In our previous post we gave 3 tips and tricks on maintaining a healthy work-life balance while working from home. We would like to continue this week on providing further tips, as it pertains to maintaining good posture. I recall in grade school being told over and over to “sit up straight.” Now more than ever this small piece of advice, while it seemed so inconsequential then is essential now. Good posture is essential to maintaining a healthy work from home lifestyle during this pandemic. Some may find this difficult, especially since many may not be utilizing dedicated office furniture which is designed to assist in maintaining proper posture.

I think most of us have noticed new aches and pains in our back and neck, or is it just me? While it may seem inviting to sit or lay on your bed and couch, this not only is bad for productivity, but it is also bad for maintaining good posture. Now that you are up (kidding), pick out a comfortable chair in your home, preferably an office chair with lumbar support like what you would have at the office. If you do not have a chair with adjustable lumbar support, use a small pillow or towel roll on your lower back to help you prevent slouching over your desk by keeping your lower back (lumbar area) supported while sitting up straight. Another option that has become popular during the pandemic, while admittedly stylish to the younger crowd, are gaming chairs. These chairs, which resemble a plush race car seat, provide excellent lumbar support and comfort as they are designed for gamers which often sit for long periods of time similar to an office environment. 

Other things you will need to investigate are things like the height of your desk to prevent you from slouching over your keyboard. If your screens have you looking at a downward angle, consider stands for your screens or laptop. These will raise your screens or laptop and are often adjustable to suit people of all heights and are inexpensive. If you are in a pinch, a stack of books or reams of paper will suffice.

Always remember like your doctor or chiropractor may say, keep your head above your shoulders and hips, sit evenly, and most importantly sit up straight. We also recommend that you take breaks every so often getting up and stretching to prevent aches and pains from setting in.

Working from home has certainly presented new challenges. We would like for you all to continue to have a healthy lifestyle despite less than ideal settings.

For more tips please see this article from Linea Rochford at Performance Therapies, P.C.

By Jonathan Rivlin, CPA

It seems that the world ends at the start of each new tax season.

We go to our usual cycle of continuing ed classes, which, as an aside, I have to say that seeing Bob J and Bill L go at each other over the webinars is one of the most reassuring things to be grateful for in the era of COVID19. Moving on; the continuing ed classes we take in the waning months of the tax year bring with it a host of new rules, modifications, extensions, and all sorts of…crazy.

One of the fathers at my kids’ daycare said that he would like to consider moving to the tax prep industry. I asked him what he was doing currently and he said, “I build radars for guided missles.” Not making that up. I replied that, “You can’t prepare a tax return, stick with your current job.” He got offended, as if I were impugning his intelligence.

Not true! I explained that, “You deal with logic and rational thought processes. Your equations are F=MA and a2+b2=c2. We deal with Assets = Liabilities + Equity and Gross Income – Adjustments = AGI – (Greater of Standard or Itemized Deductions) + AMT (if applicable) – non-refundable credits + excise and surtaxes – payments and refundable credits – liability or refund (to apply or payout) + penalties and interest if applicable. You deal with gravity and the laws of mechanics. We deal with the gravity of fear and greed.”

He stared at me as if I were speaking gibberish.

Finally, I said it like this, “I only got better at practicing in this profession when I stopped trying to understand the tax law.” He then laughed and we went into the daycare to pick up our kids.

The point of this story is that while we attempt to impose a professional construct of rational thought and reasoned processes, the fact is that there’s a lot of subjectivity in what we do.

No greater evidence of this is felt than when I hear the conversations at a lunch break (when we still had in-person seminars) about how, “I’m going to retire after this season! This new law or that new rule makes no sense!” That would be our fear, or exasperation.

Recently, in the barouque time of February 2019, one of the big issues we were rending our garments over was the IRS’ position that we’d have to include the value of parking spaces in the gross income of our employees thanks to some problematic interpretations of IRC Section 274s more arcane sub parts.

Your humble Tech Tips was dispatched to write a post about it. I did research the matter, noting that the AICPA sent a detailed request for clarification to the IRS, of which the latter responded to the former with IRS Rev Proc 2019-99.

The general idea was that whether an employer owned a building, or simply rented an office, they’d need to take some insane conjuring of numbers to ascertain the value of a parking spot and remove said value from rent expense and include it in salaries expense.

I can think of a lot of replies to such a notion and none of them are fit to print, which is one reason that article was never written. Your humble Tech Tips couldn’t get more than a few sentences out without wanting to kick a hole through the monitor.

Recently, the IRS realized that even they can push too far and reversed itself with the requirement.

The entire controversy rendered itself moot.

The point here is to take all of the nonsense that gets thrown our way with a grain of salt. Even the QBID stuff hasn’t been that big of a deal. It’s just another form to fill out – and bill for. And it will go away at some point.

Tax provisions come and go.

We need to keep an even keel.

We’d like to hear from you! Please submit your own tech tips to us! We will award a free subscription to The Tax Book to the person who submits the best tip. Please submit your tips to this email address: techtips@msatp.org

Thanks, and catch you next time!

TT

Records Retention Guidelines to Remember

Warm weather and rainy days bring the urge to purge. But before you clean your file cabinets or declutter your computer files, it’s important to review these guidelines.

 

Federal Tax Records

Most tax advisors recommend that you retain copies of your finished tax returns indefinitely to prove that you actually filed. Even if you don’t keep the returns indefinitely, hold onto them for at least six years after they’re due or filed, whichever is later.

