RDG+Partners has hired Monica Allen as an Outsourced Accounting Services (OAS) Specialist. In her new role, she is responsible for supporting the firm’s small business clients in various capacities, including bookkeeping, tax planning, QuickBooks training, and support.

Last summer, Allen served as an intern in the firm’s Outsourced Accounting Services Division, an experience that exposed her to the culture at RDG+Partners, its relationships with clients, and the expertise of its team.

“During her internship at RDG+Partners, Monica showed a clear understanding of our approach to accounting services and the positive impact it has on our clients’ business goals,” said Whitney Baniewicz, partner, RDG+Partners. “Her knowledge and youthful passion proved to be a real asset to the team, and the Outsourced Accounting Services team will benefit significantly by having her on board.”

Allen recently graduated from West Virginia University, where she received a bachelor’s degree in business administration with a major in accounting. She is currently preparing for the examination to become a Certified Public Accountant.

Allen resides in Rochester, N.Y.

Following this week’s approval of the Tax Cuts and Job Act, there will be changes to property tax deductions in 2018.
Here, our RDG+Partners tax experts answer some common questions about whether it is beneficial to prepay 2018 property taxes before the end of 2017.
SHOULD I PREPAY TAXES IN 2017 IN CONSIDERATION OF THE NEW TAX LAW?
This is a question we have heard many times over the past few days.
Now that the Tax Cuts and Jobs Act has passed Congress and is awaiting the president’s signature, we have analyzed the law and determined there may be a benefit for prepaying real estate taxes before 12/31/17.
THE NEW LAW – LIMITATION ON DEDUCTION FOR STATE AND LOCAL TAXES
The new law limits an individual’s deduction for state and local taxes, both income and real estate, to $10,000 for tax years after 2017. For taxpayers in high income and real estate tax states, such as New York, New Jersey and California, this will likely be a significant reduction of itemized deductions.
The new law further states that “an amount paid in a taxable year beginning before January 1, 2018, with respect to a state or local income tax imposed for a taxable year beginning after December 31, 2017, shall be treated as paid on the last day of the taxable year for which such tax is so imposed.” This effectively means the prepayment of 2018 income taxes by 12/31/17 will not result in an additional 2017 deduction.
However, the language of the law does not prevent the prepayment of real estate taxes.
PLANNING OPPORTUNITY
Taxpayers who will lose out on deducting a portion of their real estate taxes in 2018 should consider prepaying real estate taxes by 12/31/17 to avoid the limitation.
NOTE – while this strategy of prepaying real estate taxes may help some taxpayers, those taxpayers subject to AMT will not see a benefit from the prepayment of real estate taxes.
HOW DO I PAY PROPERTY TAXES EARLY?
Paying the entire bill this year presumably would allow you to deduct your entire property tax bill from your 2017 federal taxes. That’s important if you expect your state and local taxes will be greater than $10,000 in 2018, which means not all could be deducted.
If you pay your property taxes yourself, contact your county tax collector’s office. Many real estate property tax websites allow you to make a payment online, or you can pay by mail before 12/31/17.
If your real estate taxes are paid via escrow, you should contact your mortgage company to see if a payment in 2017 is possible.
The logistics of prepaying your real estate taxes will need to be determined on a case by case basis. We have heard that some tax collectors will not accept a payment until they have issued the actual bill, others will not accept partial payments, and some will not accept payments until after 12/31/17. If you are a resident of Monroe county, click here to obtain additional information.
If you have questions, please contact your RDG+Partners tax professional.

Early this morning, the U.S. Senate voted and passed the Tax Cuts and Jobs Act, and this afternoon, the U.S. House of Representatives did the same. With this new tax policy now heading to President Trump’s desk for signature, it’s time for everyone to understand what’s in it, and how it may impact their wallets.

Here, our RDG+Partners tax professionals have outlined changes to the tax policy relating to individuals:

  • All individual income tax cuts expire and reset Jan 1, 2026.
  • Several of the tax brackets will change. Most notably the top income bracket, which will be reduced from 39.6% to 37% for:
    • taxpayers married filing jointly with income over $600,000;
    • taxpayers filing single with income over $500,000; and,
    • taxpayers filing head-of-household with income over $500,000.
  • Capital gains rates remain unchanged from today.
  • The standard deduction increased to $24,000 for married individuals filing jointly, $18,000 for head-of-household filers, and $12,000 for all other taxpayers.
    • Increased standard deduction coupled with major changes to itemized deductions will result in many taxpayers claiming the standard deduction in the future.
  • Personal exemptions eliminated. Previously the amount for each exemption was $4,150.
    • This provision favors households with fewer children. Families of five or six see a wash.
  • The “kiddie tax” provisions will change. Taxable income of a child attributable to net unearned income is taxed according to the brackets applicable to trusts and estates.
  • After December 31, 2018, alimony is non-deductible and non-taxable.
  • Personal mandate for health insurance repealed after 2018.
  • The exclusion for moving expense reimbursements and expense deductions eliminated.
  • Personal AMT retained; however, the exemption amounts increased until 2026.
  • Cap of $10,000 on itemized state and local taxes income or property tax.
  • The mortgage interest deduction is limited to interest on indebtedness up to $750,000; the home-equity interest deduction eliminated.
  • Miscellaneous itemized deductions removed.
    • These previously included:
      • Unreimbursed employee expenses,
      • Investment expenses,
      • Certain expenses related to taxable income (attorney/accountant services).
  • The child tax credit increases to $2,000 with a refundable limit of $1,400 per qualifying child.
  • There will be an expanded use for 529 account funds. “Qualified higher education expenses” will include tuition at an elementary school or secondary public, private, or religious school up to a $10,000 limit per tax year.
  • Estate tax exemptions doubled until 2026.

Questions or concerns? Please contact your RDG+Partners tax professional.

Early this morning, the U.S. Senate voted and passed the Tax Cuts and Jobs Act, and this afternoon, the U.S. House of Representatives did the same. With this new tax policy now heading to President Trump’s desk for signature, it’s time for every business owner to understand what’s in it, and how it may impact their bottom line.

Here, our RDG+Partners tax professionals have outlined changes to the tax policy relating to businesses:

  • A deduction for pass-through income has been introduced. Taxpayers allowed a special 20% deduction for qualified business income.
    • This deduction is not allowed in computed adjust gross income (AGI), but rather is allowed as a deduction regarding taxable income.
  • The bill contains a special loophole for taxpayers with incomes below $157,500 single, $315,000 married filing jointly that own service businesses (lawyers, accountants, doctors).
    • The wording will encourage many employees to classify as independent contractors.
  • A new limitation on excess business losses has been introduced. Excess business losses will be limited to $500,000 for married filers, and $250,000 for all other taxpayers
  • The Corporate tax rate will permanently be set to 21% starting in 2018.
    • The permanent reduced rate and certain C-Corp mechanisms will make the entity choice decision that much more complicated.
  • The dividends received deduction percentages have been reduced from 80% and 70% to 65% and 50%, respectively, starting in 2018.
  • Section 179 expensing increased to $1,000,000; phase-out threshold to $2,500,000.
  • In addition to the expanded expensing limits, the “qualified real property” definition has been expanded to include certain depreciable tangible personal property used predominantly to furnish lodging or in connection with furnishing lodging.
  • Eligible qualified real property expanded to include the following improvements to nonresidential real property after the date such property was first placed in service: roofs; heating, ventilation, and air-conditioning property; fire protection and alarm systems; and security systems.
  • Starting September 27, 2017, bonus depreciation increased to 100% until 2023.
    • Used property now qualifies for bonus depreciation.
  • 15-year recovery period and straight-line depreciation for qualified improvement property
  • The deduction limits for luxury automobiles and sedans increased.
  • Taxpayers with gross receipts under $25 million now qualify for:
    • Cash accounting method,
    • Exemption from UNICAP rules, and
    • Completed contract method for construction.
  • Business interest expense limited to 30% of adjusted business income.
  • Net operating loss carrybacks and the special carryback provisions removed. NOLs that arise after December 31, 2017 limited to 80% of taxable income.
  • Like-kind exchanges are now limited only to real property that is not held primarily for sale.
  • Specified research & experimentation expenses must be capitalized and amortized ratably over a 5-year period.
  • Deductions for fringe benefit expenses have been limited:
    • Deductions for entertainment expenses are now disallowed;
    • The 50% meals deduction has been expanded to include meals provided through an in-house cafeteria or otherwise on the premises of the employer; and
    • Deductions for employee transportation fringe benefits denied, but the exclusion from income for these received benefits retained.
  • The domestic production activities deduction repealed.
  • Corporate AMT repealed starting in 2018.
  • For the 2018 and 2019 taxable years, a new credit for employer-paid family and medical leave has been introduced.
  • Starting in 2018, Partnership Technical Terminations have been repealed.
  • UBTI must now be separately computed for each trade or business activity.

