Blog Archives - Page 47 of 60

October 1, 2023

Sanctioning Terrorist Activities by Iran, Accelerating Disaster Assistance and Expanding Healthcare Opportunities for Native Americans

MAHSA Act (HR 589) – The Mahsa Amini Human Rights and Security Accountability (MAHSA) Act is a bipartisan bill that was introduced on Jan. 27 by Rep. Jim Banks (R-IN). The purpose of this bill is to impose sanctions on the leaders of Iran for supporting human rights abuses and terrorism. The sanctions block both property and visas owned by certain foreign individuals and entities affiliated with Iran. The bill passed in the House on Sept. 12 and currently resides in the Senate.

Fight CRIME Act (HR 3152) – This bipartisan bill was introduced by Rep. Michael McCaul (R-TX) on May 9. It imposes visa- and property-blocking sanctions specific to Iran’s missile-related activities, including acquiring, developing, transporting, or deploying missiles or related items, such as drone technologies. These sanctions also may be imposed on adult family members of people directly involved, as well as foreign individuals and entities that engage in transactions and knowingly provide support for the Missile Technology Control Regime (MTCR). This legislation was passed in the House on Sept.12 and is under consideration in the Senate.

Disaster Assistance Simplification Act (S 1528) – This bipartisan bill aims to facilitate streamlined information sharing among federal disaster assistance agencies, accelerate life-saving assistance to disaster survivors, and expedite the ability for communities to recover from disasters, as well as other purposes. The legislation was introduced by Sen. Gary Peters (D-MI) on May 10 and was passed in the Senate on July 27. It is presently under review in the House.

Tribal Trust Land Homeownership Act of 2023 (S 70) – Introduced by Sen. John Thune (R-SD) on Jan. 25, this bill mandates that the Bureau of Indian Affairs expedite processing and completion of residential and business mortgage applications within certain deadlines (e.g., provide approval or disapproval within 20 or 30 days, depending on the type of application). The bipartisan bill passed in the Senate on July 18 and is currently under consideration in the House.

Urban Indian Health Confer Act (S 460) – This Act, introduced by Sen. Tina Smith (D-MN) on Feb. 15, passed in the Senate on July 18 and is currently in the House. Its purpose is to expand the requirements of the Indian Health Service (IHS) on matters relating to both American Indians and Alaskan Natives. At present, the IHS is required to confer only with urban Indian organizations. However, this new bill would mandate that the U.S. Department of Health and Human Services (HHS) ensure that the IHS and other agencies consult on matters related to the Indian Health Care Improvement Act, as well as other healthcare provisions for Native Americans. The Act passed in the Senate on July 26 and has been forwarded to the House.

FEND Off Fentanyl Act (S 1271) – The objective of this bill is to impose sanctions on individuals, cartels and transnational criminal organizations involved in trafficking illicit fentanyl and related products. The legislation was introduced by Sen. Tim Scott (R-SC) on April 25 and was assigned to the committee for review on June 21. This bipartisan bill is co-sponsored by 32 Republicans, 32 Democrats and two Independents. It has a high probability of being passed by both houses and enacted by the president.

September 1, 2023

Widow/er Social Security Benefits

A widow or widower is eligible for a survivor’s benefit from Social Security even if they never worked – as long as the deceased spouse qualified for benefits based on his or her own income record. Also, note that surviving spouses must have been married to their most current spouse for at least the nine months prior to their passing or for 10 years if the couple was divorced.

When Can You Claim?

A widow/er may apply for benefits once she turns age 60, age 50 if she qualifies as disabled or if she is responsible for the care of a child under age 16 (or a mentally or physically disabled child aged 16 or older). However, if the widow/er applies for a surviving spouse’s benefit starting at age 60/50, that benefit will be permanently reduced from the maximum amount available if she were to wait until her own full retirement age.

What Is Full Retirement Age for the Widow/er?

