Saturday, August 15, 2015
Saturday, May 30, 2015
Wednesday, December 17, 2014
Standard mileage rates will change slightly in 2015
// Journal of Accountancy
Optional standard mileage rates for use of a vehicle will change a little for 2015, the IRS announced on Wednesday, with the business use rate going up and the medical and moving rate going down (Notice 2014-79). Taxpayers can use the optional standard mileage rates to calculate the deductible
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Monday, September 15, 2014
19 Years Until Social Security Trust Fund Runs Out
// AICPA Insights
(Photo credit: Wikipedia)
The government is projecting that the Social Security Trust Fund could run out of cash by 2033. While 19 years might sound like a long time, many of us have clients in their 30s and 40s who want to know that they'll receive all of the Social Security benefits due to them when they retire. Of course, CPAs and those of us who offer financial planning and estate services caution our clients not to depend solely on their Social Security checks to carry them through their later years.
It's alarming that the money may, indeed, run out—and even though this news is nothing different that what we've already heard about the money—I can't help wondering how many Americans aren't familiar with how dire the situation may be.
In late July, the Social Security Administration released its Board of Trustees annual report to Congress on the long-term financial status of the Social Security Trust Funds. According to the SSA, the combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance, are projected to be depleted in 2033, at which time 77 percent of benefits will be payable. Perhaps, though, more alarming, is the announcement that the DI Trust Fund will run out in 2016, with 81 percent of benefits payable.
Two other statements were included in the report:
- The combined trust fund reserves are still growing and will continue to do so through 2019. Beginning with 2020, the cost of the program is projected to exceed income.
- The projected actuarial deficit over the 75-year long-range period is 2.88 percent of taxable payroll – a 0.16 percentage point larger than in last year's report.
As a CPA, what can you do to help your clients? It's not exactly a time to panic, but it's our job to inform and educate our clients on what the reality is and how they can come to terms with retirement planning. Of course, there are lots of ways to plan for retirement—and the sooner, the better. Still, it's difficult to convince a Millennial or Gen-Xer that they need to look ahead some 30 to 40 years and realize they probably need more money than they thought they would need to retire and live a certain lifestyle. It also may be even more difficult to tell a 65-year-old man or woman that they won't have enough money to last their lifetime.
The key is to find the time to sit down with your clients and help them plan for the future. If you're one of thousands of CPA personal financial planners, with or without the personal financial specialist (CPA/PFS) credential, you're already in a unique position to advise them on what they ought to do.
Conversely, if you're a CPA providing tax and accounting services, you already know what your clients have in savings and investments, but you may not have the expertise to give advice on retirement planning. If this is the case, partner or consult with a CPA financial planner or CPA/PFS. What this boils down to is a matter of trust; your clients will trust you for being proactive with them rather than letting them figure this out on their own.
The AICPA's PFP Section has comprehensive resources with guides, articles and archived webcasts from national experts on retirement planning and many other areas. PFP resources include The CPA's Guide to Social Security Planning -- a practical guide for CPAs as they help their clients make decisions about Social Security – featuring plainly stated information, commonly asked client questions and advisor solutions, and references to SSA publications for more details (free for PFP/PFS members, with an excerpt for non-members).
Theodore J. Sarenski, CPA/PFS, CFP, AEP, CEO and President, Blue Ocean Strategic Capital, Inc. Ted's firm specializes in delivering customized service for individuals, retirement plans, non-profit organizations, endowments and foundations.
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Wednesday, August 27, 2014
Congressman: Md. Health Exchange Under Review For Possible Fraud « CBS Baltimore
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Tuesday, August 19, 2014
Tuesday, April 15, 2014
Senators Convince Social Security to Stop Seizing Tax Refunds for Decades-old Overpayments
A pair of senators have called on the Social Security Administration to end the policy of seizing taxpayers' refunds to hold them accountable for decades-old errors made by the agency that led to the overpayment of benefits, and the agency has agreed to do so.
"While this policy of seizing tax refunds to repay decades-old Social Security overpayments might be allowed under the law, it is entirely unjust," the senators wrote in a letter Friday to the Acting Commissioner of the Social Security Administration, Carolyn Colvin. "Grice and other families like hers are unfairly being held responsible for decades-old errors at the Social Security Administration – even though many of these taxpayers were children at the time the error was made. Too many of these families are now finding themselves trapped in a mess of paperwork and red tape that is both costly and time-consuming."
These garnishments are possible because of a provision in the 2008 Farm Bill, which allowed the Social Security Administration to pursue claims owed to it for overpayments beyond what had previously been a ten-year statute of limitations. However, the law gives the Social Security Administration the discretion not to pursue repayment of the debt in cases where doing so would be "against equity and good conscience."
Senators Boxer and Mikulski also asked the agency to provide a summary of its efforts to recover overpayments that are more than a decade old, and to detail how many of the cases involve individuals who were minor children at the time the mistake was made.
On Monday, the Social Security Administration announced an immediate halt to the practice.
"I have directed an immediate halt to further referrals under the Treasury Offset Program to recover debts owed to the agency that are 10 years old and older pending a thorough review of our responsibility and discretion under the current law to refer debt to the Treasury Department," said Colvin in a statement. "If any Social Security or Supplemental Security Income beneficiary believes they have been incorrectly assessed with an overpayment under this program, I encourage them to request an explanation or seek options to resolve the overpayment."
