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Oct 01
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Debt Relief for Military Service Members, Veterans, Family Farmers and Small Business Owners

By Blog, Congress at Work

Small Business Reorganization Act of 2019 (HR 3311) – Scheduled to take effect starting in February 2020, this new law offers small businesses more agreeable terms when filing for Chapter 11 bankruptcy status. The bill gives owners:

  • More time (90 days) to file a reorganization plan with easier rules for extension
  • The ability to retain ownership of the company even if debts are not paid in full
  • A new formula for debt payments based on projected disposable income over three to five years
  • Reduced red tape through the appointment of a “standing trustee” (instead of a credit committee) to oversee the reorganization process
  • A more “fair and equitable” process to determine owner and creditor equity interests
  • More protection against creditor ability to take away personal assets, such as a home

This bill was introduced by Rep. Ben Cline (R-VA) on June 18 and signed into law by the president on Aug. 23.

HAVEN Act (HR 2938) – Introduced on May 23 by Rep. Lucy McBath (D-GA), this legislation was enacted on Aug. 23. It stands for “Honoring American Veterans in Extreme Need.” The new bill eliminates veterans’ disability benefits (joining the status of Social Security payouts) from being included as income for the purpose of determining how much a veteran who files for personal bankruptcy must pay creditors.

National Guard and Reservists Debt Relief Extension Act of 2019 (HR 3304) – This bill was introduced by Rep. Steve Cohen (D-TN) on June 18 and signed into law on Aug. 23. The legislation reauthorizes an exemption to certain bankruptcy means-testing for members of the National Guard and Reserves (serving on active duty or in a homeland defense activity for at least 90 days) who file for bankruptcy.

Family Farmer Relief Act of 2019 (HR 2366) – This legislation increases the Chapter 12 operating debt cap to $10 million, which will enable more family farmers to seek relief under the U.S. Bankruptcy Code. The bill was introduced on April 3 by Rep. Antonio Delgado (D-NY) and was signed into law by the president on Aug. 23.

Creating Advanced Streamlined Electronic Services for Constituents Act of 2019 (HR 1079) – This bill mandates the Office of Management and Budget to create a private, secure electronic submission process to request assistance for government services such as Social Security, Medicare, Veterans Affairs or any other federal agency. The legislation was introduced on Feb. 7 by Rep. Garrett Graves (R-LA). The president signed the bill into law on Aug. 22.

Emergency Medical Services for Children Program Reauthorization Act of 2019 (HR 776) – This bill reauthorizes (through fiscal year 2024) the Emergency Medical Services for Children Program. This is a grant program administered by the Health Resources and Services Administration that works to improve emergency healthcare for children who are seriously ill or injured. The legislation was sponsored by Rep. Peter King (R-NY). It was introduced on Jan. 24 and signed into law by the president on Aug. 22.

Oct 01
Love0

What is VPN and Why Do You Need It?

By Blog, What's New in Technology

The rise in the number of data breaches reported every other day has become a major concern – even to the ordinary internet user. As a result, we have all become aware of the need to maintain privacy while online. One of the measures promising to keep you safe on the internet is the use of a virtual private network (VPN). But before rushing to install one of the many VPNs available, it’s important to understand what a VPN is, why you need it, if it is foolproof and other ways to stay safe on the internet.

What is a VPN?

The VPN service lets you browse the internet privately by masking your IP address – the unique address identifying your device on the web. It also encrypts your internet traffic as it passes through a secure tunnel created from your device to a remote server. Your data appears to be coming from the remote server. This means that a VPN can hide your geographical location, personal data, web browsing history, spending habits and mobile phone activities.

Initially, VPNs were built for business environments to help a business operate a secure network connection. But with today’s cyber security concerns, they have become popular and more widespread.

Why Would You Need to Use a VPN?

