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By Keelie Bishop kbishop@bvcocpas.com
Many individuals, regardless of generation, face the overwhelming question as to if they will ever be able to afford to retire. Too often many people do not save enough to retire. According to a U.S. Government Accountability Office review, about 48% of households had no retirement savings in 2016 and even when people are saving, their retirements won’t last very long (10-20 years). In response, Congress has made it a point to focus on retirement legislation.
For the first time in over a decade, lawmakers are working on passing comprehensive retirement reform. For example, on May 23, 2019 the U.S. House of Representatives passed the SECURE (Setting Every Community Up for Retirement Enhancement) Act by a margin of 417 to 3. This is legislation that aims to encourage retirement savings by increasing access to retirement plans.
The changes currently include: making it easier for small businesses to band together to offer 401(k) plans, requiring businesses to let long-term, part-time workers become eligible for retirement benefits and repealing the maximum age for making contributions to traditional individual retirement accounts (right now, the age is 70½), and changing the required minimum distribution age to 72 for certain retirement accounts.
The bill is intended to increase the amount of tax credit that the government will give to small businesses for having plans up to a maximum of $5,000 per year, from $500 per year. For businesses that automatically enroll employees, the maximum is $5,500.
This particular bill is now in the Senate, but is not the only bill aiming towards retirement reform. In addition there is also the RESA (Retirement Enhancement and Savings Act) bill and the Social Security 2100 Act currently being worked on. As a result it is expected that there will be significant changes to come.
By Brittany Capurro bcapurro@bvcocpas.com
Receiving an IRS notice can be stressful. The most important thing to do is not to panic, and to read the entire notice before taking any action. There are a number of different reasons one might receive a notice, so make sure you understand exactly why you received the notice. You also need to verify that the notice is legitimate and not a scam to get your personal information or money from you.
According to the IRS website, the IRS sends notices and letters for the following reasons:
Your notice will explain why you received it and instruct you on the steps you need to take to handle the issue. Keep a copy of all IRS correspondences with your tax records. If you are unsure about the information in the notice contact your accountant for help.
Do not ignore the notice or wait to take action. These are usually time sensitive with potentially severe consequences if nothing is done in response to a notice. If your notice or letter requires a response by a specific date be sure to comply with this to minimize any additional interest and penalty charges and to preserve your appeal rights if you don’t agree.
The IRS website is a good resource to help you determine if the IRS notice you received is real or if it is scam. The IRS will not initiate contact with a tax payer to request personal or financial information, so if this what the notice is requesting, it is probably a scam.
By David Schaper, CPA dschaper@bvcocpas.com
Do you have a large capital gain and don’t want to pay tax on this income immediately? Investing in an opportunity zone can be advantageous and the Reno CPAs at Barnard Vogler & Co. can help you with this process.
An opportunity zone is a designated area that has been certified by the U.S. Treasury Department as a low-income community that could benefit from private investment. A map to these areas in Nevada can be found at http://www.diversifynevada.com/programs/opportunity-zones/. An investor can go through a certification process by filing Form 8996 if they own property within this zone that they are planning to develop. An investor can also roll the proceeds of their capital gain, whether stock, business property, or property in California into a corporation or partnership that has already been certified, has property in an opportunity zone anywhere in the country, and is seeking private capital.
The mechanics of the gain and tax deferral are quite simple. If you have a capital gain then these are ordinarily taxed at 15% to 23.8%. If you put any portion of these gains into an eligible opportunity zone investment within 180 days, then the tax is deferred until December 31, 2026 at which time 85% of the deferred gain’s tax is due. If the investment is continued to be held after this date then the remaining gain is not taxable. This is a huge benefit as long as you have cash to pay the 85% of the tax on the original gain in 2026. Do you have any other questions on potential pitfalls or fine print of opportunity zone investments? 
Then a Nevada CPA at Barnard Vogler & Co is here to help. Call us at (775) 786-6141 or contact us at information@bvcocpas.com.
