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Tuition Reduction for School Employees

Posted by Kevin S. Matthews Posted on Jan 12 2020

Do you work for a university and receive tuition benefits at the same university? Perhaps you work at a trade school and want to take additional courses to improve yourself.

This video goes over that taxation of the tuition benefit you receive at your school and how it applies to you.

401k Plans

Posted by Kevin S. Matthews Posted on Jan 12 2020

Do you have a 401k plan? Do you want to learn more about how your 401k plan works? Have you ever wondered what your employer's responsibilities are with your 401k plan?

In this video, we will discuss the 401k plan, what your benefits are, how it works for you and what you need to know to make better, sound financial decisions.

Tracing Rules for Interest

Posted by Kevin S. Matthews Posted on Jan 12 2020

Did you borrow money and use it for a purpose and you’re not sure about the tax consequences of paying the interest? Did you use your home equity to fund seed money for a new business idea? Did you use your home equity loan to purchase an investment property? Did you use a home loan in order to buy a rental property?

In this video we talk about interest tracing and how to maximize your text Dash things on the loans that you have taken for a variety of purposes in your life.

Temp Job Assignment Expenses

Posted by Kevin S. Matthews Posted on Jan 12 2020

Have you been selected to do a temporary job assignment blessing when you’re less? Do you travel as a result of your work, would like to know more about the deductibility of those expenses?

This video goes over the deductibility of expenses when a temporary job assignments. We also talk a little bit about some of the different rules that are out there for job assignments the last more than one year, however this video does not focus on that particular topic.

Taxability of Debt Discharge

Posted by Kevin S. Matthews Posted on Jan 12 2020

Did you have your credit cards discharge last year? Have you gone through a foreclosure, short sale, or other form of that discharge on your primary residence? Do you have a business that they had to get canceled?

This video goes over the tax consequences of that discharge and how it can impact your taxes this year. It also goes through some ramifications and remedies that can take place as a result of this process.

Taxation of US Nonresidents

Posted by Kevin S. Matthews Posted on Jan 12 2020

Are you a us non resident with income in the United States? Do you have investments in the United States, which are subject to tax? Are you concerned that you might have a tax filing requirement in the United States?

In this video we discuss the filing requirements for tax returns in the United States if you are a US non resident.

Retained Life Interest

Posted by Kevin S. Matthews Posted on Jan 12 2020

re you considering transferring property to your air is prior to death? Do you wish to seek in ability to use property, wish you want to transfer to your hairs prior to death? Have you considered that transferring the property to a child or spouse might make more legal sense, but unsure of the tax consequences?

This video goes into was referred to as a retained life interest. Retain life interest is a useful tool in order to transfer property to your siblings, or other people who you wish to trance probably two upon death, however you would be able to receive an interest in the property where you can continue to use it until the day you die.

Restricted Stock Options and the Gambler's Election

Posted by Kevin S. Matthews Posted on Jan 12 2020

Did you get paid in restricted stock options? Or sometimes are called restricted stock units? Do you have restricted stock units and you’re about to exercise them? Have you exercised restricted stock units, and now you’re worried about the tax consequences of the stock units?

In this video we will go over restricted stock units and an opportunity to make an election to reduce your taxes significantly as a result of the gamblers election.

Taxation of US Savings Bonds

Posted by Kevin S. Matthews Posted on Jan 12 2020

Do you own savings bonds? Are you a person who’s receive US savings bonds as gifts, and you want to use them for a variety of purposes, including for higher education? Are you thinking about using savings bonds as a potential way to diversify your portfolio, or as gifts for your younger siblings nephews or nieces?

This video goes into the topic of US savings bonds and how they are taxed, and some of the provisions was allow them to not be taxed at all.

Involuntary Conversions

Posted by Kevin S. Matthews Posted on Jan 12 2020

Are you the victim of a natural disaster, eminent domain, any other events require that you had to sell your house prematurely? Are you an owner of the business due to a natural disaster or even a domain had to dispose of tangible property prematurely? This video sex to teach a better understanding of the involuntary conversion rules, which take place during natural disasters, eminent domain, other forced disposition of property.

Incentive Stock Options

Posted by Kevin S. Matthews Posted on Jan 12 2020

Did you receive incentive stock options within the past 3 to 5 years? Are you about to exercise some incentive stock options, which you received from your company? Have you already exercised incentive stock options, and nobody explained the tax consequences? In this video, we discuss the tax consequences of incentive stock options, and some things that you should address when the stock options are exercised and later sold.

Taxation of Social Security Benefits

Posted by Kevin S. Matthews Posted on Jan 12 2020

Are you a current recipient of Social Security benefits? Are you somebody who is approaching retirement age, and has many questions about the taxability of Social Security benefits? This video takes a look at the taxability of Social Security benefits as it’s received.

