Tax Accounting Blog
News and Views in the Tax Preparation, Accounting, and Financial Investment World
Is the Future of Housing 3D Print Homes?
3D Print Technology is amazing and innovative and may offer a way to solve the homeless crisis. How could that be? 3D Printing has been successful in creating objects from toys to guns. What if homes could be created dirt-cheap? In Austin, Texas a small home for the homeless was created out of a 33-foot machine. But an Italian architecture firm is taking this even further and is conducting experiments to make the process cheaper and more eco-friendly. Instead of making the home with typical building materials, they are using local soil. Using multiple 3D Print technology, they have created dome-shaped houses out of clay, like adobe, in Ravenna, Italy. Concrete, which is commonly used in home building has a deep carbon footprint, but a soil-built home is environmentally conscious. The process reduces the transportation needed to make cement because the material is sourced directly on location. The only equipment needed is the 3D Print machine, which is light and can analyze the soil on site. The soil is excavated and sifted to remove gravel and stones and blended with water and rice husks in a concrete mixer. This makes it solid enough to form viable walls. The mixture is then...
The 3 Checkpoints for the $1400 Stimulus Checks
The graphic below may be helpful in the timing of your tax returns and when and how to get your $1400 check if you qualify. The income requirement are as follows. • Single Filers and Married Filing Separate: $75,000 – $80,000• Head of Household: $112,500 – $120,000• Married Filing Joint: $150,000 – $160,000 Reach to Kevin@kevinthompsoncpa.com for more information and guidance on these and other matters affecting your business.
More Small Businesses Need to Expect an Audit in 2021
If you thought the IRS was being lax on auditing small businesses in the past, they will be increasing their audits by 50 percent in 2021. Due to recent tax laws and the economic stimulus response to COVID -19, business tax calculations will be much more complicated. This may involve more audits for businesses that range from traditional brick and mortar family businesses as well as the influx of newly formed online retail sites launched to offset the pandemic. The IRS is hiring more auditors who specialize in these types of businesses and will begin enforcing compliance by Feb 2021. Below are tips recommended by ICPAS that you need to be aware of to avoid a costly audit. Make sure your records are accurate and report all income, deductions, credits, expenses, and other items as detailed as possible.Stick to standard deductions. Anything unusual will raise red flags for auditors. If you believe uncommon deductions are warranted, check with your CPA first for guidance. For instance, reporting losses for three years or more may cause suspicion and activate an audit.Go for estimated tax payments. If you believe you will owe more than $500 in taxes for your business, make quarterly...
What Landlords Need to Know About the Federal Eviction Moratorium
The CDC has ordered that a federal eviction moratorium to halt residential evictions extend to the end of March 2021 for tenants who cannot pay their rents due to the pandemic. However, it’s important that landlords know their rights and how to deal with the moratorium to stay afloat. As a landlord, you can still file evictions Just because it is a “moratorium” doesn’t mean that filing evictions is illegal. Legal aid societies will provide copies of affidavits for tenants to sign. They will be asked if they are the tenant and will hand them a form to sign. They will tell the tenant they do not have to vacate their residence or pay rent for multiple months as long as they sign. As soon as the tenant signs the form the court has to stop the eviction. These affidavits can be challenged in court so it’s important that landlords and property managers document evidence that can be used in court to help their attorneys. Make sure to ask your attorneys questions as to what your rights are in your individual cases. Should you lease month to month? It’s suggested that it may be better, considering current circumstances, to have tenants sign short leases rather than standard 1- year...
Advance PPP Applications Recommended for Firms by AICPA
If you are a lender with $1 Billion or less in assets you can make Paycheck Protection Loans for small businesses seeking relief starting on Jan 15. All other lenders can apply as of Jan 19. Applications will be accepted by the SBA on a limited basis through community financial institutions. The timing has been confusing causing stress on small business owners and their advisers. AICPA President and CEO Barry Melancon says he believes the full program will go live ASAP. CPA firms need to be prepared and ready. It’s expected that there will be enough funding to meet first and second draw PPP applications. The CPA Business Funding Portal platform was launched for CPA firms by AICPA, CPA.com, and BIZ2Credit in September to help assist small businesses with PPP loan forgiveness. Thousands of firms have been using it and it has been recently updated to handle PPP2 applications with over 3,000 applications processed. Know that small businesses should expect more scrutiny in this next round. The SBA will be doing more vetting for potential fraud and may require further validation. It is advised that businesses as well as their financial advisers get it right to avoid delays...