By Bill Saylor, CPA bsaylor@bvcocpas.com
If you are an executive director or accountant for a nonprofit, you likely already know about the changes effective this year for calendar and fiscal year nonprofits related to financial statement accounting and reporting. For everyone else, here is the 30,000 foot summary.
There are changes to the classification of amounts received with donor restrictions and restrictions imposed by boards. 
There are enhanced disclosures around transparency and liquidity of cash. Starting this year all nonprofits are required to present expenses by both natural expense category (for example, salaries, rents, etc.) and by function (that is, program activities, management and general, and fundraising). Previously, only certain nonprofits were required to present the functional expense information.
More narrowly, organizations with endowments with losses are required to report additional information in the financial statements including the original gift, the current fair value, and the amount of any deficiency. And, nonprofits that receive donations of property and equipment are now required to release any such items from donor restrictions when they are placed in service instead of releasing them ratably over time.
Be sure you’re allowing extra time this year for the audit and that you are planning to allocate additional staff time and resources to support the process this year. Much of the additional information mandated by the new standards will have to be researched and determined by the organization.
And that’s just on the accounting side.
On the tax side, the Tax Cuts and Jobs Act changed certain employee benefits routinely provided to nonprofit employees such that they now must either be included in nonprofit employee wages or be reported as unrelated business taxable income (UBTI) to the nonprofit. These include any items that are considered qualified transportation fringe benefits (bus passes, parking passes or reimbursements, etc.) as well as any parking facility used for employee parking including, potentially, any parking lot you own or lease, and any on-site athletic premises used by employees. Additionally, UBTI is now required to be reported by each separate business line by the nonprofit.
Finally, changes under the TCJA will likely make it beneficial for fewer individual taxpayers to itemize their tax deductions. For middle income taxpayers that are now using the standard deduction, that could result in fewer charitable contributions across nonprofits broadly. While we know that most folks donate based on ideology, the tax benefit doesn’t hurt!
Overall, its going to be exciting so buckle-up and settle in for the ride!
By Leslie C. Daane, CPA ldaane@bvcocpas.com
Under the recently passed Tax Cuts and Jobs Act (TCJA), all miscellaneous itemized deductions that were subject to the two-percent floor were eliminated. Some of the deductions eliminated that fall under this category include unreimbursed employee expenses, investment fees, and tax preparation fees to name just a few that may impact you individually.
One such deduction that you may not be as familiar with is the excess deductions allowed a beneficiary on termination of an estate or trust. This deduction typically arises when an estate or trust is terminated and in the year of termination expenses are in excess of income. This “excess deduction” is then passed out to the beneficiary to report on their individual income tax return. Under the TCJA this deduction appears to have been eliminated.
The AICPA has provided a letter of comment to the IRS in response to Notice 2018-61 concerning this specific issue. These excess deductions can include expenses that are not limited to the two-percent floor on the estate or trust return but are “above the line” deductions. These include fiduciary fees, attorney fees, and accountant fees. Many times these are not paid until the final year thus resulting in the deductions exceeding the income in the final year. The AICPA’s position is that the beneficiaries should be allowed to deduct these expenses in the same manner as the trust or estate would have, “above the line.”
Treasury and the IRS intend to issue regulations to clarify if trusts and estates may continue to deduct these “above the line” deductions. 
However, it is unclear as to the outcome on the deductibility of “excess deductions” at the individual level.
As we launch into tax season, there are still many areas of the TCJA that have not been adequately addressed to date. I expect this will result in more extensions and possibly more amended returns once they get around to addressing the questions still unresolved.
By Tony Carolla tcarolla@bvcocpas.com
Taxpayers face uncertainties regarding the effect that the Tax Cuts and Jobs Act will have on their 2018 return. The IRS has acknowledged this with the release of Notice 2019-11, Relief from Addition to Tax for Underpayment of Estimated Income Tax by an Individual.
