David Moseman CPA, Author at CironeFriedberg, LLP

The Importance of Tax Planning

January 25, 2023 by David Moseman CPA

The purpose of tax planning before your fiscal year end is to minimize your tax liability. An experienced tax CPA will scrutinize your revenue, expenses and business processes to ensure that you are taking maximum advantage of all applicable opportunities to minimize your tax liability and take advantage of all tax savings programs. That is why tax planning is as important as preparing your tax return.

Careful tax planning is critical for business success in an unpredictable economy, like what we are currently experiencing. As we enter tax season, there are many factors to examine in preparing your individual tax return, too, including changes in marital status and welcoming children into your growing family. Owning a business or rental properties and various investments adds a layer of complexity of its own.

Are you sure your tax strategies are optimal for your personal situation?

The IRS is looking closely at cryptocurrency transactions. Will this affect you?

Tax planning is necessary for individuals facing the challenges of owning and managing a business and preserving and growing their wealth in a complex regulatory environment. Tax laws continually change and evolve. Our experienced tax CPAs stay up-to-date and informed about the latest tax changes. We work with many business owners to ensure that they can take advantage of any tax saving strategies available.

Once your tax returns are completed and filed, it is a good time to review their impact on your overall finances and business strategies with your CPA. So, as we end one tax season, we begin planning early in anticipation of the next. After all, the purpose of tax planning before your fiscal year end is to minimize your tax liability going forward.

Have Questions?

If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford) or email us at info@cironefriedberg.com.

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CironeFriedberg recent tax articles:

IRS Increases Interest Rates for Quarterly Payments

The Tax Implications of Closing a Business

What Business Owners Need to Know About Depreciation

The Impact of Virtual Currency on Income Tax Reporting

Important January and February Tax Deadlines

December 28, 2022 by David Moseman CPA

As you head into a new year, mark these dates on your calendar. There are tax deadlines for both individuals and businesses early in the year.

Important 2023 Tax Deadlines and Dates for Individual Filers

Individual Filers are employees, retirees, self-employed individuals, independent contractors, and gig or contract workers. Be sure to work closely with your CPA to understand how tax deadlines may affect your personal situation.

January 17 – Estimated Tax payments for 4^th quarter 2022 are due. This covers the time period of September 1 through December 31, 2022. Self-employed persons or those earning other income without tax withholding make quarterly estimated tax payments. Work closely with your CPA to be sure you are not at risk of for penalties for improper payments.

January 31 – Employers send W-2 forms. The IRS requires employers to send employees a W-2 no later than January 31 following the close of the tax year.

January 31 – 1099 forms must be sent. 1099 forms, including 1099-NEC,1099-MISC, and 1099-K are sent to those earning income as independent contractors, gig workers, or from self-employment. These forms are also sent to those receiving income from interest, dividends, prize winnings, rents collected, royalties, or brokerage accounts.

February 15, 2023 – Reclaim exemption from withholding. If you chose to claim an exemption from withholding taxes from your paycheck last year by filing a Form W-4, you’ll need to re-file the form by February 15th. You need to file this exemption request if you expect to have no tax liability this year and also had no tax liability in the prior year.

Important Tax Deadlines and Dates for Businesses

Businesses include Partnerships, LLCs, C Corps (using Form 1120), and S Corps (using Form 1120S)

January 16, 2023 – 4th Quarter 2022 estimated tax payment is due. This covers the time period of September 1 through December 31, 2022. Work closely with your CPA to be sure you are not at risk of for penalties for improper payments.

January 31, 2023 – Employers send W-2s forms to employees. The IRS requires employers to send employees a W-2 no later than January 31 following the close of the tax year.

January 31, 2023 – Send certain 1099 forms. You must send 1099 forms, including 1099-NEC,1099-MISC, and 1099-K to those earning income as independent contractors. These forms are also sent to those receiving income from interest, dividends, prize winnings, rents collected, royalties, or brokerage accounts.

Have Questions?

