rlewis, Author at Whalen & Company, CPAs

Got ISOs? You need to understand their tax treatment

rlewis on May 4, 2015

[vc_row][vc_column][vc_column_text]Incentive stock options (ISOs) allow you to buy company stock in the future at a fixed price equal to or greater than the stock’s fair market value on the grant date. If the stock appreciates, you can buy shares at a price below what they’re then trading for.

ISOs must comply with many rules but receive tax-favored treatment:

You owe no tax when ISOs are granted.
You owe no regular income tax when you exercise ISOs.
If you sell the stock after holding the shares at least one year from the exercise date and two years from the grant date, you pay tax on the sale at your long-term capital gains rate. You also may owe the 3.8% net investment income tax.
If you sell the stock before long-term capital gains treatment applies, a “disqualifying disposition” occurs and any gain is taxed as compensation at ordinary-income rates.

There also might be alternative minimum tax consequences in certain situations. If you’ve received ISOs, contact Whalen. We can help you determine when to exercise them and whether to immediately sell shares received from an exercise or to hold them.

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Your 2015 Tax Planning Should Start Now

rlewis on April 29, 2015

[vc_row][vc_column][vc_column_text]Whether you filed your 2014 income tax return by the April 15 deadline or filed for an extension, you may think that it’s a good time to take a break from thinking about taxes. But doing so could be costly. Now is actually the time you should begin your 2015 tax planning — if you haven’t already.

A tremendous number of variables affect your overall tax liability for the year, and starting to look at these variables early in the year can give you more opportunities to reduce your 2015 tax bill. For example, the timing of income and deductible expenses can affect both the rate you pay and when you pay. By regularly reviewing your year-to-date income, expenses and potential tax, you may be able to time income and expenses in a way that reduces, or at least defers, your tax liability.

In other words, tax planning shouldn’t be just a year end activity. To get started on your 2015 tax planning, contact Whalen. We can discuss what strategies you should be implementing now and throughout the year to minimize your tax liability.

Copyright 2015 Thomson Reuters
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Whalen & Company Celebrates 70th Anniversary

rlewis on April 23, 2015

WORTHINGTON, Ohio (April 23, 2015) — Whalen & Company, CPAs celebrated more than the end to a successful tax season on April 16, 2015; the Worthington-based firm commemorated its 70^th anniversary.

Established in 1945 in Springfield, Ohio, Whalen & Company has provided accounting and consulting services to companies and individuals in central Ohio, and beyond, for seven decades.

The City of Worthington, home to Whalen since 2003, recognized this achievement with a proclamation, presented to firm partners by Mayor Scott Holmes and City Council President Bonnie Michael on April 16, 2015.

Pictured Left to Right: Worthington Mayor Scott Holmes; Lisa Shuneson, Co-Managing Partner, Whalen & Company; Worthington City Council President Bonnie Michael; Richard Crabtree, Co-Managing Partner, Whalen & Company; Bruce Berry, Partner, Whalen & Company; Ohio Sen. Jim Hughes; and Patrick McClary, Partner, Whalen & Company — Pictured Left to Right: Worthington Mayor Scott Holmes; Lisa Shuneson, Partner, Whalen & Company; Worthington City Council President Bonnie Michael; Richard Crabtree, Partner, Whalen & Company; Bruce Berry, Partner, Whalen & Company; Ohio Sen. Jim Hughes; and Patrick McClary, Partner, Whalen & Company

State Sen. Jim Hughes also shared a proclamation to commemorate the firm’s anniversary on behalf of the Ohio Senate; and Lucas Crumley, representing U.S. Rep. Pat Tiberi, presented a proclamation on behalf of the U.S. House of Representatives. Whalen & Company likewise received a proclamation from the State of Ohio, sent by Gov. John Kasich and Lt. Gov. Mary Taylor.

Pictured Left to Right: Bruce Berry, Partner, Whalen & Company; Lucas Crumley, Asst. District Director for U.S. Rep. Pat Tiberi; Lisa Shuneson, Co-Managing Partner, Whalen & Company; Richard Crabtree, Co-Managing Partner, Whalen & Company,; and Patrick McClary, Partner, Whalen & Company — Pictured Left to Right: Bruce Berry, Partner, Whalen & Company; Lucas Crumley, Asst. District Director for U.S. Rep. Pat Tiberi; Lisa Shuneson, Partner, Whalen & Company; Richard Crabtree, Partner, Whalen & Company,; and Patrick McClary, Partner, Whalen & Company

Partners Richard D. Crabtree, CPA, PFS and Lisa G. Shuneson, CPA, PFS accepted the proclamations and credited Whalen’s employees for the company’s longevity.

“While the industry landscape has changed during our time in business, the values of integrity and service personified by our team have helped Whalen and Company remain successful for 70 years,” said Crabtree.

Shuneson echoed that sentiment, saying, “Our founder, Elmer Whalen, operated this business with the philosophy that ‘people don’t work for you – they work with you.’ That mentality is still a part of our culture and we are proud to work side-by-side with the outstanding members of Whalen and Company.”

Comment on this blog post for a chance to win a Whalen Anniversary Can Cooler!

Help Whalen & Company celebrate our 70^th anniversary by leaving a comment on this blog for a chance to win a limited-edition drink cooler (pictured left)!

Whalen will choose five (5) comments at random from all comments on this blog post between April 23 and April 30, 2015, and the winning commenters will receive a Whalen can cooler.

All you have to do is leave a comment on this blog post by 11:59 p.m. EST on April 30, 2015 and you’ll be entered for a chance to win!

Did the additional 0.9% Medicare tax catch you by surprise?

rlewis on April 21, 2015

[vc_row][vc_column][vc_column_text]Facing an unexpected bill for the additional 0.9% Medicare tax?

The additional 0.9% Medicare tax applies to FICA wages and self-employment income exceeding $200,000 per year ($250,000 for married filing jointly and $125,000 for married filing separately). Unfortunately, the withholding rules have been tripping up some taxpayers, causing them to face an unexpected tax bill — plus interest and penalties — when they file their returns.

Employers must withhold the additional 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 if your wages don’t exceed $200,000, your employer won’t withhold the tax — even if you’re liable for it. This might occur because you and your spouse’s combined wages exceed the $250,000 threshold for joint filers or because you have wages from a second job or have self-employment income.

If you expect to be in the same situation in 2015, 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. If you have questions about the additional 0.9% Medicare tax, please contact Whalen & Company.

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A net operating loss on your 2014 tax return isn’t all bad news

rlewis on April 14, 2015

When a company’s deductible expenses exceed its income, generally a net operating loss (NOL) occurs (though of course the specific rules are more complex). If when filing your 2014 income tax return you’ve found that your business had an NOL, there is an upside: tax benefits.

When a business incurs a qualifying NOL, the loss can be carried back up to two years, and then any remaining amount can be carried forward up to 20 years. The carryback can generate an immediate tax refund, boosting cash flow.

However, there is an alternative: The business can elect instead to carry the entire loss forward. If cash flow is fairly strong, carrying the loss forward may be more beneficial, such as if the business’s income increases substantially, pushing it into a higher tax bracket — or if tax rates increase. In both scenarios, the carryforward can save more taxes than the carryback because deductions are more powerful when higher tax rates apply.

In the case of flow-through entities, owners might be able to reap individual tax benefits from the NOL.

Please contact Whalen & Company if you’d like more information on the NOL rules and how you can maximize the tax benefit of an NOL.

Author: rlewis

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