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Sweeten CPA, 9501-B Menchaca Road Ste 210, Austin, TX (2026)

09/01/2022

Keeping us in stitches since 2018, the Sweeten team has many laughs with Lisabeth. From her first jump into accounting to her 20 years of working in the Lottery Commission department for the State of Texas, she’s a no-nonsense CPA with a love of learning. She likes things to be “by the book” and isn’t afraid to get her hands dirty to sort raw data into accurate drafts. Beyond the screen, Lisabeth has a heart for her animals and farm toys, but if it’s good weather she’s likely to be out fishing in the early morning hours. She enjoys the big Texas sky and her close friendships with the team.

05/27/2022

Meredith Schrup has been with Sweeten CPA since its infancy, one of our very first team members. She remembers working congruously with Michele and Jackie in Michele's house decades ago. Laughingly, she also remembers the pain of needing to update a tax return and having to reprint the entire return. Thank goodness we’ve gone paperless! When asked about her experience watching the company grow from a desk in a living room to the successful firm it is now, she spoke of the intention in the business by putting people first. By protecting the environment of firm, it leads people to a more tranquil work and home life. Ironically, she never thought she would have a career in accounting. In fact, Meredith only met Michele when she decided to take a continuing education course to help her wife’s business and Michele was her instructor. Nineteen years later, she is still here! When she’s not rocking reconciliations, she spends time with her wife and dog, Miss Kitty, in nature. Whether it’s bird watching, walking, or gardening, there is rejuvenation for her family in the sun! Next time you chat with Meredith, ask her what she’s currently growing in her home garden.

04/28/2022

Evolution of Accounting Systems

We’re familiar with all the stages of the awesome journey that is business ownership! There are different levels of professionals for each stage, but you call us at stage three and beyond, okay? Okay!

Stage One: It starts with an idea. It always starts with an idea. A business starts as a matter of necessity to support the dream. The business is simple: receipts in a folder, income in the entrepreneur's head, the bank balance is the measure of the business.

Stage Two: Over time, the business becomes more complicated. There are multiple jobs simultaneously. Maybe the deposits are a little too much to remember, so an excel exists somewhere to sum up the income. It's a struggle to compare income from one year to another, but it can be done in a few hours of pen and paper.

Stage Three: Oh hello, QuickBooks Online or Xero. Numbers are getting organized; there are categories for expenses; at this stage invoices and bills are flying around, too. Finally, the business has its own accounts and they're being reconciled monthly.

Stage Four: There's payroll; there's receivables; there's payables. The administrative team watches cash flow and incoming payments before paying every bill that hits the mailbox.

Stage Five: Now payables require an approval process because the organization is getting so big. Employees are clocking in and out by job and activity so profitability can be tracked by project. The Chart of Accounts is so detailed, umbrella accounts are introduced so the Profit & Loss can be rolled up to its constituent cost centers.

Stage Six: Here begins financial forecasting. Fancy financial footwork is required to match expenses to revenue, i.e. CPAs are utilizing journal entries to allocate payroll to the periods accrued, defer revenue properly, spread out prepaid expenses over the covered periods, and more. Everything is tied up in monthly journals, including interest, depreciation, and bad debt allowance. This stage often necessitates an internal CFO. Stage six and beyond will probably mean an internal financial team for your business. Our accounting department sweet spot is a company between one and twenty million in top line revenue, but, when you move past that range, we'll help interview, vet, and hire the right in-house team. We make it a smooth phase-out from Sweeten to an internal team, when the time comes.

Sweeten CPA journeys beside you as you transition from phase to phase, even, yes, to help you hire our replacement! We're rooting for your business and we're here to support you.

🖥️ From the desk of : Michele Sweeten
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04/21/2022

TaxMD – The Dangers of Googling for Tax Advice

Use the internet with caution when searching for tax advice. Much like googling for medical advice based on your systems always leads to a diagnosis of cancer, posts about tax deductions can often lead you astray. We have found that the articles written in the general category of tax deductions swing widely on the scale from accurate to misleading. In fact, I often read web articles with headlines like “12 Common Tax Write-offs”, “Boost Your Refund with These 13 Tax Deductions”, “Tax Credits Most Small Business Owners Don’t Capture” just for entertainment to see what sexy jargon they choose to drape over tired tax vocabulary. Most of the time, I find only deductions that are either very common, in which case tax preparers are automatically collecting information for deduction purposes, like deducting mortgage interest or property taxes on your personal residence, or very uncommon, where the chances that it applies to you are very slim.
There’s no harm in reading these articles and occasionally you will learn something new. But the critical component to an accurate “diagnosis” is to talk to your CPA about the specifics of whether a deduction or credit applies in your situation. You may have to pay for that conversation, but who better to take a generic tax concept and apply it to your specific situation than the CPA who has all the knowledge about your unique tax landscape? Employing new tax strategies should be a team sport that includes your CPA.