For anyone born from 1945 to 1955, their full retirement age (FRA) is 66. If born between 1955 and 1959, FRA increases by two months each year from age 66 to 67. FRA is age 67 for anyone born in 1960 or later.

How Much Can You Get?

First and foremost, all Social Security beneficiaries receive the highest benefit for which they qualify. Therefore, if a surviving spouse would receive a higher benefit from her own record of earnings than that of the deceased spouse, then that’s the amount she will receive.

If the deceased was receiving Social Security disability benefits when he passed, the survivor benefit is based on the deceased’s disability benefit.

Normally, the spousal benefit equals half the benefit of the higher-earning spouse. However, the surviving spouse’s benefit equals 100 percent of what the deceased worker would have received, including any delayed retirement credits he earned by postponing benefits to age 70.

The minimum surviving spouse benefit at age 60 is 71.5 percent of the available amount. This represents a permanent loss of 28.5 percent of the benefit available at FRA. The widow/er benefit is reduced for each month shy of his or her own FRA, so the closer they get to FRA before applying, the higher the benefit. The amount freezes once they begin drawing benefits, although it will increase incrementally based on cost-of-living adjustments.

The maximum benefit a widow/er may receive is 100 percent of what the deceased spouse would receive if he was still alive. However, that amount may already be reduced. For example, if the deceased began drawing benefits at age 62 instead of waiting until FRA, then that is the maximum benefit the widow/er is eligible for. If she begins drawing early before her own FRA, that benefit will be reduced further.

Ideally, the deceased will not have started receiving Social Security before his death. In this scenario, even if he died in his 50s, his maximum benefit is what he would have received at FRA. Now it’s up to the widow/er to time her survivor benefit – she can wait until her own FRA or take a permanently reduced benefit.

Delay Strategy

One strategy a widow/er may want to consider is to begin her own benefit at age 62, even if it is less than what she would draw as a survivor. Then, she can delay drawing the survivor benefit until it grows higher – ideally, the highest benefit at her FRA.

If the widow/er does not have her own benefit from earnings or can’t live on that amount alone, she may want to withdraw income from other sources, such as retirement savings or an annuity. While that may reduce her overall net worth, it’s important to remember that the Social Security benefit continues for life, so it may be worthwhile to get the highest benefit possible. Other accounts, such as an IRA or 401(k), will stop paying out income once they are depleted.

If the widow/er has a stronger earnings record, another option is to begin drawing the survivor’s benefit early and delay taking her own benefit until FRA or age 70, to receive a higher benefit for life based on her own record. Once she applies for her own benefit, the payout will increase to a higher amount.

Seek Professional Advice

Knowing when to begin drawing a widow/ers benefit can be challenging. The best option is usually based on factors such as other income resources and even the widow’s health. If in poor health and not expected to live many years, it may be wise to begin the survivor’s benefit as soon as possible. Otherwise, it’s probably better to wait and get a higher payout for as long as she lives.

Another thing to keep in mind is that if the widow/er doesn’t know the deceased spouse’s FRA benefit at the time of death, she is not likely to find out until age 60. The Social Security shuts down the deceased’s account at death and won’t reveal the benefit until the widow/er is of qualifying age to begin receiving it. It’s always a good idea for both spouses to check (and share with each other) their accrued benefits each year so that they have accurate numbers to plan with in case one spouse passes away.

September 1, 2023

Evaluating Net Operating Loss Considerations

When it comes to determining if a business is eligible to claim a net operating loss (NOL), it depends on the financial situation. If a business’ taxable income is less than its allowable deductions in a set tax period, usually a year, then the business can utilize the NOL deduction on future tax obligations. Since some businesses’ profits and losses result from uneven cycles, the Internal Revenue Service (IRS) Code permits businesses to find a balance with their tax obligations.