What To Know About Fringe Benefits and Taxes

December 11, 2022 by David Moseman CPA

You can generally deduct the amount you pay your employees for the services they perform. The pay may be in cash, property or services. It may include wages, salaries, bonuses, commissions or other noncash compensation such as vacation allowances and fringe benefits.

A fringe benefit is a form of pay for the performance of services beyond your employees’ normal rate of pay and can be property, services, cash or cash equivalents such as savings bonds. It can also be intangible, as in the use of a company car or life insurance.

You may deduct fringe benefit expenses if the goods, services or facilities are treated as compensation to the recipient and reported on Form W-2 for an employee or Form 1099-NEC for an independent contractor. (If the recipient is an officer, director or beneficial owner — directly or indirectly — or other specified individual, special rules apply.)

Let’s take a look at specific fringe benefits:

Meals and lodging — Generally, you can deduct 50% of certain meal expenses and 100% of certain lodging expenses provided to your employees. If the amounts are deductible, deduct the cost in whatever category the expense falls. You can deduct the full cost of the following meals:
- Meals you furnish employees with as part of providing recreational or social activities.
- Meals you furnish employees at a work site where you operate a restaurant or catering service.
- You generally can’t deduct meal expenses unless you (or your employee) are present at the furnishing of the food or beverages and such expense is not lavish or extravagant under the circumstances.

However, with food and beverage expenses incurred with entertainment expenses, no business deduction is allowed for any item considered to be entertainment, amusement or recreation. If food and beverages are provided during an entertainment activity, the food has to be separate from the entertainment costs, and then you may deduct 50% of the bill. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides for a temporary 100% deduction until Jan. 1, 2023.

Transportation (commuting) benefits — Providing transportation via a commuter highway vehicle, transit passes, or qualified parking are no longer deductible. No deduction is allowed for any expense incurred for transportation, reimbursement or in connection with travel to get to work, except when it means the safety of your employee or for qualified bicycle commuting reimbursement.
Employee benefit programs — For accident and health plans, adoption assistance, cafeteria plans, assistance for dependent care or education, life insurance coverage, and welfare benefit funds, you can generally deduct the amounts you spend in whatever categories they fall. However, you can’t deduct life insurance for any person with a financial interest in your business if you’re directly or indirectly the beneficiary of the policy. For welfare benefit funds, your deduction for contributions is limited to the fund’s qualified cost for the tax year. If your contributions are more than its qualified cost, carry the excess over to the next tax year.

This is just a summary — there are many other exceptions and provisions. Since laws and regulations are complicated and can change with little notice, be sure to seek professional advice to ensure that your benefits are reported and taxed properly.

Have Questions?

Funding Marital Gift and Credit Shelter Trusts

December 4, 2022 by David Moseman CPA

Baby boomers are inheriting their parents’ wealth, and their children are receiving funds transferred through a variety of trusts established under their parents’ estates. You may find yourself responsible for managing the wealth transfer process.

In the past, banks and trust companies were tasked with dealing with estates, but these days, individuals are taking on the jobs of executors and trustees. If you lack experience in administering estates and trusts properly, you may turn to the attorney who prepared the will or trust. But some lawyers refuse. They point to the potential conflict of interest and ethical problems swirling around questions of whom they represent — the fiduciary, the estate or the surviving spouse.

Estate administration involves complex questions about accounting and taxes, so if you have no background in those fields, you’ll need an adviser. While the knee-jerk reaction always has been to seek out an attorney to administer an estate, you may join an increasing number of folks who are turning to accountants. They are, after all, the best people to administer credit shelter trusts, an increasingly popular tool in estate planning.

One of the more popular credit shelter trusts is the marital gift trust, which preserves estate tax exemptions to be used later by trust beneficiaries. The will bequeaths to the trust an amount up to the value of the estate tax exemption. The remainder of the estate is then passed directly to the remaining spouse tax-free using the unlimited marital estate tax deduction. This divides an estate in a way that reduces the overall amount of estate tax paid.

