Barnard Vogler & Co. announced last month the hiring of Joel Learner.
Over the past 20-plus years, Learner has worked in financial leadership roles in a variety of industries, including healthcare, manufacturing, software development, nonprofit and wholesale distribution. He provides CFO, accounting and back-office support to clients, as well as support for tax services and audit engagements.
Learner earned a Bachelor of Science in civil engineering with a minor in business administration from the University of Nevada, Reno. He also earned a Master of Business Administration with a concentration in finance and accounting from the University of California, Davis, Graduate School of Management.
Important Changes to the Child Tax Credit
The American Rescue Plan Act, enacted in March 2021, made changes to the Child Tax Credit which will benefit many taxpayers.
The IRS will pay half of the Child Tax Credit in the form of monthly payments starting July 15, 2021, unless the tax filer contacts the IRS to decline this option. Taxpayers who receive the advance payments will then claim the other half when they file for their 2021 income tax return.
These tax changes will only apply to the 2021 tax year. Though temporary, these changes may present important cashflow and financial opportunities. It is also significant to note that the monthly advance of the child tax credit is a substantial change. The credit is normally part of your income tax return and reduces your tax liability. Choosing to have the tax credit advanced will affect your refund and the amount due when you file your return.
How much to expect and the qualifications:
The child tax credit advanced payments are based on a number of factors, including the age of your children and household income.
In order to qualify for the child tax credit advanced monthly payments, you (and your spouse if you file a joint tax return) must have:
You may take full advantage of the tax credit if your income (principally, your modified adjusted gross income) is less than $75,000 if filling alone or $150,000 if filing jointly and $112,500 for head of household filers. After which the credit begins to phase out above those thresholds.
Families with high incomes, for example married filing jointly filers with an income of $400,000 or less or other filers with an income of $200,000 or less, will generally get the same credit as before (usually $2,000 per child that qualifies) but may also choose to receive monthly payments.
In general, taxpayers will not need to do anything to receive these advanced payments as the IRS will use the information it has on file to begin issuing child tax credit payments.
IRS’s child tax credit update portal
Taxpayers can update their information using the IRS’s child tax credit and update portal to revise their information, such as filing status or number of children. You may also use their online portal to opt-out of advance payments or check the status of payments.
There is also a non-filer portal to use for certain situations if you qualify.
Should you wish to discuss these changes and how they affect you, please do not hesitate to contact us.
Congratulations to Nhit Hernandez and Jared Streshley on their promotions to senior accountants. Read more below!
Barnard Vogler & Co. announced March 25 that Nhit Hernandez and Jared Streshley have been promoted to senior accountants.
Hernandez joined Barnard Vogler & Co. in 2019 as a staff accountant, per a press release from the firm.
She earned a Bachelor of Science in business administration with majors in accounting and international business from the University of Nevada, Reno. She has completed her CPA exams and is working towards becoming a licensed CPA, according to a March 25 press release.
Streshley joined Barnard Vogler & Co. in 2019 as a staff accountant and has experience in auditing for nonprofits and government entities. He earned a Bachelor of Science in business administration with an emphasis in accounting, also from UNR.
Bill Saylor was featured in the Northern Nevada Business Weekly. He discussed rethinking retirement and how to handle investments during uncertain times. Read more below!
For many Americans, a top resolution every new year is a simple goal: save more money.
Achieving that in 2021, however, may not be so simple. For many, it will be much more difficult and may have to be done a bit differently, especially when it comes to saving for retirement.
In fact, nearly four out of 10 people said they will be in “survival mode” in 2021, focusing on dealing with day-to-day money matters, according to a survey by Fidelity, the nation’s largest 401(k) provider.
After all, many Americans faced a financial setback in 2020, whether it was a job loss, unexpected expenses, giving financial assistance to family and friends or dealing with a health emergency, the survey found.
As a result, many people dipped into the largest chunk of money they have — their workplace retirement savings accounts.
Nearly 60% of Americans withdrew or borrowed money from an IRA or 401(k) during the pandemic, and nearly 66% used those retirement savings to cover basic living expenses, according to a Kiplinger/Personal Capital survey of 744 people ages 40 to 74 with at least $50,000 in retirement savings.
Bill Saylor, a partner with Barnard Vogler & Co., a CPA firm in Reno, said pulling out retirement funds is a common overreaction during economic downturns.
“Pulling out retirement funds that you don’t need right now is a big mistake,” Saylor said in an interview earlier this year. “Some people pulled out funds because they were uncertain or maybe were getting a little ‘tinfoil-hat-worried’ about what was going to happen.”
