All posts by Nancy McClelland

Deadline Approaching for Overseas Taxpayers

National Association of Tax Professionals shared an important notice today:

Taxpayers living overseas qualify for an automatic two-month extension to file their tax returns. For 2016, the due date is Thursday, June 15. To claim the two-month extension, attach a statement to the tax return explaining which of these two situations applies:

  1. You are a U.S. citizen or resident alien living outside of the United States and Puerto Rico and your main place of business or post of duty is outside of the United States and Puerto Rico; or
  2. You are a U.S. citizen or resident alien in military or naval services on duty outside of the United States and Puerto Rico.

If your client can’t meet the June 15 deadline, you can use Form 4868 to request an extension to file until October 17.

More info from the IRS: U.S. Citizens and Resident Aliens Abroad

2017 Scaling New Heights Conference

A year ago, I attended my first Woodard Scaling New Heights conference. This is one of the three conferences that accounting technology geeks like me get really excited about — the other two being Accountex (formerly Sleeter Technology) and QB Connect (which I’ll be attending later this year for my first time). I absolutely loved it. I’d been to Sleeter for two years in a row, and as much as I enjoyed attending, one of their successes was helping me realize that I really want to be a QuickBooks-centric practice… I’m not interested in branching out into non-QB accounting options such as Xero, Wave, Zoho, etc. I only know this because of excellent presentations such as Greg Lam and Michelle Long‘s overviews — so I’m indebted to them — but colleagues there suggested that maybe SNH was a better choice for me, since it’s more QB-centric. (They were right.)

One problem remains. I’m not one for motivational speeches. I run my own CPA firm, so if I’m going to take time off work and pay for conference fees, travel & lodging, I’d better be spending that time and money learning something that will help me when I get back to the office — measurable results, real-life advice, tips & tricks that I can put into action to improve my clients’ lives and make me more efficient. Motivational speeches and entertainment just aren’t “worth” my time — I sit through them wishing I’d spent the time doing almost anything else. While we’re at it: I also can’t stand sales pitches. Nor information that is so general, I feel I’ve heard it all before. Finding the right conferences can be a bit of a challenge.

I was a little disappointed in the last Sleeter Technology Conference (now Accountex) I attended. In my opinion, there are too many “keynote” sessions… ones that are meant to “fire up” the audience and get us excited, or big names that we can brag about having seen in-person. These sessions are the only ones that are not concurrent with other learning sessions, meaning that 1) there’s nothing else to do during these sessions, and yet 2) there are so many concurrent sessions that I can’t attend because — well, they’re simultaneous. I wish they’d offer some of those during the keynotes so that I don’t miss the chance to go to more of them.

Yes, I know I can play “hooky” during these sessions — as my colleagues regularly remind me — but honestly, come on: I’m paying to be there. Ideally, the entire conference would be so amazing that I never want to skip out on it (though it is challenging, since they’re always held in interesting places). It might be different if my boss paid my way, but I am the boss! I can’t do billable work while I’m in sessions, so I’m effectively giving up my salary for the entire trip; plus, all of the costs are coming out of my own pocket. I’m not inclined to cheat myself out of much-valued education.

Furthermore, the breakout sessions offered by vendor-partners (presenters that are also at the conference expo, hawking their wares to us) are too often — as mentioned above — 1) either a sales pitch, which is no fun at all and just fosters resentment, or 2) more likely, the vendor has been threatened so hard NOT to make it a sales pitch, that they only offer extremely general “insights” into the industry that motivated them to create a solution. Except… see, we’re already aware of these “insights” — that’s why we attended the session in the first place: to find solutions to the problems we’re already aware exist. What we want when we attend these vendor-presented sessions is in-between these angles: a brief description of the industry issues, and then a specific explanation of how they attempted to solve these issues, and a demo of how it works. That’s not sales — that’s education on a particular piece of software, which allows us to evaluate programs based on how they work, not based on a marketing team’s list of bullet points. (I especially love vendor sessions that are on one particular topic and invite more than one vendor to illustrate their solution to it. That way we get a side-by-side, and can ask questions candidly.)

But the best sessions of all are offered by independent practitioners showing us how they use these various products to solve real-life problems that they’ve come across in their own practices. And that is what I got at last year’s Woodard “Scaling New Heights” conference.

Yes, as with their big competing conference, there were too many keynote “general sessions”. In fact, Joe Woodard’s initial presentation about how Poseidon was going to flood the room (but it’s okay… because he had a “magical force field around us” ???) — was so bad that I was terrified I’d made a serious mistake in attending. (To reiterate: I desperately wish they’d offer an alternative to the general sessions for those of us who prefer to focus on specific learning.)

