Allison L Cook CPAs PC

12/24/2021

Cook CPAs PC is happy to announce that it has merged with Arkose Tax and Accounting, LLC. Our new website is www.Arkosetax.com, email is [email protected], and phone continues as 303-415-1040. Thank you!

steady and constant.always here for you. Welcome to Arkose Tax & Consulting, a boutique accounting firm taking a personalized one-on-one approach to helping entrepreneurs and individuals make more out of their businesses and their dreams.

12/27/2017

Quick Summary of the New Tax Law

This tax law change is huge and has many moving parts. And given that the House and Senate versions were strikingly different when they headed to the joint committee, there is a ton of bad information floating around about what version actually passed. This overview of the new law just covers the big changes. A more detailed analysis will come during 2018 as the regulations are written.

Things you may consider doing before the end of the year:
• Business owners- pre-pay any expenses that are legal and possible to pre-pay. Rates on this income will be as much as 20% lower in 2018 than 2017 (meaning a 28% tax bracket may pay 22.4% instead)
• Individuals- pay 4th quarter State tax estimate in December instead of January and pre-pay any property taxes, IF:
o Your mortgage interest is between about $4,000 and $10,000 for single or between about $10,000 and $22,000 for Married couples, AND
o You are not subject to Alternative Minimum Tax (line 45 of your 2016 Form 1040)
 If you are subject to AMT, you still get the benefit of the prepayment on your Colorado return (4.63%) but you do not get any Federal benefit.

Basics of the law- Changes to take place for the 2018 tax year:
• Almost everyone will pay lower taxes in 2018 than in 2017. Because of this, it will benefit most businesses and individuals to pre-pay expenses into 2017 if legal and possible.
• Schedule A “misc deductions subject to 2% of AGI” section no longer deductible.
• Schedule A “taxes” section will be limited to $10,000.
• Vehicles will no longer be eligible for Section 1031 like-kind exchange.
• Business entertainment expense is no longer deductible. Business meals remain 50% deductible.
• Various depreciation changes which will make some Fixed Assets currently deductible.
• Standard deduction will rise from $6,300 (single) and $12,600 (MFJ) to $12,000 (single) and $24,000 (MFJ). Because of this, many people will no longer have to itemize deductions.
• No more personal exemption amounts.
• But the child tax credit has increased.
• NO CHANGE to mortgage interest deduction for current mortgages. But new loans in 2018 will have different deductibility rules (limited to $750,000 in debt and new helocs are not deductible). I don’t want to spend much time on this one because the logistics (regulations) surrounding this change have not been written yet. We’re unsure how this will be administered given that old loans are grandfathered.
• For divorces executed or revised after 12-31-18, alimony is no longer deductible for the payer and not taxable to the payee. For existing divorce agreements, there is no change.
• Not all business losses will be deductible against other income.
• NO CHANGE to the gain exclusion on your primary residence. Some speculated that the new rules would require 5 years of the past 8 in residence to exclude the gain on sale of the home. But this has all remained the same (2 years of the last 5).
• Section 529 Tuition plans can now pay for private primary school (but not homeschool).
• No longer can we recharacterize a Roth conversion in the following year.
• The new business income deduction will apply to ALL business income except C Corporations. This means it applies equally to Schedule C (sole proprieterships), Schedule E (rentals), S Corporation and Partnership flow-through income. No changes in entity type are needed. Many articles had this only applying to flow-throughs and not to Schedules C and E.

04/12/2017

https://www.forbes.com/sites/kellyphillipserb/2017/04/11/financial-spring-cleaning-what-records-to-keep-what-to-toss-after-tax-day/

Wondering which records to keep and which to toss after Tax Day? Here's what you need to know for your financial spring cleaning.

04/12/2017

IRS delays employer deadline to provide small employer HRA notice to employees. Generally effective for years beginning after Dec. 31, 2016, an eligible employer—generally, an employer with fewer than 50 full-time employees, including full-time equivalent employees, that does not offer a group health plan to any of its employees—may provide a qualified small employer health reimbursement arragement (HRA) to its eligible employees, and such an HRA won't be treated as a group health plan. Thus, a qualified small employer HRA isn't subject to the tax law's group health plan requirements, including the portability, access, and renewability requirements of the Affordable Care Act (ACA, also known as Obamacare). HRAs are arrangements under which an employer agrees to reimburse medical expenses including health insurance premiums up to a certain amount per year, with unused amounts available to reimburse medical expenses in future years. The reimbursement is excludable from the employee's income.
The qualified small employer HRA rules generally require an eligible employer to furnish a written notice to its eligible employees at least 90 days before the beginning of a year for which the HRA is provided (or, in the case of an employee who is not eligible to participate in the arrangement as of the beginning of such year, the date on which the employee is first so eligible). However, under interim guidance from the IRS, an eligible employer that provides a qualified small employer HRA to its eligible employees for a year beginning in 2017 isn't required to furnish the initial written notice to those employees until after further guidance has been issued by the IRS. That further guidance will specify a deadline for providing the initial written notice that is no earlier than 90 days following the issuance of that guidance.