How a Net Operating Loss Works

Here is an example showing a business’ situation with annual profit/loss summaries:

Year one: High profits and big tax payments due

Year two: Net operating loss incurred

Year three: High profits and big tax payments due

The way a NOL deduction works in the example above is that the losses from year two can be used to offset taxes due in year three.

Net Operating Loss (NOL) = Taxable Income – Allowable Tax Deductions

Referring to the income statement, if the company’s bottom line is a net loss, then the company might be eligible to take advantage of the NOL deduction.

It’s important to keep in mind there have been modifications to what and how businesses may use this. Until recently, the IRS let businesses utilize the carryback method to offset losses to prior years’ tax bills (up to 24 months of tax liabilities), resulting in an immediate refund. However, with the passage of the Tax Cuts and Jobs Act, NOLs were modified. Effective Jan. 1, 2018, or later, the two-year carryback provision was removed (except for select farming losses), but allowed for an indefinite carryforward period. The TCJA also limits carryforwards to 80 percent of each subsequent year’s net income. Additionally, if a business records a net operating loss in more than one tax year, they must be exhausted in the order that the losses occurred.

The Coronavirus Aid, Relief and Economic Security (CARES) Act permitted NOLs occurring in tax years 2018, 2019, and 2020 to be carried back five years and carried forward indefinitely. However, the exemptions have now expired. Losses that occurred in pre-2018 tax years are still subject to former tax rules, with any remaining losses expiring after 20 years. Beginning with the 2021 tax year, when the Tax Cuts and Jobs Act (TCJA) passed in 2017, it permitted carryforwards of NOLS indefinitely. However, only 80 percent of taxable income can be “carried forward” during a single tax period.

2021 and Forward NOL Example

Year one: NOL $10 million

Year two: Taxable income of $3 million

Year three: Taxable income of $5 million

For year two, with the taxable income’s carryover limit (80 percent) of $3 million is $2.4 million. With the carryover limit subtracted ($3 million – $2.4 million = $600,000), the company’s taxable income will be $600,000 for year two. The remaining NOL of $7.6 million will be considered a “deferred tax asset.” Looking at year three, 80 percent of the year’s $5 million in taxable income equals $4,000,000 in a carryover limit. Subtracting $4 million from $5 million in year three’s taxable income, the business will have $1 million in taxable income, and $3.6 million will be the remaining NOL balance at the end of year three.

With the tax code continuing to evolve, businesses that stay up-to-date with changes in the IRS Code will make the most of their ability to maximize deductions and reduce liabilities.

September 1, 2023

How to Write an Awesome Accounting Bio

Even though numbers are probably the biggest thing in an accountant’s wheelhouse, getting people in the door with the right words in your bio can make all the difference in the world. Here are a few tips to make sure that how you present yourself to the public via your wording is powerful, succinct, and engaging.

Make it Short and Engaging

Yes, attention spans in our world are woefully short, much like that of gnat. You have seconds to grab someone’s attention. Write your bio as if you were looking for an accountant. How would you word it? What would catch your eye? Of course, you’d start with your name and title, but what after that? Spend time thinking about this.

Don’t Use First Person

While social media is all about saying “I this” and “I that,” when it comes to bios, it’s best not to do that, use the third person as if you were talking about someone else. For instance, “John Davis is a CPA at Ernst & Young.” After that, you can launch into telling the world just how awesome you are.

Use Active Voice

And avoid passive voice. An example of this would be something like, “John’s team was involved in the overhaul of the payroll system.” For active voice, you’d write it like this: “John’s team overhauled the payroll system.” See the difference? You’ve cut out extra words and adjusted your verb to be active. A quick way to check your writing for passive voice is to do a search in your document for an “of.” If you spot these babies, fix them right away.

Update Your Social Media Profiles

While most people use LinkedIn, many others who are looking for a job include their bios on their social media pages. In fact, you might update your bio on your LinkedIn page and then share it on Facebook, Instagram, or other platforms you use. This way, when employers are casually scrolling, you’ll appear in their feed. And if they’re looking for someone, all the better.

