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Now’s the time to start thinking about “bunching” miscellaneous itemized deductions

SS&C Staff - Monday, August 29, 2016

Many expenses that may qualify as miscellaneous itemized deductions are deductible only to the extent they exceed, in aggregate, 2% of your adjusted gross income (AGI). Bunching these expenses into a single year may allow you to exceed this “floor.” So now is a good time to add up your potential deductions to date to see if bunching is a smart strategy for you this year.

Should you bunch into 2016?

If your miscellaneous itemized deductions are getting close to — or they already exceed — the 2% floor, consider incurring and paying additional expenses by Dec. 31, such as:

• Deductible investment expenses, including advisory fees, custodial fees and publications

• Professional fees, such as tax planning and preparation, accounting, and certain legal fees

• Unreimbursed employee business expenses, including vehicle costs, travel, and allowable meals and entertainment.

But beware …

These expenses aren’t deductible for alternative minimum tax (AMT) purposes. So don’t bunch them into 2016 if you might be subject to the AMT this year.

Also, if your AGI exceeds the applicable threshold, certain deductions — including miscellaneous itemized deductions — are reduced by 3% of the AGI amount that exceeds the threshold (not to exceed 80% of otherwise allowable deductions). For 2016, the thresholds are $259,400 (single), $285,350 (head of household), $311,300 (married filing jointly) and $155,650 (married filing separately).

If you’d like more information on miscellaneous itemized deductions, the AMT or the itemized deduction limit, let us know.


Don’t roll the dice with your taxes...

SS&C Staff - Tuesday, August 09, 2016

For anyone who takes a spin at roulette, cries out “Bingo!” or engages in other wagering activities, it’s important to be familiar with the applicable tax rules. Otherwise, you could be putting yourself at risk for interest or penalties — or missing out on tax-saving opportunities.



You must report 100% of your wagering winnings as taxable income. The value of complimentary goodies (“comps”) provided by gambling establishments must also be included in taxable income because comps are considered gambling winnings. Winnings are subject to your regular federal income tax rate, which may be as high as 39.6%.


Amounts you win may be reported to you on IRS Form W-2G (“Certain Gambling Winnings”). In some cases, federal income tax may be withheld, too. Anytime a Form W-2G is issued, the IRS gets a copy. So if you’ve received such a form, keep in mind that the IRS will expect to see the winnings on your tax return.



You can write off wagering losses as an itemized deduction. However, allowable wagering losses are limited to your winnings for the year, and any excess losses cannot be carried over to future years. Also, out-of-pocket expenses for transportation, meals, lodging and so forth don’t count as gambling losses and, therefore, can’t be deducted.



  To claim a deduction for wagering losses, you must adequately document them, including:  

     The date and type of specific wager or wagering activity.

     The name and address or location of the gambling establishment.

     The names of other persons (if any) present with you at the gambling establishment. (Obviously, this is not possible when the gambling occurs at a public venue such as a casino, race track, or bingo parlor.)

     The amount won or lost.

The IRS allows you to document income and losses from wagering on table games by recording the number of the table that you played and keeping statements showing casino credit that was issued to you. For lotteries, your wins and losses can be documented by winning statements and unredeemed tickets.

Please contact us if you have questions or want more information. If you qualify as a “professional” gambler, some of the rules are a little different.






Awards of RSUs can provide tax deferral opportunity

SS&C Staff - Wednesday, July 06, 2016

Executives and other key employees are often compensated with more than just salary, fringe benefits and bonuses: They may also be awarded stock-based compensation, such as restricted stock or stock options. Another form that’s becoming more common is restricted stock units (RSUs). If RSUs are part of your compensation package, be sure you understand the tax consequences — and a valuable tax deferral opportunity.


RSUs vs. restricted stock

RSUs are contractual rights to receive stock (or its cash value) after the award has vested. Unlike restricted stock, RSUs aren’t eligible for the Section 83(b) election that can allow ordinary income to be converted into capital gains.