Foreign Travel

Posted by Kevin S. Matthews Posted on Jan 12 2020

Are you a company who routinely has people travel on foreign travel? Have you traveled and you have questions about the tax implications of that travel? This video will go into some of the tax implications of the foreign travel, and offer some potential solutions to some of the problems that you might have.

Employer Tax Credit for Tips Income

Posted by Kevin S. Matthews Posted on Jan 12 2020

Do you have employees Q-tips as a normal course of their work? Did you know that there’s a credit to encourage you to have your employees report the proper amount of tips so they receive? This video will go into the various aspects of the tax credit that is available to employers who have employees properly record their tips.

Employer Credit for Paid Medical Leave

Posted by Kevin S. Matthews Posted on Jan 12 2020

s your company struggling with paying your employees in a manner that encourages them to stay at the company? Does your company already offer a generous benefits package, and you’re considering adding paid medical leave as a potential benefit? Perhaps you did not know about paid medical leave tax credits and you would like to learn more. This video goes into more detail about the employer credit for paid medical leave. It encourages employers to offer pay medical leave, especially those were small businesses and normally cannot afford to do so otherwise.

Deducting Spouse Trip Expenses

Posted by Kevin S. Matthews Posted on Jan 12 2020

Are you planning on taking a spouse on a business trip? Do you work in an industry that requires you to frequently travel, and you’re thinking about bringing your spouse along? In this video we discuss the tax consequences bring your spouse along with you on a business trip.

Conversion of a Partnership to an LLC

Posted by Kevin S. Matthews Posted on Jan 12 2020

Did you originally for a partnership with a friend to start a business, and now you’re looking at moving that partnership into an LLC? Have you already converted your partnership into an LLC? In this video, will examine what happens when you convert your general partnership into an LLC and some potential tax effects of that conversion.

Contributing Property to Your Partnership

Posted by Kevin S. Matthews Posted on Jan 12 2020

Are you involved in a partnership and want to contribute property to the partnership? Have you contributed property to a partnership before, and you’re not 100% sure as to what should happen in the first place? Have you been working with somebody, who does not see partnerships as an area of expertise for them? We will be working in various areas of partnerships over the next few videos, and in this video we talk about contribution of property to a partnership.

When are NonTax Residents Subject to US Tax?

Posted by Kevin S. Matthews Posted on Jan 12 2020

Are you a person who is potentially thinking about coming to the United States? Are you a person who has business interest in the United States, but you do not live in the United States? Are you a student or a professional scholar who works in the United States and is concerned with the taxability of the income you earn here in the United States? Through this video, we will dive into many of the topics that affect people who are non-residents of the United States, however may subject themselves to taxation in the United States.

The Deductibility of Private Club Dues

Posted by Kevin S. Matthews Posted on Dec 30 2018

Are you a member of a private club and you want to find some deductions for your club expenses? This video covers where we may find some expenses in this area.

The Child and Family Tax Credit

Posted by Kevin S. Matthews Posted on Dec 30 2018

The recent tax law came with it some changes to the Child Tax Credit and introduced the Family Tax Credit.

Capital Gains and Losses

Posted by Kevin S. Matthews Posted on Dec 30 2018

Discussion of what causes capital gains and losses and how they are determined.

Marginal, Effective and Capital Gains Rates

Posted by Kevin S. Matthews Posted on Dec 30 2018

In this video, we discuss the three different tax rates and how they affect your situation and tax planning.

1031 Exchanges

Posted by Kevin S. Matthews Posted on Dec 27 2018

Are you about to sell real property, which is used in a trade or busienss or a production of income (rental property)? If you are selling it to get another business/production of income property, a deferred-tax exchange (commonly called 1031 exchanges) is a way to limit tax exposure, while achieving your financial goals. 

Cancellation of Student Loan Debt

Posted by Kevin S. Matthews Posted on Dec 27 2018

Do you have student loans, which are about to be canceled? If so, do you know the tax effects of those cancellations? This video will discuss aspects of cancellation from a tax perspective. 

ABLE Accounts

Posted by Kevin S. Matthews Posted on Dec 27 2018

Do you have a child or grandchild, who has special needs? Children can be expensive to begin with, but add in the additional costs of special equipment and private special education, etc... it really can cost alot in the end. ABLE Accounts might be a good way to save money, grow it tax free and give your child/grandchild opportunities to achieve their full potential and happiness. 

Rental Real Estate

Posted by Kevin S. Matthews Posted on Dec 27 2018

Have you ever dreamed of owning your own real estate empire? There are significant benefits to owning rental real estate as a second source of income, but there are special rules for the deductions of these losses. Our video will go over one of these: the $25,000 loss allowance. 

Reasonable Compensation

Posted by Kevin S. Matthews Posted on Dec 27 2018

What is reasonable compensation? This video will explain how the IRS makes this determination and what you need to know in order to set your compensation correctly going forward. 


