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Assistance due to COVID-19

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In response to the economic impacts from the COVID-19 pandemic, the Federal government and State of Ohio have already passed legislation or made declarations designed to provide relief and aid to small and midsize businesses and their employees. As with many new pieces of legislation, initially they create more questions than they do answers.

This is certainly true with the COVID-19 related legislation that is being quickly written and rushed through the legislative process.  Often the actual legislation will appoint some other agency with the task of writing the rules, regulations, and guidance required to enforce and interpret the new legislation.

Due to the sweeping impact of some of the COVID-19 legislation, multiple government agencies are tasked with providing this guidance. We often must wait months on these agencies to provide that guidance.   However, due to the urgency of this matter, we have been told that this guidance should be coming in days and weeks rather than months.

At BGMF, we are making every effort to stay on top of and familiarize ourselves with any legislation or relief efforts that may be applicable to our clients. We are here to assist you in any way that we can. Unfortunately, due to the reasons noted above, some questions just can’t be answered at this time.

However, we are consistently monitoring our resources and the applicable government agencies for additional guidance and clarification. Below is a summary of the major legislation and assistance that is currently available. As additional legislation, assistance and guidance becomes available we will keep you updated. If you are aware of something that we have not included below that you think would be helpful to others, please contact us and let us know.

Families First Coronavirus Response Act

  • The Families First Coronavirus Response Act requires certain employers to provide employees with paid sick or family leave for specified reasons related to COVID-19.
  • Applies to most employers with less than 500 employees.
    • Health care workers and emergency responders may be excluded. (We are waiting on additional guidance related to this exclusion.)
    • Small businesses with fewer than 50 employees may be exempt from the extended family leave portion if following the requirements would jeopardize the viability of the business going forward. (We are waiting on additional guidance related to this exemption.)
  • The Act provides that employees of covered employers are eligible for:
    • Two weeks (up to 80 hours) of paid sick time at 100% the employee’s regular rate of pay (up to maximum of $511 per day) where the employee is unable to work because the employee:
      • is subject to a Federal, State or local quarantine or isolation order related to COVID-19; or
      • has been advised by a health care provider to self-quarantine related to COVID-19; or
      • is experiencing COVID-19 symptoms and is seeking a medical diagnosis; or
  • Two weeks (up to 80 hours) of paid sick time at two-thirds the employee’s regular rate of pay (up to a maximum of $200 per day) because the employee:
  • is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services; or
  • is caring for an individual subject to a Federal, State, or local quarantine or isolation order related to COVID-19; or
  • is caring for an individual that has been advised by a health care provider to self-quarantine related to COVID-19; and
  • Up to an additional 10 weeks of paid family leave at two-thirds the employee’s regular rate of pay (up to a maximum of $200 per day) where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
    • Consists of 12 weeks in total. The first two weeks can be either unpaid or covered by an employee’s accrued paid time off including the paid sick time mentioned above, followed by up to 10 weeks of paid extended family and medical leave.
  • Introduces two new refundable payroll tax credits, designed to immediately and fully reimburse certain employers, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.
  • Health Insurance premiums paid by the employer during these periods of sick time and family leave may also be reimbursable.
  • Self-Employed taxpayers are eligible and will be reimbursed through a refundable credit against their income tax.
  • Part-time employees are eligible based upon an average number of hours calculation.
  • Allows businesses to retain and access funds that they would otherwise pay to the IRS in payroll taxes. The payroll taxes that are available for retention include withheld federal income taxes, the employee and employer share of Social Security and Medicare taxes. (We are waiting on additional guidance as to how and when this can be implemented.)
    • If there are not sufficient payroll taxes to cover the cost of providing the sick pay and family leave, employers will be able to file a request for an accelerated payment from the IRS. (The IRS expects to process these requests in two weeks or less.)
  • Go to the following address for further information: https://www.dol.gov/agencies/whd/pandemic

Tax Filing Deadline and Tax Payments Automatically Postponed

  • The Internal Revenue Service issued IRS Notice 2020-18 that became effective March 20, 2020.
  • The April 15, 2020 deadline has been postponed until July 15, 2020.
  • Any individual, trust, estate, partnerships, association, company or corporation with a Federal income tax return due on April 15, 2020 is automatically postponed until July 15, 2020. In addition, any Federal income tax payments, including estimated tax payments, due from April 15, 2020 to July 15, 2020 will be disregarded in the calculation of penalty and interest.

