New Ohio Municipal Withholding Payment Rules

George Timoteo, CPA

Senior Manager

timoteo@hwco.com

The enactment of Ohio House Bill 5 became effective January 1, 2016, and with this law came a large number of city income tax rule changes.  One seemingly minor change not widely publicized is the due date for making city withholding tax payments.  The subtle change is that the payment of withholding taxes is due on the 15^th of the month following the end of the reporting period.  The important change is that the payment due date makes no allowance for weekends or holidays.  Therefore, if the 15^th of a given month falls on the weekend, the payment is still due on the 15^th of the month.  No allowance is made for the postmark date of a mailed payment.  Therefore, considerations should be made to make sure payment due will be received by the city in question no later than the 15^th of the month.  Payments received after the 15^th of the month can be subjected to a rather severe 50% penalty of the tax amount paid.

Don’t Forget to Consider the Ohio Business Income Deduction

Cathy Robinson, CPA

Principal

robinson@hwco.com

 

Beginning in 2015, Ohio has increased the benefit to taxpayers for the Ohio Business Deduction.  A business will receive up to 75% deduction on their first $250,000 of business income. This means up to $187,500 of business income will go untaxed by the state of Ohio no matter where it was earned.  The calculation removes the apportionment calculation that was part of the original deduction.  The remainder of the business greater than $250,000 will be taxed at the graduated rate of up to 3%.  The new deduction applies to both pass - through entities and proprietors alike.  The taxpayer should be careful though and take a closer look at what exactly constitutes business income.  Business income includes monies received in the ordinary course of a trade or business operation.

 

The deduction gets even better in 2016 when individuals can deduct 100% of their business income from their personal Ohio income tax.

 

Please remember to consider this tax deduction when preparing your return, and as always when in doubt, consult your advisor.

 

Calling the IRS Requires Patience

 

 

 

 

Cathy A. Robinson, CPA

Senior Manager

robinson@hwco.com

 

 

You may have read one of our most recent blogs in regards to identity theft. To reiterate, we advised those who are victims of fraud and identity theft to contact the IRS. What you should expect, however, is there’s a strong possibility you will be experience a wait time.

 

According to an article in Accounting Today, due to budget cuts the IRS customer service has suffered greatly. The article reports the IRS answered only 32 percent of taxpayer calls routed to a customer service representative. Hold time, for taxpayers able to get through, averaged 23 minutes.

 

Meanwhile, the Practitioner Priority Service Line was answered 45 percent of the time, with a hold time averaging 45 minutes.

 

You may also experience what the IRS calls a “courtesy disconnect.” This occurs when the IRS switchboard is overloaded and it cannot handle anymore calls. In 2014, this happened to 544,000 callers. This number skyrocketed in 2015 to an alarming 8.8 million people.

 

If you end up on the phone with an IRS agent remember you aren’t the only experiencing a wait time. Please be patient, and remember they’re there to help.

Good News For Ohio Nonprofits

Tony LaNasa
Managing Principal-Columbus Office
lanasa@hwco.com
 

As an HW Nonprofit Advisor I recognize the importance of our clients being informed of the latest changes occurring in the industry.

Ohio nonprofit organizations received great news on September 29th when the Ohio Revised Code Sec. 4123.01 was amended in HB 52 to not consider unpaid corporate officers or volunteers as employees for the purpose of workers’ compensation.  This great news is less costs to nonprofits in premiums, and more dollars for the nonprofits mission and purpose.

To read more on this subject visit the OSCPA's website or click here.

How to Protect Yourself From Identity Theft

Cathy A. Robinson, CPA
Senior Manager
robinson@hwco.com

 

 

Did you know an estimated 17.6 million people were victims of one or more incidents of identity theft in 2014? According to a report from the U.S. Department of Justice, seven percent of all residents age 16 or older were victims, with three percent of people experiencing the misuse of a credit card.  Over the last two weeks, we have discussed ways to recover from identity theft and social security fraud. So what can you do to protect yourself from the threat of identity theft?

