Author Sidney Kess, CPA, J.D., LL.M

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Tax Strategies

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Tax Perspective on Nonpublic Education

Tax Perspective on Nonpublic Education

Today, there are a growing number of primary and secondary students who are being educated outside of...

Recent Tax Favored Treatment for Small Business

Recent Tax Favored Treatment for Small Business

There are numerous instances in which small businesses receive tax-favored treatment compared with...

Three After-Tax Savings Programs with Tax Advantages

Under the current tax system, most savings programs, such as IRAs, are incentivized by tax deductions...

Proper Hiring and Tax Withholding Guidelines for Domestic Employees

Do you or your clients have household help? Does your client have a nanny or babysitter, cleaning...

Required ACA Reporting Forms

The Patient Protection and Affordable Care Act (referred to as ACA or Obamacare) requires employers and...

Taxes and Technology

Technology continues to expand at an ever-increasing rate and taxes are not immune from the impact...

Net Investment Income Tax for Estates and Trusts

There is a 3.8% additional Medicare tax imposed on trusts and estates that have net investment income...

Obamacare Tax Credits & Considerations

The main provision of the Patient Protection and Affordable Care Act of 2010, otherwise known as the...

Year-End Tax Planning for Individuals/Businesses

Now that the final quarter of the year is under way, it is an ideal time to focus on year-end tax...

Obamacare Consulting

Key provisions of the Patient Protection and Affordable Care Act (also referred to as the Affordable...

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Feature Stories

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The Great Migration to Cloud Services and Lower Cost Tax Software

The Great Migration to Cloud Services and Lower Cost Tax Software

A great migration for CPA firm software is beginning again. It’s reminiscent of the first major migration...

Outsourcing Returns Allows More Sleep and More Money

Outsourcing Returns Allows More Sleep and More Money

The recent 2015 California Accounting & Business Show and Conference featured presentations covering...

An Underfunded IRS Benefits the Non-Compliant

As the political season enters a fever pitch, some misguided candidates are calling for the abolishment...

What are Your Rights During an Audit?

It is important that you know your rights during an audit so you do not become intimidated by the IRS...

The Marijuana Industry and Internal Revenue Code Section 280E

Marijuana is quickly becoming legal across the country – albeit not federally legal. Dozens of states...

Civil Audits: Beware the Fraud Trap

An IRS notice of examination of a tax return brings great anxiety to our clients. It also takes us to...

Kiteboarding Florida CPA New Chair of AICPA

Tommye Barie, a partner with Mauldin & Jenkins LLC, is the new chair of the board of directors of...

How Has SOC Reporting Changed in 2014?

The AICPA recently issued an update to the Trust Services Principles and Criteria for Security, Availability,...

Supreme Court Holds Inherited IRAs Not Retirement Funds in Bankruptcy

Clark v. Rameker became a controversial case when the bankruptcy court, district court and 7th circuit...

Time & Billing Evolution

Time and billing studies have found that merely tracking time always more than pays for itself in professional...

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Editor Blog

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Bitcoin Qualifies for Capital Gains Due to IRS Guidance

Bitcoin will be treated a property according to guidance issued by the IRS March 25th. See www.bitcoin4biz.com...

Expanding Your Practice with QuickBooks Consulting

QuickBooks Consulting (QBC) fits neatly in the category of expanding your practice because it is one...

NSA Cyber-Tracking Avoidance Techniques

The nuisance of online machine-generated advertising has recently been exceeded by word that Google,...

Spring 2013 Statistics of Income Bulletin Now Available

  WASHINGTON — The Internal Revenue Service today announced the availability of the spring 2013...

Apple's dirty little tax secret

Cathy Kearney, an accountant in the Irish city of Cork, lives with her husband and children in a large,...

IRS Should Take More Aggressive Action to Address Travel Card Misuse

WASHINGTON – Although the Internal Revenue Service’s (IRS’s) travel card program controls are generally...

CPAs Hard to Find for SSAE 16/SAS 70 Audits

Service Organization Control (SOC) engagements are seen as a growth area for CPA firms. John McLaughlin,...

CPA Fraud Examiner

Robert Gralla is a CPA, Certified Fraud Examiner and Certified Forensic Accountant who has experience...

4 Tips on Bond Portfolios for Tough Times

The extraordinary measures taken by the United States Federal Reserve to stimulate employment growth...

Crowdfund & Small Firm Auditing

The signing of the Jumpstart Our Business Startups Act (JOBS Act) in April of this year has put the spotlight...

Author Julie Welch, CPA/PFS, CFP

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Client Tax Tip

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Tax Return Retention Policy

Tax Return Retention Policy

“How long should my client keep his/her tax returns and supporting documentation?” is a frequently...

You Can Use Health Savings Accounts to Reduce the Cost of Your Medical Care

You Can Use Health Savings Accounts to Reduce the Cost of Your Medical Care

Health Savings Accounts (HSAs) are similar to individual retirement accounts (IRAs) for medical expenses....

