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Whalen & Company, CPAs Expands Staff

rlewis on June 3, 2015

WORTHINGTON, Ohio (June 3, 2015) — Whalen & Company, CPAs recently added the following individuals to its team:

Jennifer M. Moore, Esq. – Tax Staff

In her new role as a Tax Staff member, Moore is responsible for preparing federal, state and local income tax returns for businesses and individuals. Moore will also perform various accounting duties for firm clients.

Jonathan King, CPA – Tax Staff

As a member of Whalen’s Tax Staff, King will prepare federal, state and local income tax returns for businesses and individuals. King will also perform various accounting duties for firm clients.

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About Whalen & Company, CPAs: Whalen & Company is a full service CPA firm located in Worthington, Ohio. Established in 1945, Whalen offers tax, accounting, audit and assurance, business valuation, and a variety of business consulting services.

Expect to be paying elementary or secondary school costs in the future? Consider an ESA

rlewis on June 2, 2015

[vc_row][vc_column][vc_column_text]As the school year draws to a close, it’s a good time to think about Coverdell Education Savings Accounts (ESAs) — especially if you have young children.

One major advantage of ESAs over another popular education saving tool, the Section 529 plan, is that tax-free ESA distributions aren’t limited to college expenses; they also can fund elementary and secondary school costs. That means you can use ESA funds to pay for such qualified expenses as tutoring and private school tuition.

Here are some other key ESA benefits:

Although contributions aren’t deductible, plan assets can grow tax-deferred.
You remain in control of the account — even after the child is of legal age.
You can make rollovers to another qualifying family member.

The annual contribution limit is $2,000 per beneficiary. However, the ability to contribute is phased out based on income.

Would you like more information about ESAs or other tax-advantaged ways to fund your child’s — or grandchild’s — education expenses? Contact Whalen!

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Real Estate Investors: Professional Status Matters

rlewis on May 27, 2015

Income and losses from investment real estate or rental property are passive by definition — unless you’re a real estate professional.

Why is this important? Passive income may be subject to the 3.8% net investment income tax (NIIT), and passive losses are deductible only against passive income, with the excess being carried forward.

To qualify as a real estate professional, you must annually perform:

More than 50% of your personal services in real property trades or businesses in which you materially participate, and
More than 750 hours of service in these businesses during the year.

Each year stands on its own, and there are other nuances. If you’re concerned you’ll fail either test and be subject to the 3.8% NIIT or stuck with passive losses, consider increasing your hours so you’ll meet the test. (Special rules for spouses may help.) Also be aware that the IRS has successfully challenged claims of real estate professional status in instances where the taxpayer didn’t keep adequate records of time spent.

If you’re not sure whether you qualify as a real estate professional, please contact Whalen. We can help you make this determination and guide you on how to properly document your hours.

Which M&E Expenses Are 100% Deductible?

rlewis on May 19, 2015

[vc_row][vc_column][vc_column_text]Generally, businesses are limited to deducting 50 percent of allowable meal and entertainment (M&E) expenses. But certain expenses are 100 percent deductible, including expenses:

For food and beverages furnished at the workplace primarily for employees;
Treated as employee compensation;
That are excludable from employees’ income as de minimis fringe benefits;
For recreational or social activities for employees, such as holiday parties;
Paid or incurred under a reimbursement or similar arrangement in connection with the performance of services.

If your company has substantial M&E expenses, you can reduce your tax bill by separately accounting for and documenting expenses that are 100 percent deductible. If doing so would create an administrative burden, you may be able to use statistical sampling methods to estimate the portion of M&E expenses that are fully deductible.

For more information on how to take advantage of the 100 percent deduction, please contact Whalen.

Image courtesy of stockimages at freedigitalphotos.net

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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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Category: Other News & Info

News & Tech Tips

Whalen & Company, CPAs Expands Staff

Expect to be paying elementary or secondary school costs in the future? Consider an ESA

Real Estate Investors: Professional Status Matters

Which M&E Expenses Are 100% Deductible?

Got ISOs? You need to understand their tax treatment