 

If you’ve received a phone call from someone impersonating an IRS agent demanding you pay immediately, chances are it is a scam. Should you receive this type of phone call, report it. The IRS asks these phone calls and other IRS impersonation crimes be reported to the Treasury Inspector General for Tax Administration at 1-800-366-4484 or online at IRS Impersonation Scam Reporting.  

 

If you receive an email from the IRS, even if the logo from the IRS looks real, it is a scam. The IRS does not make initial contact via the phone or email. 

 

Steps to Protect Yourself: 

·         Keep your social security card and any documentation in a safe place. Do not carry your social security card. 

·         Be mindful about sharing your social security number, even when someone asks for it. Share it ONLY WHEN ABSOLTUELY NECESSARY.

·         Protect your financial information on your computer. In a world where everything is digital, you need to make sure to protect your computer. This means using firewalls, anti-spam and virus software, and routinely changing your password to protect yourself and your information.

·         Check your credit report annually.

·         The IRS recommends checking your social security administration earning statement annually.

·         Finally, protect any of your identifiable information by only providing the information when YOU initiate contact or know who is asking for it.

 

Recovering from identity theft is hard, but you can take the precautions to prevent it from happening with these few simple steps. 

Supplemental information for this article came from the below: 

IRS.gov

Bureau of Statistics

September Intern Recruiting...Coming to a School Near You!

Kirsten Thompson, CPA
Director of HR

Katie Primeau
HR Assistant

 

HW&Co. | CPAs & Advisors will be meeting with students and recent grads from Ohio colleges during the month of September at Accounting Career Fairs!  Check the career services calendar at your university and stop by the HW&Co. booth to introduce yourself.

 

HW&Co. already looking for Accounting Interns to work through busy season January through April 15, 2016. 

September Recruiting at Ohio Colleges for Interns:

College	Date
The Ohio State University	9/08/15
Bowling Green State University	9/09/15
Ashland University	9/10/15
Case Western Reserve University	9/10/15
University of Akron	9/15/15
Cleveland State University	9/16/15
Baldwin Wallace University	9/17/15
University of Dayton	9/17/15
Kent State University	9/17/15
John Carroll University	9/21/15

Ohio Tax Budget - The Impact on Your Wallet

Cathy A. Robinson, CPA
Senior Manager
robinson@hwco.com
 

Chances are you pay income taxes to the state that you reside in. For individual taxpayers and businesses in the state of Ohio, there's good news. 


On June 30^th, 2015, Governor John Kasich signed into law, the Biennial Budget Bill. So how exactly does this bill affect you?

 

If you are just an individual taxpayer, the bill reduces the personal income tax rates 6.3 percent for all tax brackets. This means the new top marginal bracket for individuals is 4.997 percent.

 

Attention shoppers: if you're a fan of shopping, you will be happy to know the state sales tax rate was not increased. It still remains at the current rate of 5.75 percent.

 

If you own an S Corporation, partnership, limited liability or a sole proprietorship in Ohio, there's even better news for you.  For fiscal year 2015, you will be able to deduct 75 percent of your Ohio apportioned business income up to $250,000. Also beginning in 2015, the excess business income will be subject to a three percent flat tax. The tax will be effective for 2015 and going forward. 

 

As a business owner, you should also be aware there are two tax credits that may now be able to save your company taxes since the law has changed the calculation. These credits are the Jobs Creation Tax Credit and the Jobs Retention Tax Credit.

 

For those who file the CAT tax, there's good news for you as well since the CAT tax rate was not increased due to the law.

 

If you have any questions in regards to the bill and how it will affect you, contact your accounting professional.

One Crucial Tip For Business Property Owners

Cathy A. Robinson, CPA
Senior Manager
robinson@hwco.com
 

Attention business owners: do you own property? Do you know what a cost segregation study is? If you don't, you should.  As a taxpayer, you can increase your cash flow significantly by segregating property costs.

