identity Theft

You may have read or heard about the recent breach of taxpayer information at the IRS. This breach affected approximately 104,000 taxpayers whose name, address, Social Security number and other private information was used on the IRS’ “Get Transcript” page to access prior year federal tax returns. Thieves unsuccessfully attempted to gain information from another 100,000 returns.

Bear Lake Tax & Accounting did not use the Get Transcript program to prepare your return. However, like your credit card companies, the IRS will notify you if they suspect your personal information was compromised.  The IRS will provide a year of free credit monitoring for taxpayers whose information was compromised.  They will also notify you if your return was among those the thieves attempted to access. The IRS notifies you by regular mail, and does NOT ask you for confidential information or money for this service, but some scammers posing as the IRS do. If you have any doubts or worries, please forward any IRS correspondence to us immediately, so that we can advise you on the next step.

Unfortunately, identity theft has become an all too common problem.  Bear Lake Tax & Accounting uses strict protocols to protect clients’ information and encourages you to take steps such keeping an eye on changes to your credit ratings, confirming your earnings with the Social Security Administration website, carefully reviewing medical expenses processed by your insurer and taking precautions with information provided on social media or electronic transfers of confidential information. We also encourage you to view this quick tutorial from the Federal Trade Commission on steps you can take to protect your business information.

In addition to these steps, the US Government recently announced a new one-stop resource for identity theft victims. IdentityTheft.gov offers step-by-step checklists of what to do right away, and what to do next, depending on the information that’s been stolen or exposed. In addition, there are sample letters for disputing fraudulent charges, correcting information on credit reports, and getting business records relating to the theft.

Be sure to contact us if you believe you may have been a victim of identity theft. We may be able to provide additional guidance and help.

Consider the Consequences of Expired and New Business Provisions

Every year we are faced with last minute action from Congress on “extender” legislation. We are again faced with this for 2015. We are monitoring this closely and will inform you immediately when Congress takes action on the “extender’ legislation. Some of the items which may affect your business include:Depreciation. Small businesses lost valuable tax planning options when increased expensing under Section 179 and first-year “bonus” depreciation for new business property expired at the end of 2014. There’s no clear indication that either will be extended for 2015, but we can suggest alternative solutions to help maintain cash flow and minimize your tax outlay.

Tangible Property Regulations. Businesses often wrestle with understanding what items should be deducted versus what should be expensed. That task got more complicated this year when the IRS finalized new tangible property rules that affect every business that has tangible property (buildings, equipment, furniture, vehicles, etc…). We can continue to help you address these new requirements to ensure the best tax-saving option.

Lean on your CPA to Plan for the Future

The tax system remains complicated, and uncertainty exists. Proper planning will help reduce your tax bill and address the challenges and opportunities facing your business.  In addition, Bear Lake Tax & Accounting frequently serves as a business coach for owners seeking help in their strategic planning, setting up payroll or other systems or selecting the best accounting software, among other projects.We have seen the many kinds of challenges businesses face and we know how to implement the right solutions. And we’re business owners ourselves! Be sure to contact us to learn more about how we can help you achieve your business goals.


Bruce Warner, CPA

Important Announcement

I will be on vacation and at a family wedding from July 26th through August 6th.


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