The software you should use depends on the type of business, the complexity of your financial data, and the accounting staff who will be utilizing the software.  For most small businesses, Quick books is easy to use, reasonably priced, and easy to transfer files.  There are many other software packages we can review with you. 

We have  listed  the general work we do under services,  however, we consult with clients on a variety of accounting issues and we are happy to discuss your needs. 

Since your accounting information from a business standpoint is generally the support for your tax returns, you need to keep the same length of time as your returns. 

There should be a timeline and cash flow for receivables and payables.  Accounts should be reconciled timely.  Budgets should be prepared and projections done to determine the current business status and for planning.  There should be a separation of accounting duties for security and accuracy.

The office is open 9 -5 Monday through Friday all year, excluding holidays.  We have extended hours during busy times and tax season.

Yes, we do offer a free 30 minute initial consultation for our new clients. Please call for an appointment, you will almost always reach a live person!

We are conveniently located in Boca Raton FL off Congress Ave, just west of the I-95 Exit for Congress Ave, #50.  

We do our very best to work with our clients to give them an appointment as timely as possible, generally within a few days.

There are different opinions in this area and some professionals believe you are less likely to get audited if you are extended, however, audits are generally due to high income and/or high deductions, with  other  areas the IRS may be specifically targeting for audit.  If you file an extension, it is not an extension of time to pay, just an extension of time to file.

The IRS can audit a return three years from the filing date, and can go back further in certain circumstances.  We recommend you keep information for documentation supporting your tax returns for eight years.  Any items of a permanent nature, such  as closing statements or business purchases, should be kept indefinitely or until disposed  of – and then eight years beyond.

If you want to file your return by the due date, we request  corporate information by mid-February and individual information by mid-March.  If you have the bulk of your information, send it in and let us know what is missing.

You should call the office and fax or email the notice.  A notice may be informational or a request for information, but we cannot advise until we have reviewed the notice.

The Tax Cuts and Jobs Act makes sweeping tax changes that impact virtually all taxpayers. For individual taxpayers and their families, changes include a decrease in the tax rates, repeal of the personal exemption, increase in the standard deduction, modification to itemized deductions, and doubling of the child tax credit.

Under the Tax Cuts and Jobs Act, personal exemptions are repealed ($4,050 in 2017) for 2018 through 2025. Instead, the Tax Cuts and Jobs Act provides for a near doubling of the standard deduction. For tax year 2018, it increases the standard deduction from $13,000 to $24,000 for married individuals filing a joint return; $9,550 to $18,000 for head-of-household filers; and $6,500 to $12,000 for all other individuals. These standard deduction amounts are indexed for inflation for tax years beginning after 2018. The additional standard deduction for the elderly and the blind ($1,300 for married taxpayers, $1,600 for single taxpayers) is retained.

Itemized deductions

Mortgage interest deduction. The Tax Cuts and Jobs Act limits the mortgage interest deduction to interest on $750,000 of acquisition indebtedness ($375,000 in the case of married taxpayers filing separately), for tax years beginning 2018 through 2025. For acquisition indebtedness incurred before December 15, 2017, the Tax Cuts and Jobs Act allows current homeowners to keep the current limitation of $1 million ($500,000 in the case of married taxpayers filing separately). Taxpayers may continue to include mortgage interest on second homes, but within those lower dollar caps. However, no interest deduction will be allowed for interest on home equity indebtedness.

State and local taxes. The Tax Cuts and Jobs Act limits annual itemized deductions for all nonbusiness state and local taxes deductions, including property taxes, to $10,000 ($5,000 for married taxpayer filing a separate return) for 2018 through 2025. Sales taxes may be included as an alternative to claiming state and local income taxes.

Miscellaneous itemized deductions. The Tax Cuts and Jobs Act repeals all miscellaneous itemized deductions for tax years 2018 through 2025 that are subject to the two-percent floor under current law.

Medical expenses. The Tax Cuts and Jobs Act lowers the threshold for the deduction to 7.5 percent of adjusted gross income (AGI) for tax years 2017 and 2018.

