Clients continue to have a high level of satisfaction with the services and staff of Whalen & Company, based on the results of a survey administered during tax season.

The questionnaire covered general and specific areas related to staff’s delivery of services. This is the third consecutive year that the firm sought feedback from clients about its performance. Business clients were also surveyed about their views.

Nearly all respondents –- 96 percent –-indicated they were extremely satisfied or satisfied with the services the firm has provided them.

Asked to rate the value of the firm’s services compared to the cost of these services, 90 percent gave excellent or good ratings. Ninety-one percent of the respondents indicated they would absolutely or probably recommend the firm to someone they know.

The survey asked clients to assess 12 factors related to quality service standards and staff members’ expertise. At least 90 percent of the respondents indicated that staff demonstrated these quality indicators when working with them.

The areas with the highest level of satisfaction were:

• I have confidence that the work performed is done right. (97 percent)
• Staff members consistently meet my expectations. (97 percent)
• When communicating, staff members are thoughtful and considerate. (97 percent)
• I respect and trust the staff members I work with. (96 percent)
• Staff members have a positive, can-do attitude. (96 percent)
• Staff members complete work on an agreed-upon schedule. (96 percent)
• When discussing my needs, staff members listen and understand. (96 percent)
• Staff members are accessible when I need them. (96 percent)

Areas that received a high level of satisfaction, but were rated lower than others, were:

• Staff members take an interest in me personally (91 percent)
• The firm keeps me informed about changes that may affect my tax situation and planning (90 percent);
• Staff members discuss my tax situation and goals. (89 percent).

Twenty percent of the firm’s tax clients participated in the survey. Clients were given the opportunity to complete a printed survey or to respond online. Unless they chose to identify themselves, the respondents were unknown and their responses are confidential.

Fifty percent of this year’s survey respondents have been clients of the firm for more than 11 years; 15 percent, 7 to 10 years; 18 percent, 4 to 6 years; 9 percent, 1 to 3 years; 3 percent, less than a year.

Our firm’s survey is another way we gain feedback from clients. We use these results to understand what we are doing well and to focus on areas where we can improve our service levels.

We are pleased with the positive feedback we received this year. Our goal is to provide Five-Star service to all of our clients.

If you rent out your vacation home for 15 days or more, you must report the income. But exactly what expenses you can deduct depends on whether the home is classified as a rental property for tax purposes, based on the amount of personal vs. rental use. Adjusting your personal use — or the number of days you rent it out — might allow the home to be classified in a more beneficial way.

With a rental property, you can deduct rental expenses, including losses, subject to the real estate activity rules. You can’t deduct any interest that’s attributable to your personal use of the home, but you can take the personal portion of property tax as an itemized deduction.

With a non-rental property, you can deduct rental expenses only to the extent of your rental income. Any excess can be carried forward to offset rental income in future years. You also can take an itemized deduction for the personal portion of both mortgage interest and property taxes.

We can help you determine how your vacation home rental will affect your tax bill — and whether there are steps you can take to reduce the impact.

Image courtesy of www.freedigitalphotos.net.

Summer is often a time when people make major life decisions. Common events include buying a home, getting married or changing jobs. If you’re looking for a new job in your same line of work, you may be able to claim a tax deduction for some of your job-hunting expenses.

Here are seven points the IRS wants you to know about deducting these costs:

1. Your expenses must be for a job search in your current occupation. You may not deduct expenses related to a search for a job in a new occupation. If your employer or another party reimburses you for an expense, you may not deduct it.

2. You can deduct the cost of preparing and mailing copies of your résumé to prospective employers.

3. You can deduct employment and job placement agency fees you pay while looking for a job.

4. If you travel to look for a new job, you may be able to deduct your travel expenses. However, you can only deduct them if the trip is primarily to look for a new job.

5. You can’t deduct job search expenses if you’re looking for a job for the first time.

6. You can’t deduct job search expenses if there was a substantial break between the end of your last job and the time you began looking for a new one.

7. You usually will claim job search expenses as a miscellaneous itemized deduction. You can deduct only the amount of your total miscellaneous deductions that exceed two percent of your adjusted gross income.

If you need further clarification about job-search expenses, contact your Whalen tax adviser.

 

Do you work from home? If so, you may be familiar with the home office deduction, available for taxpayers who use their home for business. Beginning in tax year 2013, there is a simpler option to figure the business use of your home.

According to the IRS, this simplified option does not change the rules for who may claim a home office deduction. It merely simplifies the calculation and recordkeeping requirements. The new option can save you a lot of time and will require less paperwork and recordkeeping.

