Congress has enacted the biggest tax reform law in thirty years, one that will make fundamental changes in the way you, your family, and your business calculate your federal income tax bill, and the amount of federal tax you will pay. It will become law as soon as the President signs it.

The bill has taken shape at breakneck pace over the past two months, making it difficult for even us seasoned tax practitioners to know exactly where things stand. The bill itself is massive and contains many tax law changes, some of which are extremely complex, and many of which go into effect in a matter of weeks.
2017 will see almost no changes for small business people and individuals but for large corporations they will immediately have to perform major recalculations of their tax provisions that are required to be in their 2017 financial reports.

For small business people, our major tasks move into 2018 where we will need to reevaluate the entity structures we are in, assess whether there needs to be a revision to any of our leases that are applicable for buildings owned by business owners, evaluate owners’ payroll very closely, evaluate other business decisions and adjust ,and most importantly for some service businesses, see if there will be a way to obtain advantages for the pass-through incomes taxed in an extremely complicated, new manner, as outlined in the new law. Many professionals may not qualify for these new benefits (something the politicians really do not want to dwell on right now while they revel in their success in getting this passed).

There will be huge technical corrections, some that may take months and even years and be retroactive in nature. The IRS has a massive job of now writing regulations for the law. Those corrections likely will impact all of us and may change the directions we put our businesses in early in the year, thus making the decision process even more complex and troublesome. And all gray areas of the law will be tested and eventually taken to tax court to start developing case law to rely on. Until then it could be the wild, wild west again in our decision-making and advice. Do not believe all things you read and hear. That could be dangerous. Wrong interpretations will be common.
Bear with us as we evaluate this monster and try to assess the impacts it will have on each of you.

Meanwhile, each individual and business is unique, and these generic suggestions may not apply to you, but you can try to take advantage of some of this law now and avoid some of its impacts by taking advantage of the current law before year-end.

Since most of the changes will go into effect next year, there’s still a narrow window of time before year-end to soften or avoid the impact of crackdowns and to best position yourself for the tax breaks that may be heading your way. Here’s a quick rundown of last-minute moves you should think about making.

Lower tax rates coming. The Tax Cuts and Jobs Act will reduce tax rates for many taxpayers, effective for the 2018 tax year. Additionally, many businesses, including those operated as pass-throughs, such as partnerships, may see their tax bills cut while others will see increases.

The general plan of action to take advantage of lower tax rates next year is to defer income into next year.
Some possibilities follow:

• If you are about to convert a regular IRA to a Roth IRA, postpone your move until next year. That way you’ll defer income from the conversion until next year and have it taxed at lower rates.
• Earlier this year, you may have already converted a regular IRA to a Roth IRA, but now you question the wisdom of that move, as the tax on the conversion will be subject to a lower tax rate next year. You can unwind the conversion to the Roth IRA by doing a recharacterization-making a trustee-to-trustee transfer from the Roth to a regular IRA. This way, the original conversion to a Roth IRA will be cancelled out. But you must complete the recharacterization before year-end. Starting next year, you won’t be able to use a recharacterization to unwind a regular-IRA-to-Roth-IRA conversion.
• If you run a business that renders services and operates on the cash basis, the income you earn isn’t taxed until your clients or patients pay. So, if you hold off on billings until next year-or until so late in the year that no payment will likely be received this year-you will likely succeed in deferring income until next year.
• If your business is on the accrual basis, deferral of income till next year is difficult but not impossible. For example, you might, with due regard to business considerations, be able to postpone completion of a last-minute job until 2018, or defer deliveries of merchandise until next year (if doing so won’t upset your customers). Taking one or more of these steps would postpone your right to payment, and the income from the job or the merchandise, until next year. Keep in mind that the rules in this area are complex and may require a tax professional’s input.

The reduction or cancellation of debt generally results in taxable income to the debtor. So, if you are planning to make a deal with creditors involving debt reduction, consider postponing action until January to defer any debt cancellation income into 2018.