To avoid an underpayment penalty prior to the 2018 tax year, an individual’s combined withholdings and estimated payments would need to be greater than or equal to the lesser of 90% of the current years tax or 100% of the preceding years tax. (110% if the individual’s adjusted gross income in the previous year exceeded $150,000). With the release of Notice 2019-11, the IRS has allowed a taxpayer to waive the underpayment penalty on those who have paid at least 85% of their tax liability by January 15, 2019.
This waiver is not automatically applied to your 2018 return. To request the waiver taxpayers must file Form 2210 – Underpayment of Estimated Tax by Individuals, Estates, and Trusts. Individuals will need to determine their eligibility for the waiver and if the waiver applies, check the waiver box and include the statement “85% Waiver” with the return.
While this waiver is good news for individuals, the AICPA has recommended that the IRS and Department of the Treasury do more to assist tax payers. On January 28, 2019 the AICPA made recommendations to lower the threshold of underpayment penalty relief to 80%, make the relief process automatic, establish a process to grant taxpayers penalty relief for reasonable cause, and extend the penalty relief to businesses and other entities.
The AICPA letter addressed concerns with taxpayers’ inability to accurately determine their tax liability due to the substantial uncertainties and lack of guidance. The AICPA explained that it could be unreasonably burdensome for taxpayers to rely on prior year tax liability in situations where there was a significant increase in prior year income. The AICPA also addressed the need to apply for penalty relief, and felt it more appropriate to have the relief granted automatically. The AICPA also recommended that a process for penalty relief be established for those who do not meet the requirements but have reasonable cause, and to extend the relief to all tax paying entities.
by Keelie Bishop kbishop@bvcocpas.com
As the Federal Government has now officially been shut down for the longest length of time in U.S. history and the Tax Cuts and Job Acts is one of the largest tax reforms in 30-years, many challenges are expected for the upcoming tax filing season. Accountants are still waiting on the final word from the IRS for certain regulations of the Tax Cuts and Jobs Act that would affect clients’ 2018 returns, including the 20 percent qualified business income deduction. 
Yet, due to the government shutdown, answers aren’t likely to come in time for at least the beginning of the 2019 filing season.
About 70,000 IRS employees – roughly 88% of the workforce — have been furloughed. In preparation for the upcoming filing season, the Trump Administration has announced that it is planning to recall a significant portion of the IRS workforce without pay. With this recall, the IRS is expecting to only be able to answer 60 to 70 percent of phone calls. This has also created a lack of training for the IRS employees regarding the Tax Cuts and Jobs Act as employees have been furloughed during crucial times for the IRS. It is unsure whether the IRS will be able to actually provide answers to those searching for tax assistance.
To top it off, the National Treasury Employees Union has filed a lawsuit alleging the administration is violating the Fair Labor Standards Act (FLSA) by requiring federal employees to work without pay during the partial government shutdown. 
This includes the IRS employees that are being recalled to assist with the upcoming tax filing season.
Regardless, the IRS will be open the individual filing season on January 28, 2019 and, as of the date of this post, have announced that all deadlines will remain the same, and refunds will be processed.
By David Schaper, CPA dschaper@bvcocpas.com
There have long been campaign promises of simplifying the federal tax code, with pledges of ultimately filing personal taxes on a postcard. To be amenable to this, the IRS recently released the draft 1040 tax return for individuals to take into consideration all of the tax changes that are effective for 2018. The size of this 1040 has been dwindled to 2 half-pages and eliminated more than 50 lines compared to the 2017 version.
Does this mean that your taxes have been simplified and will require fewer pages, time, and effort to file? Most likely the answer is no, especially if you are a business owner. Various income and deductions items have been moved to an additional schedule, Schedule 1, which must be attached to the 1040. This schedule includes lines for alimony, business income, capital gains, farm income, real estate, pass-through activity from partnerships and S corporations, health savings account deductions, and IRA deductions, among others. So instead of these tax items being on the front of the 1040, they have simply been shifted to a separate schedule that must be attached to the 1040.
