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September 2020 E-Newsletter
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FIRM OVERVIEW
CLIENT SERVICES
INFO CENTER
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CONTACT
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CPA NEWS |
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Is a Roth Conversion Right For You?
Roth IRAs offer many benefits, including federal income tax-free withdrawals, provided you follow the rules. Find out if you should consider converting to a Roth IRA.
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Data Breaches
Industry studies show that data breaches cost small to medium businesses an average of $200,000. Learn how to protect your business.
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2020 Tax Changes
Did you hear about the new changes? Continue learning about the SECURE Act and the CARES act.
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September 2020 Client Profile
Allen owns a small construction business and has been self-insuring property and casualty insurance risks using a captive insurance company. Is the IRS planning to crack down on these arrangements?
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Open Enrollment Planning
Open enrollment is an important process that usually takes place November 1 through December 15. But for employers, planning starts much earlier. Planning ahead can result in savings, a smooth enrollment process and ensure you are offering benefits that help recruit and retain the best talent. Need tips for success?
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Real Mortgage Costs
Well-qualified borrowers may be able to get some very low mortgage rates on both purchases and refinance transactions. The interest rate is only one of the factors to consider before you sign.
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IRS Announces Common Tax Scams
The IRS recently announced its 2020 edition of its annual Dirty Dozen list of tax scams with a special emphasis on aggressive and evolving schemes related to COVID-19 tax relief, including Economic Impact Payments. Learn about six of the more common scams and what you can do.
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Wardrobe Shopping Doesn't Have to Break the Bank.
Shopping can be fun, but also drain your wallet. So how do you maintain a respectable wardrobe in a cost-effective way?
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Find a Budget Method That Works
Which unique method of budgeting will work for you?
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September 2020 Q & A
Q: I own a small company and want to reward my employees during the holidays. What can I do for them without triggering a tax issue?
A: All forms of compensation are subject to income tax unless specifically exempted. So items like gift cards, savings bonds, and gift certificates are all reportable as taxable income on the employee's W-2. You'll also need to do the appropriate withholding and pay payroll taxes on this money.
Follow the Rules
To completely avoid triggering any tax issues for your employees don't gift cash and cash equivalents. Understand the de minimis rules which apply to gifts that are minor, of low value, infrequent, and administratively impracticable to track and report. Benefits that meet these requirements are generally not reportable as income.
The IRS does not identify any specific value as qualifying for de minimis treatment. Instead, the IRS looks at the overall nature of the gift, bonus, prize, or perk. Holiday gifts are generally okay if the value is so low that accounting for it is unreasonable or impracticable.
Bottom Line
You can probably provide a reasonable holiday dinner, lunch or party for your employees without reporting it as income — as long as it's not a common or recurring event. The same goes for holiday gifts like flowers and gift baskets of modest value.
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SHORT BITS
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SEC WHISTLEBLOWER REWARDS
Last April, The Securities and Exchange Commission (SEC) awarded more than $27 million to an individual whistleblower who alerted the agency to industry misconduct and provided critical investigative leads that advanced the investigation. This action saved the taxpayers millions of dollars. The SEC awarded $120 million to whistleblowers in 2019 alone. Since starting the program in 2012, the SEC has awarded approximately $425 million to 79 individuals for providing information on securities-related misconduct, corruption, and other criminal activity.
WATCH THOSE CREDIT CARD BALANCES!
According to Experian, Baby Boomers (ages 55-73) and Silent Generation members (74 and older) lowered their balances by 1% in 2019. Meanwhile, younger generations have racked up higher balances. Generation Xers owe the most of all the age cohorts with average balances of $8,023 - an increase of 3% year-over-year. Millennial balances increased by 7%, to $4,702. Generation Z consumers have average balances of just $2,057, but that's up 11%over last year.
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AMERICA'S SAVINGS CRISIS
Personal finance experts frequently recommend having three to six months’ living expenses set aside for the unexpected. But fewer than one in five - 18% - have six months' expenses saved, according to the Bankrate 2019 Financial Security Index. A Federal Reserve study found that half of American households don't have an emergency fund at all. And that was before the Coronavirus job losses. Today 25% of homeowners say they have less than $500 that they could access in case of an emergency, according to a June 2020 study by Homeserve.com.
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