But RSUs do offer a limited ability to defer income taxes: Unlike restricted stock, which becomes taxable immediately upon vesting, RSUs aren’t taxable until the employee actually receives the stock.


Tax deferral

Rather than having the stock delivered immediately upon vesting, you may be able to arrange with your employer to delay delivery. This will defer income tax and may allow you to reduce or avoid exposure to the additional 0.9% Medicare tax (because the RSUs are treated as FICA income).

However, any income deferral must satisfy the strict requirements of Internal Revenue Code Section 409A.


Complex rules

If RSUs — or other types of stock-based awards — are part of your compensation package, please contact us. The rules are complex, and careful tax planning is critical.



3 Keys to Strong Business Financials

SS&C Staff - Thursday, June 23, 2016

Businesses fail for many reasons — dysfunctional management, insufficient working capital, insurmountable competition. Why they succeed, on the other hand, is often easily explained. Regardless of size and sector, most healthy companies share the following three characteristics when it comes to their financials:

1. Ample revenue

You’ve no doubt heard it before, but this cliché is true: Cash is king. Without a robust revenue stream coming in, profitability will be precarious. To determine how much revenue your company needs to be profitable, perform a profitability breakeven analysis. Then review your sales and determine where you can make changes. For example, you may need to invest more in R&D or focus more on prospective customers.

2. Well-managed labor and production costs

For most companies, labor is their biggest production cost — particularly when benefits and taxes are factored into the equation. Determine whether your labor force increases the value of products or services enough to offset its high cost. If not, consider solutions such as:

• Providing more training or better incentives,

• Improving production processes, or

• Investing in more modern facilities.

When production overhead costs are too high relative to a product’s sales price, take action. You might increase the price of the product, find better production methods or even discontinue the product.

3. Lean operations

Operating expenses — costs you incur to run your business that aren’t directly attributable to production — must be minimized. For example, compensation takes a big bite out of your operations budget, so monitor staffing needs relative to sales and adjust them if necessary. And while you can’t eliminate marketing expenditures, you can review your sales levels relative to them and ensure you’re getting bang for your buck.

Establish a foundation

If you’re trying to build the foundation for a healthy, long-lived business, focus on these three keys. For help applying them to your company’s specific size and situation, please call us.




How Summer Day Camp Can Save You Taxes

SS&C Staff - Monday, June 13, 2016

Now that the kids are out of school, summer day camp is rapidly approaching for many families. If yours is among them, did you know that sending your child to day camp might make you eligible for a tax credit?


The power of tax credits

Day camp (but not overnight camp) is a qualified expense under the child and dependent care credit, which is worth 20% of qualifying expenses (more if your adjusted gross income is less than $43,000), subject to a cap. For 2016, the maximum expenses allowed for the credit are $3,000 for one qualifying child and $6,000 for two or more.

Remember that tax credits are particularly valuable because they reduce your tax liability dollar-for-dollar — $1 of tax credit saves you $1 of taxes. This differs from deductions, which simply reduce the amount of income subject to tax. For example, if you’re in the 28% tax bracket, $1 of deduction saves you only $0.28 of taxes. So it’s important to take maximum advantage of the tax credits available to you.


Be aware of the rules...

A qualifying child is generally a dependent under age 13. (There’s no age limit if the dependent child is unable physically or mentally to care for him- or herself.) Special rules apply if the child’s parents are divorced or separated or if the parents live apart.

Eligible costs for care must be work-related, which means that the child care is needed so that you can work or, if you’re currently unemployed, look for work. However, if your employer offers a child and dependent care Flexible Spending Account (FSA) that you participate in, you can’t use expenses paid from or reimbursed by the FSA to claim the credit.


Are you eligible?

These are only some of the rules that apply to the child and dependent care credit. So please contact us to determine whether you’re eligible.




Putting your home on the market?

SS&C Staff - Friday, May 13, 2016

 Understand the tax consequences of a sale.