It’s a good idea to keep records that support items shown on your individual tax return until the statute of limitations runs out — generally, three years from the due date of the return or the date you filed, whichever is later. Examples of supporting documents include canceled checks and receipts for alimony payments, charitable contributions, mortgage interest payments and retirement plan contributions. You can also file an amended tax return during this time frame if you missed a deduction, overlooked a credit or misreported income.

Which records can you throw away today? You can generally throw out records for the 2015 tax year, for which you filed a return in 2016.

You’re not necessarily safe from an IRS audit after three years, however. There are some exceptions to the three-year rule. For example, if the IRS has reason to believe your income was understated by 25% or more, the statute of limitations for an audit increases to six years. Or, if there’s suspicion of fraud or you don’t file a tax return at all, there’s no time limit for the IRS to launch an inquiry.

In addition, records that support figures affecting multiple years, such as carryovers of charitable deductions or casualty losses for federal disasters, need to be saved until the deductions no longer have effect, plus seven years, according to IRS instructions.

There are also some cases when taxpayers get more than the usual three years to file an amended return. For example, you have up to seven years to take deductions for bad debts or worthless securities, so don’t toss out records that could result in refund claims for those items.

 

State Tax Records

The previous guidelines are all geared toward complying with federal tax obligations. Ask your tax advisor how long you should keep your records for state tax purposes, because some states have different statutes of limitations for auditing tax returns.

Plus, if you’ve been audited by the IRS, states generally have the right to resolve their own issues related to that tax year within a year of the federal audit’s completion. So, hold on to all tax records related to an IRS audit for a year after it’s completed.

 

Essential Personal Records

Your files probably contain more than just tax information. Certain essential documents should be kept indefinitely. Examples include:

• Birth and death certificates,
• Marriage licenses and divorce decrees,
• Social Security cards, and
• Military discharge papers.

These should be kept in a safe location, such as a locked file cabinet or safety deposit box. If stolen, essential documents can be used to steal your identity. In turn, a stolen identity can be used to file for bogus tax refunds or apply for credit under your name.

 

Bills and Receipts

In general, it’s OK to shred most bills — like phone bills or credit card statements — when your payment clears your bank account or at year end. However, if a bill or receipt supports an item on your tax return, follow the tax guidance above.

If you purchase a big-ticket item — like jewelry, furniture or a computer — keep the bill for as long as you have the item. You never know if you’ll need to substantiate an insurance claim in the event of loss or damage.

 

Real Estate Records

Keep your real estate records for as long as you own the property, plus three years after you dispose of it, and report the transaction on your tax return. Throughout ownership, keep records of the purchase, as well as receipts for home improvements, relevant insurance claims and documents relating to refinancing.

These documents help prove your adjusted basis in the home, which is needed to figure any taxable gain at the time of sale. They can also support calculations for rental property or home office deductions.

 

Investment Account Statements

To accurately report taxable events involving stocks and bonds, you must maintain detailed records of purchases and sales. These records should include dates, quantities, prices, and dividend reinvestment and investment expenses, such as brokers’ fees. It’s a good idea to keep these records for as long as you own the investments, plus until the expiration of the statute of limitations for the relevant tax returns.

Likewise, the IRS requires you to keep copies of Forms 8606, 5498 and 1099-R until all the money is withdrawn from your IRAs. With Roth IRAs, it’s more important than ever to hold onto all IRA records pertaining to contributions and withdrawals in case you’re ever questioned.

If an account is closed, treat IRA records with the same rules that apply to stocks and bonds. Don’t dispose of any ownership documentation until the statute of limitations expires.

 

Got Questions?

Before you clear your files of old financial records, discuss the records retention requirements with your tax advisor. You don’t want to be caught empty-handed if an IRS or state tax auditor contacts you.

Around the world, countries that have multinational corporations completing business transactions within their borders will tax the income that those companies generate. In the U.S. however, U.S. based multinationals are also taxed for income they’ve accumulated outside of the U.S. However, they receive a tax credit for any foreign income taxes they’ve already paid.

American residents with multinational businesses are taxed at the same rate as most domestic corporate income: 35%, the current maximum rate. Because multinational companies receive a tax credit for foreign income taxes they’ve already paid, many are able to use the credits earned from paying taxes in high-tax countries to counteract taxes they would have to pay for earning income in a country with lower taxes.

The statutory corporate tax rate in the U.S. has pretty much remained the same since 1986. Conversely, most other industrial countries have lowered their tax rates which has made the U.S. corporate tax rate higher than the top corporate tax rate of other leading economies.

Despite the high corporate tax rate, in 2014, the U.S. raised less revenue from corporate income taxes as a share of GDP than Japan, Canada, and Italy. Due to economic conditions and the sudden changes in investment incentives, corporate revenue has varied over the years in the U.S. — however, it has remained over 2% since the ‘80s. 

The Congressional Budget Office has projected though, that corporate revenue will decline to about 1.5% of the GDP at the end of the next decade due to factors such as the continued shifting of overseas profits. If you have a client who has a multinational business, learn how to make sure they are reporting their earnings correctly by attending MSATP’s International Tax Seminar on Wednesday, October 17. To learn more about what the seminar will entail, watch our Facebook Live from last week with the seminar’s instructor, Eli Noff, of Frost & Associates.

The International Tax seminar is being offered as both a seminar in Columbia, MD, as well as a webinar. Register now!