Here are six facts the IRS wants you to know about the new, simplified method to claim the home office deduction.

1.  You may use the simplified method when you file your 2013 tax return this year. If you use this method to claim the home office deduction, you will not need to calculate your deduction based on actual expenses. You may instead multiply the square footage of your home office by a prescribed rate.

2.  The rate is $5 per square foot of the part of your home used for business. The maximum footage allowed is 300 square feet. This means the most you can deduct using the new method is $1,500 per year.

3. You may choose either the simplified method or the actual expense method for any tax year. Once you use a method for a specific tax year, you cannot later change to the other method for that same year.

4. If you use the simplified method and you own your home, you cannot depreciate your home office. You can still deduct other qualified home expenses, such as mortgage interest and real estate taxes. You will not need to allocate these expenses between personal and business use. This allocation is required if you use the actual expense method. You’ll claim these deductions on Schedule A, Itemized Deductions.

5. You can still fully deduct business expenses that are unrelated to the home if you use the simplified method. These may include costs such as advertising, supplies and wages paid to employees.

6. If you use more than one home with a qualified home office in the same year, you can use the simplified method for only one in that year. However, you may use the simplified method for one and actual expenses for any others in that year.

The chart below provides a comparison of the regular method and the new simplified option and may be of assistance in helping you determine which method is better for you.

Simplified Option	Regular Method
Deduction for home office use of a portion of a residence allowed only if that portion is exclusively used on a regular basis for business purposes	Same
Allowable square footage of home use for business (not to exceed 300 square feet)	Percentage of home used for business
Standard $5 per square foot used to determine home business deduction	Actual expenses determined and records maintained
Home-related itemized deductions claimed in full on Schedule A	Home-related itemized deductions apportioned between Schedule A and business schedule (Sch. C or Sch. F)
No depreciation deduction	Depreciation deduction for portion of home used for business
No recapture of depreciation upon sale of home	Recapture of depreciation on gain upon sale of home
Deduction cannot exceed gross income from business use of home less business expenses	Same
Amount in excess of gross income limitation may not be carried over	Amount in excess of gross income limitation may be carried over
Loss carryover from use of regular method in prior year may not be claimed	Loss carryover from use of regular method in prior year may be claimed if gross income test is met in current year

  If you’d like additional guidance on the use of the simplified home-office deduction option, contact your Whalen tax adviser.

FRF for SMEs Blends Traditional Accounting Principles with Accrual Methods 

If you are an owner of a small- to medium-sized business and you are looking for financial statements that provide useful, relevant information in a simplified, consistent, cost-effective way, then Financial Reporting Framework (FRF) for SMEs may be for you.

There are a number of financial reporting frameworks, and FRF for SMEs is a new framework. It was developed by a working group of CPA professionals and the staff of the American Institute of CPAs, who have years of experience serving small businesses. Other financial reporting frameworks include GAAP (Generally Accepted Accounting Principles), GAAS (Generally Accepted Auditing Standards), cash, and income tax.

In a nutshell, the FRF for SMEs is drawn from a blend of traditional accounting principles and accrual income tax methods of accounting. It uses historical cost as its primary measurement basis.

FRF for SMEs provides management with a suitable degree of options when choosing accounting policies to better meet the needs of the business owner and management. It is a cost-beneficial solution for management, owners and others who require financials that are prepared in a consistent and reliable manner in accordance with a non-GAAP framework.

FRF for SMEs has the following attributes:

• Objectivity
• Measurability
• Completeness
• Relevance

The types of business entities for whom FRF for SMEs may apply are:

• The entity does not have a regulatory (SEC) reporting requirement.
• There is no intention of taking the entity public.
• The entity is for-profit.
• It is likely to be owner-managed.
• Management/owners rely on a set of financial statements to confirm their assessments of performance, cash flows and of what they own and what they owe.
• It does not operate in an industry in which it is involved in transactions that require highly specialized accounting guidance (financial institutions and governments).
• The entity does not engage in overly complex transactions.
• It does not have significant foreign operations.
• Key users, such as a banker, have direct access to management.
• Users have greater interest in cash flows, liquidity and statement of financial position strength and interest coverage.
• The entity’s financials support applications for bank financing when the banker does not base a lending decision solely on the financial statements but also on available collateral and other factors.

If you are having difficulty in fully understanding your financial statements due to the complexity of the GAAP rules or you may be unable to present a GAAP financial due to too many departures, then FRF for SMEs may be something for you to consider using. If you wish to explore this option, contact me or your adviser in the accounting department.