To that end, Saylor said another trend brought on by the pandemic is some people have stopped contributing to their retirement plan or their outside IRA during the pandemic.
“And that’s a bad thing to do,” he explained. “Hoarding those funds for what might happen is always a bad idea because when those funds are in there, they’re better able to grow for you; they’re better able to provide for you longer term.
“Yeah, there was a bunch of volatility in the market but, really, the market has come back very strongly,” he continued. “Plus, I would always point out to colleagues and clients of mine, no matter what, the market’s still going to outperform putting it under your mattress or a shoebox somewhere.”
Zach Boyd, a tax manager at Eide Bailly in Reno, agrees.
“If you’re financing your retirement, make sure that you’re putting your money away because the market returns are pretty good,” Boyd said. “There’s really nowhere else to put your money — with interest rates being low, bonds don’t make sense. You might as well throw it in stocks. That’s the thing, there’s always money pumped into the economy, so there’s always a lot of cash floating out there right now.”
Some people may be tempted to “get rich quick” and jump into day trading due to the volatility in the stock market. Boyd suggests resisting the urge to sell.
“It’s making sure that you’re disciplined with your plan, and making sure that you don’t panic and sell,” he said. “I would advise to not be too aggressive and not think you’re a professional trader.”
Boyd said that some older workers and near-retirees that stayed with their stock portfolio possibly had their retirement plans accelerated by the pandemic.
Others, Saylor said, may retire early because of the unique health barriers posed by the coronavirus.
“They’re going to look at it and say, this is enough, I’ve worked 40 years and I don’t need to work another couple years under whatever the new normal looks like,” he said. “There’s some people who may come out of the labor market and retire early.”
In the third quarter of 2020, about 28.6 million Baby Boomers — those born between 1946 and 1964 — reported that they were out of the labor force due to retirement, according to the Pew Research Center.
That equated to 3.2 million more Boomers than the 25.4 million who were retired in the same quarter of 2019. Until last year, the overall number of retired Boomers had been growing annually by about 2 million on average since 2011.
Notably, the job losses associated with the COVID recession may be contributing to the jump in Boomer retirements, the Pew Research Center reported. In other words, some have been forced into retirement.
As such, some older workers that are still employed may decide to delay their retirement, Saylor said.
Though stocks continue to perform well, lower bond yields caused by the pandemic might make it harder to make ends meet on a fixed income, he noted.
“Folks who are uncertain are going to work longer,” he said. “When your income is most likely going to be fixed, if you’re retired, and you’re going to have significant additional expenses that you can’t necessarily deal with — notably, medical expenses, which go up after we retire as we get older. And those sorts of things are outside of our control.”
Congratulations to Bill Saylor on his recent promotion to a director at Barnard Vogler & Co! Read more about Bill below.
Barnard Vogler & Co. announced this month that Bill Saylor, CPA, CGMA, was named a director at the Certified Public Accounting firm.
Saylor joined Barnard Vogler & Co. in 2018 as a senior manager, with more than 25 years of industry and public accounting experience, according to a March 11 press release.
He assists individuals, businesses and nonprofits with tax planning, compliance and consulting services, and he manages financial statement audits of contractors, nonprofits and governments, among other duties.
Saylor earned a Bachelor of Science in business administration with an emphasis in accounting from the University of Nevada, Reno.
He is a licensed CPA in Nevada and California; is a member of the American Institute of Certified Public Accountants and Nevada Society of Certified Public Accountants, and serves on the Board of Directors of the United Way of Northern Nevada and the Sierra.
Estimated taxes are a practice of pre-paying taxes typically on a quarterly basis. The total amount of these payments is based on the income during the year and the taxpayer’s estimated tax liability. The income in this calculation is income not subject to any other form of withholding. Normally, this includes self-employment income, dividend income, rental income, interest income, or capital gains.
Under United States law, citizens with income are required to pay tax in some form. Many American entities are required to pay taxes through estimated taxes. This practice helps ensure the government will receive its taxes and allow entities to not have to pay their taxes in a lump sum on Tax Day. However, not all entities must make estimated payments. It is essential for all taxpayers to know where they fall and what taxes they are obligated to pay under law.
Have to Pay Estimated Taxes, Yes or No?
The type of organization and the amount of income it generates determines what taxes it pays. The following entities must make estimated tax payments if they expect to owe $1,000 or more after any withholdings when the tax return is filed:
Corporations that expect to owe $500 or more are also required to make estimated tax payments.