Small Business Administration Disaster Loan Assistance

  • The SBA provides low-interest, long-term loans for physical and economic damage caused by a declared disaster.
  • The SBA can provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred.
  • The current interest rate is 3.75% and the term is 30 years or less.
  • Go to the following address for further information: https://disasterloan.sba.gov/ela/

Unemployment Insurance

  • An executive order issued by Governor DeWine expands flexibility for Ohioans to received unemployment benefits during Ohio’s emergency declaration period.
  • The standard waiting period for eligible Ohioans has been waived.
  • All charges during Ohio’s emergency declaration period will be mutualized.
  • The benefit is typically half of the previous wage.
  • The minimum weekly benefit is $134 and the maximum weekly benefit is $480 (could be higher depending on the number of dependents).
  • Go to the following address for further information: http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm

Deferral of Insurance Premium Payments

  • Effective March 20, 2020, the Ohio Department of Insurance issued Bulletin 2020-3, Health Insurance Coverage Flexibility for Ohio Employees.
  • All insurers must give their insureds the option of deferring premium payments, interest free, for up to 60 days from each original premium due date.

Deferral of Bureau of Workers Compensation Payments

  • The Bureau of Workers Compensation announced that the insurance premiums due for March, April and May for the current policy year may be deferred until June 1, 2020.

Bank Payments

  • Many banks are currently offering assistance to their customers. For example, banks may offer interest only payments for 3-6 months or no payments for 3-6 months. (The amount would be added to the end of the loan.)

If you have questions or need additional information concerning any of these matters, please contact us online or via phone at 937-325-0623 and we will assist you in any way we can.

If you need assistance with filling out forms, putting together financial information, and other aspects of the relief packages please get in touch with us ASAP.  For updates please check this blog, sign up for our newsletter or follow us on Facebook.

Coronovirus Update at BGMF CPAs

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To all our valued clients, friends and family,

As everyone is aware, we are currently living in an unprecedented time and certainly in uncharted territory. The safety of both our employees and clients are of the upmost importance to us. However, as we are forced to alter some of our normal business practices, we do not want to lose sight of providing you, our clients with excellent client service.

The steps being taken by both the federal and state governments, while necessary and critical to the stopping and/or slowing of the spread of the coronavirus, will have negative repercussions on many of our business clients. We are here to assist you in these difficult and unusual times any way possible.  We will make every attempt to familiarize ourselves with any assistance the federal and state governments are offering businesses and individuals. If you are experiencing any negative impacts, please feel free to contact us to discuss what options are available to assist you through these difficult times.

Currently, we ask that if a face-to-face meeting is not absolutely necessary, that you consider other forms of communication for both your safety and the safety of our employees. We have several other options available including video conferencing and a secure portal where documents can be both uploaded and downloaded.

We also ask that if you are dropping off your tax information at our office, that you place it face down in a designated box in our lobby area. If you need to place it in an envelope, please ask and we will provide you with one. At the end of each day that day’s designated box will be placed in our filing room, where it will remain for 48 hours before being handled by anyone in our office. (According to most experts, the coronavirus can live on paper type surfaces for 24 hours.)

If you have any questions or concerns, please do not hesitate to contact us. We appreciate your business and are here to help.

Available Alternatives for Document Sharing and Face-to-Face Meetings

We understand that the various restrictions and guidelines being conveyed from the government and health officials related to the coronavirus crisis can result in both inconvenience and unrest. The safety and comfort of both our clients and employees are our highest priority during these unprecedented times. Included below are the major alternatives to dropping off documents at our office and face-to-face meetings that we have available:

  • SmartVault – SmartVault is a secure document sharing client portal. All documents are encrypted while in transit and while at rest using AES-256 encryption. (The same level of encryption used by banks.) It allows our clients to upload and download documents directly into and from a private file folder. We are also able to upload documents that you can then download, view, and/or print. If you are interested in utilizing SmartVault please send an email to Amy at ajcartwright@springfieldcpas.net. Amy will then send you an “invite” email with instructions on get started using SmartVault.