 

Cost segregation studies are a tax planning tool that can help companies or individuals, who have constructed, purchased, expanded or remodeled any kind of real estate to increase cash flow by accelerating depreciation deductions.

 

When you purchase property, it does not just include a building, but it includes various components of the interior or exterior. These components, such as a parking lot, wiring, carpet, and electrical outlets may all qualify to be depreciated quicker than 39 years by the owner. The purpose of a cost segregation study is to identify all of the potential property related costs that could possibly be depreciated over five, seven or fifteen years.

 

The best time to have a cost segregation study completed is during the year of construction, purchase or remodel.  However, it still can be completed at a later date.  It is important to also consult your accounting professional when considering a cost segregation study as they will work closely with the professional who will be performing the study. 

 

In the end, a cost segregation study is a valuable and effective planning tool available to any owner of real estate property.  It offers the owner the opportunity to defer taxes, reduce overall tax burden and free up capital thus improving cash flow.  As a taxpayer who owns, renovates or constructs real estate,  you stand to benefit from having a cost segregation study performed on your property.  

 

How Will Same-Sex Marriage Affect Taxes?

The Supreme Court ruling in favor of same-sex marriage is a hot topic at the forefront of everyone’s minds.

 

How will the recent Supreme Court ruling in favor of same-sex marriage affect taxes? Does this ruling affect you?

 



Cathy A. Robinson, CPA
Senior Manager

Since the June 26^th ruling, individuals will see a change to tax filing requirements at the state level.  

 

Before the decision was made, same-sex couples were able to file joint returns at the federal level.  However, there was a catch to this method: most states did not recognize same-sex couples, and they were required to file individually or as head of household.

 

With the new ruling, there will be a streamlined process using the same filing status at the state returns. States will also begin to issue tax guidance on how same-sex couples can file their returns. In fact, Sen. Ron Wyden, a Democrat from Oregon and a member of the Senate Finance Committee, plans to introduce legislation this week that will provide gender neutrality for spouses. This bill will be called the Marriage Equality for All Taxpayers Act and would eliminate gender-specific references in the current tax code.

 

Tax guidelines are also expected to change to include treating all same-sex couples equally in regards to estate tax and other inheritance issues as married couples.

 

Under federal tax regulations, couples who live in states that currently do not recognize same-sex marriages will be now be able to:

·         Make unlimited gifts to one another without gift tax implications

·         Leave property to one another without survivor having to pay estate taxes

·         Leave IRA to surviving spouse as a "rollover" IRA

·         Be able to qualify as surviving spouse with Social Security benefits

5 Reasons Why Hiring Your Child Is A Good Idea

Cathy A. Robinson, CPA
Senior Manager

 

 

 

School is out for the summer. College and high school students alike will be in search of jobs. So how does it work if you own your own business and have a child looking for a summer job? Is it wise to hire them on? If you hire them, how does that work for deductions? There are five tips that can help to answer these questions.

 

1.)    Hiring your child can be an effective income-shifting strategy for a taxpayer that owns his or her own business.  In fact, there may be favorable payroll taxes that apply to you and your business. Many business owners who are parents do not understand is that should you hire your child, if they are under the age of 18, you are not required to withhold any payroll taxes.  This stipulation, however, only applies to Limited Liability Companies (LLC) and Sole Proprietorships.

 

 It should also be noted that if you own an S-corporation or a C- corporation, you also do not receive the benefit of avoiding payroll taxes when employing your child.  Instead, you will have to pay your child out of a corporation and have to withhold payroll taxes.

 

2.)    If preparing your child for the future is also of concern, hiring your child can also help to ease your mind.   With earned income they can contribute to a ROTH IRA. This is a great opportunity that would allow the earned income to be put into an account and later be pulled out for college.  You may be able to pull the money for college expenses penalty and tax free. 

 

3.)    You may have also heard of something called Kiddie Tax. For many parents who are business owners, this tax may be something you find yourself concerned with. However, earned income is not actually subject to Kiddie Tax, regardless of age.  This tax, in fact, only applies to unearned money or the child’s investment income.