There are numerous reasons why a person would need to enlist the services of a VPN company. Here are some situations that require the use of a VPN:

  • Since Congress cleared the way for ISPs to sell users’ browsing history without their consent, privacy is a thing of the past. This means that an internet service provider can sell your browsing data to third parties. A VPN can mask your IP address from your service provider.
  • The encryption offered by VPNs guards against digital threats, hacking, malware attacks and identify theft.
  • VPNs help keep hackers and marketers from tracking your movement online.
  • If you travel to a country where you can’t access some sites, for instance in China where Facebook is not allowed, a VPN will help you stay in touch on any of these blocked sites.
  • When using public Wi-Fi in airports or any other place that offers free Wi-Fi, a VPN comes in handy.
  • Employers who have workers going out for field work or working remotely can set up a VPN to help access company networks securely.
  • Used by whistleblowers, law enforcement agencies, investigative journalists and others who want to shield their identities or location.
  • For user with Voice over IP (VOIP) for making calls, a VPN will help prevent your phone conversations from being tracked or intercepted.
  • When you need to visit questionable websites but want to be safe. For instance, when your identity is stolen and you want to find the website selling your data.

The Bad Side of Using a VPN

Although a VPN service may sound perfect for internet security, it also has some disadvantages. Keep in mind that your internet service provider may no longer have your data, but the VPN provider now has access to it.

A VPN is not 100 percent guaranteed. The VPN provider could be disconnected or there could be a Domain Name Server (DNS) leak. Even with advanced features such as kill switch, VPN data can still leak through software, hardware or other means.

If you fail to use the right VPN, you’ll be in more problems than you are running from. Some VPNs (especially the free services) keep log files. There is no telling where your private data will end up. They could end up selling your data to third parties or supplying your information to the government.

These services also slow down your internet access speed due to the process of data encryption and tunneling network traffic to a remote server that is used to connect you to the internet.

It is not possible to know if the VPN provider commits to what they promise. The only way to find out is when things go wrong. They may promise not to keep logs, but if you fail to read the privacy policy of a VPN company, you will not know if they retain customer data.

A VPN doesn’t protect you from viruses and malware.

Other Security Measures

Since a VPN is not foolproof, it is important that you also observe other security measures to protect your privacy.

It is crucial that you practice digital privacy hygiene. In other words, when online you should limit the amount of personal information that you share. This will help minimize your digital footprint.

Investing in quality antivirus software will protect your device from malware and viruses.

Regularly check if your data has been compromised. Check for strange activity in your emails, social media accounts and even in your bank account.

Use strong passwords or other security features such as biometrics to secure your accounts.

Final Word

You may come across many different types of products and services that promise to keep you safe on the internet. The bottom line is, it’s up to you to protect yourself. A combination of several security measures is a good starting point – the use of a VPN, strong passwords and antivirus programs.

Oct 01
Love0

How Parents Can Save Money for College-Bound Kids

By Blog, Tip of the Month

No matter how old your children are, it’s always a good idea to start saving for college as soon as possible. (Yes, even when they’re still in diapers.) This might sound overwhelming, especially if you haven’t started, but take heart, it’s never too late. Here are a few things to do before you start saving, as well as smart ways to gather the resources you’ll need.

Figure Out How Much College Will Cost

Is your child interested in a state school? A small private university? Or a trade school? Create a list of schools, do the math and figure out a ballpark number of how much you’ll need. When you do this, you can calculate how much per month or year you need to set aside. The truth is that state schools are generally a lot less expensive. However, because private universities rely heavily on private donations, they also have a healthy number of scholarships available. If your child is more interested in a trade school, these can be even more affordable, depending on what they want to study.

Create a Long-Term Spreadsheet for All Your Expenses

You may want your children to go to college, but that’s not the only goal for a family. There’s saving for your own retirement, paying your mortgage and credit card bills. You’ll also want to save for emergencies. A good rule of thumb is to save up for three to six months of expenses. All of this might sound tough, but if you create a priority list, it’s absolutely possible.

Start an Education Savings Account (ESA)

Also known as an Education IRA, this fund allows you to save $2,000 (after taxes) per child, per year. And here’s the best part: it grows tax-free! You’ll also most likely earn a higher rate of return than you would with a regular savings account. But know this: you must be within the income limit to qualify; contributions are limited to $2,000 a year; and the money must be used by the time your child is 30.

Consider a 529 Plan

If the ESA sounds too limiting or you don’t meet the income limits, then a 529 Plan is a great option. You can contribute up to $300,000, but this varies by state. What’s more, most of the time there aren’t any income limits or restrictions based on age. And again, the cherry on top: it grows tax-free. But something to be mindful of when you’re shopping for a plan is whether you want to choose the funds you invest in through the account. Some 529s offer preselected funds or automatically change your investments based on the age of your child. Also, restrictions may apply if you choose to transfer your 529 Plan to another child.