04/12/2017

New guidance on how small businesses can use research credit to offset payroll tax. Businesses that increase certain research expenses may use a research credit to reduce their income tax liability. For tax years that begin after Dec. 31, 2015, eligible small businesses can take advantage of a new option enabling them to apply part or all of their research credit against their payroll tax liability, instead of their income tax liability. The option to elect the new payroll tax credit may be especially helpful for eligible startup businesses that have little or no income tax liability. To qualify for the new option for 2016, a business must have gross receipts of less than $5 million and may not have had gross receipts before 2012. Under the new rules, an eligible small business with qualifying research expenses can choose to apply up to $250,000 of its research credit against its payroll tax liability.
The IRS recently issued new guidance on this option for eligible small businesses to use the research credit to reduce payroll tax. Eligible small businesses choose this option by filling out Form 6765, Credit for Increasing Research Activities, and attaching it to a timely-filed business income tax return. The business claims the payroll tax credit on its employment tax return for the first quarter that begins after it files the return reflecting the election. For example, if a business files an income tax return on Apr. 10, 2017, with a Form 6765 attached reflecting the payroll tax credit election, it would claim the payroll tax credit on its Form 941, Employer's Quarterly Federal Tax Return, for the third quarter of 2017. An eligible small business that files annual employment tax returns claims the payroll tax credit on its annual employment tax return that includes the first quarter beginning after the date on which the business files the return reflecting the election. The eligible small business also must file Form 8947, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, and attach it to the employment tax return. Under a special rule for tax year 2016, a small business that failed to choose the payroll tax option, but still wishes to do so, can still make the election by filing an amended return by Dec. 31, 2017.

02/10/2017

What do You do if You Receive an Incorrect 1099
Friday, February 3, 2017

Here are the steps and points to remember.

1) First you should contact the business or individual who sent you the 1099 and explain why you think it is incorrect.

2) The IRS says if you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.

3) If the amount is less than $600 you should not be receiving a 1099. The amount of income received still needs to be reported.

4) It is important to remember if you do not receive a 1099 but should have you are still required to report the income.

5) It is important to remember if the amount on a 1099 received is under reported you are required to report the correct amount as income.

12/30/2016

401k and IRA Contribution Limits are Unchanged for 2017
Friday, December 30, 2016

Contribution Limits

401K $18,000 for 2016 and 2017. The addition catch up amounts for individuals who are 50 or older before the end of the tax year is $6,000 for 2016 and 2017.

IRA $5,500 for 2016 and 2017. The addition catch up amounts for individuals who are 50 or older before the end of the tax year is $1,000 for 2016 and 2017.

Saver's Credit Income limits for this credit are $62,000 for married couples filing jointly, up from $61,500; $46,500 for heads of household, up from $46,125; and $31,000 for singles and married individuals filing separately, up from $30,750.

Phaseout amounts for allowable IRA deductions have increased slightly.

For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000 to $72,000, up from $61,000 to $71,000.
For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $99,000 to $119,000, up from $98,000 to $118,000.
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000, up from $184,000 and $194,000.
For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

12/27/2016

New Tax Return Due Dates for Partnerships and Corporations!

Tuesday, December 27, 2016

Form 1040, 1040a and 1040ez the dates have not changed although the due date is April 18th,2017 because April 15th falls on a Saturday and the Washington DC holiday Emancipation Day is on Monday.

Partnership returns (Form 1065) are due on March 15th, 2017 while in previous years they were due on April 15th.

C-Corporation returns (Form 1120) are due on April 18th 2017 while in previous years they were due on March 15th.

S-Corporation returns (Form 1120S) are still due on March 15th.

The Estate and Trust return (form 1041) due date remain unchanged although this year the date is April 18th, 2017.

12/27/2016

2017 Standard Mileage Rates for Business, Medical and Moving Announced
Wednesday, December 14, 2016

The Internal Revenue Service has issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

53.5 cents per mile for business miles driven, down from 54 cents for 2016
17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
14 cents per mile driven in service of charitable organizations
The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

12/27/2016

This is an Important Year for Tax Planning
Thursday, December 8, 2016

The traditional rules of postponing income and accelerating expenses could be even more important for some taxpayers than in previous years.

