General Articles

The 2014 tax year brings us some very significant tax changes in the area of fixed asset and depreciation. For businesses, it will be even more important to review and plan expansions due to reduced immediate tax benefit for these additions.

Code Section 179 changes

One of the most commonly used tax provisions is code section 179, deduction for fixed assets. The code section has been around since the 1980’s. This provision allows companies to expense a portion of the cost of the equipment purchased each year, as long as the deduction does not create a year to date tax loss for the business after the deduction. These fixed assets may be used or new.

The most significant change in 2014 is the upper limited of the allowed election.

• In 1980, when it was established, the amount of the election was $10,000 per year
• In 2013, the amount of the election was $500,000.

Now, in 2014, election amount is $25,000.So, companies will not be able to benefit from the significant instant deduction that they have over the last few years. (Note that the year is not over. There may be changes made to the law before the end of the year.)

Code Section 168(k) changes

Another deduction that has benefited businesses is the special depreciation deduction provided by IRC code section 168(k). This code section has allowed business to write off between 50 and 100 percent of their equipment purchased during the year, as long as the equipment was brand new (i.e. not previously owned by anyone). This code section allowed for a 50% immediate depreciation deduction or bonus depreciation for qualifying fixed assets. Currently, this is no longer available. It is possible that this could change; but, as of the writing of this article, it is no longer available.

For more information on these depreciation changes or for assistance in planning the best way to utilize available deductions, contact Patrick Mutchler at pmutchler@brickleydelong.com or (231) 725-5870.

The Journal of Accountancy published 10 useful Excel shortcuts. As a CPA, I spend a lot of time in excel, and I find shortcuts extremely helpful and they allow me to work more efficiently. These are the 10 listed:

1. The SUM function. Pressing Alt+= in the cell below a column of numbers inserts the SUM function and highlights that column of numbers.
2. Select a range of data. Pressing Ctrl+A inside a range of data selects the data range.
3. Select an entire worksheet. Pressing Ctrl+A outside a range of data selects the entire worksheet.
4. Select a column. Pressing Ctrl+Spacebar selects the entire column where your cursor is located.
5. Select a row. Pressing Shift+Spacebar selects the entire row where your cursor is located.
6. Go to cell A1. Pressing Ctrl+Home moves the cursor to cell A1 (unless you have your Transition navigation keys turned on, in which case pressing the Home key accomplishes this task).
7. Go to the end. Pressing Ctrl+End moves your cursor to the bottom-right corner of the active range. (The active range can be defined as that range from cell A1 to the intersection of the bottommost row and rightmost column in which you have entered data, even if you have since deleted that data.)
8. Hide a column. Pressing Ctrl+0 (zero) hides the current column, or columns if you have more than one column selected. This shortcut even works when you use the Ctrl key to select multiple columns that are not adjacent to one another.
9. Insert the date. Pressing Ctrl+Semicolon inserts the current date.
10. Insert the time. Pressing Ctrl+Shift+Semicolon inserts the current time.

Of the shortcuts listed in this article, I use many of them; but, the one that saves me the most time is the insert date function. There are lots of internal documents that we use that have specific cells used to document a date of when an item is complete.

We invite you to comment below with your experience with Excel shortcuts… either good or bad.

Attached is a link the article,10 Excel Shortcuts by J. Carlton Collins

Author: Edward J. Elsner CPA, CFE

My name is David Milligan, and I am a staff accountant here at Brickley DeLong. As my one year anniversary here at Brickley DeLong approaches, I wanted to countdown five lessons I learned in my first year here.

1. Tax season does not stop for bad weather.

The weather no longer closes work like it did in college. My first day at Brickley DeLong PC was one of the worst ice/snow storms of 2014. Needless to say, it was a stressful drive; but, if I could make it on that day, then the rest of the tax season would be a breeze. The weather is a significant factor when you are driving toward the lakeshore in the middle of winter.