The new 1040 also summarizes other information that must be detailed on a separate schedule, which was previously on the 1040. This information includes a form to detail the various types of tax liabilities, a form to detail various nonrefundable credits and a form to detail other federal tax payments and refundable credits.
The 1040 has become simpler to file for 2018 if you only have wage income, interest income, and do not own a home. Otherwise, it has not become simpler to file as many politicians have promised, they have merely put this information onto other forms that must be included in your tax filing. 
Combine these separate schedules with new complex tax laws for qualified business income deductions and many other changes and a Reno CPA may still be needed to assist you in your filings.
The Tax Cuts and Jobs Act brought to mainstream attention the use of temporary tax provisions by Congress. 
As temporary provisions near their expiration dates several options exist for Congress to choose from. Congress may decide to keep the provision temporary by extending the expiration date, make a temporary provision permanent, or simply allow the provision to expire. When a temporary provision has expired, Congress can also extend the provision retroactively; as was the case in 2018 when Congress retroactively extended the majority of 2016 expired provisions with the passing of the Bipartisan Budget Act of 2018.
As in years past, 2017 saw the expiration of many of these temporary provisions. Twenty eight provisions expired at the end of 2017. Of these, twelve were related to business entities, thirteen to energy credits, and three to individuals.
The three individual provisions that expired will impact a large number of taxpayers.
The first of three expired individual provisions was the tuition and fees deduction. We first saw this provision in the Economic Growth and Tax Relief Reconciliation Act of 2001. This provision allowed a qualified individual to take an above the line deduction on up to $4,000 of qualified education expenses. This temporary provision has been extended in the past several times and if you were a qualified individual in 2017 and still a student in 2018 this change will impact your tax return.
The second expired individual provision was the mortgage insurance premium deduction. This provision allowed individuals to deduct the entire premium for mortgage insurance on a qualified residence as an itemized deduction on Schedule A. We first saw this provision in 2006 with the Tax Relief and Health Care Act. Like the tuition and fees deduction, this provision has been extended several times in the past. If you had a qualified mortgage in 2017 and 2018 and paid mortgage insurance, this expiration will impact your tax return in 2018.
The final individual temporary tax provision that expired in 2017 was the exclusion in income of the cancellation of mortgage debt on your primary residence. 
Typically, when a debtor receives debt forgiveness the IRS requires this to be included as income. This temporary provision allowed for qualified mortgage debt forgiveness to be excluded. We first saw this deduction with the passing of The Mortgage Forgiveness Debt Relief Act of 2007. If you received mortgage forgiveness on a qualified residence in 2018, you will now likely be required to include this in your taxable income in 2018.
The three expired individual tax provisions described in this post have been used in tax planning and filing for at least a decade. Many of us have used them in the past, and may have been planning on using them in 2018. It is impossible to determine the impact this may have when combined with the increase of the standard deduction in 2018 without being familiar with your individual tax situation. If you are concerned with the impact these changes may have on your 2018 tax return, consult with your trusted tax professional. For more detailed reading on the subject of this post see Congressional Research Service Report R45347.
By Jarad Clark, CPA jclark@bvcocpas.com
It is no secret that the majority of our friends and family are on social media. But small business is taking on an expanded roll into the usually social environment. “Friend me”, “Follow me” or “Find me on LinkedIn” are the new aged business card exchange. Gone are the days of stacks of business cards on young professional’s desk, now we share LinkedIn profiles for contact information. Here are a few statistics about the power of social media in 2018:
In 2018, there are 3.196 billion global social media users. A 42% penetration of the worlds population.
There are few other platforms that you can reach such a wide array of potential clients with relatively cheap advertising.
These stats show the power that social media has become in the marketing and business development world. Social media is the most likely place that your potential clients, employees, and business partners are going to hear about you. Now is the time to utilize the platforms at hand to gain an edge on your competition.