Posted by Kevin S. Matthews Posted on Dec 27 2018

There are many misconceptions about IRA and how to best use them. In this video, we work to explain the SEP IRA and how it can save you literally thousands on taxes, when you own your own busienss. 

EA, CPA, or a Tax Attorney

Posted by Kevin S. Matthews Posted on Dec 27 2018

Kevin... what is a CPA, EA or a Tax Attorney? This is a common question I get frequently as I travel and teach about taxes and other financial issues. This video seeks to address some of the differences and also, why you need to hire one of these experts on your team. 

Military Separation and Other Military Benefits

Posted by Kevin S. Matthews Posted on Dec 27 2018

Are you about to leave the military? If so, there are many changes coming to your life and you need to be better prepared for the transition. As a veteran myself, I want to thank you for your service, and now let us serve you, with this video about some tax effects of military seperation. 


Posted by Kevin S. Matthews Posted on Dec 27 2018

SIMPLE IRA/SIMPLE 401k - Today, we we turn toward business owners and see about ideas for adding retirement plans to your compensation strategy. Sometimes, a full blown 401k is simply not an option, as they are expensive and require alot of time. SIMPLE IRAs or SIMPLE 401ks might be a good fit for you. 

American Opportunity Tax Credit - AOTC

Posted by Kevin S. Matthews Posted on Dec 27 2018

American Opportunity Tax Credit - As we come to the end of the Fall semester, many parents are faced with the prospect of dealing with how to pay for classes for their child, or for themselves. There are a few options and today, we will start with the American Opportunity Tax Credit. Please feel free to comment below or reach out if yuou have any questions. Enjoy!

Lifetime Learning Credit

Posted by Kevin S. Matthews Posted on Dec 27 2018

Lifetime Learning Credit - As we come to the end of the Fall semester, many parents are faced with the prospect of dealing with how to pay for classes for their child, or for themselves. There are a few options and today, we will start with the Lifetime Learning Credit. Please feel free to comment below or reach out if yuou have any questions. Enjoy!

Traditional IRA

Posted by Kevin S. Matthews Posted on Dec 27 2018

Do you have an IRA and not really know how your taxes can affect it? Perhaps you are new to retirement and looking to get started, but really want to understand how it all works? Today, we discuss how Traditional IRAs work in the world of tax. Enjoy today's video and feel free to reach out, if you have any additional questions.

Home Mortgage Deduction.

Posted by Kevin S. Matthews Posted on Dec 27 2018

The Home Mortgage Deduciton is going through some major changes and it could affect many people. Please take this time to learn more about it and if there is anything we can do, please let us know. 

Charitable Contributions for 2018

Posted by Kevin S. Matthews Posted on Dec 18 2018

As the holidays approach and the year draws to a close, many taxpayers make charitable gifts — both in the spirit of the season and as a year-end tax planning strategy. But with the tax law changes that go into effect in 2018 and the many rules that apply to the charitable deduction, it’s a good idea to check deductibility before making any donations.

Much of the charitable contribution rules and applications did not change from before. Confirm you can still benefit from itemizing last year’s tax reform didn’t put new limits on or suspend the charitable deduction, like it did to many other itemized deductions. Nevertheless, it will reduce or eliminate the tax benefits of charitable giving for many taxpayers this year. Itemizing saves tax only if itemized deductions exceed the standard deduction. For 2018 through 2025, the TCJA significantly increases the standard deduction, to $24,000 for married couples filing jointly, $18,000 for heads of households, and $12,000 for singles and married couples filing separately. One additional thing to consider in your itemized deductions is the limit on state and local taxes ($10,000 for most filers; $5000 for Married, Filing Separate).

The nearly doubled standard deduction combined with the new limits or suspensions of some common itemized deductions means you may no longer have enough itemized deductions to exceed the standard deduction. And if that’s the case, your donations won’t save you tax. So, before you make any year-end charitable gifts, total up your potential itemized deductions for the year, including the donations you’re considering. If the total is less than your standard deduction, your year-end donations won’t provide a tax benefit.

You might, however, be able to preserve your charitable deduction by “bunching” donations into alternating years. This can allow you to exceed the standard deduction and claim a charitable deduction (and other itemized deductions) every other year. Meet the delivery deadline To be deductible on your 2018 return, a charitable gift must be made by Dec. 31, 2018. According to the IRS, a donation generally is “made” at the time of its “unconditional delivery.” The delivery date depends in part on what you donate and how you donate it. Here are a few examples for common donations:

  • Check – The date you mail it.
  • Credit card – The date you make the charge (Year of the Swipe).
  • Stock certificate – The date you mail the properly endorsed stock certificate to the charity. Make sure the organization is “qualified” To be deductible, a donation also must be made to a “qualified charity” — one that’s eligible to receive tax-deductible contributions.

The IRS’s online search tool, Tax Exempt Organization Search, can help you easily find out whether an organization is eligible to receive tax-deductible charitable contributions.