RDHB CPAs and Kroner Gamble & Company CPA, P.C., have reached an agreement to merge, effective January 1, 2018. The combined accounting firm—to be named RDG+Partners—will be led by six partners and will employ more than 30 professional staff.

“After nearly a year of collaboration, we determined that together, we can offer higher levels of service to our clients than we can apart,” said Christopher Gamble, co-managing partner of the firm. “Our firms have been in existence for more than 25 years combined, and our clients will benefit from expanded capabilities, talent, and expertise.”

The boutique accounting and business consulting firm will continue to provide personalized tax, business planning, accounting, auditing, and wealth management services. It will operate out of RDHB’s current offices on Monroe Avenue in Pittsford, which earlier this year were expanded and renovated to enable greater collaboration among the firm’s staff and clients.

“Our firms share strong cultures and values, and subscribe to the same progressive approach to client service—yet we each have our strengths,” said John Rizzo, co-managing partner. “At RDHB and kg+co, we have all prided ourselves on the individualized attention, innovative ideas, and service we offer clients. We make sure to gain a complete understanding of each client’s financial goals, then work alongside them to help achieve them. Now, as RDG+Partners, we have the best possible resources to do so. The success of our clients bolsters growth of the entire community—we all rise together.”

In addition to Gamble and Rizzo, the firm’s leadership will consist of four other partners: Whitney Baniewicz, Michelle Bryant, Brian DiGiacco, and Timothy Hern.

  Effective tax planning is a year-round effort—especially as your overall financial position changes—and at RDHB, we work with our clients to minimize tax liability and maximize tax savings. As the end of the year approaches, it is a good time to review several ways that you can potentially lower your tax bill for 2017. […]

 

For the greatest tax savings, it is necessary to be conscious of tax planning throughout the whole year. Your team at RDHB is always available to discuss tax strategies that are applicable to your business. But with the end of 2017 just weeks away, there is still time to make some moves that can be beneficial. Consider the following year-end tax-planning strategies for businesses and business owners:

  • Businesses should consider making expenditures that qualify for the business property expensing option. For tax years beginning in 2017, the expensing limit is $510,000 and the investment ceiling limit is $2,030,000. Expensing is generally available for most depreciable property (other than buildings), off-the-shelf computer software, air conditioning and heating units, and qualified real property-qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. The generous dollar ceilings that apply this year mean that many small and medium sized businesses that make timely purchases will be able to currently deduct most if not all their outlays for machinery and equipment. What’s more, the expensing deduction is not prorated for the time that the asset is in service during the year. The fact that the expensing deduction may be claimed in full (if you are otherwise eligible to take it) regardless of how long the property is held during the year can be a potent tool for year-end tax planning. Thus, property acquired and placed in service in the last days of 2017, rather than at the beginning of 2018, can result in a full expensing deduction for 2017.
  • Businesses also should consider making expenditures that qualify for 50% bonus first year depreciation if bought and placed in service this year (the bonus percentage declines to 40% next year). The bonus depreciation deduction is permitted without any proration based on the length of time that an asset is in service during the tax year. As a result, the 50% first-year bonus writeoff is available even if qualifying assets are in service for only a few days in 2017.
  • Businesses may be able to take advantage of the “de minimis safe harbor election” (also known as the book-tax conformity election) to expense the costs of lower-cost assets and materials and supplies, assuming the costs don’t have to be capitalized under the Code Sec. 263A uniform capitalization (UNICAP) rules. To qualify for the election, the cost of a unit of property can’t exceed $5,000 if the taxpayer has an applicable financial statement (AFS; e.g., a certified audited financial statement along with an independent CPA’s report). If there’s no AFS, the cost of a unit of property can’t exceed $2,500. Where the UNICAP rules aren’t an issue, consider purchasing such qualifying items before the end of 2017.
  • Businesses contemplating large equipment purchases also should keep a close eye on the tax reform plan being considered by Congress. The current version contemplates immediate expensing-with no set dollar limit-of all depreciable asset (other than building) investments made after Sept. 27, 2017, for a period of at least five years. This would be a major incentive for some businesses to make large purchases of equipment in late 2017.
  • If your business was affected by Hurricane Harvey, Irma, or Maria, it may be entitled to an employee retention credit for eligible employees.
  • A corporation should consider deferring income until 2018 if it will be in a higher bracket this year than next. This could certainly be the case if Congress succeeds in dramatically reducing the corporate tax rate, beginning next year.
  • A corporation should consider deferring income until next year if doing so will preserve the corporation’s qualification for the small corporation AMT exemption for 2017. Note that there is never a reason to accelerate income for purposes of the small corporation AMT exemption because if a corporation doesn’t qualify for the exemption for any given tax year, it will not qualify for the exemption for any later tax year.
  • A corporation (other than a “large” corporation) that anticipates a small net operating loss (NOL) for 2017 (and substantial net income in 2018) may find it worthwhile to accelerate just enough of its 2018 income (or to defer just enough of its 2017 deductions) to create a small amount of net income for 2017. This will permit the corporation to base its 2018 estimated tax installments on the relatively small amount of income shown on its 2017 return, rather than having to pay estimated taxes based on 100% of its much larger 2018 taxable income.
  • If your business qualifies for the domestic production activities deduction (DPAD) for its 2017 tax year, consider whether the 50%-of-W-2 wages limitation on that deduction applies. If it does, consider ways to increase 2017 W-2 income, e.g., by bonuses to owner-shareholders whose compensation is allocable to domestic production gross receipts. Note that the limitation applies to amounts paid with respect to employment in calendar year 2017, even if the business has a fiscal year. Keep in mind that the DPAD would be abolished under the tax reform plan currently before Congress.
  • To reduce 2017 taxable income, consider deferring a debt-cancellation event until 2018.
  • To reduce 2017 taxable income, consider disposing of a passive activity in 2017 if doing so will allow you to deduct suspended passive activity losses.