But — WOW — did they make up for these with some of the best breakout sessions I’ve ever attended. Hector Garcia’s Quickbooks sessions were all incredible, with real-life tips and best practices. I passed the QBO certification with flying colors, no doubt in part to his training. Will English, who I initially met at Sleeter (and who writes for Intuitive Accountant), gave an insightful session on POS solutions — specifically ones that work for retail inventory management. Norman Axelman did a couple great sessions on Excel tricks — he was very generous with his time and eager to solve everyone’s issues. Stacy Kildal was one of my favorite presenters, as she nailed the two-prong approach that most appeals to me: 1) new technologies 2) applied in real-life situations. Her session on QBO apps was insightful and inspiring, and I wish there were a three-hour-long session where I could just watch her work. David Leary from Intuit was one of the most sincere “big-deal” presenters I’ve ever seen; to some extent he restored some of my trust in QB. His eagerness to answer questions and explain the “why” behind big-company decisions was refreshing.

One recommendation to organizers (and DIY attendees) — I always go through the directory of exhibitors and sort them by type of solution: financial analysis, business management/workflow, inventory, publications, POS systems, payroll, 1099/W-2 prep, etc. So it certainly would be helpful if the exhibitors were color-coded by industry, to help us decide who to visit in our limited time away from sessions.

I’m headed back there this week, eager to soak up as much information as I can, and to avoid as many references to the “Yeti” of our practice challenges that we all have to face. (I’m not kidding; that’s the theme.) And if that turns you off as much as it does me, please reconsider, because there are 98 pages of training session information — and I’m just talking about the summaries of the sessions, not the handouts. Plenty of non-Yeti material for us all.

Stacey Byrne will be offering Restaurant Industry Tips & Tricks; MB Raimondi will be teaching the QB Desktop Advanced ProAdvisor Certification Exam Prep; Michelle Long is teaching Apps 101; and Stacy Kildal and Ingrid Edstrom are teaching the session that most interests me: a People’s Choice Peer-Led Apps Training that compares Fathom and LivePlan.

I hope to see you at Scaling New Heights!

Source: 2017 Scaling New Heights Schedule – Woodard

Upcoming Webinar on Internal Controls Self-Assessment

The National Society of Accountants for Cooperatives is offering a webinar on Monday, June 19 entitled “Internal Controls Self-Assessment: How to recognize warning signs and prevent potentially problematic situations”.  This short webinar promises to be useful and informative not just for cooperatives and their accountants, but for any business that may have as-yet unidentified risks inherent in their internal controls.

It’s being presented by Bill Judd and Jim Halvorsen of CliftonLarsonAllen LLP — I’ve had the pleasure of meeting Jim at a couple of the National Cooperative Business Association’s “Co-op Professionals Conference” get-togethers, and I’m sure they’ll do a great job with this topic.  Jim will be presenting later this year at the NSAC Tax, Accounting & Finance for Cooperatives conference as well.

Source: NSAC Cooperative Learning Network – Internal Controls Self-Assessment-How to recognize warning signs and prevent potentially problematic situations

Tips from ‘Accounting Today’ on Securing Client Data

The Security Summit, a partnership between the IRS, state tax agencies and the private sector tax industry, is sharing information and tips aimed at tax professionals that help them protect their clients’ data from those who would try to hack into the data they use to file their clients’ taxes.

In addition to this advice from the IRS, Accounting Today offers seven specific things you can start doing now to help you protect client data:

1. Audit your data protection practices
2. Make sure your clients know about email security
3. Don’t ignore physical security
4. Is your WiFi secure?
5. Are your files regularly backed up?
6. Prohibit employees from accessing client data on their personal computers
7. Encourage your clients to take an active role in monitoring their data security

See the full article for more info: 7 tips for keeping client data secure | Accounting Today.

By taking a proactive approach to protect your clients’ data, rather than waiting for a successful attack on your accounting practice, you can potentially avoid the financial harm your clients could experience should their data be stolen.

Best Small Business Blogs of 2017

I’m proud to announce that once again this blog was chosen as one of FitSmallBusiness.com‘s Best Accounting Blogs of 2017.  This year, they took all their “best of” blogs for small businesses and sub-divided them into fields, such as accounting, retail, finance, marketing, e-commerce, tech, insurance, real estate, legal, etc.  It’s solid one-stop shopping for the entrepreneur wanting to research topics that affect them.

As was the case last year, I’m especially pleased to be included in such impressive company, such as The Accountex Report (formerly the Sleeter Technology blog) and StacyK Academy (a favorite resource and speaker).

I started this blog as a space to store and index my research on various client accounting and tax issues somewhere within reach and easy-to-find, where others in my situation might also benefit from it.  I had no idea it would develop such a following.  The best part about the information age is being able to share our knowledge and experiences with each other — thanks for contributing!