Remember that political donations aren’t deductible. Consider other rules we’ve discussed only some of the rules for the charitable deduction; many others apply. We can answer any questions you have about the deductibility of donations or changes to the standard deduction and itemized deductions.

TCJA Tax Law Changes for Small Businesses

Posted by Kevin S. Matthews Posted on July 20 2018

Things slow down in our industry (not at Beta, though!), it’s an appropriate time to review some of the provisions of the Tax Cuts and Jobs Act (TCJA) that may significantly impact their taxes for 2018 and beyond. Generally, the changes apply to tax years beginning after December 31, 2017, and are permanent, unless otherwise noted.

Corporate taxation. Replacement of graduated corporate rates ranging from 15% to 35% with a flat corporate rate of 21%. Replacement of the flat personal service corporation (PSC) rate of 35% with a flat rate of 21%. Repeal of the 20% corporate alternative minimum tax (AMT).

Pass-through taxation. Drops of individual income tax rates ranging from 0 to 4 percentage points (depending on the bracket) to 10%, 12%, 22%, 24%, 32%, 35% and 37% — through 2025. New 20% qualified business income deduction for owners — through 2025, called the QBID (Qualified Business Income Deduction).

Reduced or eliminated tax breaks. New disallowance of deductions for net interest expense more than 30% of the business’s adjusted taxable income (exceptions apply). New limits on net operating loss (NOL) deductions.

Elimination of the Section 199 deduction, which is also commonly referred to as the domestic production activities deduction or manufacturers’ deduction (DPAD) — effective for tax years beginning after December 31, 2017, for noncorporate taxpayers and for tax years beginning after December 31, 2018, for C corporation taxpayers

Some additional changes include:

  • Changes to many other tax breaks for individuals — generally through 2025 New or expanded tax breaks
  • Doubling of bonus depreciation to 100% and expansion of qualified assets to include used assets — effective for assets acquired and placed in service after September 27, 2017, and before January 1, 2023
  • Doubling of the Section 179 expensing limit to $1 million and an increase of the expensing phaseout threshold to $2.5 million (these amounts will be indexed for inflation after 2018)
  • New tax credit for employer-paid family and medical leave — through 2019
  • New rule limiting like-kind exchanges to real property that is not held primarily for sale (generally no more like-kind exchanges for personal property)
  • New limitations on excessive employee compensation
  • New limitations on deductions for certain employee fringe benefits, such as entertainment and, in certain circumstances, meals and transportation

Don’t wait to start 2018 tax planning! This is a small list of many significant TCJA changes, which will affect small businesses and their owners beginning this year. Call a professional, to better understand how these and other rules will affect you.

The combined impact of these changes should inform which tax strategies you and your business implement in 2018, such as how to time income and expenses to your tax advantage. The sooner you begin the tax planning process, the more tax-saving opportunities will be open to you; therefore, don’t wait to start; contact us today at

Selling Your Home: What is the Tax Effect

Posted by Kevin S. Matthews Posted on July 20 2018

Here in the Washington DC area, summer is peak-time for selling and buying a home. If you’re planning to put your home on the market soon, you’re probably thinking about things like how quickly it will sell and how much you’ll get for it. But don’t forget to consider the tax consequences.

Home sale gain exclusion The U.S. House of Representatives’ original version of the Tax Cuts and Jobs Act included a provision tightening the rules for the home sale gain exclusion. Fortunately, that provision didn’t make it into the last version that was signed into law. As a result, if you’re selling your principal residence, there’s still a good chance you’ll be able to exclude up to $250,000 ($500,000 for joint filers) of gain. Gain that qualifies for exclusion also is excluded from the 3.8% net investment income tax.

To qualify for the exclusion, you must meet certain tests. For example, you generally must own and use the home as your principal residence for at least two years during the five-year period preceding the sale. (Gain allocable to a period of “nonqualified” use generally isn’t excludable.) In addition, you can’t use the exclusion more than once every two years.

More tax considerations. Any gain that doesn’t qualify for the exclusion generally will be taxed at your long-term capital gains rate, if you owned the home for at least a year. If you didn’t, the gain will be considered short-term and subject to your ordinary-income rate, which could be more than double your long-term rate.

Tax Basis. Basis is money, which has already been taxed. To support an accurate tax basis, be sure to maintain thorough records, including information on your original cost and subsequent improvements, reduced by any casualty losses and depreciation claimed based on business use.

Losses on the sale of the home. A loss on the sale of your principal residence generally isn’t deductible. But if part of your home is rented out or used exclusively for your business, the loss attributable to that portion may be deductible.

Second homes: If you’re selling a home, which you did not live in as a primary home for two years of the last five years, be aware that it won’t be eligible for the gain exclusion. But if it qualifies as a rental property, it can be considered a production of income asset, and you may be able to defer tax on any gains through an installment sale or a Section 1031 exchange. Or you may be able to deduct a loss, where losses may have built up over time.