 

The United States House of Representatives recently released proposed legislation entitled the “Tax Cuts and Jobs Act.” The proposal contains major changes to individual income taxation, which we summarize below.

Note that this legislation is only proposed; it is not law.

Under this new legislation, the tax brackets would be restructured to the following:

New Brackets Single Head of Household Married Filing Joint
12% $12,200  – $45,000 $18,300 -$67,500 $24,400 – $90,000
25% $45,001 – $200,000 $67,501 – $200,000 $90,001 – $260,000
35% $200,001 – $500,000 $200,001 – $500,000 $260,001 – $1,000,000
39.6% $500,000 and above $500,000 and above $1,000,000 and above

Observation – The current 33% bracket is $191,650 – $416,700 for Single Filers and $233,350 – $416,700 for Married Filing Joint. Individuals in this zone may face a tax increase from the new 35% bracket.

  • New business income rate of 25% on pass-through entities. Professional services firms such as lawyers, accountants, and architects do not qualify for the new rate
  • Standard deduction for individuals $12,200; head of house $18,300; for married couples $24,400
  • Repeal of the personal exemption – currently $4,050 per dependent
  • Child tax credit increased to $1,600 up from $1,000 with a new credit for non-child dependents
    • Phase-out of credit increased to $115,000 for single and $230,000 for married taxpayers
  • Repeal of the adoption credit and electric vehicle credit
  • Expansion of American Opportunity Credit to five years instead of four
  • 529 plans eligible to pay up to $10,000 a year for elementary and high school education
  • The following are removed for education incentives
    • Lifetime learning credit
    • Student loan interest deduction
    • Tuition and fees deduction
    • Teachers $250 education expense deduction
  • Alimony paid to be non-deductible for the payer and non-taxable to the recipient
  • Medical expense deductions on Schedule A eliminated
  • Mortgage interest deduction limited to loans with a value of $500,000 and one residence
  • Property tax deduction capped at $10,000
  • State and local income tax deduction eliminated
  • Tax preparation expense repealed
  • Unreimbursed business expense deduction repealed
  • Charitable contributions maintained

Comment – The reduction in allowable itemized deductions coupled with increased standard deductions would affect New Yorkers more than other U.S. taxpayers.

Planning Opportunity – More than ever it may be advisable for taxpayers to pre-pay state income and property taxes by year-end. Consider paying your 2018 property taxes at the end of 2017 by making a payment based upon your 2017 property tax bills.

All itemized deductions such as charitable contributions, tax preparation fees, and unreimbursed business expenses could potentially be permanently lost under the proposed plan if not front-loaded into 2017.

  • AMT repealed
  • Estate exclusion doubled and repealed after 2023

RDHB CPAs provides its clients with personalized tax, business planning, accounting, auditing, and wealth management services. The items discussed in this report are just a few highlights of the individual changes in the new tax proposal. For more information on the new tax proposal, please contact David Feor, CPA at dfeor@rdhbcpa.com or a member of your RDHB team.

 

The United States House of Representatives recently released proposed legislation entitled the “Tax Cuts and Jobs Act.” The proposal contains major changes to business income taxation, which have been summarized below.
Note that this legislation is only proposed; it is not law.

