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3 More Tax Tips for Tax Season

  • Written by T. Steel Rose, CPA, ACS Editor

rose steelThe dawn of a new year brings a fresh opportunity to help clients make tax-optimized decisions. Here are three more tips and tricks to help tax professionals continue to manage, enhance, and expand their practice, including IRS and AICPA tax tools and a sugesstion on how to apply them.

IRS Tax Tools

Reliable resources to answer common tax questions are worth their weight in gold. Two such tools are the IRS Tax Map and the IRS Interactive Tax Assistant tool. The Tax Map provides tax law information integrated with related tax forms, instructions and publications. While both resources are slow to the point of timing out, they are reliable and worthy of a spot in a tax professional’s toolbox.

AICPA Marginal Tax Rate Calculator

Helpful tools are available to enhance the work you already perform. The AICPA provides a Marginal Tax Rate Calculator to show clients and new staff members the effect of deductions and tax credits on the actual tax rate: http://www.360financialliteracy.org/Calculators/Marginal-Tax-Rate-Calculator. Whether clients are in the 15% or 39.6% tax bracket, it helps to show them their effective tax rate on tax decisions. This calculator is one of several provided by the AICPA at http://www.360financialliteracy.org.

Tax Transcipts

One final tax practice management tip is rather than pay $50 per return to request a copy of a return from the IRS by using Form 4506, Request for Copy of Tax Return is to request a Tax Return Transcript free of charge using Form 4506-T. There is an automated self-help service at IRS.gov. Click on “Get a Tax Transcript” or call 1-800-908-9946.

Publishing CPA Magazine since 2002, T. Steel Rose began his career with Price Waterhouse leading to the start of Rose & Cash, CPAs. He was a VP for Solomon Software, now owned by Microsoft, and launched CPA Software News in 1991.

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3 Tax Tips for Tax Season

  • Written by T. Steel Rose, CPA, ACS Editor

rose steelThe dawn of a new year brings a fresh opportunity to help clients make tax-optimized decisions. Here are three tips and tricks to help tax professionals manage, enhance and expand their practice this tax season.

Electronic Fund Transfer

The fastest way for a client to receive their refund is to combine e-file with Direct Deposit. About eight in 10 taxpayers use direct deposit. This is likely because the IRS issues nine out of 10 refunds in less than 21 days. If money is to flow the other direction because your clients owe taxes, the best way to make the payment is with IRS Direct Pay. This free service can transfer money using the client’s checking/savings account, debit/credit card, or Electronic Funds Withdrawal. Refer to the “Payments” tab at www.irs.gov for further guidance on transferring money electronically.

Late Payment

If a client owes money to the IRS and cannot make the entire payment, they should pay as much as possible to reduce interest and penalties for late payments. They may file Form 9465, Installment Agreement Request, with their tax return requesting to pay in installments. They may also use the Online Payment Agreement tool to request more time to pay. You may file this for them if you have power of attorney.

Affordable Care Act

Provisions of the Affordable Care Act can cost clients in the form of additional taxes and penalties without the “minimum essential coverage.” The fee increases each year until it is near the price of the cheapest available health plan. One such provision is the Individual Shared Responsibility Provision. In 2015, the fee was $325 for an uninsured adult and $162.50 for an uninsured child (up to $975 for a family) or 2% of the person’s taxable income, whichever is greater. In 2016, the fee is $695 per adult and $347.50 per child (up to $2,085 for a family), or 2.5% of household income above the tax return filing threshold for filing status, whichever is greater. Your client may pay 1/12 of the total fee for each full month in which a family member went without coverage or an exemption. See Individual mandate for more details on the fee. The IRS cannot enforce the Individual Shared Responsibility Provision with liens or the typical methods of IRS collections. The only way for the IRS to collect an unpaid fee for not having health insurance is to withhold it from a possible refund after the tax return is filed.

The easiest way to qualify for an exemption is to go to HealthCare.Gov and sign up for a marketplace account which automatically determines if a client qualifies for exemptions. One such exemption is the hardship exemption which can be used to enroll in the catastrophic plan. A catastrophic plan features lower premiums.

Applying for an exemption should not be left to the last minute. Clients must file the form and then wait for confirmation in order to report the exemption. In addition, many exemptions require specific documentation to verify eligibility. Obtaining the necessary documentation also takes time which will delay any refund.