Look into a UTMA or UGMA

Otherwise known as Uniform Transfer/Gift to Minors Act, this option is different because it is not created just for college savings. The account will be set up in your child’s name, but it will be controlled by a custodian, which is usually a parent or grandparent. When your child turns 21, the control of the account transfers to the child. While there are tax advantages for you, a significant downside is that your child can use the funds any way she wants. (College or trip to Vegas?)

Saving for college, especially these days, might seem daunting. But it’s not impossible. In fact, if you chart a course and stick to it, you’ll be in good shape when those little ones of yours become all grown up.

SOURCES

https://www.daveramsey.com/blog/saving-for-college-is-easier-than-you-think

https://www.daveramsey.com/dave-ramsey-7-baby-steps?int_cmpgn=no_campaign&int_dept=dr_blog_bu&int_lctn=Blog-Text_Link&int_fmt=text&int_dscpn=saving_for_college_blog-inline_link_baby_step_5#baby_step_5

Oct 01
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How to Inflation-Proof a Retirement Portfolio

By Blog, Financial Planning

Statistics indicate that the average life expectancy is longer than it used to be, but empirically we see this every day among elderly people who have lived much longer than they probably expected. This phenomenon spotlights a particular component of retirement planning that was not as significant in the past as it is now: long-term inflation.

While we’ve not experienced annual inflation rates this century as high as the latter part of the 20th century, inflation can balloon at any time. But what can be even more devastating to a retiree on a fixed income is cumulative inflation over time. It’s also important to recognize that specific consumer product inflation rates can differ substantially from the averages.

For example, according to the Bureau of Labor Statistics, the cost (not always the price a consumer pays) of an oil change in 2000 was about $20. However, motor oil, coolant and fluids have experienced an average inflation rate of 5.66 percent per year – so in 2019 the cost of providing an oil change was about $56.89. That’s a 184.45 percent increase in less than 20 years for a common household expense during a normal retirement timeframe.

To build a portfolio designed to provide inflation-adjusted income throughout a long retirement, consider the following tactics.

Optimize Your Social Security Benefits

Social Security benefits receive periodic cost of living adjustments (COLA) based on the Consumer Price Index (CPI), which is a weighted average of prices of common goods and services purchased by all urban consumers. However, retirees spend more of their household income on goods and services that experience higher levels of inflation, such as medical services. Therefore, Social Security benefit increases might not keep up with a retiree’s actual cost of living – especially over time.

That’s why it’s important to consider inflation in order to optimize your Social Security benefits. In other words, except for people in exceedingly poor health (expected to die within a few years) or in dire circumstances, it’s a good idea to delay starting Social Security benefits as long as you can. If you can wait until age 70, benefits will increase by as much as 8 percent each 12-month period past your full retirement age. Delaying not only increases the level of income you’ll receive each month, but it also gives you more time to save money for retirement and allows your investments more time to grow.

Inflation-Aligned Investments

Another way to inflation-proof your retirement portfolio is to allocate a portion of assets to investments that tend to increase at the same pace as inflation. The following are some options you might want to consider.

  • Series I Savings Bond – The I-Bond, guaranteed by the federal ­government, helps protect an investor from creeping inflation in a couple of ways. First, the I-Bond credits the holder’s account with a fixed interest rate plus the annualized inflation rate from the preceding six months. Second, the account value does not drop when prices fall.
  • TIPS – Treasury Inflation-Protected Securities (TIPS) are marketable securities whose principal increases and decreases in tandem with the inflation rate (adjusted every six months). However, the coupon rate is fixed, so payouts vary based only on the inflation-adjusted principal. Upon maturity, the investor receives the greater of the adjusted principal or the original principal.
  • CIPS – Corporate Inflation Protected Securities (CIPS) are similar to TIPS, but they invest in corporate bonds and typically pay a higher yield that combines a fixed payout plus the variable CPI rate. Unlike TIPS, they are not guaranteed by the U.S. government but are backed by the financial strength of the issuing company.
  • REITS – A Real Estate Investment Trust (REIT) pays out reliable dividend income that tends to rise with inflation. REITS own or finance a diversified portfolio of income-producing real estate, such as office buildings, apartment buildings, warehouses, retail centers or hotels. REIT dividends have outpaced inflation in all but two of the past 20 years, according to the National Association of Real Estate Investment Trusts.
  • IPA – With an inflation-protected annuity (IPA), initial income payouts are low but rise over time to align with long-term inflation, based on a formula linked to the CPI. A differentiating benefit of an IPA is that it offers issuer-guaranteed income for life, so the retiree doesn’t have to worry about reinvesting assets during later stages of retirement.

