by Marketing | Jun 6, 2016 | Security
The latest credit cards have a new feature: a half-inch square on the card’s face that looks like a mini circuit board. The square is a small computer chip called an EMV. The acronym stands for Europay, MasterCard, and VISA, the developers of the technology. Over the next several years, these chip-embedded cards are expected to replace the familiar magnetic strip technology on cards that you now swipe at point-of-sale devices. When you use your EMV card, you’ll need to “dip,” or insert, it into a new type of reader.
Why the change? The new chips are expected to improve credit and debit card security. Data on cards with the older technology is much easier for crooks to steal because the information on the magnetic strip is static and can be copied. As a result, a thief can use your card for multiple fraudulent transactions. Cards with the new chip are different. Every time you use an EMV card, the chip creates a unique transaction code. As a result, the newer cards aren’t as useful to counterfeiters and card thieves.
by Marketing | Jun 1, 2016 | Tax Tips
June 30, 2016, is the deadline for filing the 2015 Form 114, Report of Foreign Bank and Financial Accounts, known as the FBAR. Not sure if you need to file? The general rule is that a return is due when you have a financial interest in, or signature authority over, foreign financial accounts if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year. The requirement applies to both individuals and entities such as trusts and businesses, and you may need to file even if your foreign account produces no income.
Be aware that June 30, 2016, is a “hard” deadline. Your 2015 Form 114 must be filed electronically with the Treasury Department no later than that date. No filing extension is available for 2015 forms – even if you filed an extension for your federal income tax return.
How to respond to an IRS notice
If you find yourself on the IRS mailing list, here’s what to do.
- Scan the heading. The first line, generally printed in bold type and centered beneath your name and address, will tell you why the IRS is contacting you. Questions about missing information, additional taxes owed, or payments due mean you’ll want to take prompt action to avoid more notices or assessments of interest and penalties.
- Review the discrepancy. You’ll find the tax form and the year to which the notice applies printed in the upper right corner. Pull out your copy of the corresponding tax return, along with the supporting documents, and compare what you filed with what the IRS is questioning.
- Prepare your explanation. Are the proposed changes correct? Did the IRS misapply a payment? Whatever the issue, there’s usually no need to file an amended return. However, the IRS typically wants a response, either by phone or mail, in order to clear the notice from your account.
- Do not delay. Ignoring IRS correspondence will not make it go away. Reply to the IRS in a timely manner even if you don’t have all the information being requested.
Please contact us if you receive a notice from the IRS, or your state or local taxing authority. We’re here to set your mind at ease by helping you resolve the matter as quickly as possible.
by Marketing | May 9, 2016 | Uncategorized
Discussing finances with your parents may be a talk none of you are eager to tackle. But addressing the topic can benefit your entire family by clarifying your parents’ wishes and enabling you to help establish a joint plan for carrying those wishes to fruition. Here are questions that can start the dialogue.
- Legal – Do your parents have a will and an estate plan? Have they executed a trust, a durable power of attorney for finances, or an advance healthcare directive? Will they allow you to review the documents and/or speak with their attorney?
- Medical – What medical insurance policies are in place? Do your parents have long-term care insurance? Who is their personal physician and what significant medical issues exist?
- Income, expenses, and debt – What are the sources and amounts of your parents’ income and expenses? To whom do your parents owe money, and how much do they owe?
- Records – Where do your parents keep tax returns, bank and brokerage statements, and similar records? Who are their tax preparers, financial advisors, and/or stockbrokers? Will your parents allow you current access to those records and advisors?
Talking about finances with your parents can be a daunting prospect. Give us a call if you’d like us to be part of the conversation. We’re here to help.
by Marketing | May 6, 2016 | Uncategorized
The “time value of money” is a critical concept in handling personal finances. The same basic premise can be applied in making decisions for your business.
Here’s how it works: Typically, the money you currently have in your hands is worth more than it would be years from now. That’s because you’re able to spend or invest the funds now instead of waiting to receive them. In other words, there’s an “opportunity cost” attached to any delay.
For example, let’s say you’re entitled to a $100 payment. If you receive the $100 now and you’re able to invest it at a 5% annual interest rate, you’ll have $105 after one year. Assuming you don’t need the money for expenses, it will be worth $110.25 after two years, and so on. This amount is known as the “future value” of the money.
Similarly, you can compute the “present value” of money. Suppose you won’t receive the $100 payment until one year from now. The value of the money must be discounted due to the opportunity cost. Using the same 5% interest rate, the present value of the $100 you’ll receive a year from now is $95.24 ($100 value divided by 1.05).
It’s easy to see how this concept can affect your business. Accelerating payments from customers will enable you to better meet your current obligations and provide reserves for investment. On the other hand, delays hamper cash flow and reduce the opportunity for investment. Computing the time value of money may also encourage you to lease, rather than buy, assets.
The time value of money is an important factor in business decisions. For help running the numbers and analyzing the results, give us a call.
by Marketing | May 3, 2016 | Uncategorized
Did you know that a recent law made changes to the section 179 expensing election for 2016? These modifications took effect as of January 1. Here’s what to consider as you make asset purchasing decisions this year.
- Change #1. Beginning in 2016, section 179 is indexed for inflation. This year, the basic section 179 expensing limit will be $500,000. That limit is reduced dollar-for-dollar once your purchases exceed $2,010,000.
- Change #2. The definition of “section 179 property” now permanently includes computer software and real property such as qualified leasehold and retail improvements and restaurant property. That means you can elect to use section 179 expensing when you purchase those assets.