Publishing CPA Magazine since 2002, T. Steel Rose began his career with Price Waterhouse leading to the start of Rose & Cash, CPAs. He was a VP for Solomon Software, now owned by Microsoft, and launched CPA Software News in 1991.

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Bitcoin Qualifies for Capital Gains Due to IRS Guidance

  • Written by T. Steel Rose, CPA

Bitcoin will be treated a property according to guidance issued by the IRS March 25th. See www.bitcoin4biz.com for full release and FAQs. Bitcoin has grown in popularity across a broad spectrum of users over the last five years. First there were the technology-savvy cryptologists, who see digital currencies as a platform for open finance the same way the Internet has democratized communication. Next were the investors and speculators, like the Winklevoss twins who believe in the future of digital currencies, and have filed with the SEC to provide a bitcoin fund for investors.

At a U.S Senate hearing in November 2013 virtual currencies were described as “a legitimate financial service with the same benefits and risks as other online payment systems”. Then tech-savvy businesses recognized the potential of bitcoin payments and the publicity that comes along with adopting new payments technology.

“It wasn’t just the number of people who wanted to use bitcoin, it was the number of people that became interested in our hotel,” said Susan Hitch, CFO of The D Casino Hotel in Las Vegas, in an announcement.

The most interesting group is the growing number of small businesses using bitcoin. They are able to reduce the cost using traditional payment processing options. Domestic credit card fees of 3% can be reduced to less than 1%, with larger savings for international remittances. Additionally, greater international reach can be achieved as certain payment processors may not be accessible in certain locations. PayPal, for example, is not available in over 25 countries including Ghana, Iran, Montenegro, Pakistan and Paraguay.

CPA Magazine believes that CPAs, as the most trusted business advisors, need to have the correct information to provide to their clients concerning bitcoin and other advanced payment technologies. See www.aicpa.org for video comments by AICPA CEO Barry Melanson concerning bitcoin. CPA Magazine is co-hosting a Payments Summit in Seattle September 29th to educate CPAs on bitcoin and other evolving payment solutions. A presentation will be made by Overstock.com vice-chairman, Jonathan Johnson III, and other early adopters of advanced payment solutions. See www.Bitcoin4Biz.com for further details.

One thing is certain; credit card transaction fees that were never built for the Internet will have to become more efficient. The genie is out of the bottle. There are too many examples of businesses that believe in the power of digital currencies. Both of the major bitcoin payment processors claim 26,000 merchants respectively accept bitcoin on their systems. See here (http://bitpay.com/) directory for a list of companies using bitcoin.

Whether or not digital currencies reach mainstream adoption may depend on how regulators and politicians react to them, but more efficient payment systems, especially for the Internet will never be the same.

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The Future of Not-For-Profit Software

  • Written by Joshua Fluegel

gossett chuckNot-for-profit organizations have a very particular set of accounting and tax needs making a CPA an invaluable resource. The market for not-for-profit organizations is worth exploring for CPAs. The National Center for Charitable Statistics reports there are over 1.5 million registered not-for-profit organizations in the U.S. The benefits of this market could be even better realized when effective not-for-profit (NFP) software is implemented.

Not-for-profit software has come a long way and continues to fill unexpected gaps in CPAs’ practices. NFP software vendors are looking forward to anticipate issues that may need to be remedied in the coming years.

“Despite limited media attention on the very real problem of embezzlement-related fraud within the business community, the industry is gaining appreciation for the risk,” said Chuck Gossett, CEO of Cougar Mountain Software. “Based on their board fiduciary responsibilities, our not-for-profit prospects and customers are sharing a greater appreciation for higher levels of security and accountability. If inappropriate adjustments can be made in the financials without the oversight capabilities of a true audit trail, what excuse - in light of damage control - is worthy to the board and the donors? As the not-for-profit industry tolerates less and less risk, the software industry must continue to adopt stricter standards and controls. This will guide the industry into the future.”

Not only is it likely that software will be securing CPAs’ future with not-for-profit clients, but the software’s presence could become lighter and more accessible for CPAs.

“Certainly we expect to see more online and hosted integrations, but in the near term, it will be interesting to see how the FASB reporting changes coalesce,” said Pete Koblinski, marketing manager at CYMA Systems.

However, only time and the CPAs who vocalize their needs to software vendors will decide the true future of not-for-profit software.

