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Thursday, April 5, 2018

Partner's Business Use of A Home


 
Partners report expenses for the business use of a home as unreimbursed partnership expenses on Part II,  Line #28, column (h), Schedule E, Form 1040.

Partners do not use Form 8829, Expenses For Business Use Of A Home, for a partner's expenses.

See a detailed discussion of Partner's Unreimbursed Expenses, article.

 
This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

Monday, April 2, 2018

The Value of a Deal


I recently saw a great sale on watches. Not those offered on the streets in some cities, but an unusually good deal in any event. I did not really need another watch, but I fell for the deal, and purchased one. It had the main watch dials as well as two smaller dials and a few added controls on the side. It took a while to get the band sized to fit with the help of the seller. I actually could not see the smaller dials without my glasses, which I did not have in my possession at the time of sale. When I got home and had some time I looked closer and determined that the two small dials and controls were decorative only, without functionality at all. The next day I returned to the seller and asked about this and he responded: “what do you expect for that price?”  He was right. The deal was just that…

He also took the watch back and returned my money. OK seller…of TRASH…and I should have knowm better…

How about your products and/or service?

 
Steve Koenig, SCORE Counselor


 

 

Un-reimbursed Partner Expenses

 

Under the general rule, a partner in partnership is NOT allowed to deduct un-reimbursed partnership expenses (partnership business expenses paid by the partner that the partner is not reimbursed for) on his/her individual tax return.

An exception applies when there is a provision in the partnership agreement requiring the partner to pay the specific expenses.

Each partner's Schedule K-1 should indicate in Box 20, Code Z along with a statement that the amount is for “UPE”.

Allowable expenses are deducted on Part II, Schedule E, Form 1040 of the partner's individual income tax return.

Report allowable un-reimbursed partnership expenses as a separate item on Line 28, Schedule E. Enter “UPE” as the name of the line item, then list the amount on (h) of line 28.

The “UPE” amount will be deducted from partnership income and will also reduce the net income subject to self-employment tax.

Audit Tip:

Include the requirement that the partners pay the specific expenses in the written partnership agreement to help ensure deductibility in case of an IRS Audit. Also include wording that the partnership will not reimburse the partners for the expenses.

This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

Marketing tip of The Month


#11 THE OPENING KICKOFF


Start every business day, and I mean EVERY business day, by making TWO cold calls. It’s a great, proven tactic. You’re bound to meet customers who had a great day themselves the day before and are ready to do business with you. But it’s got to be a habit. Every business day.


Martin Kahn, SCORE Counselor


 

 

 


 

 

 

Monday, March 12, 2018

IRS Installment Agreements

 
If you are financially unable to pay your tax debt immediately, you may be able to make monthly payments through an installment agreement with the IRS.

Before applying for a payment agreement, you must file all required tax returns.

You may be eligible to apply for an online payment agreement:

·Individuals must owe $50,000 or less in combined individual income tax, penalties and interest, and have filed all required tax returns.

·Business must owe $25,000 or less in payroll taxes and have filed all required tax returns.

Even if you are ineligible for an online payment agreement, you can still pay in installments:

·Complete and mail Form 9465 and Form 433-F

·Call 800-829-1040 or the phone number on your bill or notice.

 
Things to Consider

·Penalties and interest continue to accrue until your balance is paid in full.

·Your future refunds will be applied to your tax debt until it is paid in full.

·There may be a restatement fee if your agreement goes into default.

·You must pay at least your minimum monthly payment---on time.

·You must file all required tax returns on time.

·You must contact the IRS if you need to make any changes to your agreement.

·Ensure the IRS has your current address if you move by filing Form 8822 Change of Address.

·Include your name, address, SSN, daytime phone number, tax year and return type on your payment.

Currently, the IRS One Time Fee for a standard installment agreement or payroll deduction agreement is $120 or $52 if you choose to pay through a direct debit from your bank account.

 

This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

Tuesday, March 6, 2018

Product, Price and Service


We recently had a good example of the subject title that could be a good learning experience. First, we purchased a small home appliance from a discount retailer.

Upon putting the pieces together and plugging it in to power, the power circuit breaker blew out.. each time it was reset and reattempted. The retailer replaced the appliance with one that would not blow the breaker, but also would not turn on at all. So we gave up and returned this second one for a refund which the retailer provided. So we received a terrible product, but received good service, but felt a lack of confidence in any event. We then purchased a replacement appliance from another retailer. The model and manufacturer were different, as was the price…slightly lower…which was a surprise as the device was of higher quality. The lack of confidence in the products carried by the discount retailer, also led us to return another small appliance UNOPENED, and received another refund. So this is a case where poor quality products led to NO SALES.

How about your business?


Steve Koenig, SCORE Counselor

 
 

 

 

Saturday, March 3, 2018

IRS Offer In Compromise


The IRS Offer In Comprise program allows you to settle your tax debt for less than the full amount you owe—if you are eligible.