Your home is likely one of your biggest investments, so it’s important to consider the tax consequences before selling it. If you’re planning to put your home on the market, we can help you assess the potential tax impact. Contact us to learn more:

Bonus Depreciation for 2018 and going on...

Posted by Kevin S. Matthews Posted on Jan 27 2018

The Tax Cuts and Jobs Act (TCJA) adds some tax breaks for businesses while reducing or getting rid of others. One break it increases — temporarily — is bonus depreciation. While most TCJA provisions go into effect for the 2018 tax year, you might be able to benefit from the bonus depreciation enhancements when you file your 2017 tax return. 2017 and earler bonus depreciation Under pre-TCJA law, for qualified new assets that your business placed in service in 2017, you can claim a 50% first-year bonus depreciation. The asset has to be new as used assets don’t get this depreciation.

This tax break is available for the cost of many different assets including: computer systems, purchased software, vehicles, machinery, equipment, office furniture, etc. In addition, 50% bonus depreciation can be claimed for some improvement property, which means any qualified improvement to the interior portion of a commercial building if the improvement is placed in service after the date the building is placed in service. But qualified improvement costs don’t include some expenditures such as enlarging of a building, adding an elevator or escalator, or the internal structural framework of a building.

TCJA expansion The TCJA significantly expands bonus depreciation: For qualified property placed in service between September 28, 2017, and December 31, 2022 (or by December 31, 2023, for certain property with longer production periods), the first-year bonus depreciation percentage increases to 100%. In addition, the 100% deduction is allowed for not just new but also used qualifying property. The new law also allows 100% bonus depreciation for qualified film, television and live theatrical productions placed in service on or after September 28, 2017. Productions are considered placed in service at the time of the initial release, broadcast or live commercial performance.

Beginning in 2023, this special depreciation is scheduled to be reduced 20 percentage points each year. So, for example, it would be 80% for property placed in service in 2023, 60% in 2024, so on and so forth, until it would be fully eliminated in 2027. For certain property with longer production periods, the reductions are delayed by one year. For example, 80% bonus depreciation would apply to long-production-period property placed in service in 2024. These complicated rules require specialized knowledge as to how to implement these changes over the course of the life of your business.

Bonus depreciation is only one of the business tax breaks that have changed under the TCJA. Contact us for more information on this and other changes that will impact your business.

Payroll Update - 27JAN2018

Posted by Kevin S. Matthews Posted on Jan 27 2018

The IRS has issued notice 1036, where they discuss how withholding rates will change for the 2018 year going forward. Since the Tax Cuts and Jobs Act of 2017 will remove personal exemptions, it was our expectation exemptions are no longer going to be factored into how much will be withheld. This will simplify the system and make it easier for taxpayers in general. 

For a copy of the act, please visit the following link: IRS Notice 1036

Save more for college through the tax advantages of a 529 savings plan

Posted by Kevin S. Matthews Posted on Nov 01 2017

With kids back in school, it’s a good time for parents (and grandparents) to think about college funding. One option, which can be especially beneficial if the children in question still have many years until they’ll be starting their higher education, is a Section 529 plan. Tax-deferred 529 plans are generally state-sponsored, and the savings-plan option offers the opportunity to potentially build up a significant college nest egg because of tax-deferred compounding or state tax deducitons. So these plans can be particularly powerful if contributions begin when the child is quite young. Although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred. In addition, some states offer tax incentives for contributing, including allowing deductions. Distributions used to pay qualified expenses (such as tuition, mandatory fees, etc.) are income-tax-free for federal purposes and typically for state purposes as well, thus making the tax deferral a permanent savings. More pluses 529 plans offer other benefits as well: They usually have high contribution limits. There are no income-based phaseouts further limiting contributions. There’s generally no beneficiary age limit for contributions or distributions. You can control the account, even after the child is a legal adult. You can make tax-free rollovers to another qualifying family member. Finally, 529 plans provide estate planning benefits: A special break for 529 plans allows you to front-load five years’ worth of annual gift tax exclusions, which means you can make up to a $70,000 contribution (or $140,000 if you split the gift with your spouse) in 2017. In the case of grandparents, this also can avoid generation-skipping transfer taxes. Minimal minuses One negative of a 529 plan is that your investment options are limited. Another is that you can make changes to your options only twice a year or if you change the beneficiary. But whenever you make a new contribution, you can choose a different option for that contribution, no matter how many times you contribute during the year. Also, you can make a tax-free rollover to another 529 plan for the same child every 12 months. We’ve focused on 529 savings plans here; a prepaid tuition version of 529 plans is also available. If you’d like to learn more about either type of 529 plan, please contact us, here at Beta Solutions CPA, LLC. We can also tell you about other tax-smart strategies for funding education expenses. 

