Wow! It seems like we just started March and we’re already moving into April! As we move into the final stretch of tax season, we’re recapping this month’s news for you, just in case you missed it amid the tax-related hubbub.
MBS Accountancy: November Review
This month, our blog focused on clarifying common accounting myths, outlining unique ways a CPA is qualified to help your business succeed and summarizing the TCJA’s changes to depreciation.
3 Myths You Shouldn’t Believe About Accountants
In this post, we discussed three common myths among business owners regarding accountants. Specifically, we examined the main differences between an accountant and a bookkeeper, outlined the ways that an accountant can help you with your business’ strategy, and clarified that it’s okay (and sometimes best) to switch accountants.
3 Ways A CPA Can Make Your Business Successful
There’s often a lot of confusion around the distinction between accountants and certified public accountants (CPA). In this post, we outlined three reasons a CPA is more beneficial to business owners who are interested in growth and long-term success.
4 Key Changes To Depreciation Under The TCJA
Last week’s post focused on the changes to depreciation brought by the Tax Cuts and Job Act (TCJA). In particular, we discussed details of bonus first-year depreciation and changes to the definition of qualified property, luxury auto depreciation, Sec. 179 deduction changes, and recovery period changes.
California’s Franchise Tax Board Highlights
Inappropriate Severance Pay Taxation On Veterans
Under the Combat-Injured Veterans Tax Fairness Act (CIVTFA), veterans who retired from the Armed Forces due to combat-related injuries are allowed to file for a refund of any severance pay that was wrongfully taxed. This month, the Tax Board reminded veterans that, because California does not conform to the federal regulations that extend this refund timeframe, they should either file for a refund within Calfornia’s statute of limitations (generally about two years) or wait until the corresponding federal claim is approved.
To file for a refund, veterans should submit a Schedule X with a claim letter, Form 540 (either standard 540, 540EZ, or 540NR) for tax years including and after 2017, or a Form 540X for tax years before and including 2016. Additionally, any letters from the IRS that concern the refund or IRS allowance for the refund should be included with the Schedule X.
Special Note On Itemized Deductions
Though the TCJA adjusted the standard deduction so that it’s generally now more beneficial than itemizing your deductions, the FTB reminded us that California doesn’t allow state and local income taxes (SALT) to be deducted on our state returns. For federal taxes, deductions are limited to $10,000 if you’re single or filing jointly, or $5,000 if you’re married filing separately. For charity contributions, federal laws restrict your deductible cash contributions to 60 percent of your adjusted gross income, while California limits your charitable donations to 50 percent of your adjusted gross income.
IRS News Highlights from March
Fraud Warnings For 2019
The IRS’ annual “Dirty Dozen” list outlined 12 techniques that are used by scammers to cheat taxpayers out of refund money or gain access to their personal information. For instance, scam artists often attempt to persuade businesses to inflate their expenses to maximize their deductions, taking their fee and leaving you with a future filled with tax payments. To reduce the possibility of this kind of bad advice, we recommend you take time when choosing your CPA and question them about the reasoning behind any confusing advice. Fake charities were also highlighted in this list of scams due to their success in recent years at scamming businesses and individuals out of contribution-related deductions. To avoid fake charities, use the IRS tool to look for legitimate charities before you hand over your sizable donation.
Revisions To EIN Application Process
Beginning May 13, 2019, the Employer Identification Number (EIN) application process will be revised to only allow individuals with an SSN or ITIN to be listed on the EIN application as the responsible party. You can use the Form SS-4 instructions to determine the appropriate responsible party for your business.