2. You must experience your first tax season to understand it.

Tax season is nothing like what I thought it would be like in college. During my entire time at Grand Valley State University, I only had to prepare a single 1040 for a class. That was definitely not the case once January approached. Learning everything there was about tax made for a quick study on the whole tax side.

3. Tax returns have a “feel” and “smell”.

Partners and managers have a “feel” and “smell” when preparing tax returns. As stated earlier, I had only prepared a single return through college. When I began preparing returns for clients, I would be asked if the return “smelled” or “felt” right. Over the first couple weeks, you get to know exactly what those smells and feelings are. They develop without any conscious thought; and, before long, I could see the input and know what was supposed to be showing up on the return.

4. Audit and tax are very different.

Audits and tax are not similar in any way, well, at least 1040s and audits. Learning how to do both at once was, in my opinion, like jumping off the proverbial deep end. While this was difficult, it also got me acclimated so much quicker. I am so thankful for all of the experience I got at the time. Learning to manage both and overcome the stresses made me a stronger person than if I had eased into it.

5. Workplace culture is important.

The final thing I learned is that the people you work with make all the difference in the world. The feel and culture at Brickley DeLong is amazing. Having people who care about your learning and education are key to your success and prosper in your future career. So, thank you to all who have helped me learn so far, and those who will help me learn in the future.

For more information on the experience of working in a CPA firm, please visit our accounting career pages or contact Christine Dill (231) 726-5835.

The concept of work-life balance has been something that the corporate world has been addressing for many years. With millennials becoming increasingly more prevalent in the work force, the traditional work week is evolving.

Younger professionals are more concerned about flexibility in the jobs than the generations before them. To retain employees, it is extremely important for companies to adapt to this generational shift. The corporate mindset must change to ensure that professionals have the flexibility to fulfill all to their responsibilities and desires (both work-related and personal).

Flexibility means something different for everyone:

• Some people are more interesting in working from home
• Some people would like work compressed work weeks
• Some people require shorter days, possibly due to family obligations
• Some people prefer to work until tasks at hand are complete.

The Bottom Line…

CPA firms are becoming more flexible to meet their employees’ needs.   Talented professionals will always be sought after by growing firms. These individuals are more than capable of taking care of the responsibilities given to them. The more job flexibility awarded to employees, their ability to succeed in all facets of their lives increases.

Here at Brickley DeLong, workplace flexibility has always been awarded to our employees. We work with employees on adjusting their work schedules to help fulfill their personal duties. In addition, flexibility is important in relation to our clients. With new millennials in the workforce, we are adapting to make schedules work best for both our employees and our clientele.

So, what is your take on workplace flexibility? We invite you to comment on this blog post or contact us.

Author: Ed Elsner, CPA, CFE

October 1, 2014 is the last day to establish a safe harbor 401 (k) plan.

A 401(k) plan, with safe harbor provisions can enable highly compensation employees to maximize salary deferrals 3 ways:

1. Defer up to $17,500 with an additional $5,500 if you are 50 years or older.
2. Contribute maximum of $52,000 via employer and employee contributions in 2014, with additional $5,500 if you are 50 years and over.
3. Consider Roth 401(k) post-tax as an option.

Please contact Brenda Jacobs at (231) 726-5880 or bjacobs@brickleydelong.com for more details.

Recently, one of my clients was faced with an Unemployment Insurance Audit (UIA). The target of this audit was the company’s contracted services; in agriculture this is often called “Custom Hire”. The auditor inspected payroll tax returns and unemployment returns for the audit period. Questions raised were:

• Was form1099-MISC issued to the persons held as non-employees?
• Did the non-employees provide their own tools?
• Did the non-employees hold themselves out as a business?
• Did the non-employees have any other customers?
• Did the non-employees have a website or issue invoices?
• Did the company supervise their work?
• Did the company set the hours for their work performed?

It appears the UIA has not looked at the agriculture industry in a while and are making a concerted effort to audit more agriculture entities.

