January 2016 – The Long Letter
After 20 plus years as a solo practice, two stellar CPAs have agreed to stand with me as shareholders of our corporation: Kim Ruane and Jaleh Gerdemann.
Most of you know Kim Ruane – she has been my right hand for nearly 20 years. I could not have grown and supported our firm without her over these many years. We did not wake up one morning and decide to spend our live together, but…that is what happened, and I am so glad it did! She has been a business comrade and a friend, and many of you depend on her as much as I do.
Jaleh Gerdemann is new to our team – she started in February 2015. She is young and smart, positive and full of energy — I knew she would add much to our firm for our great clients. She hails from corporate America and brings a basket of skills that are deep and wide for helping small businesses grown into healthy enterprises. She has a heart for people and is driven to solve problems. I know you will like her as much and Kim and I do.
We have a proactive game plan for 2016 and look forward to serving your more effectively and efficiently than ever before. That will be a joy for everyone – you and us! We have added wonderful staff, expanded our space, upgraded our systems (although I hope you don’t have to listen to our canned music too often…). You will even find a new Keurig coffee maker in the kitchen. Help yourselves to a fresh cup of joe – the mugs are in the cabinet. 🙂 And there will always be chocolate on the kitchen table.
We plan to have the best year ever and we look forward to sharing it with you.
Thank you – we appreciate you!
Kathy and the Team
Zaffore Ruane Gerdemann CPAs PC.
SO…WHAT ABOUT THOSE LEGISLATORS?
This little section of the long letter has become quite repetitive – another year – another Congressional nail-biter. Decisions, decisions. On December 17, 2015 Congress made permanent 22 provisions, extended 4 provisions five years through 2019, and extended 30 provisions 2 years through 2016 by passing the Protecting Americans from Tax Hikes (PATH) Act. And then they rushed home, hoping not to find lumps of coal in their stockings. If we are still mining coal, that is. As soon as Congress reconvenes in January, consider sending your Congress person and Senators and email asking for all of them to act in a more timely fashion for We the People, and while they are at it, simplify the Tax Code. It just gets worse every year. We will add a link to our resources page to help you find your elected representatives. They need to hear from all of us.
UPDATE ON SECTION 179: One of the most popular provisions has been Section 179. It allows small businesses to avoid the difficult and costly depreciation rules and just expense capital equipment (including 6000+ pound cars/trucks used substantially for business) up to a legislated amount purchased and placed in service during the year. For 2015 and 2016 the amount is $500,000 and this amount is now permanent. YAY!! A relief for small businesses and their stressed out CPAs.
ANOTHER GOODY FOR SMALL BUSINESSES: In 2015, small businesses were allowed for the first time to simply expense assets that cost $500 or less if an election was made on the tax return. Late in 2015, the IRS decided to increase that expensing election to $2,500! This is not the same as Section 179, but rather allows us to move small assets off the fixed asset schedule and simply call them “office supplies” or something similar. This is a huge simplification! Thank you IRS! I don’t know what County Assessors are going to do with this development. It won’t take them too long to figure out we no longer need to put desks, computers, scanners, small equipment on the company’s depreciation schedule. Stay tuned.
NEW FORMS FOR 2015 TAX RETURNS
In one way or many, we have all been affected by Obamacare (ACA) during 2015—good, bad, and now confusing. We hope it will get better, but this Tax Season is bound to continue to be difficult as we all wade through what must be reported on your tax return regarding health insurance. You are about to see new forms – they are important for your tax return. Please be sure to get them to us.
- Form 1095-A “Health Insurance Marketplace Statement.” If you purchased health insurance through state or federal exchange, you will receive Form 1095-A. The instructions indicate that you will use this information to complete the Form 8962 to claim the insurance premium tax credit or if you have already received the credit. IF the Form 1095-A doesn’t indicate advance credits and you are pretty darned sure that your income will be 400% over the Federal Poverty Line, then you won’t need to file Form 8962. We will probably prepare it for you anyway as part of due diligence.
- Form 1095-B “Health Coverage.” Insurance companies will issue Form 1095-B. It indicates the amount you have paid for “minimum essential coverage” and for which time periods you were covered during 2015. This is the form that will inoculate you from penalties for failing to purchase coverage.
- Form 1095-C “Employer Provided Health Insurance Offer and Coverage.” Employers will issue these forms to employees. Large employers must file the forms by February 29, 2016, or March 31, 2016, if filing electronically, but as individual taxpayers, we will be required to report health care coverage whether we get the 1095-C or not. Your W-2 will provide information.
We know you will be patient with us and vice versa as we work together to understand, plan for and comply with an incredibly complex body of law. Please be sure to share with us anticipated fluctuations—up or down—in your 2016 income. And NOTE: if you are on Medicare or Medicaid, you are probably “good to go” and will not be receiving any of the forms mentioned here. Unless you have family members who are subject to ACA. Sigh.