How to determine if you need to worry about estate taxes

Posted by Kevin S. Matthews Posted on Nov 01 2017

Among the taxes that are being considered for repeal as part of tax reform legislation is the estate tax. This tax applies to transfers of wealth at death, hence why it’s commonly referred to as the “death tax.” Its sibling, the gift tax — also being considered for repeal — applies to transfers during life. Yet most taxpayers won’t face these taxes even if the taxes remain in place. Exclusions and exemptions For 2017, the lifetime gift and estate tax exemption is $5.49 million per taxpayer. (The exemption is annually indexed for inflation.) If your estate doesn’t exceed your available exemption at your death, then no federal estate tax will be due. Any gift tax exemption you use during life does reduce the amount of estate tax exemption available at your death. But every gift you make won’t use up part of your lifetime exemption. For example: Gifts to your U.S. citizen spouse are tax-free under the marital deduction. (So are transfers at death — that is, bequests.) Gifts and bequests to qualified charities aren’t subject to gift and estate taxes. Payments of another person’s health care or tuition expenses aren’t subject to gift tax if paid directly to the provider. Each year you can make gifts up to the annual exclusion amount ($14,000 per recipient for 2017) tax-free without using up any of your lifetime exemption. What’s your estate tax exposure? Here’s a simplified way to project your estate tax exposure. Take the value of your estate, net of any debts. Also subtract any assets that will pass to charity on your death. Then, if you’re married and your spouse is a U.S. citizen, subtract any assets you’ll pass to him or her. (But keep in mind that there could be estate tax exposure on your surviving spouse’s death, depending on the size of his or her estate.) The net number represents your taxable estate. You can then apply the exemption amount you expect to have available at death. Remember, any gift tax exemption amount you use during your life must be subtracted. But if your spouse predeceases you, then his or her unused estate tax exemption, if any, may be added to yours (provided the applicable requirements are met). If your taxable estate is equal to or less than your available estate tax exemption, no federal estate tax will be due at your death. But if your taxable estate exceeds this amount, the excess will be subject to federal estate tax. Be aware that many states impose estate tax at a lower threshold than the federal government does. So you could have state estate tax exposure even if you don’t need to worry about federal estate tax. If you’re not sure whether you’re at risk for the estate tax or if you’d like to learn about gift and estate planning strategies to reduce your potential liability, please contact us. We also can keep you up to date on any estate tax law changes.


Posted by Kevin S. Matthews Posted on July 22 2017

Your compensation may take several forms, including salary, fringe benefits and bonuses. If you work for a corporation, you might also receive stock-based compensation, such as stock options. These come in two varieties: nonqualified (NQSOs) and incentive (ISOs). With both NQSOs and ISOs, if the stock appreciates beyond your exercise price, you can buy shares at a price below what they’re trading for. The tax consequences of these types of compensation can be complex. So smart tax planning is critical. Let’s take a closer look at the tax treatment of NQSOs, and how it differs from that of the perhaps better known ISOs. Compensation income NQSOs create compensation income — taxed at ordinary-income rates — on the “bargain element” (the difference between the stock’s fair market value and the exercise price) when exercised. This is regardless of whether the stock is held or sold immediately. ISOs, on the other hand, generally don’t create compensation income taxed at ordinary rates unless you sell the stock from the exercise without holding it for more than a year, in a “disqualified disposition.” If the stock from an ISO exercise is held more than one year, then generally your lower long-term capital gains tax rate applies when you sell the stock. Also, NQSO exercises don’t create an alternative minimum tax (AMT) preference item that can trigger AMT liability. ISO exercises can trigger AMT unless the stock is sold in a disqualified disposition (though it’s possible the AMT could be repealed under tax reform legislation). More tax consequences to consider When you exercise NQSOs, you may need to make estimated tax payments or increase withholding to fully cover the tax. Otherwise you might face underpayment penalties. Also keep in mind that an exercise could trigger or increase exposure to top tax rates, the additional 0.9% Medicare tax and the 3.8% net investment income tax (NIIT). These two taxes might be repealed or reduced as part of Affordable Care Act repeal and replace legislation or tax reform legislation, possibly retroactive to January 1 of this year. But that’s still uncertain. Have tax questions about NQSOs or other stock-based compensation? Let us know — we’d be happy to answer them. © 2017