 

4.)    So what does this mean for you the parent?  The first $6,300 of income made isn’t taxed by the federal government. By hiring your child, you keep that money in the family. Other deductions include claiming your child on your return as a dependent and taking that exemption, as well as the Child Tax Credit.

 

5.)    The most important thing to remember is that you need to keep your business legitimate even when hiring your child. Your child should only be paid for the services that they render to your business or property. Payments must also be made to your child and should be in accordance with the services they are providing.  It should go without saying that by hiring your child they should be performing a necessary task to the business so that they may be legitimately involved with it. Hiring them to do chores around the house will not qualify you for deductions, and could also involve setting yourself up to be audited.

 

In conclusion, hiring your child could be a good idea for a parent who is a business owner. It can help you pay for college later on down the road, give you a tax break and also teach your children the importance of having a work ethic. 

 

Consulting your accountant before making any financial move is always important, as they can help to guide you as you take the steps towards a better financial plan for you and your child. Be sure that you bring up the above points as your business takes the steps towards hiring your child.

 

 

 

This update is published periodically by HW&Co. as an information service to our clients, business associates and friends. It is general information and professional advice should be obtained before acting on any comments contained in this document.

Succession Planning...It Starts Now.

Cathy A. Robinson, CPA
Senior Manager

Succession planning isn’t always the first thought on your mind as a business owner or professional.

 

You have put in the time, the hard work, the blood, sweat and tears that have made your company or your profession what it is today. How could you possibly just hand over the reins to someone else?

 

The truth of the matter is simple … you can’t predict the unpredictable.  

 

There are several ways to leave a company:

 

Death

Retirement

Disability

Expected departure

Involuntary departure

 

Eventually your partnership with your company will end, and it is important to make sure you are on a path that is suitable for you, your company, and your clients. What would happen to your company or your partner should you unexpectedly pass away? What would happen to your practice if your partner wanted to leave to be closer to his or her children or grandchildren?  Or, what if your children didn’t want to take over the family business?  Do you have the necessary steps in place to help with any of these situations should they arise?

 

Addressing these questions sooner rather than later will help you deal with the unavoidable later on down the road.  In fact, there are two tips mentioned by lawyer Eliot M. Wagonheim in a blog on Huffington Posts that are especially important to keep in mind.

 

1)      Consider a valuation. Use an expert experienced with doing valuations in your industry for an appraisal of your company.

2)      Work out a purchase agreement with your partner utilizing your accounting professional to ensure everyone is receiving a fair share of the company.  Having a plan in place will help to avoid any possibilities of a sticky situation when someone leaves, expectedly or unexpectedly.

 

Talking with your family members is also important if you own your own business. If you plan on passing the business down, make sure they have a serious interest in taking it over. If they do not, you need to start planning for succession or the possibilities of selling off the business.

 

If you are in the professional service industry, it is also important to sit down and have a conversation with your clients.  Planning according to what is best for the client and the long-term relationship with your company is crucial. The best and smartest succession plans begin with a thoughtful plan that incorporates the wants and needs of your existing and developing clients.

 

Spending just a few hours to put a plan into place now can keep you or your partner from putting fires out later, while helping to manage emergency situations later should they arise.  The earlier you begin planning for the next stage, the better the chances of your company’s continued success will be.



This update is published periodically by HW&Co. as an information service to our clients, business associates and friends. It is general information and professional advice should be obtained before acting on any comments contained in this document.

IRS Issues Reminder for Tax-Exempts About May Deadline

Accounting Today announced on May 7^th that the IRS had sent out a reminder on May 6^th to tax exempt organizations. This reminder informs tax-exempt organizations that filing 990-series information returns must be done by May 15^th.  By sending out the reminder they also had hoped to also caution organizations about unneeded personal information and against using Social Security numbers. Instead they’re asking organizations to e-file.

 

The IRS is urging organizations to e-file to help with the reduction of inadvertently including Social Security Numbers and other unneeded personal information.