In order for the credit shelter and marital trusts to be used effectively, married couples should examine how their individual assets are titled and whether there are sufficient assets to fund the marital trust exemption of 12.06 million dollars in 2022. If all assets are held jointly with rights of survivorship, the joint assets would pass directly to the spouse and no exemption would be utilized.

Assets placed in a credit shelter trust remain tax-free even if they increase in value. On the death of the surviving spouse, the value of the trust assets won’t be included in his or her estate. One benefit of the marital gift trust is that the surviving spouse is not required to take income distributions on an annual basis. Instead, the principal remains intact, which may increase the trust’s overall value for all parties.

The rub is capital gains on the assets. The value of the assets will continue to grow during the remaining spouse’s lifetime and eventually will be taxable to heirs. This is an issue that your CPA can advise you on.

Portability has changed marital estate planning by allowing more options. It may be better to create a marital gift of credit shelter trust on the first death and not use the deceased spouse’s exemption. By porting, the survivor will have the benefit of two estate tax exemptions to shelter the assets from any estate tax. If the first spouse to die does not use the entire estate exemption, Form 706 is required to be filed with the IRS if a portability election is desired even if no requirement to file exists.

Dividing property between the marital gift and credit shelter trusts is required only if the decedent left a surviving spouse and the estate more than the current estate exemption of 12.06 million.

Careful estate planning can eliminate a significant estate tax burden for surviving spouses and their beneficiaries. Credit shelter and marital gift trusts can be useful tools in preserving an estate’s assets. Determining which option is best in a given situation depends on the amount of control desired by the original donor and the income needs of the surviving spouse.

The number of trusts is increasing primarily for tax purposes, which means your chances of being asked to be an executor or trustee is growing too. While technology has made trust information easier to deal with, it still wouldn’t hurt if you turn to a CPA who’s in a unique position to provide professional services as you deal with the estate or trust. Your accountant can interact with lawyers, financial planners, other CPAs, insurance agents, realtors and members of the decedent’s family. Give the office a call.

Have Questions?

Home Sellers’ Profit Exclusions Aren’t One-Time Opportunities

November 23, 2022 by David Moseman CPA

The tax code authorizes “exclusions” that allow home sellers to completely sidestep federal and state income taxes on sizable portions of their profits when they unload their principal residences. The profit exclusions are as much as $500,000 for married couples who file joint returns and $250,000 for single filers and couples who file separate returns. So says Julian Block, an attorney and former IRS special agent.

Contrary to what many sellers mistakenly believe, the exclusions aren’t one-time opportunities. They can avail themselves of the exclusions as often as every two years.

The law allows a seller we’ll call “Louise” to qualify for the exclusion only if she satisfies two requirements:

She has owned and lived in the property as her principal residence or main home for at least two years out of the five-year period that ends on the date of sale.
She can’t have excluded the gain on the sale of another principal residence within the two years that precede the sale date.

An accommodating Internal Revenue Service cuts Louise some slack on the two years that she occupies the home. The two years don’t have to be consecutive; they can actually be off and on for a total of two full years.

What about short temporary absences for vacations or other seasonal absences? No problem, says the IRS. It’s OK for Louise to count them as periods of owner use. This holds true even if she rents out the property during the absences.

The IRS doesn’t limit exclusions to sales of conventional single-family homes. It considers Louise’s principal residence to be any of the following:

A condominium.
A cooperative apartment.
Her portion of a multi-unit apartment building.
A house trailer.
A mobile home.
A houseboat or yacht that has facilities for cooking, sleeping and sanitation.
A vacation retreat that she moves into full time after retirement.

Another plus: The location of her principal residence doesn’t matter. It can be outside the U.S.

Partial profit exclusions. Suppose Louise sells another home within the previous two years or fails to satisfy the ownership and use requirements; all is not lost. She may be able to claim a partial exclusion.