ANNOUNCING www.zaffore.com NEW AND IMPROVED!!
Stuff you will find on the NEW AND IMPROVED web site:
- Contact information with our bios
- Tax Filing Season 2016 information – like 2015 organizers, extension info, checklists, and the ever popular “Team Gossip Page” and MORE
- Articles we have written over the years to help you make and grow your money
- Calculators for a host of questions – like should you buy or lease a car? Does it make sense for both spouses to work? How fast can you pay off your school loans? When will you be a millionaire (or, with inflation, a billionaire)? Should you create a b-u-d-g-e-t (a six-letter word)?
- Our Blog – “The Daily Dollar” – we write it occasionally and it reflects our *unique* perspective, but also addresses hot topics (YES, there are accounting and tax “hot topics”). We will write more often if you let us know you are interested in it.
- The Portal – this is where you will find secure copies of your tax returns, your QB/Sage files, and other items. We remind you every year that we are prohibited by law from sending your tax returns to anyone without your express written permission every single time and we can NEVER send them by unencrypted email EVER – so – the portal makes it very simple for you to access your returns, download them and send them on to anyone who wants them any time of day or night. If you need help to use the portal, let us know. You will like it once you have tried it – we promise!
We would love to have our clients (and ourselves) resolve to:
- Understand (and make peace with) our money
- Work our money so it lasts a lifetime (and beyond??)
- Work more effectively and intelligently with financial planners and advisors
- Don’t worry, be happy – Ok, that is more the goal than the resolution…
If you are interested in joining a small group of people to learn more about money over a period of a few months (monthly meetings), please let us know. We want to facilitate your desire to learn and grown and gain control over your financial life. Email Jaleh@zaffore.com
TAX LAW AND IRS AUDIT Audits of various sorts are becoming more common every year. Most are easy to navigate, but … some are rather broad in scope. Common audit topics: charitable contributions, S corporation compensation, economic reality (how does one live on nothing – the IRS has the right to ask that question apparently…), real estate holdings and deductions, Schedule C small business income and deductions—particularly auto mileage (you DO need a log! And there is an App for that – many actually), gross receipts verification, meals and travel expenses.
The key to a quick and relatively painless audit? DOCUMENTATION. If you are not yet managing your life and business with accounting software – let us help you get started this year. It is easy and will make your life a lot simpler (after you get past the learning curve…but you CAN do it!).
DEADLINES AND EXTENSIONS – PERSONAL TAX: DEADLINE TO PAY YOUR TAXES AND FILE YOUR RETURN OR AN EXTENSION IS APRIL 18, 2016 (Calendar year corps – deadline is March 15). THERE IS (almost) NO EXTENSION TO PAY TAX—TAX IS DUE APRIL 18. Tax paid after April 18 is subject to interest and penalties—even if you file an extension!!! Please plan to pay your tax by April 18!!!
IF YOU EVEN THINK YOU ARE GOING TO OWE TAX ON YOUR RETURN…PAY BY APRIL 18!!! WE ARE HERE TO ASSIST AS BEST AS WE CAN, BUT AS YOU CAN IMAGINE, THE CLOSER WE GET TO APRIL 15TH, THE CRAZIER IT GETS AROUND HERE. ULTIMATELY, IT IS YOUR RESPONSIBILITY TO GET YOUR TAX PAYMENT MADE!!
OK – You CAN request an up-to-six-month extension of time to PAY your taxes for reason of “undue hardship” – but be prepared to argue your case with documentation. That extension is also due April 18 – talk to us if you would like more information. Extended tax returns are due October 17, 2016. (Calendar corps, LLCs, partnerships and most trusts are extended until September 15, 2016).
WE CANNOT FILE EXTENSIONS FOR YOU WITHOUT YOUR EXPRESS WRITTEN PERMISSION…so, be aware that IF your personal tax data is in our office by March 15 and WE need to file an extension, we will contact you by email for your permission and you will not be charged for the extension. However, if your data is NOT in the office by March 15, it is YOUR RESPONSIBILITY to email us with a request for extension (and you will not be charged). BUT (big BUT) If WE have to contact you in order to get permission for extension, you will be charged $25 for the extension. Time is money. So save your money and email us! Or better yet – SIGN THE PERMISSION FORM AHEAD OF TIME. Thanks!
Here We Go With Tax Season—the Nitty Gritty
You now have your very own plastic tax envelope in hand………
- Place the plastic envelope wherever you process your mail (near a shredder, for example).
- As tax info arrives, put documents directly into the envelope. Immediately!
- Review the checklist on our web site—see Home Page and click on Checklist 2015 — or review the customized organizer that we have provided for you as a reminder of items we need to do your return. Place additional documents in the envelope (ie HUD settlement sheets for refinances and new home purchase, car registration for deductible owner tax, BASIS ON STOCK YOU HAVE SOLD, YEAR END PAYSTUB IF YOU HAD ANY STOCK OPTION ACTIVITY—or good clues so we can find that info–purchase date and number of shares purchased etc.).