Disappearing or reduced deductions, larger standard deduction. Beginning next year, the Tax Cuts and Jobs Act suspends or reduces many popular tax deductions in exchange for a larger standard deduction. Here’s what you can do about this right now:

• Individuals (as opposed to businesses) will only be able to claim an itemized deduction of up to $10,000 ($5,000 for a married taxpayer filing a separate return) for the total of
  1. State and local property taxes; and
  2. State and local income taxes.
  To avoid this limitation, pay the last installment of estimated state and local taxes for 2017 no later than December 31, 2017, rather than on the 2018 due date. But don’t prepay in 2017 a state income tax bill that will be imposed next year – Congress says such a prepayment won’t be deductible in 2017. However, Congress only forbade prepayments for state income taxes, not property taxes, so a prepayment on or before December 31, 2017, of a 2018 property tax installment, is apparently OK.
• The itemized deduction for charitable contributions won’t be chopped. But because most other itemized deductions will be eliminated in exchange for a larger standard deduction (e.g., $24,000 for joint filers), charitable contributions after 2017 may not yield a tax benefit for many because they won’t be able to itemize deductions. If you think you will fall in this category, consider accelerating some charitable giving into 2017.
• The new law temporarily boosts itemized deductions for medical expenses. For 2017 and 2018 these expenses can be claimed as itemized deductions to the extent they exceed a floor equal to 7.5% of your adjusted gross income (AGI). Before the new law, the floor was 10% of AGI, except for 2017 it was 7.5% of AGI for age 65-or-older taxpayers. But keep in mind that next year many individuals will have to claim the standard deduction because many itemized deductions have been eliminated. If you won’t be able to itemize deductions after this year, but will be able to do so this year, consider accelerating “discretionary” medical expenses into this year. For example, before the end of the year, get new glasses or contacts, or see if you can squeeze in expensive dental work such as an implant.

Other year-end strategies. Here are some other last-minute moves that can save tax dollars in view of the new tax law:

• The new law substantially increases the alternative minimum tax (AMT) exemption amount, beginning next year. There may be steps you can take now to take advantage of that increase. For example, the exercise of an incentive stock option (ISO) can result in AMT complications. So, if you hold any ISOs, it may be wise to postpone exercising them until next year. And, for various deductions (e.g., depreciation and the investment interest expense deduction), the deduction will be curtailed if you are subject to the AMT. If the higher 2018 AMT exemption means you won’t be subject to the 2018 AMT, it may be worthwhile, via tax elections or postponed transactions, to push such deductions into 2018.
• Like-kind exchanges are a popular way to avoid current tax on the appreciation of an asset, but after December 31, 2017, such swaps will be possible only if they involve real estate that isn’t held primarily for sale. So, if you are considering a like-kind swap of other types of property, do so before year-end. The new law says the old, far more liberal like-kind exchange rules will continue to apply to exchanges of personal property if you either dispose of the relinquished property or acquire the replacement property on or before December 31, 2017.
• For decades, businesses have been able to deduct 50% of the cost of entertainment directly related to, or associated with, the active conduct of a business. For example, if you take a client to a nightclub after a business meeting, you can deduct 50% of the cost if strict substantiation requirements are met. But under the new law, for amounts paid or incurred after December 31, 2017, there’s no deduction for such expenses. So, if you’ve been thinking of entertaining clients and business associates, do so before year-end.
• Under current rules, alimony payments generally are an above-the line deduction for the payor and included in the income of the payee. Under the new law, alimony payments aren’t deductible by the payor or includible in the income of the payee, generally effective for any divorce decree or separation agreement executed after 2017. So, if you’re in the middle of a divorce or separation agreement, and you’ll wind up on the paying end, it would be worth your while to wrap things up before year-end. On the other hand, if you’ll wind up on the receiving end, it would be worth your while to wrap things up next year.
• The new law suspends the deduction for moving expenses after 2017 (except for certain members of the Armed Forces), and suspends the tax-free reimbursement of employment-related moving expenses. So, if you’re in the midst of a job-related move, try to incur your deductible moving expenses before year-end, or if the move is connected with a new job and you’re getting reimbursed by your new employer, press for a reimbursement to be made to you before year-end.
• Under current law, various employee business expenses (e.g., employee home office expenses), are deductible as itemized deductions if those expenses plus certain other expenses exceed 2% of adjusted gross income (AGI). The new law suspends the deduction for employee business expenses paid after 2017. So, you should determine whether paying additional employee business expenses in 2017, that you would otherwise pay in 2018, would provide you with an additional 2017 tax benefit. Also, now would be a good time to talk to your employer about changing your compensation arrangement-for example, your employer reimbursing you for the types of employee business expenses that you have been paying yourself up to now, and lowering your salary by an amount that approximates those expenses. In most cases, such reimbursements would not be subject to tax.
• If you are considering buying an electric car, do it before the end of 2017 as the tax credit for this type of vehicle expires on December 31, 2017.
• If you were planning a move related to a new job, try to get it done and paid for before 2018 as the deduction for moving expenses will not be available in 2018.