Primary reasons for sales. The IRS permits sellers to avail themselves of reduced exclusions only when the primary reasons are health problems (for example, if Louise moves to a new school district for her special-needs child); changes in employment; or certain unforeseen circumstances, broadly defined to include divorces or legal separations, or natural or man-made disasters that cause residential damage — floods, for example.

An example: Louise is single and has lived in her dwelling for just 12 months before she moves to a new job in another city. She can exclude a gain of as much as $125,000 — 12 months divided by 24 months, or 50% of her maximum allowable $250,000 exclusion.

The bottom line? Don’t make assumptions about what you may or may not be allowed to deduct. Work with a tax professional to make sure you get everything you’re entitled to claim.

Advising Business Owners During Volatile Economic Times

November 6, 2022 by David Moseman CPA

The landscape of accounting and taxation has been very dynamic over the past several years. Tax reform, the adoption of digital currency, pandemic-induced debt, supply chain disruptions and workforce changes are layered upon an already complex and regulated industry.

The purpose of tax planning before you are in the throes of tax season is to minimize your tax liability. At CironeFriedberg, our experienced CPAs take a holistic view of the impact of new and existing tax programs and regulations that can be implemented to optimize your tax situation.

CironeFriedberg clients are C corporations, S corporations, Limited Liability Companies (LLCs), partnerships, and sole proprietors across various industries. We assist business clients to structure transactions in the most advantageous tax manner to help minimize the tax impact and take advantage of tax benefits.

“Our business clients in all industries are working to improve product and service delivery while controlling costs in a very challenging economic environment. We listen to them and approach each client as a having a unique set of needs and challenges. Our team collaborates in ways to find and implement creative approaches to deliver the best solutions possible.”

– Tony Cirone, CPA

Business Mergers, Acquisitions, Sales, and Expansion

Business owners and family businesses rely on us to advise them on business structure, acquisitions, sale of a business, and compensation plans for management and owners. When faced with growing through acquisition or transferring a business to family members, they seek our advice. They know CironeFriedberg has their back.

At CironeFriedberg our Certified Valuation Analysts offer specialized knowledge and expertise in valuations as required for purchase, sale, merger, gifting or tax election requirements. Our valuation professionals are trained in current professional standards and hold Certified Valuation Analyst (CVA) and Accredited in Business Valuation (ABV®) certifications.

Our unique expertise in Litigation involving shareholder and partner disputes, dissenting shareholder actions, and related expert testimony is also in high demand.

Continually Changing and Evolving Tax Laws

Our experienced tax CPAs stay up-to-date and informed on complex and constantly changing tax regulations. David Moseman, CPA, is one of the partners in charge of tax services at CironeFriedberg and oversees a team of experienced accounting professionals with excellent critical thinking skills.

Tax laws are complex and continually changing. Our CPAs specialize in Federal and state tax laws and regulations and are committed to delivering accurate and timely tax filings. At CironeFriedberg, we put our clients’ needs front and center. We listen. Our team has the technical expertise and experience required to ensure efficient tax compliance and effective tax planning for each client.

“We are constantly expanding our knowledge to proactively meet our clients’ needs. There are new IRS regulations affecting many areas such as cryptocurrency and digital currency taxation. We stay on top of these changes and are continually expanding our expertise and capabilities to serve the needs of new clients including those stepping into the Cannabis industry.”

– David Moseman, CPA

Careful tax planning is critical for business success in today’s volatile economy. In a complex regulatory environment with global pressures and challenges beyond our control, strategic tax planning is necessary to achieve business success and preserve and grow wealth.

The Importance of Tax Planning

Have Questions?

Important January and February Tax Deadlines

Important 2023 Tax Deadlines and Dates for Individual Filers

Important Tax Deadlines and Dates for Businesses

Have Questions?

What To Know About Fringe Benefits and Taxes

Have Questions?

Funding Marital Gift and Credit Shelter Trusts

Have Questions?

Home Sellers’ Profit Exclusions Aren’t One-Time Opportunities

Advising Business Owners During Volatile Economic Times

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