The most common thing SmartVault is used for is for clients to upload their tax documentation. We can then view and print these documents to prepare your tax return. We can also upload your completed tax return where you can review it and print it if necessary. You will need some type of scanner to upload your documents.

  • Video Conferencing – We have a variety of video conferencing options including Skype for business, Microsoft Teams, FaceTime, Go to Meeting, and Zoom. Video conferencing is a great alternative to face-to-face meetings. All you need is either a webcam, laptop or tablet with a built-in camera, iPad or iPhone, or a Microsoft Surface. If you would prefer to have a video conference, as opposed to a face-to-face meeting, please contact whomever your meeting will be with and they will be happy to work with you to find the most convenient and easiest solution.
  • Fax – Documents can be faxed directly to our office. Our fax number is 937-325-9476.
  • Texting – If you only need to relay a page or two and privacy and security is not a major concern, you can take a picture of the document and text it to us. We all have the capability to print documents directly from our cell phones.

Great client service is always a priority for us and that holds even more true during these unprecedented times. We truly appreciate the fact that you have chosen us to be your tax and accounting service provider.  If you have any questions or concerns, please feel free to contact us.

We appreciate your understanding in this situation,

Sincerely,

Bennett, Groeber, Mullen & Feltner – BGMF CPA

Changes in Individual Tax Deductions 2019

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New tax law changes2019 tax filing season is well under way and BGMF CPAs have been planning and working diligently to prep for the incoming tax documents and ensuring we’re well educated on the new tax laws for your benefit.

For individuals we wanted to provide a refresher of the changes related to the new tax laws to help you prepare accordingly not only for tax filing, but for 2020 tax planning.

The recently enacted tax reform law made some significant changes to the system of income tax deductions used by consumers. Here are highlights of the changes.

The standard deduction is increased.

The standard deduction has grown. Because of the significant increases, many taxpayers who formerly itemized their deductions may now benefit from the standard deduction instead.

 

Changes in Standard Deductions
Filing Status Old Law New Law
Single $6,500 $12,000
Married filing jointly $13,000 $24,000
Head of Household $9,550 $18,000
Married filing separately $6,500 $12,000

The deduction for state and local taxes is reduced.

For those who itemize their deductions, the maximum amount permitted for all state and local taxes (SALT) combined is $10,000 per year ($5,000 for married individuals filing separately). How the new limit affects you will depend on your specific situation. If you live in a high-tax state, you may see much of your SALT deduction reduced, and that could mean that itemizing deductions is no longer the better option.

The mortgage interest deduction has a lower cap.

For mortgage debt incurred after December 15, 2017, you may only deduct interest on debt value up to $750,000 ($375,000 for married individuals filing separately). Previously, the limit was $1 million. For home equity debt, the deduction for interest is suspended through 2025, unless the proceeds are used to buy, build, or substantially improve the home that secures the loan.

Casualty and theft losses are not now generally deductible.

Beginning this year, only losses that occur as the result of a federally-declared disaster may be deducted. Formerly, casualty and theft losses had generally been deductible to the extent they exceeded 10% of adjusted gross income (AGI).

Miscellaneous itemized deductions are suspended.

Various miscellaneous expenses, such as unreimbursed employee business expenses and tax preparation expenses, were formerly deductible as an itemized deduction to the extent they totaled more than 2% of the taxpayer’s AGI. The new law suspends the deduction for these expenses.

Charitable contributions are still deductible if you itemize.

Cash contributions will now be allowed up to 60% of the taxpayer’s “contribution base,” up from 50%. A taxpayer’s contribution base is generally equal to AGI exclusive of any net operating loss carryback for the year. This change will affect only those taxpayers who contribute a significant proportion of their income to charity.

Medical expense rules become more generous.

Taxpayers with substantial medical expenses who also itemize can now deduct unreimbursed medical expenses in excess of 7.5% of their AGI, down from the deductibility threshold of 10% previously.

Moving expenses lose their tax advantage.

The deduction for qualified moving expenses, which can be claimed even if a taxpayer doesn’t itemize, has been suspended, except for members of the Armed Forces on active duty (provided certain conditions are met).