Capital Gains for Noncorporate Taxpayers-2015

Julie Welch (Runtz), CPA, CFP, and Randy Gardner, LLM, CPA, CFP, are the authors of 101 Tax-Saving...

Significantly Reduce Costs Of Owning A Vacation Home

The interest expense and real estate taxes can deduct on both a primary home and a second home. To...

Client’s Children Hired for Their Business

If your client has chores their children can do in their business, they should consider hiring them....

Have Employer Pay for Tuition and Exclude Cost From Income

Education expenses can reduce taxes in one of three ways. First, job-related education expenses can...

Why Give Appreciated Property to Charity

Donating appreciated property to charity can produce substantial tax savings. Appreciated property...

Help Clients Maximize a SIMPLE Retirement Plan

Savings Incentive Match Plan for Employees (SIMPLE plans) are retirement plans that can be set up...

Retirement Plan Distributions Before 59 ½

Penalties generally apply if you withdraw money from your retirement plan before you reach age 59 ½....

Avoid 50% Penalties on Distributions From Your Retirement Plan

When it comes time to withdraw money from a retirement plan, you should consider both nontax as...

Author Martin M. Shenkman, CPA, MBA, PFS, J.D.

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Tax Checklist

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Charitable Tax Planning Consulting

Charitable Tax Planning Consulting

√ Charitable Planning Should Address Personal Goals Charitable giving is too often focused on tax...

Planning Ideas for High Net Worth Clients

Planning Ideas for High Net Worth Clients

High net worth clients require a different nature of planning than other clients. Practitioners serving...

S Corp. Planning

The income tax is the new estate tax. With a federal estate tax exemption at $5,430,000 and increasing...

Tax Audit Hot Buttons for Gifts and Estates

√  Donee Transferee Liability When clients make gifts few donees give thought to the tax issues,...

Aging Clients and Home Improvements as Medical Expense Deduction

With an aging population, higher income tax rates and more clients trying to live at home than in facilities,...

Practice Development: Quicken for Later Life Planning

Every CPA can and should be a proactive to help clients with estate planning matters. In the past,...

LLC and FLP: The Swiss Army Knife of Planning Options

LLCs are ubiquitous in tax and business planning for clients. They have become the default answer...

Post-ATRA Trust Income Tax Planning

Income tax planning for trusts has been profoundly affected by the dramatic changes the American Taxpayer...

Help Clients Save Taxes Using Form 1065 Post ATRA

Partnerships, and limited liability companies (LLCs) taxed as partnerships (both to be referred to...

Income Tax Tips and Estate Planning

Since so few clients have estates subject to federal estate tax ($10.5M+ for a couple) income tax...

Author E. Martin Davidoff, CPA, Esq.

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IRS Representation Advisor

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IRS Posts New Forms for Offers in Compromise

IRS Posts New Forms for Offers in Compromise

On December 31, 2013, the IRS posted the January 2014 revision to Form 433-A (OIC), Collection Information...

IRS Provides Guidance for Clients Affected by DOMA

IRS Provides Guidance for Clients Affected by DOMA

 In July, I wrote about how the United States Supreme Court found Section 3 of the Defense of...

Defense of Marriage Act Overturned with Respect to Federal Benefits and Federal Tax Laws

On June 26th, the United States Supreme Court found that Section 3 of the Defense of Marriage Act...

Steps to Effective IRS Audit Resolution, Part II

You can view the first half of this article by visiting http://www.cpataxmag.net/davidoff-stories/42-e-martin-davidoff-columns/869-steps-to-effective-irs-audit-resolution....

Steps to Effective IRS Audit Resolution

When taxpayers receive the dreaded notice that their business is going to be examined by the Internal...

The American Taxpayer Relief Act of 2012

On New Year’s Day, Congress completed its compromise to avoid the fiscal cliff. Here are the...

Offers In Compromise Improving

On May 21st, the IRS announced major revisions to the Offer in Compromise program (http://www.irs.gov/newsroom/article/0,,id=257542,00.html)....

IRS Appeals in Collection Matters

The most underutilized arm of the Internal Revenue Service with respect to Taxpayer collection issues...

Dealing with the IRS Regarding Collections, Penalty Abatements and Examinations

In practicing before the IRS regarding collection matters, penalty abatements and examinations, I...

New IRS Procedures Claim to Provide 'Fresh Start' for Taxpayers

Over the past several weeks, the IRS has made some significant changes in collection policies and...

Author Jerry Love, CPA/PFS

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Financial Planner

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Helping Clients Develop a Household Budget

Helping Clients Develop a Household Budget

I am frequently asked by clients to help them develop a household budget. As most CPAs know all too...

Affordable Care Act - 1040 Reporting Requirements

Affordable Care Act - 1040 Reporting Requirements

When Congress passed the Affordable Care Act (ACA) in 2010, the impact on our tax practices seemed...

Social Security Benefits for Children

Social Security is considered by many as one of the most important government programs in American...

Health Insurance Mandate for Employers

According to Whitehouse.gov, “Small businesses are the backbone of our economy, but high health...

Paying for College and Finding Means to Do So

Over the last 50 years, going to college has become an expected rite of passage for a large majority...