Most entities are obligated to pay estimated tax payments by law, but there are certain circumstances where this is not the case. In situations where an individual’s primary source of income is salary/wage based, these individuals may file a Form W-4 with their employers to avoid making estimated tax payments. In this form, individuals can request your employer withhold more from your earnings to pay for the tax on the other types of income noted above, circumventing the need for estimated tax payments. This is done by filling out a certain line on Form W-4, where they state the additional tax you wish your employer to withhold from each paycheck.
As discussed before, the tax owed to the government depends on the income or expected income of the taxpayer. To help simplify this process, the IRS provides a free tax withholding estimator on their website. A link to this tool is provided below:
Taxes must be paid and never purposely dodged. The penalty for purposeful tax evasion is quite punitive with imprisonment and massive fines being the most likely result. However, the IRS understands not all improper tax practices are intentional. Accidents will happen, so the IRS has created a less punitive system of consequences for those who unintentionally file improper tax payments. A common consequence is a payment penalty of 20% of the underpayment.
Should It Stay or Should It Go?
When it comes to the choice of paying estimated taxes when it is not required by law, the most appropriate solution for an individual is based on their own personal preferences and their current financial situation. If you prefer to have more capital on hand for spending/investing and income is precarious, you may prefer not to pay estimated taxes. This would keep your capital more liquid and available for new opportunities and or problems that may arise in life at the cost of potential penalties and interest on the underpaid estimates. On the other hand, if you are risk-averse with a secure financial situation, you may prefer to pay estimated taxes and avoid lump sum payments and more complicated filings come Tax Day.
If you have any questions regarding estimated taxes or general accounting questions, please call the professionals of Barnard Vogler & Co., at 775.786.6141 or visit our contact form on our website, http://bvcocpas.com/contact-us/.
Over the last year, the COVID-19 pandemic has limited business activity and strained the economy and job market. This has forced the federal government to step in and provide a variety of assistance programs, where small business owners/managers can access the resources they need to continue operations. One area where small business owners may find their needed financing is in the federal programs supported by the Consolidated Appropriations Act, 2021.
Consolidated Appropriations Act, 2021
The Consolidated Appropriations Act, 2021 was passed by Congress on December 21 and was signed into law on December 27. It serves as a continuation of the many programs and actions created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was originally passed on March 27, 2020. The main purpose of the CARES Act and the following Consolidated Appropriations Act is to provide financial support to American businesses and citizens struggling through the economic hardships created by the pandemic. Over $2 trillion was set aside to support Americans in the CARES Act, with an additional $900 billion being dedicated to continuing this support with the Consolidated Appropriations Act.
This support took a variety of different forms, from an additional round of stimulus checks to increased unemployment benefits. However, an observant business leader should pay special notice to the actions taken by the United States Small Business Administration (SBA). The two most important actions that should be noted are the restarting of the Paycheck Protection Program (PPP) and the new stipulations on American loans.
With $325 billion in the Consolidated Appropriations Act being dedicated to supporting small businesses, business owners are given the perfect opportunity to receive the resources they need to sustain their business. This opportunity presents itself in the format of generous loans. These loans fall into one of two categories with SBA 7(a)s, 504s, and microloans making one group, while the other group consists of loans created by the PPP. While both loan groups can be helpful to support small businesses, the effects and structures of each group are starkly different.
SBA 7(a)s, 504s, and Microloans
SBA 7(a)s, 504s, and microloans are standard loans that have been part of the American financial system for a considerable amount of time. Yet, the new stipulation that governs these loans are quite unprecedented. Loans in this category will have their payments of principal and interest be paid for by the SBA for the first six months if they were created within six months of the CARES Act or approved between February 1 and September 30, 2021. These payments will be capped at $9,000 a month per borrower. The SBA has also been authorized to waive borrower and lender fees for these loans.
Paycheck Protection Program (PPP) Loans
PPP loans were created specifically by the CARES Act and Consolidated Appropriations Act to provide much-needed capital to small businesses. While the program ended its first run in the summer, it has been restarted and funding extended in the Consolidated Appropriations Act to begin accepting loan applications again. These loans are unique as they are fully forgivable if certain requirements and stipulations are met. Some key stipulations include:
Some businesses are also eligible to apply for another PPP loan if they have already received one during the first run of the PPP and have met certain requirements. For more information about all the stipulations and functions of PPP loans, please contact our firm.
If you are considering using this source of funding, please contact Barnard Vogler & Co. for more information about how to access the funds and how to properly use them in regard to SBA guidelines.