The alimony deduction for payers is eliminated.

The tax treatment of alimony payments will change significantly under the new law. Such payments will no longer deductible by the payer (and the recipient will no longer be required to include the alimony in income). The change applies to alimony paid under any divorce or separation agreement executed after December 31, 2018.

Note that some of these provisions are scheduled to sunset in 2019 or 2026 unless Congress acts to extend them. Talk to one of our tax advisors to see how the law may ultimately impact your situation.

Now is a great time to consider buying rental real estate or starting or buying a business to take advantage of other aspects of the new tax laws. Contact us today to set up a time to discuss these strategies.

BGMF in the News 2020

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BGMF CPAs team of Bill Groeber, Christiann Arimany and Joe Collinsworth recently sat down with the Springfield News-Sun to share with the community that Bill is entering his 50th tax season.

He was kind enough to share some of his insights over the years, changes he’s witnessed and we provided some tips on how to keep your personal information safe and what to do with regards to IRS scams.

Click here to view the Springfield News-Sun Article with BGMF

Below are some additional insights related to fraud and scams:

  1. Phone scams. The IRS will not start with a call nor threaten/demand payment.
  2. Phishing scams. Typically these come in the form of emails wanting you to click a link to provide information. The IRS won’t email.
  3. Phony letters. The IRS tends to begin correspondence with a letter and now scammers are utilizing fake letters to taxpayers.
  4. False tax returns & promises. Scammers will file false tax returns under your social security number to get the refund.
  5. False tax preparers. They will promise large refunds by inflating deductions/credits and charge large fees.
  6. False charities. You may receive a phone call or email requesting donations.

Tips to Avoid Potential Scams or Fraud:

  1. Never give out social security number, bank information or other personal information.
  2. Don’t engage on the phone or respond to emails (do not click on the links).
  3. Utilize reputable preparers and verify organizations you donate to.
  4. If you receive a potential scam call, email, or letter talk with your advisor immediately.
  5. Consider credit monitoring if concerned about identity theft.
  6. Contact the IRS and authorities.
  7. Protect your personal information both at home and when in public.
  8. Change your passwords often and use strong, unique passwords.

This is not an exhaustive list and protecting your identity is becoming more important.  Contact our firm today for tax preparation services or if you have concerns related to scams or fraud so we can assist you in dealing with these matters.

Do You Need to File Information Returns?

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Do you need to file information returns or are you expecting to receive these forms to file your taxes? Every January we receive a series of questions related to the requirement to file information returns and what qualifies.

Below is an overview of whether you should prepare and remit information returns or if you should plan to receive one prior to filing.

If you made or received a payment in a calendar year as a small business or self-employed individual, you most likely are required to file an information return to the IRS.  BGMF CPAs assists clients in preparing the necessary forms to ensure compliance with the IRS.  Contact us if you need help in January with form filings or have questions.

If you engaged in certain financial transactions during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS.

Below are some of the transactions that you have to report.

  • Services performed by independent contractors — those not employed by your business.
  • Prizes and awards, as well as certain other payments — termed other income.
  • Rent.
  • Royalties.
  • Backup withholding or federal income tax withheld.
  • Payments to physicians, physicians’ corporation or other suppliers of health and medical services.
  • Substitute dividends or tax-exempt interest payments, and you are a broker.
  • Crop insurance proceeds.
  • Gross proceeds of $600 or more paid to an attorney.
  • Interest on a business debt to someone (excluding interest on an obligation issued by an individual.
  • Dividends and other distributions to a company shareholder.
  • Distribution from a retirement or profit plan, or from an IRA or insurance contract.
  • Payments to merchants or other entities in settlement of reportable payable transactions — any payment card or third-party network transaction.

Review the IRS guide to information returns.

Being in receipt of a payment may also require you to file an information return. Some examples include:

  • Payment of mortgage interest (including points) or reimbursements of overpaid interest from individuals.
  • Sale or exchange of real estate.
  • You are a broker and you sold a covered security belonging to your customer.
  • You are an issuer of a security taking a specified corporate action that affects the cost basis of the securities held by others.
  • You released someone from paying a debt secured by property, or someone abandoned property that was subject to the debt or otherwise forgave their debt to you (1099-C).
  • You made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than in a permanent retail establishment.