Casualty losses. For tax years 2018 through 2025, a casualty loss will only be allowed to the extent it is attributable to a federally declared disaster.

The phaseout of itemized deductions is suspended for tax years 2018 through 2025.

The doubling of the standard deduction and modifications to itemized deductions effectively eliminates many individuals from claiming itemized deductions other than higher-income taxpayers. For example, for the vast majority of married taxpayers filing jointly, only those with total allowable mortgage interest, state income and local income/property taxes (up to $10,000), and charitable deductions exceeding $24,000, would claim them as itemized deductions (absent extraordinary medical expenses).

In contrast, the enhanced child credit has been highlighted as one of the provisions that will lower overall tax liability for middle-class families. The Tax Cuts and Jobs Act temporarily increases the current child tax credit from $1,000 to $2,000 per qualifying child. Up to $1,400 of that amount is refundable. The child tax credit is also expanded to provide for a $500 nonrefundable credit for qualifying dependents other than qualifying children. More families will be able to take advantage of the credit due to an increase in the adjusted gross income phaseout thresholds, starting at $400,000 for joint filers ($200,000 for all others).

In addition to changes related to exemptions, the child tax credit and the standard and itemized deduction discussed above, the Tax Cuts and Jobs Act also makes changes to alternative minimum tax and the individual tax brackets. Because these tax provisions are interrelated, estimating the impact of these changes to the tax liability for any particular family is challenging. However, as with any tax reform, there will be winners and losers.

 Keep in mind that many of the changes to the Internal Revenue Code in the Tax Cuts and Jobs Act are temporary. This is true especially with respect to the provisions impacting individuals. This decision was made in order to keep the tax reform within budgetary parameters, but with no guarantees that a future Congress would extend them. In future years, as the tax reform provisions expire, tax liability for individuals may be negatively affected.

If you have any questions related to tax reform and the impact on your tax liability, please call our office. We are here to assist you.

Individuals are more impacted by the provisions of the act than any other class of taxpayer. With the reduction in effective tax rates, the elimination of some deductions, exclusions, and credits coupled with the enhancement of other deductions and credits, individual taxpayers are going to have to navigate a different maze in making decisions to maximize their tax benefits and minimize their tax liability.

The major goal of tax reform is to simplify tax filing. Provisions of the 2017 Tax Cuts and Jobs Act affecting all individuals is the elimination of the deduction for personal exemptions and the near doubling of the standard deduction. The higher standard deduction that replaces the personal exemption, will cut, by more than half, those taxpayers who would otherwise do better by itemizing deductions. Of course, that group will realize less of a net tax benefit than those taxpayers who do not now itemize. Supporters argue that, in addition to simplification, it effectively creates a more broadly applicable "zero tax bracket" for taxpayers earning less than the standard deduction amount.

The loss of many itemized deductions will channel an even greater number of taxpayers to the standard deduction. There are new limits on mortgage debt for purposes of the mortgage interest deduction. Annual itemized deductions for all state and local taxes, including property taxes, is capped at $10,000. The threshold for medical expense deductions is lowered to 7.5 percent of adjusted gross income (AGI) for tax years 2017 and 2018 and casualty losses will only be allowed for losses in federally declared disaster areas. For a large number of taxpayers, their total itemized deductions will no longer exceed the standard deduction.

An enhanced child and family tax credit will make up some of the difference for certain families. As a credit, in contrast to a deduction, the enhanced child credit has been highlighted as one of the provisions that will lower overall tax liability for middle-class families.

 These are just highlights of the changes and impact of the Tax Cuts and Jobs Act. There is much more to discuss than can be covered in this letter, including changes to the education benefits, alternative minimum tax, and the individual mandate, to name a few. Tax reform is further complicated because many of the changes are temporary, generally ending after 2025. Therefore, a comprehensive tax plan must be flexible and anticipate either expiration of these changes or possible extenders in years to come.

We are focused on the immediate and long-term impact of the Tax Cuts and Jobs Act on your situation. Please call our office for guidance on all of the provisions that directly affect you.