Please keep in mind that I’ve described only some of the year-end moves that should be considered in light of the new tax law. If you would like more details about any aspect of how the new law may affect you, please do not hesitate to call.

Snyder & Company, PA, CPA’s is pleased to announce that Robert Wise has become a shareholder and vice-president of the firm. Rob has been an associate with the firm for over 23 years and is committed to helping our small business clients succeed. Rob holds a Bachelor of Science degree in Accounting from Goldey-Beacom College and is a Certified Public Accountant.

Rob is a member of the American Institute of Certified Public Accountants, the Delaware Society of Certified Public Accountants and the Professional Association of Small Business Accountants. He is experienced in providing accounting, tax planning and preparation, and business consultation to his clients and is committed to carrying on the tradition of Snyder & Company in providing superior service to the small business and professional community.

Snyder & Company has been providing monthly accounting services to small to medium sized businesses and professionals since 1982.

The Professional Association of Small Business Accountants held its 11th annual awards ceremony at the 2017 Spring Marketing Conference in St. Pete Beach FL. During the conference dinner party, it was announced that Dennis Snyder was chosen as the 2017 medium practice recipient of the Association’s Accounting Firm of the Year for his firm, Snyder & Company. Mr. Snyder was nominated by the members of the association to receive this outstanding award that honors a member who has consistently demonstrated the beliefs of the association’s motto, Teach~Share~Learn. The Professional Association of Small Business Accountants represents Certified Public Accountants, Public Accountants, and Enrolled Agents who provide accounting services to small businesses throughout the United States. Members of the Association have built a nationwide network of accountants to benefit small business clients across the country. Association members offer their clients a level of service and expertise that individual practices are unable to rival.

Following is helpful information found on the Federal Trade Commission IdentityTheft.gov website. You need to act now if you haven’t yet taken steps to prevent the misuse of your sensitive personal information that was exposed in the Equifax Data Breach.

The first step, as stated below, is to determine if your personal information was compromised. Equifax is offering free services to all U.S. consumers due to the breach. Visit Equifax’s website, https://www.equifaxsecurity2017.com.
Find out if your information was exposed. Click on the “Potential Impact” tab and enter your last name and the last six digits of your Social Security number. Your Social Security number is sensitive information, so make sure you’re on a secure computer and an encrypted network connection any time you enter it. The site will tell you if you’ve been affected by this breach.

Whether or not your information was exposed, U.S. consumers can get a year of free credit monitoring and other services. The site will give you a date when you can come back to enroll. Write down the date and come back to the site and click “Enroll” on that date. You have until November 21, 2017 to enroll. · You also can access frequently asked questions at the site.

Here are some additional steps you might want to take because your Social Security Number was exposed…
1. Consider whether you want to sign up for the free credit monitoring services that Equifax is offering.
2. Get your free credit reports from annualcreditreport.com, and check for any accounts or charges you don’t recognize. You can order a free report from each of the three credit bureaus once a year.
3. Consider placing a credit freeze. A credit freeze makes it harder for someone to open a new account in your name.
4. If you place a freeze, you’ll have to lift the freeze before you apply for a new credit card or cell phone – or any service that requires a credit check. If you decide not to place a credit freeze, at least consider placing a fraud alert.
5. Try to file your taxes early – before a scammer can. Tax Identity Theft happens when someone uses your Social Security number to get a tax refund or a job. Respond right away to letters from the IRS.
6. Don’t believe anyone who calls and says you’ll be arrested unless you pay for taxes or debt – even if they have part or all of your Social Security number, or they say they’re from the IRS.
7. Continue to check your credit reports at www.annualcreditreport.com. You can order a free report from each of the three credit reporting agencies once a year.
8. Equifax plans to notify people whose credit card information was exposed. If you receive a notice…Contact your bank or credit card company to cancel your card and request a new one.
9. If you have automatic payments set up, update them with your new card number.
10. Review your transactions regularly. Make sure no one misused your card. If you find fraudulent charges, call the fraud department and get them removed.