Posted by Kevin S. Matthews Posted on July 12 2017
It’s easy to think of lenders as doing your company a favor. But business financing relationships are just that: relationships. Yes, a lender has the working capital you need to grow. But a stable, successful business represents an enormously beneficial opportunity for the lender as well. So you should be just as picky with your lender as it is with your financials. Where to start If you indeed have a long-standing relationship with a local bank, make that your first call. There’s no understating the importance of familiarity, good communication and an amicable rapport when negotiating terms, making payments and dealing with whatever business complications may come up. But should your local bank not offer the size or scope of financing needed, or if you’d just like to get an idea of what else is out there, don’t hesitate to shop around. Look for a lender with multiple loan products, so you have a better chance at structuring one to your liking. And get some referrals regarding the strength of service and support. Other alternatives If yours is a small business, check into the availability of Small Business Administration or other government-backed loan programs. These are often designed to boost local economies, so you may be able to get favorable terms and rates. Last, but not least, don’t limit yourself to traditional lenders. Today’s lending environment is competitive and technology driven. So businesses have a wide variety of alternatives, many of which are just a few clicks away. These include angel investors, online peer-to-peer lending networks and crowdsourcing. Best results Many, if not most, companies can’t grow without taking on some debt. But precisely how you go about using debt to your advantage depends largely on the lenders with which you choose to do business. Let us play matchmaker and help you find the ideal partner. We can also offer assistance in structuring and presenting your financial statements for best results. © 2017


Posted by Kevin S. Matthews Posted on July 12 2017

Adequate insurance coverage is, in many cases, a legal requirement for a business. Even if it’s not for your company, proper coverage remains a risk management imperative. But that doesn’t mean you have to take high insurance costs sitting down. There are a wide variety of ways you can decrease insurance costs. Just two examples are staying on top of facilities maintenance and improving the safety of those who work there. Facilities maintenance For starters, have an electrician check your facility. Can the building’s electrical system handle the load at peak times? Are there circuits at risk of being overloaded? Also look at installing a sprinkler system (or upgrading your existing system if needed). Some insurance carriers provide premium discounts for installing fire prevention equipment such as sprinklers. And check your fire extinguishers. Are they well maintained and the right type? The type of extinguisher you need for an electrical fire isn’t the one you need for a kitchen grease fire. Many municipalities offer free or low-cost fire safety inspection services. Your local fire department may be able to recommend steps that not only reduce hazards, but also reduce insurance premiums. And don’t forget to consider how much maintenance you’re actually obligated to perform. Renting or leasing real estate, rather than owning it directly, is often less costly because the property owner may be responsible for much of the upkeep. Ownership has its advantages, of course, but it also brings potential liability with it that has to be insured against. Worker safety Employee injuries can drive up insurance and workers’ compensation expenses. Inspect your floors and other high-traffic areas for slippery spots, lack of nonslip surfacing, ice buildup or other hazards. Also eliminate clutter, poor carpet installation, loose steps and handrails, and anything else that could potentially generate a slip and fall claim. Additionally, consider asking the Occupational Safety and Health Administration (OSHA) for a courtesy inspection. Doing so may help you avoid potential penalties as well as prevent injuries and other incidents that would raise your premiums. Opportunities for savings Yes, buying the right array of insurance policies is a cost of doing business. But you may have more control over these expenses than you think. We can help you assess your insurance costs and identify opportunities for savings. © 2017


Posted by Kevin S. Matthews Posted on Apr 20 2017

Whether you didn’t save as much for retirement as you would have wished earlier in your career or you’d simply like to make the most of tax-advantaged savings opportunities, if you’ll be age 50 or older on December 31, consider making “catch-up” contributions to your employer-sponsored retirement plan by that date. These are additional contributions beyond the regular annual limits that can be made to certain retirement accounts. 401(k)s and SIMPLEs Under 2016 401(k) limits, if you’re age 50 or older, after you’ve reached the $18,000 maximum limit for all employees, you can contribute an extra $6,000, for a total of $24,000. If your employer offers a Savings Incentive Match Plan for Employees (SIMPLE) instead, your regular contribution maxes out at $12,500 in 2016. If you’re 50 or older, you’re allowed to contribute an additional $3,000 — or $15,500 in total for the year. But, check with your employer because, while most 401(k) plans and SIMPLEs offer catch-up contributions, not all do. Self-employed plans If you’re self-employed, retirement plans such as an individual 401(k) — or solo 401(k) — also allow catch-up contributions. A solo 401(k) is a plan for those with no other employees. You can defer 100% of your self-employment income or compensation, up to the regular yearly deferral limit of $18,000, plus a $6,000 catch-up contribution in 2016. But that’s just the employee salary deferral portion of the contribution. You can also make an “employer” contribution of up to 20% of self-employment income or 25% of compensation. The total combined employee-employer contribution is limited to $53,000, plus the $6,000 catch-up contribution. Catch-up contributions to non-Roth accounts not only can enlarge your retirement nest egg, but also can reduce your 2016 tax liability. And keep in mind that catch-up contributions are available for IRAs, too, but the deadline for 2016 contributions is later: April 18, 2017. If you have questions about catch-up contributions or other retirement saving strategies, please contact us at


Posted by Kevin S. Matthews Posted on Mar 19 2017

There’s a lot to think about when you change jobs, and it’s easy for a 401(k) or other employer-sponsored retirement plan to get lost in the shuffle. But to keep building tax-deferred savings, it’s important to make an informed decision about your old plan. First and foremost, don’t take a lump-sum distribution from your old employer’s retirement plan. It generally will be taxable and, if you’re under age 59½, subject to a 10% early-withdrawal penalty. Here are three tax-smart alternatives:

1. Stay put. You may be able to leave your money in your old plan. But if you’ll be participating in your new employer’s plan or you already have an IRA, keeping track of multiple plans can make managing your retirement assets more difficult. Also consider how well the old plan’s investment options meet your needs.