The Act makes sweeping changes to the U.S. tax code and impacts virtually every taxpayer. For businesses, tax benefits include a reduction in the corporate tax rate, increase in the bonus depreciation allowance, an enhancement to the Code Sec. 179 expense and repeal of the alternative minimum tax. Owners of partnerships, S corporations, and sole proprietorships are allowed a temporary deduction as a percentage of qualified income of pass-through entities, subject to a number of limitations and qualifications. On the other hand, numerous business tax preferences are eliminated.  

Corporate Taxes

A reduced 21-percent corporate tax rate is permanent beginning in 2018. Also, the 80-percent and 70-percent dividends received deductions under current law are reduced to 65-percent and 50-percent, respectively. The Tax Cuts and Jobs Act also repeals the alternative minimum tax on corporations.

Bonus Depreciation

The bonus depreciation rate is often seen as a means to incentivize business growth and job creation. The Tax Cuts and Jobs Act temporarily increases the 50-percent "bonus depreciation" allowance to 100 percent. It also removes the requirement that the original use of qualified property must commence with the taxpayer, thus allowing bonus depreciation on the purchase of used property.

Section 179 Expensing

The Tax Cuts and Jobs Act sets the Code Sec. 179 dollar limitation at $1 million and the investment limitation at $2.5 million. Although the differences between bonus depreciation and Code Sec. 179 expensing would now be narrowed if both offer 100-percent write-offs for new or used property, some advantages and disadvantages for each will remain. For example, Code Sec. 179 property is subject to recapture if business use of the property during a tax year falls to 50 percent or less; but Code Sec. 179 allows a taxpayer to elect to expense only particular qualifying assets within any asset class.

Deductions and Credits

Numerous business tax preferences are eliminated. These include the Code Sec. 199 domestic production activities deduction, non-real property like-kind exchanges, and more. Additionally, the rules for business meals are revised, as are the rules for the rehabilitation credit. However, the Tax Cuts and Jobs Act leaves the research and development credit in place, but requires five-year amortization of research and development expenditures. It also creates a temporary credit for employers paying employees who are on family and medical leave.

Interest Deductions

In an attempt to "level the playing field" between businesses that capitalize through equity and those that borrow, the Tax Cuts and Jobs Act generally caps the deduction for net interest expenses at 30 percent of adjusted taxable income, among other criteria. Exceptions exist for small businesses, including an exemption for businesses with average gross receipts of $25 million or less.

Pass-Through Businesses

Currently, up to the end of 2017, owners of partnerships, S corporations, and sole proprietorships – as "pass-through" entities – pay tax at the individual rates, with the highest rate at 39.6 percent. The Tax Cuts and Jobs Act allows a temporary deduction in an amount equal to 20 percent of qualified income of pass-through entities, subject to a number of limitations and qualifications.

The Tax Cuts and Jobs Act contains rules that will prevent pass-through owners—particularly service providers such as accountants, doctors, lawyers, etc.—from converting their compensation income taxed at higher rates into profits taxed at the lower rate.

Net Operating Losses

The Tax Cuts and Jobs Act modifies current rules for net operating losses (NOLs). Generally, NOLs will be limited to 80 percent of taxable income for losses arising in tax years beginning after December 31, 2017. It also denies the carryback for NOLs in most cases while providing for an indefinite carryforward, subject to the percentage limitation.

These are just highlights of the changes and impact of the Tax Cuts and Jobs Act. There is much more to discuss than can be covered in this article. We can help you with the immediate and long-term impact of the Tax Cuts and Jobs Act on your situation. Please call our office for guidance on all of the provisions that directly affect you.

The Tax Cuts and Jobs Act calls for a 21-percent corporate tax rate beginning in 2018. The maximum corporate tax rate currently tops out at 35 percent. In addition, the 80-percent and 70-percent dividends-received deductions under current law are reduced to 65 percent and 50 percent, respectively. The Tax Cuts and Jobs Act also repeals the alternative minimum tax on corporations.

21-Percent Corporate Income Tax Rate

For tax years beginning after December 31, 2017, the graduated corporate rate structure is eliminated and corporate taxable income is taxed at a 21-percent flat rate. The new rate is permanent.