  • Corporate tax rate would be a flat 20%
  • 100% immediate ‘bonus’ depreciation for property placed in service between September 27, 2017 and before January 2023

Observation  – The new ‘bonus’ provisions would be available for the taxpayer’s first use of property, repealing the current requirement that original use of the property begin with the taxpayer.

  • Section 179 expensing increased to $5 million with a $20 million phase-out
  • Businesses with average gross receipts less than $25 million would be allowed
    • Cash method accounting
    • Exemption from uniform capitalization rules for inventories
    • Use of the completed contract method for long-term construction contracts
  • All businesses would be subject to a limitation on interest expense equal to 30% of the business’s adjusted taxable income
  • Net operating losses would be limited to 90% of taxable income
    • The net operating loss carryback would be no longer allowed after 2017
  • Like-kind exchange deferral rules would apply only to ‘real property’
  • Entertainment expenses would not be allowed as a deduction
    • Meals would continue being subject to the 50% deduction limitation
  • The deduction for income attribute to domestic production activities would be repealed
  • Repeal of the work opportunity credit
  • Credit for increasing research activities would be maintained

 

RDHB CPAs provides its clients with personalized tax, business planning, accounting, auditing, and wealth management services. The items discussed in this report are just a few highlights of the business changes in the new tax proposal. For more information on the new tax proposal, please contact David Feor, CPA at dfeor@rdhbcpa.com, or a member of your RDHB team.

 

We continue our quest to introduce you to all of RDHB’s directors and managers—the people behind the day-to-day work we do to help our clients grow their businesses. This week, we’re focusing on one of our newest team members, tax manager Kara Cline! She may have only been with us for a short time, but she’s already making big waves. Let’s learn more about this new addition to the RDHB family!

Name: Kara Cline
Title: Tax Manager
Time at RDHB: Two months

What three words would you use to describe RDHB?
Motivated. Inspiring. Welcoming.

What do you like most about working at RDHB?
The people are wonderful. Everyone is genuine and very friendly. There is a family-like atmosphere that makes coming to work enjoyable.

Why did you choose a career in accounting? What led you to RDHB?
I didn’t always want to be an accountant. Actually, I wanted to major in space science, but thanks to my Dad, I stumbled upon accounting. After a little time, I knew it was the right choice for me. I loved working with money when I was younger, and always needed things to be in balance, so a career in accounting made perfect sense. I was drawn to RDHB’s success, their culture and their overall desire to assist their clients with all aspects of their businesses.

How would you describe your job to a child?
Well, if I was explaining it to my son, I would say that I help people save money so they can buy more toys!

Where is your hometown?
Hornell, N.Y.

Tell us about your family.
My husband Brian and I have two wonderful boys—Connor (4) and Caleb (1 ½). We also have two dogs, Miller and Keystone, and two cats, Petey and Roxie. They keep us busy!

How do you spend the majority of your time outside of work?
Lately I’m spending most of my time either finishing up projects and settling into our new house, or enjoying time with the family.

It’s a Sunday at 2:00pm. What are you most likely doing?
It’s naptime for the kids, so I’m usually catching up on chores around the house or running errands.

Name one thing that people would be surprised to know about you.
People that don’t know me are always surprised by how crafty and creative I am (especially for being an accountant). Pre-children, I spent a lot of time baking and decorating cakes/cupcakes, crocheting and knitting, sewing, and making wire name hangers for brides-to-be.

What do you consider to be your greatest accomplishment?
Being a successful working mother. It’s not easy to balance both work and life. It takes patience, dedication and organization.

You work in accounting, so it must be asked: What is your favorite/lucky number, and why?
My favorite number has always been 22. My birthday is July 22, so that must be why I gravitated towards it.

What is your favorite thing about the Rochester area? What is your favorite thing to do here?
I am new to the area, so I am interested to hear about everyone else’s favorite things to do!

What gets you out of bed in the morning?
Usually the baby crying.

Favorite line from a movie?
“Change is good.”

Favorite TV show to binge-watch?
NCIS

Where is your most favorite place you have ever visited?
When I was in high school, I went to France with my French class. It was beautiful and enriching. I would love to visit again someday!

If you could switch places with anyone in the world for one day, who would you switch with?
Ellen DeGeneres

If Hollywood made a movie about your life, what famous actor or actress would play you?
Julia Roberts

If you could witness any historical event, what would you most want to see?
The first steps on the moon.

What is something you wish you could do, but can’t?
I wish I could time travel.

Name one thing that is on your “bucket list.”
Skydiving; although, my brother is an aeronautical engineer and pilot, so I’m sure this would not be well received.