In agriculture, employers that file a Federal form 943, in place of a traditional form 941, do not need to file a Form UIA 1028 until they pay wages of $20,000. This must be in a calendar quarter for the current or preceding year.

If a business has at least ten agricultural workers for twenty different weeks (current or preceding calendar year) they are subject to the UIA tax. The weeks do not have to be consecutive. And, the twenty workers can be different people. If you are close to the wage threshold, this can be especially important as the tax, penalties and interest come into play. If the auditor finds issues, they can open up the prior two years as well.  Therefore, it is recommended to acquire social security numbers from non-workers up front if a 1099 or W-2 is necessary. Penalties increase when social security numbers are not available.

The State of Michigan Department of Licensing and Regulatory Affairs Unemployment Insurance Agency (UIA) office has a form UIA 1015 available for use to help with this determination.

For more information on UIA audits, please contact Paul Gilbert at pgilbert@brickleydelong.com or (231) 726-5860.

What is form 8938?

Form 8938 is utilized to report foreign financial assets. The form is filed as an attachment to your personal income tax return and is due with your personal tax return.

What constitutes a foreign financial asset?

A foreign financial asset is any assets included in a foreign financial account. It also includes many directly held foreign assets. For example, if you directly own shares of a foreign company, then these assets would need to be included on the form. Another example would be if you owned an interest in a foreign partnership, or foreign trust, these assets would need to be included on the form.

When is it required to file?

The form is only required if your foreign financial assets reach a certain level and is based upon various asset amounts (see table below). Many of the foreign assets are required to be reported on other special forms; however, these assets still need to be included in determining if you are required to file. This form is very similar to form 114 Report of Foreign Bank and Financial account. But, filing one of the forms does not alleviate the requirement to file the other. To compare differences between the form, visit Comparison of Form 8938 and FBAR Requirements.

Failing to file brings significant penalties

A person can be assessed a penalty of $10,000 for not filing a complete and accurate return by the due date of the personal return (including extensions). In addition, you can be assessed another $10,000 for each 30 day period that you do not reply to an Internal Revenues Service notice.

It is important to take a full inventory of all assets held overseas and review each one to determine if it is required to be reported, or you may face serious consequences. Contact Patrick Mutchler at 231-726-5870 or pmutchler@brickleydelong.com for questions or assistance on this subject.

Social security is one of the most misunderstood benefits available. Many people believe that they should take the benefit as soon as it is available. While doing so may be the correct course of action to take, it is important to look at your situation, as well as other strategies for drawing social security.

First, let’s take a look at the three of the most common forms of Social Security. Each of the following benefits has a place, and can provide you the best benefit.

1. A person can receive benefits as a worker who paid into the system.
2. A person can claim benefits as a spouse.
3. A person can receive benefits as a survivor of a spouse who has passed away.

Before making any decision in regards to social security, a person should determine a number of things.

1. What is the normal retirement age?

You can claim benefits at age 62, but at a reduced amount.

2. What is your current medical status, as well as your family history?

If you are in poor health, you may want to claim benefits early. It is also important to consider what your family medical history is. Does your family have a history of living well into their 80’s, or a history of genetic illnesses?

3. What is your current financial status?

What type of retirement assets do I have? How much do I need to live the type of retirement lifestyle that I desire? What assets do I have to meet these requirements?

4. What is your spouse’s age?

Even a slight age difference between couples can lead to opportunities, as well as challenges, when determining when and who should file for benefits.

So… should you draw early at 62? Should you wait until your full retirement age? Should you wait until age 70, and then receive a much larger benefit? Or, should you file for benefits (to open doors for your spouse) and then suspend receiving benefits for yourself? You can also receive benefits under a spouse’s account, under certain conditions, while your individual benefit continues to grow.

Making the wrong decision can seriously affect your retirement ages. Contact us to help you determine what strategy fits your situation. You only get one change to retire. Let’s do it right.