- You will find your personalized organizer in YOUR TAX PACKAGE. We are routinely sending the abridged version since most of our clients do not fill out their organizers in detail—and that is OK. The abridged version is a good reminder of what you had on your return last year and thus what we will probably need to do your return this year. If you haven’t received an organizer or want the BIG detailed one, call the office or drop us an e-mail. Remember – use the organizer as a guide. It is not necessary to fill it out in detail. Unless you want to. We love it when you do, but…we still need your original documents—not that we don’t trust you or anything…:) (photocopies are ok—and faxes and pdfs posted to the portal.). Please do keep in mind though, you must do the questionnaire.
- To get your documents to us (choose one or more):
- Mail us the plastic envelope filled with the info you’ve gathered (you MUST put the plastic envelope into a mailing envelope—do not drop the plastic envelope alone into the mail – it is not tough enough to withstand the rigors of the US Postal Service)
- Make an appointment and bring in your documents
- Drop off at the OFFICE Suite 101. OR there is a drop slot at the office. It is conveniently located on the back porch steps which you will find on the north side of the building off of the public parking lot behind the Mainstreet Center (the old Parker Methodist Church). “Kathleen M Zaffore PC” is on a sign on the north side of pink house and the drop slot is below the sign.
- Scan and post .pdf files to your portal folder. Do NOT attach docs to an email!!
- Note – the big brown client mail box at Kathy’s house in the Pinery had a collision with a buck and is no longer available…sorry. But there is a milk box on the front porch. If you use it – email us to let us know!! Do not use the street mailbox – the post lady will get it before we do and then who know where it will go???
Under current regulations, we cannot even start your tax return until we have a signed engagement letter. So, please sign and return it – posted to portal, emailed, faxed, or with your tax papers. If paper, we will scan it for our records and return it to you with your tax returns and documents. REMEMBER PLEASE – married couples: each of you must sign the engagement letter. Sorry.
HIGH NEED TO KNOW
CPAs are basically nosey…for a good reason. 🙂 We want to know a lot about you – as we probe around, we might discover important ways to save your money or your bacon. So…please take a few moments to fill out the questionnaire. and then stick it in your plastic envelope. With current climate of regulation – we really do insist that you do the questionnaire. WE WILL NOT START YOUR TAX RETURN UNTIL THE QUESTIONNAIRE IS COMPLETED – our apologies, but the questionnaire is not optional. Your answers will:
- help you remember things you wanted to ask/tell us – FEEL FREE TO WRITE IN THE MARGINS
- remind you of documents we will need to prepare your return
[like data for IRA contributions, long term care insurance, car tax, 529 Plan contributions, stock basis, everything you have on employer stock options…etc etc]
- help us NOT to overlook income and deduction items critical to your return
- possibly protect you from draconian penalties
- uncover possible strategies to reduce your taxes now and in the future!
- all of the above and more. Really.
TURN AROUND TIME – WE ARE WORKING ON THIS!!!
We confess – we can be slow. We treat every return we do as if it is our own. That means that we consternate and turn over every stone looking for ways to reduce your tax liability legally. It means we might have to do research. We most certainly will email you and talk with you. We might ask questions you think are redundant or even stupid. Key here is — we do not want to overlook important data. And we want you to be involved. This is not a tax chop shop. No two returns are the same. Every return deserves our best time and attention.
We attempt to do returns in the order that they come into our office. Returns that arrive in February may have a two week turn around—unless we run into issues or are waiting for you to provide answers or documents. But the crush of our work load arrives in March and April. Returns that arrive late in March or in April will likely be extended. We try to work quickly through every return in our office prior to April 18 so we can help people who owe tax to get those taxes paid by April 18. Then we extend and go back over those previously and quickly done returns.
You can help us speed up turn around on your return by making sure you have provided all of your data, by answering our questions quickly, by making time to discuss your returns with us. After your data is in…please feel free to bug Amy and Laurie regarding the status. Shhh…don’t tell anyone I said that.
If you are feeling stressed about getting data to us, tell us. If you feel that we have not communicated with you, tell us. You matter to us and we want the tax return process to be as little like a root canal as possible. If you are a dentist, no offense. But you know what we mean.
Please also remember that first-time data arriving in our office less than three weeks from a final filing date (Sept 15, Oct 17) will incur a Late Night Stress Charge – get your stuff in before September, puh-leeze!. We know that many of our clients have no control over arrival of K-1s, but we can have your whole return finished and just pop in the last minute data…if we have all of the other stuff well before final filing dates. Have mercy on us.
PAYMENTS: We accept cash, checks, credit cards, and compliments (along with payment). We do not accept livestock but might consider gold. If your account is more than 30 days overdue, we will rebill you with a finance charge of 1.5% per month and a rebilling fee of $5 per month. Sorry 🙁 Do communicate with us if you are having difficulty paying the bill…we will set up a payment plan for you.