- Change #3. You may be able to deduct more of qualified leasehold and retail improvements and restaurant property in 2016. Beginning this year, the law eliminated the $250,000 cap on the amount of section 179 you could claim for this property.
- Change #4. Beginning in 2016, air conditioning and heating units are eligible for section 179 expensing.
Contact us for help in maximizing the section 179 deduction for your business asset purchases.
by Marketing | Apr 1, 2016 | Tax Tips
Monday, April 18, is the deadline for filing certain returns and taking certain tax-related actions. Here are the major deadlines.
- Filing 2015 income tax returns for individuals. If you cannot file your return by this deadline, be sure to file an extension request by April 18. The automatic extension (you don’t need to explain to the IRS why you need more time) gives you until October 17, 2016, to file your return. An extension does not, generally, give you more time to pay taxes you still owe. To avoid penalty and interest charges, taxes must be paid by April 18.
- Filing 2015 partnership returns for calendar-year partnerships.
- Filing 2015 income tax returns for calendar-year trusts and estates.
- Filing 2015 annual gift tax returns.
- Making 2015 IRA contributions.
- Paying the first quarterly installment of 2016 individual estimated tax.
- Amending 2012 individual tax returns (unless the 2012 return had a filing extension).
- Original filing of 2012 individual income tax return to claim a refund of taxes. Some taxpayers have tax refunds due them for prior years, and unless a return is filed to claim the refund by the three-year statute of limitations, the refund is lost forever.
by Marketing | Mar 30, 2016 | Tax Tips
In 2013, the IRS issued regulations clarifying when tangible real and personal business property can be expensed. The regulations provided safe harbors that let you deduct certain costs you’d otherwise have to capitalize. For example, using a de minimis safe harbor, you could elect to deduct individual capital expenditures of $500 or less if your business did not have an “applicable financial statement.” (In general, an applicable financial statement is a financial statement based on a certified audit by an accounting firm.) Effective beginning with 2016 taxable years, this safe harbor has increased to $2,500 per invoice or item. In addition, the IRS says it will not contest similar treatment in audits of earlier years.
by Marketing | Mar 15, 2016 | Tax Tips
What supporting documentation do you need to claim charitable deductions on your federal income tax return?
In general, you can support monetary contributions of any amount with a cancelled check, credit card statement, proof of payroll deduction, or a receipt from the charity. The paperwork must show the organization’s name and the amount and date of your contribution.
When you contribute cash of $250 or more, get a written acknowledgement from the charity. The receipt must show the name of the charity, the date of your donation, and the amount donated, as well as a description and the estimated value of any nondeductible item (such as a book or dinner) provided to you.
For property donations, keep copies of support for the value you claimed. The allowable deduction for a property donation is generally limited to the lesser of cost (or other basis) or fair market value. That means you’ll need records showing what you paid for the item, as well as support for the current value. For example, you might use ads from second-hand stores or consignment shops to determine the fair market value of donated clothing and household items.
Be aware that the higher the value of a property donation, the more support you need. When you donate an item with a value under $250, ask for a receipt from the charity showing the organization’s name, the date and location of the contribution, and a description of the property. For items valued up to $500, the receipt also needs to include a statement indicating whether you were given any goods or services in exchange for your contribution. In addition, the receipt must provide a description and estimated value for those goods or services. If you donate property with a value between $500 and $5,000, your paperwork must show how and when you got the property and its cost or other basis. Items valued over $5,000 generally need a written appraisal from a qualified appraiser.
Additional requirements apply when you donate property that has appreciated in value.
by Hawkinson | Jul 13, 2015 | Uncategorized
Hawkinson, Muchnick & Associates is looking for a career oriented CPA with 3 to 5 years of public CPA firm experience to join our team.
HMA is a CPA firm in Douglasville, GA providing advanced accounting and tax services to closely held businesses, individuals, estates and trusts.
Qualified candidates must have extensive experience with a public CPA firm preparing and reviewing business and individual tax returns, accounting and financial statement preparation, and interacting with clients directly.
We offer an excellent opportunity to escape the long commute and grueling demands of the large downtown firms. Interested applicants should send their resume to [email protected].
by Hawkinson | Feb 12, 2015 | Uncategorized
If you have a business or rental property, you might have to prepare 1099s to send to anyone you paid at least $600 for services in 2014. You should have sent these 1099 forms by January 31. You will then need to file a copy of the forms with the IRS by February 28. You generally do not have to send 1099s to corporations.
This requirement has been around for a while but the reason this is more critical than in the past is that there are questions on tax forms now specifically asking whether any payments you made require you to prepare these 1099s and, if so, whether you have or will file the required forms.
When you are ready to file your 2014 tax return and are faced with these questions you will be faced with the following if you have not filed the forms:
Truthfully answer the questions that you do not have to file the forms or that you have properly filed them;
- Falsely answer the questions that you don’t have to file them;
- Leave the forms blank.
In the case of alternative 2, you will be perjuring yourself which is NEVER a good idea and, is in fact, illegal.
In the case of alternative 3, you will be inviting the IRS to audit your return to see if you are in compliance. This is also NOT a good idea.
If you have not filed the required 1099s, you still can do so even though they are now late since they should have been sent already.
If you have any questions or if we can be of assistance, please call us.
NOW THAT YOU ARE THINKING ABOUT THE 1099 FILING REQUIREMENT, THIS WOULD BE A GOOD TIME TO GIVE SOME THOUGHT TO HOW TO ACCUMULATE SUCH INFORMATION FOR 2015 SO THAT YOU WILL BE ABLE TO FILE ON TIME. Since you might not know whether you will exceed the $600 filing requirement threshold until the end of the year, it would be best to put in place a system to track this information now through the end of the year.