🖥️ From the desk of : Michele Sweeten

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04/19/2022

See you tomorrow!

04/14/2022

The tax trap of converting your primary residence into a rental property

Many people, and certainly most realtors, are aware of a tax law that allows you to exclude $250,000 ($500,000 for married couples) of gain from the sale of your personal residence, as long as you meet the requirement of living in the house for at least two out of the last five years from the date of the sale.
And this is indeed an awesome part of the Tax Code (IRC §121). But what many people, including realtors, don’t know is that the rules of §121 are much more complex than the simple “two-out-of-five-years rule”. Some of the rules in §121 significantly reduce the gain exclusion if you’re not careful.
The biggest rule almost always overlooked is the rule about “periods of non-qualified use”.
Section §121 says “nonqualified use means any period during which the property is not used as the principal residence of the taxpayer or the taxpayer’s spouse or former spouse.”
This is where the rental property trap comes in. Sometimes a taxpayer has the opportunity to move to a new house without having to sell their old primary residence (for example, receiving a new house as inheritance). Oftentimes, when this happens, the taxpayer decides to convert their old residence to a rental property after they’ve moved into the new place.
Then, after a few years of renting the property, they decide they would actually like to sell the house instead of continuing to rent it. Typically, the tax payers still technically satisfy the rule of having the house be the primary residence for two out of the last five years (the two oldest years of the five being the primary residence, and the most recent 2-3 years being the time as a rental property).
The taxpayers sell the house and are then surprised to find out they get hit by a large tax bill related to gain on the sale. Unfortunately, what has happened is that the 2-3 years of renting the property means the majority of the time is considered “unqualified use”.
What’s double trouble about this trap is that it is a proportional disqualification. This means gain on the sale needs to be allocated to the rental property portion of the house’s history in proportion to the amount of nonqualified use time over the past five years. So, if you rented your former personal residence for 3 years, that means that 3/5ths of the gain needs to be allocated to the rental property period, and only 2/5ths of the gain can be excluded as a personal residence.
With the way Texas real estate has been rapidly appreciating in value, a taxpayer could be in for quite the surprise tax bill. For example, let's say that a taxpayer just sold their rental property/former home and had $250,000 of gain from the sale. If the home had never been a rental property (i.e. never had any nonqualified use), then the entire gain from the sale could be excluded under IRC §121.
But lets say the property was rented for the past three years instead. This would mean that 3/5ths of the $250,000 gain (i.e. $150,000) would be allocated to the rental property and would be subject to capital gains tax. That could result in a tax bill of $22,500 to $35,700 depending on the taxpayer's tax bracket.
After accounting for the cost of taxes, as well as the value of gain exclusion lost due to periods of non-qualified use, oftentimes it turns out to be a better return on investment to simply sell the former home instead of renting it.
If you are considering converting your primary residence to a rental property, please reach out to us so we can provide you with additional guidance to see if this really is the most effective strategy.

04/07/2022

Core Value #2 Proactive

"The best time to plant a tree was 20 years ago. The second best time is now" - Unknown

Here are three ways Sweeten CPA stays proactive during tax season that you can do, too! Proactivity is one of our five core values and a mindset we foster internally. From the cents to the projections, we aim to create structures that set you up for success. Here are some key items we love to manage for clients in advisory packages, but you make these smart moves for yourself!

Extensions: Filing an extension for your tax return allows you to file your return at the second deadline. But beware! Filing an extension does NOT allow you to pay any taxes you owe on the second deadline. Again, regardless of filing an extension or not, your taxes are still due at the first deadline. In 2022, that due date is April 18th for personal returns. However, an extension can give you the breathing room to ensure all relevant information is included in the return. To file an extension for yourself, the individual extension is Form 4868 https://www.irs.gov/forms-pubs/about-form-4868

Transcripts: As the IRS receives information about you, they compile this data and it's actually available to you, the taxpayer, in different "transcripts." Account transcripts, available in January or February, have proved pivotal recently as it can verify the amount of stimulus payments or advanced child tax credit a taxpayer received. Our favorite transcript, the Wage & Income transcript, doesn't get released till around July, but it will show forms reported under your SSN, such as W2s, 1099-NECs, 1099-Divs, etc., which is a critical way to double-check you've included all the income from last year. As a CPA firm, we can access your transcripts only by having an active IRS Power of Attorney (Form 2848) filed with the IRS on your behalf. In addition, this IRS POA allows our CPAs to speak to an agent about issues or returns for the authorized set of years. If you do not have a retained CPA with IRS POA authority for you, taxpayers can request their own transcripts at https://www.irs.gov/individuals/get-transcript

Certified Return Receipts: If you are in the unfortunate situation of needing to mail in your return, we recommend you send that with a certified return receipt service. What this does is require the recipient (the IRS mail room) to stamp that return receipt paper with the day it was received, and that receipt is then mailed back to you. In the instance that a client is audited or the IRS claims they haven't received the return, it changes the game to have a certified return receipt showing exactly when your document was received via mail. Call us paranoid, but have you heard about how backed up the IRS mail room is lately? Here is a helpful article by US Global Mail on how to send certified mail https://www.usglobalmail.com/how-to-send-certified-mail/

For these and more tips from our professional team, build an advisory relationship with us as your favorite accounting team!