Advanced Preparation for Social Security Retirement Benefits

Retirement is the goal that most of us look forward to at the end of our career. There is much debate...

Advising Clients Over Social Security Disability

According to the Social Security Administration’s Fact Sheet in February of 2013, 25% of the 25-year-olds...

The Affordable Care Act's Influence on Long-Term Care

A recent article by Christine Vestal, ACA Spurs State Shift in Long Term Care, caught my attention...

What Spouse Receives Based on Your Social Security

Earlier this summer, I wrote an article about the topic of when a person should start drawing their...

Do You Have Enough Money to Retire?

This is a question I am frequently asked by the Baby Boomer generation. After all, most of us have...

Financial Planning Starting with Form 1040

mug jerry loveWithout a doubt there is a wealth of information we already know about our clients’ financial status because we prepare their tax return. If we step back to see the forest instead of the trees there is much more the tax return is telling us about their overall financial well being and could lead to expanded services.

It is very important at the outset of this column to emphasize that all tax professionals who wish to offer services to their clients that are beyond tax compliance and tax planning, need to be familiar with Treasury Reg. Section 301.7216-2(n). These Regulations permit the tax return preparer to use their client list to send a newsletter to clients containing, “tax information and general business or economic information or analysis for educational purposes.” However, 7216 explicitly states that the client list may not be used to “solicit any service or product other than tax return preparation services.” You can find more information at www.pfp.aicpa.org.

You can use the tax return to identify personal financial planning needs of the client. It gives you an overall picture of clients’ financial situation and can uncover opportunities for planning that client should consider.

Items to consider include:

1.  What is their ratio of investment income to their total income?

2.  If they have a high level of income but little or no investment income, do they have a high level of debt or high level of consumption or a combination?

3.  As you review their investment income, do they seem to have diversified investments?

4.  Is there an appearance that the client’s assets may be low yield investments or at the opposite, concentrated in high-risk investments? Do they need assistance in defining their risk tolerance and/or assistance in understanding the principles of risk/reward?

5.  Do they have a high cash balance in a limited number of financial institutions? Have they considered their balances in light of the FDIC insurance limits?

6.  Have they established an emergency savings fund?

7.  Are they maximizing their participation in a 401k or similar deferral plan?

8.  Do they have an option to participate in a Flex Plan?

9.  If they are self-employed, have they established a retirement plan? Is their plan structured to give them the maximum contribution possible?

10.  If their primary investment and retirement is based on a closely held business, do they have a strategy for developing its value and have a succession plan to realize that value?

11.  If they are self-employed, have they considered the opportunity to have dependents employed in the business?

12.  Do they have children under age 18? Do they have plans to send them to college and if so, do they have a strategy for funding part or all of that cost?

13.  Will they potentially have any financial responsibility for other family members whether that might be parents, siblings, adult children or grandchildren?

14.  Is their spouse active in the business and if so, have they explored the compensation to the spouse including fringe benefits and retirement plans?

15.  If they have an IRA, have they considered converting it to a Roth IRA? Have they considered funding the maximum non-deductible IRA in addition to their retirement plan funding?

16.  Do they have items reflected on Schedule C, F or E that may be a drain on their overall cash flow and diminishing their liquidity? Have they considered the long-term benefit of the venture and how it may be contributing or hindering their financial goals?

17.  If the client has been successful in the accumulation of assets and developing their net worth, do they need estate planning? Do they have plans to make significant charitable contributions during their lifetime or at their death?

18.  Has the client considered their potential needs relative to life insurance whether it may be to provide income replacement or to provide cash to pay either estate taxes or fund a buyout of their closely held business?

19.  If they are self-employed does their health insurance qualify to be deducted on page 1 of Form 1040?

20.  Does the client qualify for a Health Savings Account? Have they considered using the HSA as an additional vehicle to accumulate tax deferred dollars for their retirement years?

21.  Do they have disability insurance? Will it meet their needs?

22.  Has the client given consideration to long-term care insurance and how to address the potential future medical expenses they may encounter?

23.  How much is their annual mortgage interest expense? Do they have more than one mortgage? Do they have home equity loans or home equity line of credit? Do they need to evaluate their cash flow and consider a plan to reduce their overall debt?

24.  Are they high-income taxpayers who are living paycheck to paycheck and putting their financial security on the back burner?

25.  On Schedule E, what type of entities do they have? Do any of these give rise to concerns for unexpected liability?

26.  On Schedule D, do they have a large volume of trading? Does their portfolio contain unrealized gains or losses?

This column and list is not an all inclusive list. For a more extensive list, refer to http://www.aicpa.org/InterestAreas/PersonalFinancialPlanning/Resources/TaxPlanning/DownloadableDocuments/AnalysisofaTaxReturnforPFP.pdf.

As indicated, this short column cannot give an in depth discussion of everything to consider when reviewing the Form 1040 and although the above referenced list gives more guidance, neither will replace a scheduled time to explore financial planning topics with your client. Clients both want and need to explore financial planning in more depth.

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