It is a good idea to work with a financial advisor to incorporate inflation-resistant investments for your retirement portfolio based on your individual objectives, tolerance for risk and timeline.

Oct 01
Love0

Will China’s Recent Soybean Purchase Begin Thawing the Trade War?

By Blog, Stock Market News

With the United States Department of Agriculture’s Foreign Agriculture Service announcing a purchase of 204,000 metric tons of U.S. soybeans by private Chinese importers, there are hopes that the trade war is beginning to dissipate.

Seeing that the last significant purchase of U.S. soybeans by China was in June, professional traders see the September acquisitions as a potential weakening of the U.S.-China trade war. With the USDA’s Foreign Agricultural Service announcing more than 600,000 tons of U.S. soybeans purchased by private Chinese operators on Sept. 13, 16 and 17, there are signs of positive movement between the two nations.

The shipments are expected to leave between October and December from ports in the Pacific Northwest. Looking at the Chicago Mercantile Exchange, soybean futures hit monthly highs on Sept. 16. Coupled with November futures contracts well off their lows, this shows renewed promise. The purchase of soybeans is part of China’s gesture of goodwill to buy other agricultural products, such as pork, during ongoing trade negotiations.

These recent developments are important because China increased tariffs on American soybeans by 25 percent in July 2018 in response to the Trump Administration’s tariffs. On Sept. 1, 2019, U.S. soybeans were subject to another 5 percent in import tariffs by China.

The Context of Soybean Sales

Based on data from the United States International Trade Commission (USITC), there was a drop in soy exports from the U.S. to China to $3.1 billion, or 18 percent of U.S. soybean exports for 2018.

The 2018 U.S. soybean export figure to China represents a drop of 75 percent, compared to 2017’s U.S. sales exports of soybeans worth $12.2 billion to China. The large drop in 2018 is also noteworthy against U.S. exports of soybeans to China in 2016 of $10.5 billion. This drop was directly attributable to trade tensions.

It’s important to note that soybeans are America’s biggest agricultural export (16 percent of all agricultural exports) – $20.9 billion annually on average between 2014 and 2018. With China importing more than 50 percent of U.S. soy over the past 60 months, it illustrates why the trade war has been so impactful. In response to the sharp drop in exports to China, 2018 began the quest for U.S. growers of soybeans to counteract the $9.1 billion drop in soy exports to China by finding new buyers in Mexico, the European Union and Egypt.

Similarly, as the Congressional Research Service points out, trade talks are working toward building upon an existing $12.9 billion of U.S. agricultural exports to Japan, as of 2018. Current talks have expectations for an additional $7 billion in U.S. agricultural exports to Japan. Soybeans, along with dairy, wine, beef and pork, are examples of agricultural imports Japan is willing to buy, based on soon-to-be released details from finalized U.S.-Japanese trade talks.  

However, despite maintaining a competitive or even subpar price against competitor nations such as Brazil, it didn’t sway the Chinese to buy more American soy. Much like American farmers and with China’s state-influenced help, there may be long-term, structural changes for future Chinese soybean purchases even if trade tensions subside. However, China also has established new suppliers of soybeans from Ukraine, Kazakhstan and Russia.

While many do expect a trade deal between the United States and China, there could very well be structural and long-lasting changes on how both countries conduct trade for years to come.

Oct 01
Love0

When Full Costing Accounting Makes Sense

By Blog, General Business News

With more than 1.4 million accounting jobs in 2018, according to the Bureau of Labor Statistics, there are many different uses for accountants and their skills. With the need for accuracy and transparency in private and public accounting, one important concept to explore is absorption, or full costing.

Absorption or full costing is an accounting method that is used by businesses to determine the complete cost of producing products or services.

