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.