Alternative Minimum Tax (AMT) for Corporations

The alternative minimum tax (AMT) for corporations is repealed beginning after 2017. Any unused minimum tax credit of a corporation may be used to offset regular tax liability for any tax year. In addition, a portion of unused minimum tax credit is refundable in 2018 through 2021. The refundable portion is 50 percent (100 percent in 2021) of any excess minimum tax for the year over any credit allowable against regular tax for that year.

Repeal of the AMT allows some corporations to use certain tax benefits to effectively pay significantly below the new 21-percent rate.

Reduction of Dividends-Received Deduction

The 70-percent dividends-received deduction has been reduced to 50 percent, and the 80-percent dividends-received deduction is reduced to 65 percent.

The Tax Cuts and Jobs Act reduces the dividends-received deduction to reflect the new lower corporate tax rate of 21 percent. Dividends subject to the new 50-percent dividends-received deduction will be taxed at a maximum rate of 10.5 percent (50 percent of the 21-percent new corporate tax rate). Dividends subject to the new 65-percent dividends-received deduction will be taxed at a maximum rate of 7.35 percent (35 percent of the 21-percent new corporate tax rate).

The Tax Cuts and Jobs Act temporarily increases the alternative minimum tax (AMT) exemption amounts for individuals for tax years 2018 through 2026. The AMT system was originally enacted to ensure that all taxpayers, particularly higher-income taxpayers, pay at least a minimum amount of federal income tax. 

A taxpayer's AMT for a tax year is the excess of the tentative minimum tax over the regular tax liability.

Exemption amount and phaseout thresholds for individuals temporarily increased

Beginning in 2018, the AMT exemption amounts are

• $109,400 for married individuals filing jointly or surviving spouses;

• $70,300 for single or head of household filers; and

• $54,700 for married individuals filing separately (i.e., 50 percent of the amount for married individuals filing jointly).

The threshold amounts for phaseout or reduction of the AMT exemption amount are also temporarily increased after 2017. The phaseout threshold is $1 million for married individuals filing jointly or surviving spouses, and 50 percent of this amount for all other individuals. Thus, the phaseout threshold is $500,000 for an individual filing as single, head of household, or married filing separately.

For tax years after 2018, the temporary increases in the AMT exemption amounts and phaseout thresholds are adjusted annually for inflation.

The exemption amount continues to phase out 25 percent for each $1 that AMTI exceeds certain threshold amounts.

The AMT exemption amount and phaseout threshold for an estate or trust are not impacted by any of the temporary increases in the exemption amount and phaseout threshold for an individual. The corporate AMT is repealed effective for tax years beginning after December 31, 2017.

The Tax Cuts and Jobs Act makes modifications to ABLE accounts created by the Achieving a Better Life Experience Act of 2014. These changes, effective in 2018 through the year 2025,

• allow rollovers from 529 accounts into ABLE accounts, up to an amount equal to the annual gift tax exclusion;
• increase the annual contribution limit by the lesser of any earned income of the designated beneficiary or the poverty line for a one-person household; and
• make contributions to ABLE accounts eligible for the saver’s credit.

ABLE accounts are designed to encourage individuals and families to provide private funding to assist disabled individuals in maintaining a healthy, independent, and quality lifestyle through a tax-favored savings account program. This program has been available since 2015.

Eligible individual

An individual eligible to be the designated beneficiary of an ABLE account must be disabled or blind, and the onset of the disability or blindness must have occurred before the individual attained age 26. The individual must either be entitled to benefits based on blindness or disability under Title II of the Social Security Act; or the person must certify under penalties of perjury that the individual (or the individual's agent under a power of attorney or a parent or legal guardian of the individual) has the signed physician's diagnosis, and that the signed diagnosis is retained and provided to the ABLE program or the IRS upon request.

Contributions

Any person may make nondeductible contributions to an ABLE account for the benefit of an eligible individual. However, the aggregate annual contribution amount cannot exceed the annual gift tax exclusion amount ($15,000 for 2018).