Going forward, it’s important to monitor your credit card and bank accounts closely. If you find charges you don’t recognize, come back to IdentityTheft.gov to report it.

U.S. Citizenship and Immigration Services (USCIS) has published a revised version of Form I-9, Employment Eligibility Verification. The I-9 form confirms that you have verified the identity of your employee and their authorization for employment in the United States.

The revised form is available on our website at: Snyder CPA Forms

This new version must be used by ALL new employees effective January 22, 2017.  The old form is valid until then, but be sure to replace copies in your Personnel policies procedures as soon as possible.  There is a minimum penalty of $110 per form for not completing the new and improved form for each new hire.

Changes are designed to reduce errors and make it easier to complete the form on a computer.  Drop down menus, calendars, on screen instructions, smart error checking, and a “clear the form” option all enhance the ability of employers to collect required information quickly and easily.

Important news for business owners!  The Department of Labor’s (DOL) new overtime rule, set to go into effect on December 1, 2016 has been temporarily blocked by a Federal Judge in Texas.   For now, that means businesses are in a holding pattern.  The courts action stops the proposed changes from going into effect while the court decides the case.

The Backstory: Back in May the DOL released regulations that made significant changes to the Fair Labor Standards Act (FLSA), specifically raising the minimum salary for a staff member to be “exempt from overtime” from $23,660 per year to $47,467 per year.   This would be the first change to this regulation since 2004.  The proposed regulations also provided for automatic updates of these thresholds every three years.

Business groups in 21 states advocated to fight the proposed change by filing lawsuits against the DOL and in October asked for an injunction to delay the ruling.  The delay is only temporary but does apply to employers nationwide.

What now?  For now, you are not required to make any changes to the way you pay your salaried employees by December 1^st.  If you have already increased salaries of your exempt employees to meet the new threshold to continue to be “exempt”, it would be difficult and probably not wisest move to take it back.  But… if you were planning on re-classifying a staff member to a “non-exempt” status as of December 1^st you DO have the option to postpone that decision until the litigation plays out.  If you’re not sure, it’s a good idea to consult legal council before communicating your decision to your staff.

While the rule has been delayed, it may not go away.  You should still have a plan to implement this change in the future if court rules against the pending lawsuit.  It is also possible that the next DOL administration could modify the changes regardless of what the court decides.

Either way, it’s good business practice to continue to evaluate the FSLA status of your employees by reviewing job duties and responsibilities to be sure that you have your employees classified properly and compensated fairly.

First it was “Small Businesses MUST have a Website”, then the discussion turned to “Search Engine Optimization” (also known as SEO).  In 2016 successful businesses are grabbing the millennial market share by increasing their Social Media presence.  It can feel like an uphill battle, but the efforts will reap great rewards!

What are the main goals of social media marketing:

• Building/Strengthening your Brand
• Increasing the conversation about your company
• Improving SEO
• Gaining new clients
• Build an emotional connection with current and potential clients

Consider this: According to Hubspot, 92% of marketers in 2014 claimed that social media marketing was important for their business, with 80% indicating their efforts increased traffic to their websites. And according to Social Media Examiner, 97% of marketers are currently participating in social media—but 85% of participants aren’t sure what social media tools are the best to use.

Facebook, Twitter, Linked In, Pinterest, YouTube, Google+, only you can determine which social media outlets will bring the most business to your door, but no one will find you without it.

Here are some quick tips about managing your social media presence:

• Google – if you don’t manage your social media, someone else will! Almost all business have a presence on Google, but if you are not managing your listing, you’re leaving it up to anyone who chooses to add details and photos (good or bad) about your business to the web.
• Consistency is key- Make sure that your company name and information is consistent on all media outlets. Google analytics that drive SEO are looking for matching results.
• Make it easy for people to follow you: how will your clients find you on social media? Will they search for your company name on their favorite social media outlet?  Probably not.  But if you provide them with a quick link they will click and follow!
• Build your audience with motivation and inspiration. To become a trusted and valued connection, share about 4 times as much educational and inspirational material as you do about your company.    Get them listening first….then tell them about your business.
• Be on top of your communications! If someone comments on your post, be ready to LIKE & REPLY to it!  Regardless if it is positive or negative, your action says “yes, I hear you and I am engaged with you”
• Reviews – Millennials choose the companies they do business with based on reviews. If there are two companies vying for the market share, the company with good reviews wins every time over one that has none.  (shutter to think your only review being negative!)   Ask your raving fans to review you on social media and be sure to review your favorite businesses too!
• Use social media management tool, like Hootsuite, to keep all of your social networks organized in one place. This makes it easy for you to share across any or all social networks at once.