Source: The Best Small Business Blogs of 2017

Bonnie Nagayama In Memoriam

I received the extremely sad news during the height of tax season, and am only now finding the words to express my sense of loss.

Bonnie Nagayama was a gifted and educated CPA and QuickBooks ProAdvisor who regularly contributed to our community with lectures, webinars, articles, videos, and her excellent blog… and she was a wealth of information. Generous beyond compare, and a resource to us all; quick to assist in any way possible; and eager to help make connections in the industry with an eye toward providing client value. In a statement from her company, McWilliams & Associates:

With a sad heart we need to inform you of Bonnie Nagayama’s passing on March 3, 2017. Bonnie had worked with QuickBooks since the early 90s and was a member of the Intuit Reseller Program since the beginning of the program. She will be missed by all those in the QuickBooks community.

Both Insightful Accountant and The Progressive Accountant have written short articles on her passing as well, and many in the community have taken time to share their memories online, such as Doug Sleeter, who called her, “A good friend of mine and someone who helped everyone around her.” (Bonnie was one of the chief consultants for The Sleeter Technology Group and a frequent presenter at the Sleeter Conference.)  I especially appreciated Clayton Oates’ moving personal tribute.

Bonnie always made time for me, and as a leading QuickBooks reseller, made time for my clients when they needed to purchase the right bookkeeping solution for their situation. I appreciated that she’d call when she had a client in my area who needed assistance, and our network of CPAs, accountants, bookkeepers and ProAdvisors would work to make sure they got the best service possible. She was dedicated and hardworking, but also personable and kind.  Her quiet demeanor was a calming influence, and her dedication to providing the best continuing education possible was inspiring.

She will be greatly missed.

Taxing the Sharing & Freelance Economies – 4/12 FREE Webinar

One of my absolute favorite sources for continuing education — CPAAcademy.org — is back with a FREE session on “Taxing the Sharing & Freelance Economies”, this upcoming Wednesday, April 12th.

Millions of Americans earn money through the sharing and freelance economies, and the number of participants in those economies is expected to grow. The lack of automatic tax withholding from many of the participants in these new economies, along with novel compensation arrangements, has given rise to significant compliance issues for the Treasury. Further, the lack of IRS guidance to participants in the sharing economy has increased compliance risk and has also failed to inform market participants of potential tax benefits to which they may be entitled. This presentation will discuss the potential tax pitfalls and tax benefits for participants in the sharing and freelance economies.

If it weren’t six days before my biggest deadline of the year, I’d be right there with you. Crossing my fingers that they archive it.  If you attend, please share what you learned in the comments section below!

Source: CPA Academy

Coordinating 529/ESA Plan Withdrawals With Education Expense Benefits

I’m seeing some confusion about this from tax clients this season, so I realized it’s worth explaining a few of the basics regarding education expenses, 529 college savings plan/ Coverdell ESA distributions, and tax credits and deductions.

There are five main tax benefits used to defray the cost of education:

  1. American Opportunity Tax Credit
  2. Lifetime Learning Credit
  3. Deduction for Qualified Education Expenses
  4. Student Loan Interest Deduction
  5. 529 or Coverdell Plan Contributions and Distributions

The American Opportunity Tax Credit reduces your federal tax bill by up to $2,500 per year for each eligible college student for whom you pay qualified tuition expenses. It can be claimed on behalf of an undergraduate for four years. And if you have more than one child in college at the same time, you can claim for each eligible child. The amount of the credit is calculated as 100% of the first $2,000 in qualified tuition and fees costs paid, plus 25% of the next $2,000 paid for such fees. For lower income taxpayers who don’t owe $2,500 in tax, up to $1,000 of the credit is refundable. Source: Coordinating 529 Plan Withdrawals With The American Opportunity Tax Credit

But there are limitations here: The credit phases out if you make too much money, you can’t claim any portion that was already paid with Pell Grant money, and you cannot claim the AOTC (or any of the education benefits) based on expenses that were also used to calculate the tax-free portion of a distribution from a 529 college savings or prepaid plan, or a Coverdell Education Savings Account (ESA).

The Lifetime Learning Credit is nonrefundable but can reduce the amount of tax you owe by up to $2,000. There is no limit to the number of years this credit can be claimed, but eligible expenses are only those charged by the school for attendance that were not paid for with the Pell Grant or 529 college savings or Coverdell ESAs.  Source: http://finance.zacks.com/can-claim-education-tax-deduction-used-pell-grant-pay-5114.html

The Tuition and Fees Tax Deduction is not allowable if you take one of the educational credits — and it’s usually not as good a deal. But if you don’t qualify for one of the credits (which frequently happens, if your income is too high or you’re not able to take your dependent as an exemption), this deduction can be used to lower your taxable income by up to $4,000. You do not have to itemize deductions to get this deduction; instead, it adjusts your reported income.  Obviously, lowering your income is not as good as reducing your tax with a credit, but it’s still a nice benefit.  As with the others, the deduction is limited to the portion of expenses not paid for with the Pell Grant or 529 college savings or Coverdell ESAs.  Source: http://finance.zacks.com/can-claim-education-tax-deduction-used-pell-grant-pay-5114.html