As the school year draws to a close and the days lengthen, you may be one of the many homeowners who are getting ready to put their home on the market. After all, in many locales, summer is the best time of year to sell a home. But it’s important to think not only about the potential profit (or loss) from a sale, but also about the tax consequences.


If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain — as long as you meet certain tests. Gain that qualifies for exclusion also is excluded from the 3.8% net investment income tax.

To support an accurate tax basis, be sure to maintain thorough records, including information on your original cost and subsequent improvements, reduced by any casualty losses and depreciation claimed based on business use. Keep in mind that gain that’s allocable to a period of “nonqualified” use generally isn’t excludable.


A loss on the sale of your principal residence generally isn’t deductible. But if part of your home is rented out or used exclusively for your business, the loss attributable to that portion may be deductible.

Second homes

If you’re selling a second home, be aware that it won’t be eligible for the gain exclusion. But if it qualifies as a rental property, it can be considered a business asset, and you may be able to defer tax on any gains through an installment sale or a Section 1031 exchange. Or you may be able to deduct a loss.

Learn more

If you’re considering putting your home on the market, please contact us to learn more about the potential tax consequences of a sale.



2015 Year end Tax Planning Time!

SS&C Staff - Tuesday, October 20, 2015

Credit: Jim Colahan, CPA

As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next.

Factors that compound the challenge include turbulence in the stock market, overall economic uncertainty, and Congress's failure to act on a number of important tax breaks that expired at the end of 2014. Some of these tax breaks ultimately may be retroactively reinstated and extended, as they were last year, but Congress may not decide the fate of these tax breaks until the very end of 2015 (or later).

These breaks include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the-line-deduction for qualified higher education expenses; tax-free IRA distributions for charitable purposes by those age 70-1/2 or older; and the exclusion for up-to-$2 million of mortgage debt forgiveness on a principal residence.

For businesses, tax breaks that expired at the end of last year and may be retroactively reinstated and extended include: 50% bonus first-year depreciation for most new machinery, equipment and software; the $500,000 annual expensing limitation; the research tax credit; and the 15-year writeoff for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.

Visit our new information page "Year-end Tax Planning for 2015" to learn more! 


Skyler W. Fairchild, CPA to Address Property & Casualty Executives at BriteCon2015

Skyler Fairchild - Wednesday, October 14, 2015

Skyler W. Fairchild, CPA will introduce Intacct P&C Solutions by SS&C Solutions, Inc. at BriteCore's 7th Annual Conference, BriteCon2015, October 18 - October 20, 2015 in Springfield, MO.

Intacct P&C Solutions by SS&C Solutions, Inc. combines key financial and operating data. Every dashboard is based upon industry standards and is fine tuned to what is unique to property and casualty insurance companies and presents a consistent set of real-time metrics across roles and departments.

SS&C Solutions, Inc. and Summers, Spencer & Company, P.A. Certified Public Accountants have deep experience in the property and casualty insurance industry. We provide industry-focused assurance, tax and advisory services. We can help insurers realize the potential of their core systems by transforming business processes to take advantage of the flexible capabilities in Intacct software.

Our Intacct experience is based on a rich inventory of business cases, and technical requirements, process flows and property and casualty artifacts based upon their general ledger system. We have the ability to provide ongoing application maintenance support for our clients.

To learn more about Intacct P&C Solutions by SS&C Solutions, Inc. please visit the product page on our website:

​Big Changes Proposed For Not For Profits

SS&C Staff - Wednesday, May 06, 2015

FASB proposed an ASU (Accounting Standards Update) last month to seek standardization for not-for-profit reporting. These changes would be the most significant changes made to this industry since 1993.

The proposed changes include:

*   All NFPs would be required to report expenses by both their nature and function.

*   The face of the statement of activities must present the net investment expenses against investment return.

*   NFPs would be required to present two intermediate operating measures on the basis of two dimensions:

        1.)   Mission dimension based on whether resources are from or directed at carrying out an NFPs mission or purpose.