When it comes to calculating the full cost, there are three main categories taken in account:

  1. Direct Costs – How much material, labor, machinery, etc. it costs to produce each product.
  2. Total Amount of Fixed Costs – Examples include monthly rent payments, tax payments, base salaries, etc. These are the types of expenses a company would incur regardless of the level of production.
  3. Total Amount of Variable Costs – If there’s increased demand for a particular product, companies would incur variable costs to meet that demand. Examples would include additional wage payments, increased electricity bills for extended or additional shifts, etc. Unlike a pre-negotiated rate for a lease, paying overtime or for more staff would vary based on changes in production needs.

It’s important to note that with absorption or full costing, regardless of the accounting period, both variable and fixed selling and administrative costs are not included when calculating cost per item. These costs are accounted for in the accounting time, whenever the expenses actually occurred or on an accrual basis.

Along with being GAAP-compliant (following Generally Accepting Accounting Principles) when it comes to absorption or full costing, the direct material costs, labor costs and variable and fixed overhead expenses are factored into the per-product cost to the point of sale. Once sold, the expenses will then be reflected on the Income Statement within the COGS fields (Costs of Good Sold).

Further Considerations and Differences with Variable Costing

The primary difference between full costing and variable costing can be seen when it comes to fixed overhead manufacturing costs.

For the absorption or full costing approach, fixed manufacturing overhead costs are recognized when the product is sold. With the variable costing method, the fixed manufacturing overhead costs are accounted for when the business incurs the expenses for that product (i.e., during production time).

Whether or not produced items are sold or still part of the business’ inventory, the absorption costing approach assigns all expenses to the inventory. This helps companies calculate their net profit more precisely. The approach to determining net profit is especially helpful if a company’s inventory is unsold after the accounting timeframe when production occurred.

When fixed costs such as insurance, salary, advertising and related expenses add up quickly and to great amounts, this is something to keep in mind when determining private performance and public perception for publicly traded companies.

Sources

https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm

 

Oct 01
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How to Get the IRS to Pre-Approve Your Taxes

By Blog, Tax and Financial News

It might seem odd, but it is possible to get the IRS to give you a straight-forward and binding answer to ambiguous tax positions in advance. How does this happen, you ask? The answer is through an IRS private letter ruling.

IRS private letter rulings provide many benefits, but they are not easy to obtain. There are costs, potential delays, and even then, you run the risk of not being granted a ruling. This dynamic might seem odd as the entire point of applying for a private letter ruling is to obtain certainty. If your position is weak from a tax law perspective, the government could refuse to rule on it. Alternatively, if the position you are seeking is obviously correct, the government might refuse to rule as well because they don’t like to issue “comfort rulings.” Essentially, the only way to get the government to rule is to make a request regarding a position that is in the middle.

If you believe the tax position in question lies somewhere in the middle, requesting a private letter ruling may make sense. If you are more likely one of the outliers, then requesting a tax opinion usually makes more sense. The problem is that tax opinion, unlike private letter rulings, doesn’t bind the IRS.

Deciding Which Path to Take

If the relative certainty of the tax position in question doesn’t provide enough guidance, how do you decide to go after a tax opinion versus a private letter ruling? To make the choice, it helps to understand more details.

First, tax opinions can cover a broader range of topics and can be written about pretty much anything; rulings cannot. In fact, the IRS has an explicit list of subjects that it will not produce private letter rulings on (they modify it occasionally, but there’s always a list). As a result, the first step is to assess the list as this might make the choice for you.

Second, don’t request a private letter ruling unless there is a good chance you think it will be granted. For one, rulings are not cheap with fees often costing upward of $25,000 to obtain a ruling. If you get a “No” ruling against your position, you can withdraw the request to take the ruling off the books, but you may or may not get the fee back. Moreover, when you withdraw a request for a ruling, the IRS sends a notice to your local IRS field office, potentially flagging your return for audit.

Third, opinions can be quick and obtained in as little as a few days or weeks. Rulings, on the other hand, often take months. Also consider that a request for a ruling must be specific and there is little room for modification after filing. Opinions have more flexibility.