An ABLE account’s designated beneficiary may contribute an additional amount equal to the lesser of the amount of any earned income or the federal poverty line (of the prior year) for a one-person household ($12,060 for 2017). The increased contribution amount, based on earned income, is only available to eligible individuals who do not participate in a retirement plan. Contributions made by eligible individuals to their own ABLE account may qualify for the saver’s credit.

Contributions may also be received as rollovers from 529 plans, provided that the ABLE account is owned by the designated beneficiary of that 529 account or a member of such designated beneficiary's family. Such rolled-over amounts count towards the overall limitation on amounts that can be contributed to an ABLE account within a tax year.

Excess contributions. The designated beneficiary (or a person acting on their behalf) must maintain adequate records for ensuring that the annual contribution limit is not exceeded. A 6-percent excise tax applies to excess contributions to ABLE accounts. An excess contribution subject to tax does not include timely-made corrective distributions which must be made on or before the day (including extensions of time) for filing the individual's return for that tax year.

Distributions

Distributions from an ABLE account for a tax year are not included in gross income unless they exceed the amount of qualified disability expenses incurred during the tax year. Qualified disability expenses include, but are not limited to

• education,
• housing,
• transportation,
• employment training and support,
• assistive technology and personal support services,
• health,
• prevention and wellness,
• financial management and administrative services,
• legal fees,
• expenses for oversight and monitoring, and
• funeral and burial expenses.

Rollovers

Amounts in an ABLE account can be rolled over for the purpose of either changing the designated beneficiary or the ABLE program. To escape tax, the amount must be paid into another ABLE account in a qualified ABLE program not later than the 60th day after the date of payment or distribution. The ABLE account accepting the payment must be established for the designated beneficiary or an eligible individual who is a family member of the designated beneficiary. However, there is no such thing as an inherited ABLE account. The assets, if any are left over from paying qualified disability expenses, will generally be transferred to the state.

Individuals with disabilities face significant barriers to living independently and finding and holding employment. Although the federal government provides certain safety-net programs, these benefits can either be lost once the disabled individual establishes a minimum level of savings and income, or are inadequate due to the increased costs of health care and support systems to allow them to be employed and live independently. An ABLE account may be of special interest to you. If you have any questions related to this tax benefit, please call our office. We are happy to help.

Currently, owners of partnerships, S corporations, and sole proprietorships – as “pass-through” entities – pay tax at the individual rates, with the highest rate at 39.6 percent. The highest rate is reduced to 37 percent under the Tax Cuts and Jobs Act. The Act also allows a temporary deduction in an amount equal to 20 percent of qualified income of pass-through entities, subject to a number of limitations and qualifications. Conversely, the Tax Cuts and Jobs Act limits the deduction for excess business losses from pass-through entities.

Pass-through Income Deduction

Noncorporate taxpayers may deduct up to 20 percent of domestic qualified business income from a partnership, S corporation, or sole proprietorship (Code Sec. 199A deduction). A similar deduction is allowed for specified agricultural or horticultural cooperatives. A limitation based on wages paid, or on wages paid plus a capital element, is phased in for taxpayers with taxable income above a threshold amount. The deduction is not allowed for certain service trades or businesses, but this disallowance is phased in for lower income taxpayers. The deduction applies to tax years from 2018 through 2025.

Caution. The Tax Cuts and Jobs Act provides rules that would prevent pass-through owners—particularly service providers such as accountants, doctors, lawyers, etc.—from converting their compensation income taxed at higher rates into profits taxed at the lower rate.

For individual taxpayers, the Code Sec. 199A deduction is not allowed in determining adjusted gross income. Further, it is not an itemized deduction, but it is available to individuals who itemize deductions and to those who claim the standard deduction. However, the deduction amount cannot be more than the taxpayer’s taxable income (reduced by net capital gain) for the tax year.

The Code Sec. 199A deduction is similar to the domestic production activities deduction under Code Sec. 199, in that both allow taxpayers to deduct a portion of their “taxable income” if it is less than a portion of their relevant business income. Also, neither deduction can be claimed if the taxpayer has no relevant business income. It is anticipated that the IRS will provide a new worksheet or form for calculating the Code Sec. 199A deduction, similar to Form 8903, Domestic Production Activities Deduction.