Not-For-Profit Software

Vendor Not-For-Profit Product Website Phone Email
Cougar Mountain Software Denali Fund https://nonprofit-accounting-software.cougarmtn.com/ 800-388-3038 This email address is being protected from spambots. You need JavaScript enabled to view it.
CYMA Systems CYMA Not-For-Profit Edition http://www.cyma.com/business-accounting-software/nfp.asp 800-292-2962 This email address is being protected from spambots. You need JavaScript enabled to view it.
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Expanding Your Practice with QuickBooks Consulting

  • Written by T. Steel Rose, CPA

QuickBooks Consulting (QBC) fits neatly in the category of expanding your practice because it is one of the preferred seminars offered to get acquainted with prospective clients. How you enter this field and how to maintain it is the key to your success. First know that in general you cannot maintain your normal billable rates on QBC engagements. The strategy is to acquire clients that will also need you for taxes and financial planning. Therefore, the premier QBC experts are not necessarily CPAs or EAs. It is something you do because you enjoy it, and/or you have someone on staff (or someone you can refer to) who charges an hourly rate as much as half of your normal rate. In that case you have a terrific advantage providing your clients a valuable service. This point was emphasized by small business QB user Jae Leist, from Lakewood, Colorado.

"I wish my CPA would do all the QuickBooks entries for me but that would be too expensive,” said Leist. Leist emphasized that it would be far better to have everything in the same place, rather than having to, "make a separate call for taxes, a separate call for QB consulting and another call to the financial planner.”

The AICPA has emphasized financial planning for CPAs for 25 years. It is almost a mission.

"Why should someone who is less experienced in taxes be doing financial planning, when CPAs already have the skill set," said Jerry Love, at the annual AICPA High Net Worth at Las Vegas conference in May. The same analogy works for QBC. Who knows taxes and accounting better than CPAs?

If you are interested, there are several resources to help you. The place to get started is www.accountants.intuit.com. You can sign up for the QB ProAdvisor program for $549 a year or $49.99 a month. You obtain free software, discounts on software, and U.S. based support. The software includes QuickBooks Accountant, QB for Mac, QB Point of Sale, QB Enterprise Solutions for Accountants with advance inventory, and now QB Online Accountant. The discounts on software purchases for clients range from 25% - 40% depending on your certification level. The marketing tools include engagement letters. You can obtain a free listing on the Intuit Advisor profile page if you choose to become certified. Technical support includes unlimited chat and 90 days of phone support which is unlimited if you become certified.

The Certified QuickBooks ProAdvisor (CQPA) requires a certification exam. The nine courses to prepare for the exam are free and online. They are designed to take between 16-20 hours to complete. However, “the more you already know about QuickBooks the less time it will take,” said CQPA Reesa McKenzie.

There are a number of conferences that emphasize QB consulting. One of the most widely attended is the The Sleeter Group’s Accounting Solutions Conference. There will be sessions on other small business accounting packages as well. Doug Sleeter, the founder of the conference, established his authority several ago when he reviewed the Microsoft Small Business Accounting product and stated, "It won’t last".

Sleeter even provided advice to Microsoft, which they did not adopt. Sleeter was right. Microsoft was wrong. Intuit can now add another chapter to their book on how they slayed the giant in the marketplace. The Accounting Solutions Conference will be held at Caesars Palace in Las Vegas November 3-6 this year. On November 3rd a class will be taught be Pat Harley about how to implement a step-by-step seminar system to attract new clients. Refer to www.sleeterconference.com.

Another QBC expert is Joe Woodward. He provides consulting, seminars, and manages the National Advisor Network of Certified QB ProAdvisors. You are able to attain the Master QB Consultant designation through this affiliation. The Scaling New Heights conference will be held on June 23-26 in Orlando. Refer to www.scalingnewheights.com. One of the speakers at Woodward’s events is Michelle Long, CPA, who wrote The Comprehensive Guide to Starting and Growing a QuickBooks Consulting Business. Long is an Advanced ProAdvisor who founded the Successful QuickBooks Consultants group on LinkedIn, another terrific resource on how to attract and retain clients.

Once you add QuickBooks Accountant to your computer, you are able to batch reclassify transactions and email journal entries to your clients. It is a small inconvenience to keep all your clients on the same version you are using. The demand exists and the resources are plentiful. It is rare to find an accountant without a client using QuickBooks. QBC is not only a proven method to expand your practice, but you can keep your current clients happy making one call to you their most trusted advisor.

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