Disability Income
Today I asked a friend of mine, Ed Kelly to chime in on Disability Insurance. Please enjoy this read. And try not to be frightened. There are relatively inexpensive solutions to disability issues. What is worse than high taxes on your income? NO income! And no income is what you might have should you become disabled. What if you suffer a serious accident or succumb to a devastating illness? Will your income continue? From where? And how much will it be? Probably the most overlooked part of one’s overall financial plan is this issue of Long-Term Disability. It is confusing. It changes when we change jobs. If we have coverage at work, we often have very low amounts of coverage. Let’s look at the basics. First, if you are sick or injured and out of work for a week or two, or perhaps even a month, you probably have sick pay and personal days off that can be used to provide your income. And, if you are paying into your state’s short term disability program, you will have some minimal coverage there, for a minimal amount of time. * By the way, if you are NOT paying “SDI” through your paycheck, then you don’t have this short term state coverage. This often happens with...
Will Calls from the IRS be Real or Fake?
For years, we’ve been told that calls from the IRS are fake and to hang up immediately if someone says they’re from the agency. However, starting soon, that warning may not be true. The IRS is going to begin to use collection agencies to demand payment from people who owe back taxes. Kevin Thompson CPA says “the problem is, it’s going to be hard to determine if a call is legitimate or a fraud because the callers will be from third party companies. I laud this effort by the IRS. I’d like to see this underfunded bureaucracy utilize public-private partnerships to make them more efficient. They’d also have the opportunity to become more in touch with taxpayers and resolve many of these collection matters.” The Better Business Bureau has been voicing concern about calls from the IRS because of the trust factor. Thompson says “there’s a lot to do here to reduce the opportunity for crooks to continue to mislead US taxpayers.” Crooks have been using spoofing technology to convince victims they are from the IRS which has cost victims a pretty penny. The scam makes them think they owe back taxes and they are told to wire the money to avoid arrest or deportation. It cost taxpayers over $50...
The Future of CPA’s and Why Mark Cuban is Wrong
Mark Cuban remarked that he wouldn’t want to be a CPA right now because advances in technology mean it isn’t a profession that will be valid in the future. One CPA had the opportunity to confront Mr. Cuban when he happened to be in her office building one day. Kevin Thompson, CPA said “I wish that CPA would have been me. First I would have told him that the Dallas Mavericks suck. Second, Shark Tank is a Great scripted reality show. Third, I’d get to the issue at hand … Don’t criticize someone until you have walked a mile in their shoes. Mr. Cuban knows a lot about a lot of things but one of them is not the accounting profession.” She introduced herself to him as he was standing in the lobby and mentioned that she had read his remarks and was concerned about them. She told him it was causing her to lose sleep. Thompson says “I can see where this might be disconcerting to young professionals. A wise man like Cuban might be onto something. And if this is your career of choice, you might have to sweat thinking about it.” He laughed and they had a short 10-minute conversation to clear things up. She shared some of the ways that CPA’s have embraced technology to create new ways of...
Lending to a Business to Pay Payroll taxes can Lead to Penalties
A Texas physician lent $100,000 to one of his businesses to cover its payroll taxes and got nailed with a $4.3 million IRS penalty. Lending to a business is complex. In this case, an employee had embezzled the money. Kevin Thompson, CPA says “the first mistake this man made was making the loan and paying the taxes without including the IRS in this process. Perhaps, he was unaware of the magnitude of the debt.” The court concluded that the physician was responsible and acted in a willful manner. You can still be considered “willful” even if you don’t have an evil motive or intent as in the case of employee embezzlement. Thompson says, “it’s almost evil how onerous and vindictive the IRS penalty structure has become.” The physician’s business had to shut down operations and remit its remaining receivables to pay the IRS penalty. No matter what the employee did, the owner was responsible. “The IRS justifies this closure by saying that the taxpayer was a bad business owner,” says Thompson. The IRS gets aggressive when it comes to payroll taxes and some people can face imprisonment when they aren’t paid. The agency is being encouraged to prosecute more payroll violations because it...
THE PATH ACT – Protecting Americans From Tax Hikes – Depreciation
Protecting Americans from Tax Hikes Act of 2015 (The PATH Act) has given taxpayers new opportunities to accelerate their depreciation and the expenses they incur in qualifying real property. Kevin Thompson, CPA says “who names these bills? I can assure you that there have already been 10 other bills that did not protect us from tax hikes.” Generally, the cost of commercial real-estate improvements is recovered over 39 years using the straight-line depreciation method with three exceptions: qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. Together, these exceptions are known as “qualified real property.” Qualified real property allows a quicker recovery period of 15 years when using the straight-line method. However, before the PATH act, this was a temporary allowance that was extended periodically. Having most recently expired for property placed in service until after Dec 14, 2014. Thompson says “this is HUGE. Being able to recapture the cost of investments and match it against current income is one of the great advantages to business and property owners. And being able to recapture 24 years sooner is a boon to...