Senator Charles Grassley, R-Iowa, had also sent letters to the Social Security Administration and the Treasury, asking about how they interpreted their authority to pursue old debts. He also welcomed the change in policy Monday.
"Payment beneficiaries have to be accountable for overpayments from the government, but the government has to be reasonable and use common sense," he said in a statement. Is it fair and reasonable to pursue debts from the surviving children for payments to the parents, no matter how long ago any overpayment occurred? The agency is right to revisit that point. However, it shouldn't take embarrassing media coverage and lawsuits for this step to take place. Agencies should be able to apply common sense and fairness without a public firestorm. And Congress needs to be careful about legislating one line in an unrelated bill that an agency then develops into something possibly beyond what Congress intended. The statute of limitations language didn't give the agency permission to collect debts where the debtor is deceased. It's not clear where that authority came in. There's a difference between collecting decades-old debt from the debtors and decades-old debt from their kids. I still expect responses to my letters."
Sunday, April 13, 2014
Apr 13, 2:12 PM EDT
CHANCES OF GETTING AUDITED BY IRS LOWEST IN YEARS
BY STEPHEN OHLEMACHER
WASHINGTON (AP) -- As millions of Americans race to meet Tuesday's tax deadline, their chances of getting audited are lower than they have been in years.
Budget cuts and new responsibilities are straining the Internal Revenue Service's ability to police tax returns. This year, the IRS will have fewer agents auditing returns than at any time since at least the 1980s.
Taxpayer services are suffering, too, with millions of phone calls to the IRS going unanswered.
"We keep going after the people who look like the worst of the bad guys," IRS Commissioner John Koskinen said in an interview. "But there are going to be some people that we should catch, either in terms of collecting the revenue from them or prosecuting them, that we're not going to catch."
Better technology is helping to offset some budget cuts.
If you report making $40,000 in wages and your employer tells the IRS you made $50,000, the agency's computers probably will catch that. The same is true for investment income and many common deductions that are reported to the IRS by financial institutions.
But if you operate a business that deals in cash, with income or expenses that are not independently reported to the IRS, your chances of getting caught are lower than they have been in years.
Last year, the IRS audited less than 1 percent of all returns from individuals, the lowest rate since 2005. This year, Koskinen said, "The numbers will go down."
Koskinen was confirmed as IRS commissioner in December. He took over an agency under siege on several fronts.
Last year, the IRS acknowledged agents improperly singled out conservative groups for extra scrutiny when they applied for tax-exempt status from 2010 to 2012. The revelation has led to five ongoing investigations, including three by congressional committees, and outraged lawmakers who control the agency's budget.
The IRS also is implementing large parts of President Barack Obama's health law, including enforcing the mandate that most people get health insurance. Republicans in Congress abhor the law, putting another bull's-eye on the agency's back.
The animosity is reflected in the IRS budget, which has declined from $12.1 billion in 2010 to $11.3 billion in the current budget year.
Obama has proposed a 10 percent increase for next year; Republicans are balking.
Rep. Ander Crenshaw, R-Fla., chairman of the House subcommittee that oversees the IRS budget, called the request "both meaningless and pointless" because it exceeds spending caps already set by Congress.
Koskinen said he suspects some people think that if they cut funds to the IRS, the agency won't be able to implement the health law. They're wrong, he said.
The IRS is legally obligated to enforce the health law, Koskinen said. That means budget savings will have to be found elsewhere.
Koskinen said he can cut spending in three areas: enforcement, taxpayer services and technology. Technology upgrades can only be put off for so long, he said, so enforcement and taxpayer services are suffering.
Last year, only 61 percent of taxpayers calling the IRS for help got it. This year, Koskinen said he expects the numbers to be similar. To help free up operators, callers with complicated tax questions are directed to the agency's website.
"The problem with complicated questions is they take longer," Koskinen said.
Your chances of getting audited vary greatly, based on your income. The more you make, the more likely you are to get a letter from the IRS.
Only 0.9 percent of people making less than $200,000 were audited last year. That's the lowest rate since the IRS began publishing the statistic in 2006.
By contrast, 10.9 percent of people making $1 million or more were audited. That's the lowest rate since 2010.
Only 0.6 percent of business returns were audited, but the rate varied greatly depending on the size of the business. About 16 percent of corporations with more than $10 million in assets were audited.
Most people don't have much of an opportunity to cheat on their taxes, said Elizabeth Maresca, a former IRS lawyer who now teaches law at Fordham University.
Your employer probably reports your wages to the IRS, your bank reports interest income, your broker reports investment income and your lender reports the amount of interest you paid on your mortgage.
"Anybody who's an employee, who gets paid by an employer, has a limited ability to take risks on their tax returns," Maresca said. "I think people who own their own business or are self-employed have a much greater opportunity (to cheat), and I think the IRS knows that, too."
One flag for the IRS is when your deductions or expenses don't match your income, said Joseph Perry, the partner in charge of tax and business services at Marcum LLP, an accounting firm. For example, if you deduct $70,000 in real estate taxes and mortgage interest, but only report $100,000 in income.
"That would at least beg the question, how are you living?" Perry said.
Koskinen said the IRS could scrutinize more returns - and collect billions more in revenue - with more resources. The president's budget proposal says the IRS would collect an additional $6 for every $1 increase in the agency's enforcement budget.
Koskinen said he makes that argument all the time, but for some reason, it's not playing well in Congress.
"I say that and everybody shrugs and goes on about their business," Koskinen said. "I have not figured out either philosophically or psychologically why nobody seems to care whether we collect the revenue or not."
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