Make Sure You Are Eligible

Before the IRS can consider your offer, you must be current with all filing and payments requirements. You are not eligible if you are in an open bankruptcy proceeding. You can use the IRS Offer In Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal.

The IRS will generally approve an offer in compromise when the amount offered represents the most the IRS can expect to collect within a reasonable period of time.

The IRS considers each taxpayers unique set of facts and circumstances such as:

·Ability to pay

·Income

·Expenses, and

·Asset equity

 
IRS Form 656-B contains the step-by-step instructions and all the forms and information required for submitting an offer in compromise.

Note that the IRS will return any newly filed Offer In Compromise Application where the taxpayer has not filed all required tax returns. This policy does not apply to current year tax returns if there is a valid extension to file.

Currently the application fee is $186.00 and is non-refundable. You will also need to make an initial payment (non-refundable) with each Form 656.

BEWARE:

Television ads suggesting you can settle for “pennies on the dollar” may be misleading. Always seek competent professionals you can trust before considering an offer in compromise.

 
This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

Marketing Tip of The Month


#10 SIGNS OF SUCCESS

Get yourself a license plate with your company name or tag line, anything that uniquely identifies you when you pull up, or that promotes you as you drive about.  I’m an Interior Designer..or was til I retired..my plate could be DECOR8. What’s yours?

 

Martin Kahn, SCORE Counselor

Friday, February 16, 2018

Payroll Taxes and the Trust Fund Recovery Penalty (TFRP)


To encourage prompt payment of payroll employment taxes, Congress passed a law that provides for the TFRP. These taxes are called trust fund taxes because you actually hold the employee's money in trust until you make a federal tax deposit payment in that amount. The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business. And, the business does not have to have stopped operating in order for the TFRP to be assessed.

Who Can Be Responsible for the TFRP?

The TFRP can be assessed against any person who:

1-Is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and

2-Willfully fails to collect or pay them.

A responsible person may be:

·An officer or employee of  a corporation

·A member or employee of a partnership

·A corporate director or shareholder

·A member of a board of trustees for a nonprofit organization

·Another person with authority and control over funds to direct their disbursement

·Another corporation or third party

·Payroll service providers or responsible parties within these organizations

 
For willfulness to exist, the responsible person:

·Must have been, or should have been, aware of the outstanding taxes and

·Either intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required)

The Penalty and Enforcement

The amount of the penalty is equal to the unpaid balance of the trust fund tax.

Once the IRS asserts the penalty, they can take collection action your personal assets by fiing a federal tax lien or take levy or seizure action.

Avoiding the TFRP

You can avoid the TFRP by making sure that all employment taxes are collected, accounted for, and paid to the IRS when required. Make your tax deposits and payments in full and on time.

 

This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor

Visit us at: www.scoresouthflorida.net

 

 

 

Sunday, February 11, 2018

Florida Small Business Index Report

 
Near the end of 2017 The Florida Chamber of Commerce reported its
Quarterly Small Business Index statewide survey showing small businesses are most concerned about:
 
Workforce quality (18 percent),
Government regulations (17 percent),
Economic uncertainty (12 percent),
Healthcare costs (10 percent),
Lawsuit abuse (8 percent),
Access to capital (6 percent).
 
The Chamber reported: Of Florida small businesses, 48 percent of respondents expect to hire in the next six months.
 
How does your business compare?
 
Steve Koenig, SCORE Counselor
 
 

Thursday, February 1, 2018

Canceling an EIN "Employer Identrification Number"

 
If, for some reason, you have an old EIN with the IRS, the IRS can close your business account.

The IRS cannot cancel your EIN. Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity. Regardless of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity. The EIN still belongs to the business entity and can be used at a later date, should the need arise.

If you receive an EIN but later determine you do not need the number (the new business never started up, for example), the IRS can close your business account.

To close your business account, send the IRS a letter that includes the complete legal name of the business entity, the EIN, the business address and the reason you wish to close your business account.

If you have a copy of the EIN Assignment Notice that was provided by the IRS when your EIN was assigned, include that with your letter.

Send the information to:

Internal Revenue Service
Cincinnati, Ohio 45999

To prevent potential tax issues down the road, it is a good idea to take the above steps to close your business account with the IRS.

 
This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

 

Marketing Tip of the Month


#9 THINGS THAT GO BUMP IN THE NIGHT

Want your mail opened? Include something that makes a “bump” in the envelope. It could be as simple as a wrapped mint, a product sample, whatever.  I guarantee it will be opened, because we’re all curious, aren’t we, just like the  proverbial cat! And to be doubly sure? Use a bunch of stamps instead of one!