End Strong

The abbreviation in the marketing world is CTA, or Call to Action. You see it on nearly every digital ad as a button. But if you reimagine it in terms of the last sentence of your bio, it can leave a lasting impression and, hopefully, trigger a response. You might end your bio with a short, friendly statement, your email, and your phone number: “John is actively seeking employment, can be reached at [FILL IN INFO], and is just a ping or phone call away.” No matter what you choose to end with, it should reflect you and your personality.

If you need a little help to get started, here are two different samples:

Sally Smith is a CPA and a Senior Accountant at ABC Company, a full-service tax and bookkeeping firm in Home Town, USA.

John Jones joined ABC Company in 2000. In his current role, he is a seasoned tax preparer with a focus on international taxes. This involves staying up-to-date with current and future tax regulations for foreigners living and working in the United States and abroad, as well as state tax regulations in California and Florida.

Writing an accountant bio that will stand out from the crowd will take a bit of time, but it is well worth it. You want to present yourself in the best possible light to your audience. When you do this, you’ll get more traction and, in turn, more business.

September 1, 2023

IRS Announces End of Unannounced Taxpayer Visits (Mostly)

You wake up in the middle of the night. Heart racing, drenched in sweat, and breathing heavily. Thankfully, it was just a nightmare when the IRS showed up at your doorstep unannounced. Recently, however, this was the reality for some taxpayers – and not just a bad dream. The IRS just publicized a significant shift in policy, effectively ending the vast majority of surprise taxpayer visits. The change comes in an effort to create safer conditions for IRS officers as well as ease public concerns.

Who’s Knocking at My Door?

In order to understand the change in policy, you’ll need to understand the three categories of IRS employees that typically interact with taxpayers: Revenue Officers, Revenue Agents, and Special Agents.

IRS Revenue Agents are tax return auditors. They don’t typically show up unannounced.

IRS Revenue Officers, of which there are approximately 2,300, have duties that include paying visits to taxpayers to collect back taxes and tax returns not filed. They are not auditors but instead focus on collection efforts, including issuing liens and levies. Revenue Officers are the main category of IRS employees impacted by the policy change.

Special Agents deal with criminal matters and are part of one of the largest law enforcement agencies in the United States. The change in policy does not impact Special Agents.

Safety

Why the shift to (mostly) eliminating surprise visits from IRS Revenue Officers? Safety is cited as the main concern. Unannounced visits to taxpayers, whether at home or their business, can be risky. Historically, IRS Revenue Officers faced contentious and sometimes dangerous conditions during their unannounced visits.

Taxpayer Confusion

There is also a growing number of scam artists pretending to be IRS agents or officers. As a result, taxpayers are increasingly wary of unannounced visits, and this causes confusion for both the taxpayer and law enforcement.

The difficulty in distinguishing between IRS representatives and fakes has caused concern for taxpayers already on guard for scam artists. The IRS believes that maintaining trust among the public will go a long way to maintaining the legitimacy of the organization.

Appointment Letters In Lieu of Visits

In place of these previously unannounced visits, the IRS will contact taxpayers through a 725-B letter, more colloquially known as an appointment letter.

An appointment letter will facilitate scheduling in-person meetings, with the opportunity for the taxpayer to prepare any information and documentation beforehand, allowing for quicker resolution of cases. These meetings occur at a pre-determined time, date, and place.

Limited Visits Will Still Occur

The policy change does not completely eliminate unannounced visits by the IRS. In “extremely limited situations,” such as serving summonses and subpoenas and the seizure of assets, unannounced visits will still occur. To give some perspective, these types of visits will account for only a few hundred per year compared to the tens of thousands of unannounced visits under the old policy.

Conclusion

Unannounced IRS visits are (almost) a thing of the past. They will be carried out only in rare, necessary cases, with most Revenue Officer visits being pre-scheduled. This should ease taxpayer anxiety and make case resolution more efficient.