The Student Loan Interest Deduction is something that may be a benefit in future years — but be careful: predatory for-profit colleges and universities are constantly touting this benefit as a reason to take out large loans, but the benefits often do not come to fruition.  For one, there’s a pretty low limit as to how much you can deduct each year — only $2,500 — and if you exceed that limit, the balance does not carry forward.  That college probably also promised you that getting a degree would make you much more valuable to society, and your income would skyrocket — but the loan interest deduction phases out pretty quickly as your income rises, so chances are, if they’re right… most of this interest will not end up being deductible.  Source: https://www.irs.gov/taxtopics/tc456.html

529 College Savings Plans and Coverdell Educational Savings Accounts are both great vehicles to saving for college.  Similar to a Roth IRA, these contributions are not deductible at the federal level, but all of the principal, as well as the interest, dividends and capital gains — all growth — is non-taxable upon distribution if used for qualified education expenses.  (This is pretty fantastic.)  Add to it that most states will allow a deduction for contributions, and you’ve got a no-brainer for college savings.  The important bits to remember here are: each state has pretty strict rules about what qualifies as a plan; each state decides whether the withdrawal is free of income tax or simply deductible from income; and — here’s the theme of my post — if you take a distribution to pay for educational expenses, you may not also take one of the other educational tax benefits above.  529 plans and ESAs are pretty complicated; make sure to compare and contrast, and understand the potential penalties, before signing up.  Source: http://www.360financialliteracy.org/Topics/Paying-for-Education/College-Savings-Options/529-Plans-vs.-Coverdell-Education-Savings-Accounts

I want to recommend two websites with excellent examples of how to combine these plans to get the best overall tax benefits.  Scroll part-way through to see the “example” sections, and see if any of these scenarios come close to matching your own situation.  Have fun!

Winter Storm Extension: IRS Gives Affected Businesses Extra Time to Request 6-Month Extension

S-Corporations and Partnerships had a deadline of March 15th this year to file their returns or request an extension.  However, because of Winter Storm Stella, which hit portions of the Northeast and Mid-Atlantic, the IRS granted affected businesses an additional 5 days to do so.

Business taxpayers who were victims of the storm, and unable to file their tax return by the due date of March 15, can request an automatic extension (by filing the usual Form 7004) on or before March 20, 2017.  Important tip if filing Form 7004 by paper: eligible taxpayers taking advantage of this relief should write “Winter Storm Stella” on their Form 7004 extension request.  However, the fastest and easiest way to get an extension is still to file this form electronically.

Source: Winter Storm Extension: Many Businesses Have Extra Time to Request A Six-Month Extension

IRS Data Retrieval Tool for FAFSA Will Be Unavailable For “Several Weeks” — What Are The Alternatives?

Important news from the IRS and the U.S. Department of Education Office of Federal Student Aid:

The IRS Data Retrieval Tool on fafsa.gov and StudentLoans.gov is currently unavailable. We are working to resolve the issue as quickly as possible. However, at this time, the IRS anticipates the online data tool will be unavailable for several weeks.

The online FAFSA and IDR application tool itself remains operational — it’s just the IRS’s DRT portion, which provides tax data that automatically fills in some of the financial information on the application.  The income information needed to complete the FAFSA form and apply for an IDR plan can be found on your tax return.  If you didn’t keep a copy of your tax return, you may be able to access the tax software you used to prepare your return or contact your tax preparer to obtain a copy (please note that many preparers charge a small fee for a copy, since you should be saving the pdf they send you in a safe, easily retrievable place).

If you are unable to get a copy of your tax return, visit www.irs.gov/transcript to view and download a summary of your tax return, called a tax transcript, at Get Transcript Online.  You must verify your identity to use this tool — review the rigorous identity authentication requirements for Secure Access before attempting to register.  You also may use Get Transcript by Mail or call 1-800-908-9946, and a transcript will be delivered to your address of record within five to 10 days.

While the Data Retrieval Tool is offline, the IRS offers other ways for students and families to find the tax information they need to complete student financial aid applications.

As part of a wider, ongoing effort at the IRS to protect the security of data, the IRS decided to temporarily suspend the Data Retrieval Tool (DRT) as a precautionary step following concerns that information from the tool could potentially be misused by identity thieves.

Source: Internal Revenue Service (IRS) and U.S. Department of Education Office of Federal Student Aid (FSA) Statement‎ about the IRS Data Retrieval Tool (DRT)