Private Letter Ruling Process

Given the specificity and consequence of requesting a ruling, there are intermediate steps to help you test the water before you go all in. Nearly all ruling requests start by initiating a discussion with the IRS to get their general view on your proposed ruling. After this, the taxpayer usually submits a brief memo covering the facts and ruling they are looking to obtain. Next, there are more meetings either in person or by phone with IRS attorneys involved. At this point, if everything looks good, you can prepare and submit the actual ruling request. If you back out at this point, you avoid triggering any fees (IRS fees – not your lawyers or accountants) or audit notices.

Benefits of a Ruling Versus an Opinion

The reason taxpayers go through the time, expense and effort to obtain rulings instead of opinions is that they have several advantages. First, rulings are binding on the IRS. Second, you don’t need to consider penalty protection. Most of all, they provide certainty. Given the difficulty in obtaining a ruling, they generally make financial sense only when a taxpayer has a seriously substantial tax position in play, or at least will over time, and he wants to protect against future audits and legal challenges.

Sep 07
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IRS Releases New Projected 2019 Tax Brackets, Rates and More

By Blog, Tax and Financial News

IRS Releases New Projected 2019 Tax Brackets, Rates and More

IRS Releases New Projected 2019 Tax Rates, Brackets and MoreBloomberg recently released projected tax rates, brackets and other numbers that apply to the 2019 tax year (the IRS will release the official numbers later this year). Note, these are NOT the numbers that apply to the 2018 taxes you file in 2019, but to the income and activity that occurs during the 2019 tax year that starts January 1, 2019.

A big part of the IRS’s consideration in formulating 2019 numbers is the inflation index. The Tax Cuts and Jobs Act (TCJA) replaced the normal Consumer Price Index with chained CPI. Chained CPI doesn’t simply measure the change in prices, it measures consumer responses to high prices, effectively creating a smaller inflation adjustment. In any case, inflation adjustments are a critical component (and often the main driver) in year-to-year tax bracket, exemptions and eligibility thresholds.

With an understanding of what underpins the 2019 adjustments (in addition to the impact of the new tax legislation), let’s look at the changes.

Tax Brackets

The increasing CPI means brackets are being pushed upward – albeit slightly – giving us these projected tax brackets for 2019.

Individual Taxpayers
Taxable Income Tax Due
$ – to $9,700 10% of Taxable Income
$9,701 to $39,475 $970 plus 12% of the amount over $ 9,700
$39,476 to $ 84,200 $4,543 plus 22% of the amount over $39,475
$84,201 to $160,725 $14,383 plus 24% of the amount over $84,200
$160,726 to $204,100 $32,749 plus 32% of the amount over $160,725
$204,101 to $510,300 $46,629 plus 35% of the amount over $204,100
$510,301 and higher $153,799 plus 37% of the amount over $510,300
Married Filing Jointly
Taxable Income Tax Due
$ – to $19,400 10% of Taxable Income
$19,401 to $78,950 $1,940 plus 12% of the amount over $19,400
$ 78,951 to $168,400 $9,086 plus 22% of the amount over $78,950
$168,401 to $321,450 $28,765 plus 24% of the amount over $168,400
$321,451 to $408,200 $65,497 plus 32% of the amount over $321,450
$408,201 to $612,350 $93,257 plus 35% of the amount over $408,200
$612,351 and higher $164,710 plus 37% of the amount over $612,350
Married Filing Separately
Taxable Income Tax Due
$ – to $9,700 10% of Taxable Income
$9,701 to $39,475 $970 plus 12% of the amount over $ 9,700
$39,476 to $ 84,200 $4,543 plus 22% of the amount over $39,475
$84,201 to $160,725 $14,383 plus 24% of the amount over $84,200
$160,726 to $204,100 $32,749 plus 32% of the amount over $160,725
$204,101 to $306,175 $46,629 plus 35% of the amount over $204,100
$306,175 and higher $82,355 plus 37% of the amount over $306,175
Head of Household
Taxable Income Tax Due
$ – to $13,850 10% of Taxable Income
$13,851 to $52,850 $1,385 plus 12% of the amount over $13,850
$52,851 to $84,200 $6,065 plus 22% of the amount over $52,850
$84,201 to $160,700 $12,962 plus 24% of the amount over $84,200
$160,701 to $204,100 $31,322 plus 32% of the amount over $160,700
$204,101 to $510,300 $45,210 plus 35% of the amount over $204,100
$510,301 and higher $152,380 plus 37% of the amount over $510,300
Trusts & Estates
Taxable Income Tax Due
$ – to $2,600 10% of Taxable Income
$2,601 to $9,300 $260 plus 12% of the amount over $2,600
$9,301 to $12,750 $1,868 plus 22% of the amount over $9,300
$12,751 and higher $3,076 plus 37% of the amount over $12,750

Personal Exemption Amounts

Personal exemptions are eliminated under the TCJA, so there is no adjustment any longer. The deduction for a qualifying relative is a similar type of item to the personal exemptions and is expected to be between $4,150 and $4,200 for 2019.