President elect Trump has proposed lowering the top tax rate from 39.6% to 33% and replacing the current brackets which range from 10 percent to 39.6 percent, with three brackets of 12 percent, 25 percent and 33 percent.

A couple of other proposed changes are:

Replace the current personal exemption and standard deduction with a new standard deduction of $30,000 for married filers and $15,000 for single filers.

Repeal the Net Investment Income Tax, which is an additional 2.3 percent tax on net investment income.

A new deduction for child care costs, up to an amount equal to the average cost of care in your state, allow a tax credit of up to $1,200 for child care expenses to lower-income families and create new savings accounts for care of children or elderly parents. Currently there is a credit for child care expenses.

Reduce the top tax rate on corporations to 15%.

At this point it is impossible to tell exactly what is coming but it is pretty certain there will be major changes .

So with that in mind here are a bakers dozen of tax planning tips

Take full advantage of 401K plans and IRA deductions.
Donate to charity before the year end if you will itemize deductions. Contributions paid by credit card before year end are deductible even before you have paid the credit card bill.
Donate non cash goods before year end. If the total is over $500 special reporting requirements are required (Form 8283).
If you are making state estimated payments consider paying next year’s January payment at the end of the current year.
Accelerate payment of other itemized deductions.
If a property tax payment is not due until early next year consider paying before year end.
If you have high medical and dental expenses pay any bills before the end of the year. This only applies if your total medical expenses will be more than 10% of your total income.
If you have capital gains consider selling stocks that have lost money to offset these gains.
Defer income if possible into the next year if possible.
Accelerate business deductions if you have net income.
Pay college tuition before year end if you have not reached the maximum allowed for deductions and credits.
Make sure you have taken any required minimum distributions (RMDs) from retirement plans if you are over 70 ½. The penalty is onerous.
Watch out for the Alternative Minimum Tax (AMT) because some deductions (for example property taxes) can increase AMT and end up not helping you.
If you have a gifting strategy make sure all gifts are made before the year end. An individual can gift $14,000 tax free to each recipient.
This year more than ever Consult Your Tax Professional. Many of these strategies can be complicated.
Selling losing stocks may not be a good strategy depending upon numerous other factors. Some of these factors are your capital gains tax rate, expectations for the stock in the future , etc.
If you expect to earn less the next year accelerating deductions and postponing income may not save you money depending upon your tax bracket and more.
See number 9. Depending upon your income you may not qualify for education credits or deductions.
See number 11. The Alternative Minimum Tax is a very tricky subject to say the least. According to proposals the AMT may be repealed.

12/27/2016

Earned Income Tax Credit and Additional Child Tax Credit Refunds Delayed until Feb 15, 2017 or Later
Wednesday, November 30, 2016

In addition, new identity theft and refund fraud safeguards put in place by the IRS and the states may mean some tax returns and refunds face additional review.

Beginning in 2017, a new law approved by Congress requires the IRS to hold refunds on tax returns claiming the EITC or the ACTC until mid-February. The IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the agency more time to help detect and prevent fraud.

''This is an important change as some of these taxpayers are used to getting an early refund," said IRS Commissioner John Koskinen. "We want people to be aware of the change for their planning purposes during the holidays. We don't want anyone caught by surprise if they get their refund a few weeks later than in previous years."

As in past years, the IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should submit returns as they normally do. Even though the IRS cannot issue refunds for some early filers until at least Feb. 15, the IRS reminds taxpayers that most refunds will be issued within the normal timeframe: less than 21 days, after being accepted for processing by the IRS. The Where's My Refund? tool on IRS.gov and the IRS2Go phone app remains the best way to get this status of a refund.

Stronger Security Filters and Tax Refund Processing

As the IRS steps up its efforts to combat identity theft and tax refund fraud through its many processing filters, legitimate refund returns sometimes get delayed during the review process. While the IRS is working diligently to stop the issuance of fraudulent refunds, it also remains focused on releasing legitimate refunds as quickly as possible.

Recently, the Internal Revenue Service, state tax agencies and industry partners finalized plans for 2017 to improve identity theft protections for individual and business taxpayers. This comes after making significant inroads this year against fraudulent returns. Additional safeguards will be set in place for the upcoming 2017 filing season.

The IRS and its partners saw a marked improvement in the battle against identity theft in 2016. This is highlighted by the number of new people reporting stolen identities on federal tax returns falling by more than 50 percent, with nearly 275,000 fewer victims compared to a year ago.

"These increased security screenings are invisible to most taxpayers," Koskinen said. "But we want people to be aware we are taking additional steps to protect taxpayers from identity theft, and that sometimes means the real taxpayers face a slight delay in their refunds.”