Drew, J. (2021, January 14). Guidance issued for PPP first-draw loan increases, reapplications. Journal of Accountancy. https://www.journalofaccountancy.com/news/2021/jan/ppp-first-draw-loan-increases-reapplications.html.
Flynn, M. C., Pear, A. M., Connell, L. D., James K. Dyer, J., Gillison, R. S., Mitchell, T. A., & Peo, V. B. (2020, December 28). New PPP Changes in the Stimulus Bill: Second PPP Loan for Hardest-Hit Existing PPP Borrowers, Additional Categories of Forgivable Expenses, Tax Deductibility for Expenses Paid with PPP Proceeds, Lender Liability Limitations, Simplified Forgiveness Application for Loans of $150,000 or Less, and Other Changes. Lexology. https://www.lexology.com/library/detail.aspx?g=78c0d14e-1eba-434c-96f9-1f7bbca1fa44.
The New Stimulus Bill’s Sweeping Changes to the Paycheck Protection Program. (2020, December 29). https://www.huschblackwell.com/newsandinsights/the-new-stimulus-bills-sweeping-changes-to-the-paycheck-protection-program#:~:text=For%20SBA%207(a)%2C%20504%2C%20and%20microloans%20made,capped%20at%20%249%2C000%20per%20month.
Reosti, J. (2020, December 23). New stimulus package clears path for increased SBA lending. American Banker. https://www.americanbanker.com/news/new-stimulus-package-clears-path-for-increased-sba-lending.
Schmidt, M. (2020, December 31). Small Business Owners Get More PPP Relief, Expanded Loan Options. https://www.fa-mag.com/news/new-stimulus-package-offers-more-relief-for-small-business-owners-59592.html.
Snell, K. (2020, March 26). What’s Inside The Senate’s $2 Trillion Coronavirus Aid Package. https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package.
Terrell, K. (2020, December 28). Congress Passes New Stimulus Relief Bill. AARP. https://www.aarp.org/politics-society/advocacy/info-2020/covid-stimulus-relief.html.
The year 2020 brought unprecedented changes, from economic challenges, major shifts in the job market and the passing of legislation to assist citizens and businesses. It is likely that 2021 will continue to serve up historic changes, as the economy gets back on track, many of our citizens return to the work force and regulations continue to shift. We have compiled a list of items to be aware of as you prepare for 2021 tax season.
Communication and Organization | Expect new forms, credits, and requirements in 2021; so it is critical that businesses stay organized and communicate with their tax preparer. Last year’s tax return, accurate information regarding all expenses, revenue and deductions along with all employee information including annual payroll records, will need to be readily available.
Paycheck Protection Program (PPP) | As of December 27, 2020, expenses paid under the provisions of the PPP program are also tax deductible, and proceeds from forgiven PPP loans are tax-exempt.
Tax Day | Tax Day for Partnerships and S Corporations is Monday, March 15, while calendar year C Corporations and individuals have until Thursday, April 15 to file a return or extension. Tax preparation this year is more involved due to PPP funds, and other provisions in the 2021 COVID relief bills, the CARES act and the FFCRA as well as Tax Cuts and Jobs Act from 2017.
New Tax Credits and Loan Programs | Major changes to the business tax code for 2020 include new tax credits and loan programs to help businesses weather the effects of COVID-19. For businesses that received any governmental assistance during 2020 or that opted to defer tax payments, it is vital to ensure the use of the loans, grants or extensions received are accurately tracked and reported when filing taxes. New programs and changes include:
• CARES act
• Economic Injury Disaster Loan (EIDL)
• Employee Retention Tax Credit (ERTC)
• Families First Coronavirus Response Act (FFCRA)
Individuals | COVID legislation most notably included economic impact payments for individuals of $1,200 and $600 respectively, more generous rules on distributions from IRAs and other retirement plans, a suspension of the RMD requirement for older Americans, as well as a $300 above-the-line deduction for charitable contributions for taxpayers who don’t itemize. Other provisions provided renter protections and student loan deferments to those struggling financially.
Tax Cuts and Jobs Act | The Tax Cuts and Jobs Act significantly changed Sec. 274 of the Internal Revenue Code by eliminating the deduction for any expenses considered entertainment, amusement, or recreation. Of course, December 2020 legislation then provided a 100% deduction for meals (but still 0% for entertainment) for 2021 and 2022 when purchased from a restaurant. While intended as a benefit for a restaurant industry decimated by COVID, this is still a welcome break for small businesses.
Thank you to our community! We are honored to be a top-three finalist for Best Accounting Firm in the Northern Nevada Business Weekly’s Best in Business awards!