Limit on Excess Business Losses for Noncorporate Taxpayers

Under the Tax Cuts and Jobs Act, excess business losses of noncorporate taxpayers are not allowed for tax years beginning after December 31, 2017, and before January 1, 2026. Any excess business loss that is disallowed is treated as part of the taxpayer’s net operating loss (NOL) carryover to the following tax year.

 Noncorporate taxpayers must apply this rule for excess business losses after applying the passive activity loss rules. For partnerships and S corporations, the limit on excess business losses is applied at the partner or shareholder level.

Comment: For losses arising in tax years beginning after December 31, 2017, an NOL may generally only reduce 80 percent of taxable income in a carryback or carryforward tax year.

 An “excess business loss” is the excess, if any, of

(1) the taxpayer’s aggregate deductions for the tax year from the taxpayer’s trades or businesses, determined without regard to whether or not such deductions are disallowed for such tax year under the excess business loss limitation; over

(2) the sum of

(a) the taxpayer’s aggregate gross income or gain for the tax year from such trades or businesses, plus

(b) $250,000, adjusted for inflation (200 percent of the $250,000 amount in the case of a joint return).

The $250,000 amount is adjusted for inflation for tax years beginning after December 31, 2018.

Example: For 2018, Ned Brown has $1,000,000 of gross income and $1,400,000 of deductions from a retail business that is not a passive activity. His excess business loss is $150,000 ($1,400,000 − ($1,000,000 + $250,000)). Brown must treat his excess business loss of $150,000 as an NOL carryover to 2019.

The result of this provision is that an individual taxpayer is limited to offsetting a maximum of $250,000 of business loss against other income for the tax year. In the example, if Ned Brown reported wages of $400,000 (and no other income) in 2018, his adjusted gross income would be $150,000. Under present law, all of the $400,000 of losses can be used to offset wage income to arrive at adjusted gross income of $0.

If you have any questions on how the pass-through income deduction or excess business loss limitations affect your tax liability, please call our office. We are here to assist you.

The Tax Cuts and Jobs Act (TCJA) enhances some tax breaks for businesses while reducing or eliminating others. One break it enhances — temporarily — is bonus depreciation. While most TCJA provisions go into effect for the 2018 tax year, you might be able to benefit from the bonus depreciation enhancements when you file your 2017 tax return. Pre-TCJA bonus depreciation Under pre-TCJA law, for qualified new assets that your business placed in service in 2017, you can claim a 50% first-year bonus depreciation deduction. Used assets don’t qualify. This tax break is available for the cost of new computer systems, purchased software, vehicles, machinery, equipment, office furniture, etc. In addition, 50% bonus depreciation can be claimed for qualified improvement property, which means any qualified improvement to the interior portion of a nonresidential building if the improvement is placed in service after the date the building is placed in service. But qualified improvement costs don’t include expenditures for the enlargement of a building, an elevator or escalator, or the internal structural framework of a building. TCJA expansion The TCJA significantly expands bonus depreciation: For qualified property placed in service between September 28, 2017, and December 31, 2022 (or by December 31, 2023, for certain property with longer production periods), the first-year bonus depreciation percentage increases to 100%. In addition, the 100% deduction is allowed for not just new but also used qualifying property. The new law also allows 100% bonus depreciation for qualified film, television and live theatrical productions placed in service on or after September 28, 2017. Productions are considered placed in service at the time of the initial release, broadcast or live commercial performance. Beginning in 2023, bonus depreciation is scheduled to be reduced 20 percentage points each year. So, for example, it would be 80% for property placed in service in 2023, 60% in 2024, etc., until it would be fully eliminated in 2027. For certain property with longer production periods, the reductions are delayed by one year. For example, 80% bonus depreciation would apply to long-production-period property placed in service in 2024. Bonus depreciation is only one of the business tax breaks that have changed under the TCJA. Contact us for more information on this and other changes that will impact your business. © 2018