 

If tax-exempt organizations fail to file annual reports for three consecutive years their federal exemptions are then revoked on the due date of the third filing.

 

Have questions? Contact Nonprofit Director Brandon Miller at (216) 831-1200.

This update is published periodically by HW&Co;. as an information service to our clients, business associates and friends. It is general information and professional advice should be obtained before acting on any comments contained in this document.

Ohio Health Care Association's Long Term Care Recap

Recently, our HW Healthcare Advisors attended the Ohio Health Care Association's Long Term Care spring convention.

Director of Healthcare and principal, Rosemary Orlando, and Senior Manager, Ryan Kramer, had the privlege of speaking at the convention.

Their presentation was entitled ICF-IID Strategies for Changing Times....What is Your Game Plan?
Tips include:
-Ohio Overview
-National & State Trends
-HB 64 Provisions (ICF/Waiver
-And more!

If you would like to see the full presentation here! 

Visit www.hwco.com for more details!





This update is published periodically by HW&Co;. as an information service to our clients, business associates and friends. It is general information and professional advice should be obtained before acting on any comments contained in this document.

The perks of busy season

Every year our firm provides an array of busy season perks for our staff.

From catered dinners to jeans days on Fridays. Keeping our team happy and motivated is our biggest priority.

Our Principals sincerely thank all of our staff for all of their hard work and dedication this season!

(Indian's Home Opener)

(Sundae Monday_that's our CEO scooping ice cream!)

(National Cereal Day!)

(Raising Awareness for Epilepsy)

FASB Issues Update-April 7th, 2015

Anthony S. LaNasa, CPA, CFE

Principal

lanasa@hwco.com

 

 

 

On April 7^th, 2015 the FASB (Board) issued Accounting Standards Update (ASU) No. 2015-03, Interest: Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.  It was part of the accounting board initiative to simplify U.S. GAAP.

 

So what will this new accounting update mean?

 

It means that the costs for issuing debt should appear on a balance sheet as a direct deduction from the debt’s value. The Board stated that these amendments won’t affect the recognition and measurement of the costs for issuing debt.

 

This update is effective for all companies for reporting periods beginning after December 15, 2015.  Adopting these amendments early is also being allowed by the Board, including any financial statements that have not been previously issued.

 

As companies adopt the amendments, they should revise balance sheets for periods being presented prior to the effective date. Once a company adopts the changes, it is required to disclose the applicable information for a change in an accounting principle.

 

The FASB Board is really focusing on simplifying and making U.S. GAAP more readable and understandable.  Lastly, does this change make sense because are debt issuance costs really assets that provide a future economic benefit?  My opinion to that answer is no.

This update is published periodically by HW&Co. as an information service to our clients, business associates and friends. It is general information and professional advice should be obtained before acting on any comments contained in this document.

The HW Group Goes Purple!

Around the world people are wearing purple to show their support of epilepsy awareness. Annually, March 26th represents a global show of support of epilepsy awareness.

Did you know that 50 million people world wide live with epilepsy and that 50% of those affected don't know the cause? Did you also know that that 2.2 million Americans are living with epilepsy? The facts are scary, but true.

We are proud to raise awareness of such an important cause and invite each and every person to join us in wearing purple next year.

Want to learn more about epilepsy? Or want to know how you can help make a difference? Click on any of the links below for more information.

http://epilepsyinfo.org/

http://www.purpleday.org/aboutepilepsy

First Major Changes to Not-For-Profit Accounting

 

 

Anthony S. LaNasa, CPA, CFE

Principal at HW&Co.

 

On March 4^th, 2015 the Financial Accounting Standards Board voted to release a proposal that will overhaul how universities, charities, foundations, and other not-for-profit organizations convey how they spend their time and how they invest their money.  With this decision came some dissatisfaction with this standard. The uneasiness that came from the decision is even stronger than anyone had initially thought.  This was especially conveyed by the dissenting votes of FASB Chairman Russell Golden and Vice Chairman James Kroeker. It should also be mentioned that two of the five board members who voted in favor of the proposal did so with reservations.