Finally, we get to my favorite (and what I think is the most important) tip: experiment. There’s no such thing as a perfect or surefire social media strategy. Instead, you have to test the waters and gradually learn what does and doesn’t work over time. The only way to do this reliably is through experimentation; try something. If it works, keep it, and if it doesn’t, ditch it.

These tactics range from easy to difficult, but all of them will, in some way, help you achieve a better reach in your organic social media marketing campaign. The more people you can reach, the more effective your content will become, the more traffic you’ll receive, and ideally, the more revenue you’ll generate. It takes time to build a thriving audience, but if you remain committed to your ongoing improvements, there’s nothing stopping you from increasing your social media presence and growing your business!
 

Taxpayers may not like receiving 1099s. Businesses may not like sending them out. Perhaps no one likes 1099s except the IRS!  The agency loves them because they easily allow the matching of data against tax returns.   Forms 1099 are a vital part of IRS matching. Take these forms seriously. The IRS sure does!

Form 1099-MISC is the form you MUST complete when you pay for certain business expenses such as rent or services performed by an independent contractor.  Information reporting has become the centerpiece of IRS enforcement efforts.

Who gets a 1099-MISC?

Indpendent contractors paid over $600 in one year

Landlords who receive Rent

Any amount paid to an attorney

When are they due?

On or before January 31^st you must furnish a copy of the 1099-MISC to the recipient and you must also submit the 1099-MISC information to the Internal Revenue Service by the same deadline.

August is a good time to review your filing compliance because this is the time of year the IRS typically begins sending notices for prior year information such as returns with missing and incorrect taxpayer identification numbers

How do I get the info I need?

BEFORE you pay an Independent Contractor have them complete an IRS Form W-9. This will give you all the information you need to file AND will protect you from penalties if any of that information is incorrect.  The form is available on our website.  Or click here: Form W-9

What are the penalties if I don’t?

The IRS is serious about your complying with the 1099 reporting requirements.  Take a look at the penalties:

Failure to Furnish a 1099 to the payee – $530;

Failure to File the 1099 with the IRS – $530;

Filing with the IRS up to 30 days late – $50;

Filing with the IRS late but by August 1st – $100;

Filing after August 1^st – $260.

This is PER 1099 and the Failure to Furnish is in addition to the Failure to File so if you do not issue 1099’s when required it could cost you $1,060 PER Form 1099.

I received an IRS notice, now what?

If you get a notice, you may be able to get penalties waived by proving you acted in a responsible manner before and after the error.

The notice has to be answered within 45 calendar days (60 days for foreign payers) from the notice date.

If more time is needed, submit a written request to the address listed on the notice before the end of the 45 day (60 days for foreign payers) period.

Explanations should be as detailed as possible to limit the number of contacts required to establish reasonable cause, and should provide an explanation of the steps taken to comply with the Internal Revenue Code and regulatory provisions.

Do not submit copies of the solicitations unless requested by an IRS employee.

If reasonable cause is established, IRS Letter 1948C will be issued stating that the explanation given was accepted.

If the reply does not establish reasonable cause, or only partially establishes reasonable cause, a penalty will be assessed. A balance due notice will be sent (CP15/215) with a separate letter explaining any appeal rights.

Agreement to the proposed penalty should be submitted with a payment and the response page (or signed consent statement on the response page) and the payment slip to show agreement. A balance due notice (CP15/215) will be sent after receipt of the consent statement.

No response to the Notice 972CG within 45 days (60 days for foreign payers) will result in assessment of the full amount of the proposed penalty and a balance due notice (CP15/215) being issued

Please contact us for more information.

Here’s a list of the key individual and business provisions that have been extended and may affect you or your business:

• Section 179 expense for new equipment purchases restored to $500,000
• 50 per cent bonus depreciation for new asset purchases
• Credit for nonbusiness energy property
• Above the line deduction for qualified tuition and related expenses
• Above the line deduction of $250 for teacher expenses
• Premiums for mortgage insurance deductible as qualified residence interest
• The provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per tax year, by taxpayers age 70 1/2 or older