2. Roll over to your new employer’s plan. This may be beneficial if it leaves you with only one retirement plan to keep track of. But evaluate the new plan’s investment options.

3. Roll over to an IRA. If you participate in your new employer’s plan, this will require keeping track of two plans. But it may be the best alternative because IRAs offer nearly unlimited investment choices.

If you choose a rollover, request a direct rollover from your old plan to your new plan or IRA. If instead the funds are sent to you by check, you’ll need to make an indirect rollover (that is, deposit the funds into an IRA) within 60 days to avoid tax and potential penalties.

Also, be aware that the check you receive from your old plan will, unless an exception applies, be net of 20% federal income tax withholding. If you don’t roll over the gross amount (making up for the withheld amount with other funds), you’ll be subject to income tax — and potentially the 10% penalty — on the difference.

There are additional issues to consider when deciding what to do with your old retirement plan. We can help you make an informed decision — and avoid potential tax traps.

Help retain employees with tax-free fringe benefits

Posted by Kevin S. Matthews Posted on Mar 14 2017

One way your business can find and keep valuable employees is to offer an attractive compensation package. Fringe benefits are an important incentive — especially those that are tax-free. Here’s a rundown of some common perks and their tax implications. Medical coverage. If you maintain a health care plan for employees, coverage under the plan isn’t taxable to them. Employee contributions are excl[...] uded from income if pretax coverage is elected under a cafeteria plan. Otherwise, such amounts are included in their wages, but are deductible on a limited basis as itemized deductions. Employers must meet a number of requirements when providing coverage. For instance, benefits must be provided through a group health plan (fully insured or self-insured). Disability insurance. Your premium payments aren’t included in employees’ income, nor are your contributions to a trust providing disability benefits. Employees’ premium payments (or other contributions to the plan) generally aren’t deductible by them or excludable from their income. However, they can make pretax contributions to a cafeteria plan for disability benefits, which are excludable from their income. Long-term care insurance. Your premium payments aren’t taxable to employees. However, long-term care insurance

What the self-employed need to know about employment taxes

Posted by Kevin S. Matthews Posted on Mar 14 2017

In addition to income tax, you must pay Social Security and Medicare taxes on earned income, such as salary and self-employment income. The 12.4% Social Security tax applies only up to the Social Security wage base of $118,500 for 2016. All earned income is subject to the 2.9% Medicare tax. The taxes are split equally between the employee and the employer. But if you’re self-employed, you pay both the employee and employer portions of these taxes on your self-employment income. Additional 0.9% Medicare tax Another employment tax that higher-income taxpayers must be aware of is the additional 0.9% Medicare tax. It applies to FICA wages and net self-employment income exceeding $200,000 per year ($250,000 for married filing jointly and $125,000 for married filing separately). If your wages or self-employment income varies significantly from year to year or you’re close to the threshold for triggering the additional Medicare tax, income timing strategies may help you avoid or minimize it. For example, as a self-employed taxpayer, you may have flexibility on when you purchase new equipment or invoice customers. If your self-employment income is from a part-time activity and you’re also an employee elsewhere, perhaps you can time with your employer when you receive a bonus. Something else to consider in this situation is the withholding rules. Employers must withhold the additional Medicare tax beginning in the pay period when wages exceed $200,000 for the calendar year — without regard to an employee’s filing status or income from other sources. So your employer might not withhold the tax even though you are liable for it due to your self-employment income. If you do owe the tax but your employer isn’t withholding it, consider filing a W-4 form to request additional income tax withholding, which can be used to cover the shortfall and avoid interest and penalties. Or you can make estimated tax payments. Deductions for the self-employed For the self-employed, the employer portion of employment taxes (6.2% for Social Security tax and 1.45% for Medicare tax) is deductible above the line. (No portion of the additional Medicare tax is deductible, because there’s no employer portion of that tax.) As a self-employed taxpayer, you may benefit from other above-the-line deductions as well. You can deduct 100% of health insurance costs for yourself, your spouse and your dependents, up to your net self-employment income. You also can deduct contributions to a retirement plan and, if you’re eligible, an HSA for yourself. Above-the-line deductions are particularly valuable because they reduce your adjusted gross income (AGI) and modified AGI (MAGI), which are the triggers for certain additional taxes and the phaseouts of many tax breaks. For more information on the ins and outs of employment taxes and tax breaks for the self-employed, please contact us. © 2016