 

The chief concern that Golden has concerning this decision was his belief that the proposal would create too many reporting differences between not-for-profit organizations and for-profit business.  He also believes that the projected changes would go too far.  Kroeker, who was unable to attend the meeting and voted by proxy, said in a prepared statement that he didn’t agree with the changes that would be made to the not-for-profit groups cash flow statements.

 

Although there was concern about the changes to the cash flow statements for members like, Lawrence Smith, the benefits of changing to the proposal weren’t enough to make him vote against it.

 

“I didn’t object to it and I voted for the changes made because I think when you look at the two cash flow statements side by side, one under direct and one under indirect, it’s pretty obvious the direct method conveys more easily understood information than indirect,” he stated.  He further commented on his decision to vote in favor of the proposal by praising the changes made to the basic performance statement.

 

"Is there flexibility? Yes. There's flexibility up the wazoo in terms of how management designates things, but it's clearly laid out and that's the important thing," he said. "It clearly lays out what funds are available to an entity in terms of furthering its mission."

 

The FASB also would like to improve the statement of activities by including the presentation of an operating measure with the information about expenditures related to the organization’s mission and donated funds available to be spent.

 

The changes in the proposal will be the first major changes to not-for-profit accounting and reporting in over 20 years.  My opinion is that the proposal is long overdue and the changes will enhance not-for-profit financial statements and provide the users of the financial statements, like donors, an increased understanding of the financial performance of Organizations.

 

 

This blog is published periodically by HW&Co. as an information service to our clients, business associates and friends. It is general information and professional advice should be obtained before acting on any comments contained in this document.

 

The Role of Quality Measures in Long-Term Care Reimbursement

Barb Notardonato-Cole

Principal

After attending the OHCA Winter Conference last week and listening to Medicaid Director John McCarthy speak, I was again struck by how important quality measures are going to be for future reimbursement dollars.  Deputy McCarthy’s presentation discussed the “Balancing Incentive Program”, a plan whose goal is to create a unified system for long-term care access and to link payments to person-centered outcomes.  He also touched on “Payment Innovation” initiatives being explored by the Governor’s Office of Health Transformation.  The Office of Health Transformation website lists the goal of Payment Innovations as “to design and implement new health care delivery systems to reward the value of services, not the volume”.   In other words—payment based on quality.

Quality is a great buzzword, and everyone wants to provide it, but sometimes it can be really tricky to measure.  I have many long-term care clients who do a great job of delivering quality.  What they don’t do, however, is a great job of tracking it.  It’s a balancing act.  Do you use resources to provide the care or to document the care?  With skilled nursing facility staffing already being squeezed by cuts in Medicaid and Medicare reimbursement, it can be difficult to allocate those resources to do the necessary documentation.

Quality can be very subjective; yet we are increasingly being called on to quantify it.  Sometimes the quantitative measures don’t reflect the true story.  For example, Hospital A may have much higher mortality rates than Hospital B.  However, Hospital A likely takes patients with much higher acuity, or specializes in a newer experimental treatment for those patients who are more critically ill. On the surface, mortality rates may seem like a good statistic to analyze because it is so easy to obtain.  But it is rarely a good indicator of hospital quality.  This is the downside of “quantifying quality”.

It is becoming clear (even without a crystal ball), that health care dollars are going to be tied to quality and divided up among larger groups of providers.  Skilled nursing facilities may find themselves splitting episodic payments with home and community-based providers, hospitals, and others, and their share will be based on quality and outcomes.  Facilities will need to focus efforts on properly measuring and reporting quality statistics. It has to become a priority.  I also believe that technology will continue to play a big role in this.  To the extent that measuring quality can be automated, it will alleviate some of the tug of war between using resources to provide the care versus documenting the care.

Payment models for long-term care are evolving.   The facilities that become the most successful may not be the ones providing the best quality, but they will be the ones that do the best at documenting it. Facilities that thrive and grow in the future will be good at both.