        2.)   Availability dimension based on whether resources are available for current-period activities and indicating both external limitations and internal actions from the governing board.

*   Direct method for cash flows would be required.

*   The three existing classes of net assets would be replaced with ‘net assets with donor restrictions’ and ‘net assets without donor restrictions’.

*   Other changes include classification of the use of the in-service approach for the treatment of expiration of restrictions on long-lived assets, classification of underwater endowment funds, and liquidity assessments performed by the NFP.


Credit for article- Jayme Painter, CPA

Senate Passed Tax Extender for Individuals

Skyler Fairchild - Friday, December 19, 2014

As a result of TIPA, your taxes may be lower for 2014 than what they would otherwise have been without the new law, because the law extended several deductions and credits that had expired in 2013. The new law may even create an opportunity to lower your taxes further if you take advantage of these tax breaks between now and year-end. The following are some of the more significant tax breaks to be extended.


State and Local General Sales Taxes Deduction

The election to deduct state and local general sales taxes (instead of state and local income taxes) as an itemized deduction had expired for tax years beginning after December 31, 2013. TIPA extends the availability of that election to tax years beginning before January 1, 2015.


Above-the-Line Deduction for Qualified Tuition and Related Expenses

For years before 2014, taxpayers with modified adjusted gross income below certain thresholds could deduct up to $4,000 of qualified education expenses paid during the year for themselves, their spouses, or their dependents. The maximum deduction was $4,000 for an individual whose adjusted gross income for the tax year did not exceed $65,000 ($130,000 in the case of a joint return), or $2,000 for other individuals whose adjusted gross income did not exceed $80,000 ($160,000 in the case of a joint return). For those with incomes above the maximum threshold, no deduction is allowed. TIPA extends the availability of the deduction to tax years beginning before January 1, 2015.


Credit for Energy-Efficient Existing Homes

A taxpayer is allowed a 10-percent nonbusiness energy property credit for the purchase of qualified energy efficiency improvements to existing homes. Additionally, a taxpayer can claim specified credits for the purchase of specific energy efficient property originally placed in service by the taxpayer during the tax year. There is a lifetime limitation of $500 on the total amount of nonbusiness energy property credit that may be claimed. There are also dollar limitations on the amount of the credit that may be claimed for specific types of qualified energy efficiency improvements and residential energy property. This credit expired for any property placed in service after December 31, 2013. TIPA extends the availability of the credit to property placed in service before January 1, 2015.


Mortgage Insurance Premiums Treated as Qualified Residence Interest

A taxpayers' ability to treat qualified mortgage insurance as qualified residence interest expired for amounts paid or accrued after December 31, 2013, or for amounts properly allocable to any period after that date. TIPA extends this treatment to amounts paid or accrued before January 1, 2015.


Deduction for Expenses of Elementary and Secondary School Teachers

The rule that allowed elementary and secondary school teachers to deduct from gross income up to $250 of qualified expenses they paid during the year ($500 on a joint return if both spouses were eligible educators) expired for tax years beginning after 2013. TIPA extends the deduction through tax years beginning before 2015.


Exclusion for Discharge of Qualified Principal Residence Indebtedness

For certain tax years before 2014, taxpayers could exclude from income the discharge of qualified principal residence debt. This provision was scheduled to expire for debt discharged after December 31, 2013. TIPA extends the exclusion to debt that is discharged before January 1, 2015.


Tax-Free Distributions from IRAs for Charitable Purposes

A qualified charitable distribution from an Individual Retirement Account (IRA) by individuals at least 70 1/2 years of age (up to $100,000 per taxpayer per year) may be excluded from income. TIPA extends the exclusion for qualifying distributions made before January 1, 2015.

As you can see, the provisions in the Tax Increase Prevention Act of 2014 are quite extensive. Please contact us at your earliest convenience so we can discuss how the tax breaks extended by TIPA may benefit your tax situation.