 
Martin Kahn, SCORE Counselor


 

 

Friday, January 19, 2018

Special Counselor of the Month


OWEN KOFF 

Electing a counselor of the Quarter is often a difficult task for the CTT (Counselor Training Team). So many of our members do such outstanding work, with clients, colleges, organizations, Chambers, truly we are blessed with the outstanding staff we have. And of all the members perhaps no one works harder, takes on more additional duties and responsibilities than does our Counselor of the 1st Quarter of 2018, Owen Koff.

You may know Owen as an outstanding client-devoted fellow member, but are you aware Owen is a member of the Executive Committee, a member of the CTT, a special ambassador to the JM Executive Program for Entrepreneurs, a representative to the Delray Chamber of Commerce, both as a speaker and a Mentor, a developer of a Boot Camp on the Art of Selling, a representative to St. John Paul’s, an ambassador to the West Boca Chamber of Commerce, all  among his many “jobs”. Additionally  Owen has designed and written his own material for his Seminars, and will be delivering an all-day Seminar on Selling as part of our upcoming Business Certificate Academy.

As the Chapter Editor, I can tell you that when it comes to “volunteering”, Owen is at the head of the line. And yes, Owen has won this award before, but he simply never says “no”, and always wants to help the Chapter in any way he can. All of that begins to describe this very special guy, and so we join in saluting him for everything he does that makes our Chapter shine.

Take a bow, friend, you are so worthy of the award and you ARE our Special Counselor of the Quarter for January, February, and March.
 
Martin Kahn, SCORE Counselor
 
 

Sunday, January 14, 2018

Entertainment & Meal Expense Tax Rules

 

The following tax law rules pertain to entertainment and meal expenses.

1-The expense must be directly related to and or associated with the active conduct of the taxpayer's trade or business.

2-Generally, the deductible portion is 50% of the amount deemed not lavish or extravagant. Meal expenses incurred in the course of travel away from home fall in this category. (NOTE: Some limited exceptions to the 50% limit apply and the full 100% is deductible)

3-The total expense also includes any admission fees, parking fees, tips, and taxes paid.

4-Club dues such as airline, country, hotel, luncheon, social, and sporting clubs are NOT deductible in and of themselves.

5-The deductible portion of business gifts is limited to $25 per recipient per year and is treated separately from entertainment and meal expenses.

The taxpayer should keep documentation and substantiation with the following information:

            Date
            Description
            Total Amount
            Business Discussed
            Business Relationship of those entertained
            Identification of individuals who attended the event, their reason for attending, their titles, etc.


This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

 

Friday, January 5, 2018

Terrible Customer Service



A family mail ordered a lamp shade to replace one of their own that had aged. Prior to placing an order the supplier asked them to send via email a scanned photo of their existing shade to confirm they had a replacement. The family did so. When the replacement shade arrived it was the correct version, however, it was discolored and damaged probably from years on a shelf.

The family called the supplier who pushed back, refusing to take the unit in return. The family escalated to management of the organization who agreed to accept the unit and pay the cost of return shipping. The return shipping costs where high because the supply organization refused to allow use of their bulk shipping rates. The family notified their credit card company to dispute the charges, and made a point with management about abuse from the underlings in the organization. Someone probably lost a job as a result.

How to you train your employees?

 

Steve Koenig, SCORE Counselor


 

 

Accountable & Non-accountable Reimbursement Plans


 

The arrangement under which an employer reimburses business expenses incurred by employees or provides advances to cover such expenses is either an accountable or non-accountable plan.

The federal tax treatment of each plan is summarized below.

Accountable Plans

Amounts paid under an accountable plan are deductible by the employer as business expenses and are not reported as taxable income to the employee. They are not reported on the employee's Form W-2 and are not subject to federal income tax withholding, social security tax withholding, medicare tax withholding, or Federal Unemployment Tax (FICA and FUTA).

Non-accountable Plans

Amounts paid under a non-accountable plan are deductible by the employer as “compensation” reportable on the employer's Form W-2 and subject to withholding as supplemental wages.

Expense reimbursements that are subject to withholding may be added to the employee's regular wages for the appropriate payroll period and withheld payroll taxes may be withheld on the total.

Specific Rules for Accountable Plan Treatment

Accountable plans have the following 3 requirements:

1-the expenses covered under the plan must have a business connection,

2-the plan must require the employees to document and document and substantiate the covered expenses within a reasonable period of time, and

3-the plan must require the employees who receive advances to return any amounts in excess of their documented and substantiated expenses within a reasonable period of time.

If the above rules for accountable plans are not strictly followed, employer reimbursements will be deemed to be made under a non-accountable plan.

It is good practice to put the plan in writing to document and substantiate all expense reimbursements. This will provide valuable evidence should an IRS Tax Audit occur.


This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

Marketing tip of the month


#8  COPYCAT

Want to impress your clients that you really care about them? Photocopy interesting articles and send them to clients and prospects  with a hand written  FYI (For your information) note, and include your business card.

 

Martin Kahn, SCORE Counselor