Keep in mind that information is for businesses and not all types of business entities are required to receive various information returns. You will not have to file an information return if you are not engaged in a trade or business. You also will not have to file an information return if you are engaged in a trade or business and 1) the payment was made to another business that’s incorporated, but wasn’t for medical or legal services or 2) the sum of all payments made to the person or unincorporated business was less than $600 in one tax year.

In addition, a question that arises often is what if I don’t receive a 1099 for income earned because it was less than the thresholds?  The answer is you are still required to report the income on your tax return whether you receive an information form (i.e. 1099-Misc) or not.

Finally, if your company does business in a foreign country, has a bank account or assets outside the United States, there may be additional informational filing requirements that must be completed. The new tax laws brought many changes to foreign filing requirements.

This is just an introduction to a complicated topic, and the mechanics of filing such a return are filled with essential details. If you’re running a business, even a small one, be sure to discuss the details with one of our qualified professionals today!

Tax Planning and Strategies to Pay Less Tax

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tax saving strategiesYear-end is upon us again! Time to celebrate the holidays with family and friends, set those new year resolutions and of course do some tax planning!

Is tax planning a must? That is an excellent question and depends on your strategy to expand and grow your business and wealth.  BGMF CPAs always recommends tax planning in your strategy.

Waiting to plan when you file your taxes is not a good course of action. There isn’t much to do at that point to ensure you don’t overpay. It’s your money, not the governments and the tax law is written primarily to reduce your taxes.

Taxes are stealing your money (sometimes up to 50% or more), time and future so now is the time to stop the bleeding. Ever wonder where your money goes? We’ve seen a lot of changes in tax laws the last decade and we find that many tend to ignore the realities. This is due to a variety of factors, such as not understanding the tax code and how to make it work for them or trying to plan alone.

I’ll have you consider that the tax law is a map to vast amounts of wealth. If you follow the law carefully, you will be shocked to uncover secrets within the code which can allow you to amass huge amounts of cash flow and wealth.  The reason for this relates back to the government wanting the economy to grow through investment and spending in various sectors.

What you make is important, but even more so is what you keep. That is where your advisors come into play. A high-quality advisor will help you navigate the tax code to keep more of your hard-earned money and make better investment decisions.

Taxes Are a Major Expense & What You Can Do to Save

Consider that taxes are one of your biggest expenses and too many people ignore taxes in their strategy. When you meet with our tax planning team, we’ll look at a variety of factors, but we’ve boiled tax savings into a few different categories; type of taxpayer, changing the year, type of income, changing the deductions.

As a business owner or investor, we’ll review entity structure and if changing the taxpayer makes sense (i.e. switch to a C Corporation). We’ll also consider the year in which income and expenses occur to plan accordingly for deductions and credits. In addition, we’ll review type of income and deductions that are either being taken or not utilized.  For example, are you truly taking advantage of all expenses that could be considered legitimate business deductions (i.e. travel, home office)?

As an individual, we’ll review your overall situation to determine where you can save in taxes. In addition, we’ll review any major changes in your life such as getting married, having children, buying a home, college planning, divorce, retirement or other.  We’ll also discuss potential opportunities that may not be as apparent such as areas to invest, starting a business or taking advantage of deductions and credits that you may be missing.

We also work with your other advisors so everyone on your team is working in unison to keep money in your pocket.

How to Hire a Tax Advisor

When hiring an advisor to review tax planning with you, beware of those who promise to lower your taxes and cross the line to cheating.  There are plenty of legal ways to reduce taxes with the right plan.

Tax advisors and CPAs come with a variety of skill sets and beware of advisors who aren’t willing to understand the code to utilize the tax saving strategies available. Ask a lot of questions and ensure you’re comfortable and confident with the team you’re working with.

In summary, we’ll leave you to consider this – taxes are unique to each individual and based on your specific facts and circumstances. Change those and you will change your tax!

In other posts, we’ll provide specific tax saving strategies, but this overview of why tax planning is important will help you take the right steps prior to year end to ensure you have the opportunity to save in taxes now!

Call us at 937-325-0623 x5 or

Schedule a consult with one of our advisors today