Standard Deduction

Standard Deductions
Filing Status Standard Deduction Amount
Single $12,200
Married Filing Jointly & Surving Spouse $24,400
Married Filing Separately $12,200
Head of Household $18,350

In combination with eliminating personal exemptions, the TCJA approximately doubled the standard deduction for most taxpayers in 2018. With inflation figures where they currently stand, projections are as follows for 2019:

Certain taxpayers receive additional standard deductions; for example, the aged (65 or older) or the blind will be $1,300 in 2019 for married filing jointly and $1,650 if neither married nor a surviving spouse.

Capital Gains

There is no change in capital gains rates for 2019; break points between brackets do change, with the maximum zero and 15 percent rate amounts as follows:

Capital Gains
Filing Status Maximum Zero Amounts Maximum 15% Rate Amount
Single $39,350 $434,550
Married Filing Jointly & Surving Spouse $78,750 $488,850
Married Filing Separately $9,350 $244,400
Head of Household $52,750 $461,700
Trusts & Estates $2,650 $12,950

Section 199A Deduction (aka the Pass-Through Deduction)

Under the TCJA, sole proprietors and owners of pass-through entities are allowed up to a 20 percent deduction on qualified business income. To qualify for the deduction, a certain threshold must be met, and phased-in limitations are applicable. They are projected to be as follows for 2019:

Section 199A Deduction (aka the Pass-Through Deduction)
Filing Status Threshold Amount Phased-In Amount
Married Filing Jointly $321,450 $421,450
Married Filing Separately $160,725 $210,725
All Other Taxpayers $160,700 $210,700

Alternative Minimum Tax (AMT)

AMT exemptions are also subject to adjustment for inflation and are projected to be as follows:

Alternative Minimum Tax (AMT) Exemptions
Filing Status Exemption Amount
Single $71,700
Married Filing Jointly & Surving Spouse $111,700
Married Filing Separately $55,850
Trusts & Estates $25,000

Don’t forget, these are only projected changes. The IRS will release the official numbers later this year.

Aug 01
Love0

Pass It On: Accounting Tips to Share With Kids

By Blog, Tip of the Month

Accounting Tips to Share With Kids, Accounting childrenIt’s never too early to helps kids understand accounting – the concepts of earning and spending. Here are a few ways to teach your little ones about how money works and even have a little fun.

Play Money Games

One way to explain the principles is by playing games like Monopoly and The Game of Life. However, if you want to be more homegrown and less commercial, bake some cookies, bag and price them, and turn your kitchen into a store. You might even get a toy cash register and calculators to make the whole experience more authentic. Then record the earnings, expenses and profits. This will really give children a “taste” of accounting!

Create a Family Budget

When sharing this activity with your kids, you don’t have to include every single expense – just those that they can easily understand, such as mortgage or rent, electricity, gas, phone, groceries and so on. Then, ask them to write up a budget of their own and include their income and expenditures for an allotted amount of time, perhaps a week. This way, you can demonstrate the importance of tracking money and explain that this is a common way that businesses and families deal with their finances.

Teach Them About Checking Accounts

Even though checks are being used less and less these days, a check register is still a good way to show kids how to reconcile expenses. First, you can let them watch you write a check, then explain how to record the check in the register. Then, get some generic deposit slips from your bank and demonstrate how deposits and withdrawals work. Finally, tell them that these transactions will be sent to them each month in a statement – you might even show them one you have to help them visualize the concept.