From the desk of : Mandi Ruth

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04/05/2022

Ecstatic to have had so much fun with Start-Up Kids' Club last weekend!

03/31/2022

Since April 15th is sneaking up on us, here's your reminder to extend your tax return if you haven't filed it yet! "What's an extension?" We're so glad you asked; Let's go over some important tax return extension facts:

1) A tax return extension is NOT a red flag to the IRS. A tax return extension is a legal extension of the deadline for your tax return. It does not increase the likelihood of getting audited! Whether or not you have an extension doesn't factor into your audit risk. You don't suddenly become more interesting to the IRS, but we're sure you're a very lovely, interesting person regardless.

2) A tax filing extension regards ONLY the tax form and NOT the taxes themselves. If you’re confused by the system, don’t worry – you’re not alone. Let’s clear up this commonly frustrating issue. In a normal year, your personal tax return (1040) is due on April 15th. That’s a normal year – the last two years have had some special circumstances, but, even with the special circumstances, these principles apply. When you file “an extension” for your personal tax return, you are extending ONLY the deadline for the form, the tax return, the paperwork – whether electronic or not. Your taxes in a normal year are still due on the original deadline. Yes, even after filing “an extension,” your taxes are still due at the original due date. So, in a normal year, if you extend your return, your return that was due on April 15th is now due on October 15th, while your taxes are still due April 15th. It’s an extension to get your paperwork in order, not an extension to pay the government, a subtle but critical detail. If you believe that you’ll owe on your tax return, filing an extension will not extend your time to pay and you will accrue interest on your taxes due from the original date of filing (April 15th in a normal year) to the day you pay your taxes. If this feels like a cruel joke, we understand.

The best way to handle paying your taxes on time – extension or no extension – is to engage a CPA for tax projections. Our expert team of CPAs use the IRS safe harbor rules and your current financial data to help you estimate what you will need to pay in and by which due dates.

Don’t struggle through the red tape alone. Call in for a CPA consultation

🖥️ From the desk of: Abigail

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03/17/2022

Important tax considerations for cryptocurrencies

Thanks to a number of celebrity endorsements and attention-grabbing headlines, cryptocurrencies have rapidly become more and more mainstream. With the growth in popularity, new crypto investors are discovering the hard way that some of the tax rules can be real “gotchas”.

One of the main reasons for the confusing rules is that cryptocurrencies is that they can be used in different ways, which means that crypto gets classified multiple ways which leads to overlapping tax consequences.

Like the name ‘cryptocurrency’ implies, crypto can be used to purchase everyday goods and services as if it was a typical currency like Dollars, Euros, etc. However, unlike when you buy something with regular dollars, purchasing something with crypto is actually two simultaneous transactions—a regular, everyday-type transaction, and a capital asset transaction. And this can cause a lot of tax problems for unsuspecting crypto enthusiasts.

This additional treatment of crypto as a capital asset, per the eyes of the IRS, is seen similarly to the stock of a publicly traded company (e.g. IBM, Exxon, Amazon, etc). Consequently, when you use crypto to buy a good or service or when you trade one crypto for another, the taxpayer becomes subject to the capital asset rules. You have “sold” your cryptocurrency on the open market as if you had sold your shares of IBM stock and must now determine whether or not there is capital gain or loss on that transaction.

As a result, tax reporting for cryptocurrencies can be complex, and time consuming to analyze. Each purchase, trade, or sale you make with crypto needs to be tracked to deduce whether there are any capital gains or losses that need to be reported on the tax return. Even if someone has purchased crypto simply as a long-term investment - making no other moves - gains may still need to be reported on returns for those transactions during the year.

If you have had transactions in cryptocurrencies this year and have questions about your tax reporting requirements, let Sweeten CPA help you.

🖥️ From the desk of; Andrew Wallin

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03/10/2022

Meet Cari Vincent! She is one of our delightful CPAs who has been with us for almost six years, a new personal record for her career! We love beating that record annually. While she has many areas of expertise, her most well-known niche is her mastery of IRS letters. From soothing clients’ fears of intimidating letters to speaking the language of the IRS agents, she is our go-to for IRS guidance. Between the numbers, Cari shows compassion for the client and a genuine love of helping them with tough situations. Outside of work, she’s picked up crocheting. While her grandmother taught her how to crochet, about 30 years passed before she was inspired by the birth of her first granddaughter to try it again. She now uses this hobby for relaxation and to make items for her family and friends. She’d love for you to ask her what project she's working on now!

Thanks for being on our team, Cari!

02/17/2022

As we begin the tax season, be sure you know where to reach us! (For existing clients)

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