Explain Debits and Credits

Grab a blank sheet of paper and write a large T on it. Above the left side of the bar, write “Income: Money In” and above the right side of the bar, write “Expenses: Money Out.” Point out the difference between the two sides. If your child has an allowance, a way of earning money by doing chores or if they have a summer job, then ask them to pretend that they’re going to spend some of their money on things they’d like, such as games or candy. Have them record the amounts of earned income in the left column. Then ask them to imagine spending the money on the things they want and have them record those expenses in the right column. Then subtract the expenses from the income. This is quite effective because it helps kids see the money going in and out of an account. When they get a feel for how this works, they might be a little less interested in spending every cent they earn.

There are many other tools you can use to teach your children how money works, but these are a few good ones to get you started. As many parents can attest, helping kids comprehend how to manage money is one of the best lessons you can teach them.

Sources

https://www.sapling.com/12003624/accounting-activities-kids

Aug 01
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How the Accountant Role has Morphed with Technology, and What New Skills are Necessary

By Blog, What's New in Technology

How the Accountant Role has Morphed with Technology, and What New Skills are NecessaryAccountants are no strangers to inventions. Known inventions such as the abacus, calculators and computers have helped complete tasks quickly and in less time. However, today’s technology is complex and is reshaping the world of accounting. Such new technologies include big data, cloud computing, artificial intelligence, block chain, payment systems, mobility and social collaboration, among many others.

How Technology has Changed the Accounting Industry

Accounting, a traditional field, has not been immune to technological innovations. Initially, an accounting department would rely on IT leaders to make its technology decisions. Today, CFOs are increasingly taking part in decision making when it comes to the implementation of new technologies.

These changes are due to technological innovations in the accounting industry that have contributed to improved productivity and operational efficiency. The replacement of manual accounting with computerized tools has contributed greatly to reducing errors, resulting in more accurate reporting.  

The accounting industry has reaped many benefits from adopting technology. Such benefits include virtual storage of documents, compliant online tools for accounting and taxes, use of communication platforms that ease connecting with customers, forensic analysis tools, and filing financial details with authorities.

Technology such as cloud computing means that a CPA can collaborate with clients in real time. This means that you are able to provide your clients with frequent business insights for performance monitoring and decision making.

All this makes it crucial for any company or professional to adopt these new technologies to remain competitive in today’s digital world.

Impact on the Accounting Profession

There is mixed opinion regarding how technology impacts the accounting industry. With the new technologies adopted in accounting, the accountant and finance professionals are expected to master new skills beyond numbers.

As accounting technology continues to evolve, there are considerations about necessary skill sets for new hires. Recruiters also are searching for candidates with extra skills relating to emerging technological trends.

Obviously, some roles such as manual entry and calculations have become obsolete. But technology has introduced new roles that require that accountants to approach the business environment differently so as to drive value. This calls for a mindset ready to embrace the constant state of change.  

Why It’s Necessary to Have IT Skills

Today it’s not enough just to have basic training for software programs used in accounting. CPAs are now becoming part of strategic planning teams. Their new roles include developing new processes, giving advice and even performing future forecasts. You may find an accountant working with a system programmer when developing a digital financial process.

This means that apart from learning accounting practices, an accountant should know how to integrate accounting processes with IT programs. Systems used today require technical skills. Such systems include strategic software applications like enterprise resource planning (ERP) and supply chain management (SCM) systems. Other technologies such as cloud computing have taken accounting to new levels that require advanced skills.

We also can’t ignore the fact that technology has also brought with it new challenges. Data security is one such challenge. This requires that accountants also be equipped with knowledge on protecting data and computer systems against cyber threats.

Technology Skills for Accountants

As we have seen, the accounting industry has been impacted by technology. For an accountant to remain relevant in the accounting industry, here are some necessary technology skills:

  • Knowledge of enterprise resource planning (ERP) and supply chain management (SCM) systems
  • Experience in cloud computing
  • Data analytics skills
  • Knowledge of business intelligence software
  • Understanding how processes work
  • Advanced Excel ability

What the Future Holds

Initially, it was thought that the advent of accounting tools would make the accountant redundant. But these tools have helped professional accountants become financial advisors, business counselors and strategists. Hence, the growing automation of accounting tasks presents a great opportunity for professional accountants willing to take up new skills.

It is critical that accountants understand the importance of investing in themselves. This will require learning skills beyond number crunching and preparing tax returns.

It’s also important to note that apart from technological skills, the new work environment will require additional skills such as customer service, business insight, flexibility, communication skills, regulatory knowledge and leadership abilities.

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