816-741-7882
Professional services with a personal touch.

Wealth Accumulation Planning for Business Owners

05/01/2017

Trump Tax Reform Goals: Press Release and Articles

Trump at microphonePresident Donald Trump has released a single-page summary of the goals and priorities of his tax reform package.  We have a copy of the document to share with you as well as links to various articles on the subject available online for your review. While specifics of an actual proposal are not yet available, we hope the information and various media reviews will help clarify the intended direction of a tax reform proposal from the perspective of the White House. Please contact one of our tax planning experts if you have questions as to how the proposed tax reforms may affect your individual and/or business tax planning strategies.

Click on the information lines below to download articles and postings:

Actual Media Release from the White House

White House Press Briefing on Proposed Tax Reform Goals

Various Media Articles With Responses and Opinions   (Postings of these links to articles should not infer that McRuer CPAs is in agreement with any or all of the following media responses. The list is simply a way to provide you more information from various views.)

Journal of Accountancy from the American Institute of CPAs (AICPA.org)

FOX Business News

Wall Street Journal

New York Times

Bloomberg Review

The National Review

CNN Money

Kansas City Star

St. Louis Post-Dispatch

Jefferson City News Tribune

04/12/2017

Tax Reform Timeline

Although Republicans appear to have more agreement on the specifics of tax reform than health care reform, experts predict we’ll be hearing more debate in committees and in the media before an actual tax reform bill makes it to the House or Senate floor.  Now many experts predict a tax reform or reduction bill will pass, but it may not happen in 2017.

Capitol-hill-washington-d_cThe White House and Republican lawmakers know they need a more unified front to sustain a push for major tax reform, especially in the wake of continued angst and division over health care reform. Treasury Secretary Steven Mnuchin is a key player in drafting and negotiating a tax reform proposal.  He says he is optimistic that a comprehensive plan should win approval by the Congressional recess this August. But President Donald Trump has been less specific. When asked recently whether he could “cut a deal on tax reform this year” by a Financial Times editor, Trump responded he did not want to talk about timing saying, “We will have a massive and very strong tax reform. But I am not going to talk about when.”

Leading House Republicans, including House Speaker Paul Ryan, have proposed tax code changes that include a much-debated border adjustment tax. CEOs of 16 U.S. companies including General Electric and Boeing support the proposal that would reduce corporate income tax from 35% to 20%.  It would also impose a 20% tax on imported goods while removing taxes on exported goods.  Critics claim such a tax structure would cause consumer prices to rise and unfairly burden retail and automotive manufacturing industries that purchase low-cost parts and supplies from overseas.

Trump has also expressed an interest in pushing simplified personal income and corporate tax reform through at the same time and may also include an infrastructure investment package in a comprehensive tax plan. Tackling big issues with a massive all-encompassing bill may provide opportunities to please all parties, but may also result in the same kind of partisan and intraparty fractures suffered by health care reform efforts.  

Democrats are also unlikely to support major income tax cuts at either the corporate or personal level.

Based on their recent disappointment over a failed attempt to repeal the Affordable Care Act, Republicans know they need to build and confirm support for significant tax reform.  Many financial experts say that means an agreement may not be reached until late 2017 or early 2018.

05/07/2015

Your Foreign Accounts Tax Deadline Alert

The global marketplace has round-the-clock worldwide Internet-enabled communications, sales and trading cycles. That has ensured more Americans than ever before work, live and/or do business in or with another country. Think about your accounts; you could be among the 4 out of 10 of Americans who have a bank account, brokerage account, mutual fund, trust or other type of foreign financial account or foreign asset. If so, a June 30th filing deadline approaches to meet updated tax reporting guidelines, even if your account has produced no taxable income.

Globe and calculator in blueThere are several different kinds of tax and crime-prevention documents that need to be filed depending upon whether you are an American working overseas; paying an American to work for your company overseas; a business owner selling and/or producing products and services overseas; an entity organized in a foreign jurisdiction; and/or someone who has international investments.

The Foreign Account Tax Compliance Act (FATCA) requires the filing of a Report of Foreign Bank and Financial Accounts (FBAR) annually for anyone with a foreign financial interest in types of foreign accounts by June 30th. This particularly affects Americans who work overseas and their employers, as well as those with interests in foreign accounts (including those with ownership interests in or signature authority over bank and certain investment accounts).

The FATCA was passed to ensure that income is reported and any applicable taxes are paid, though some American-based global companies claim the variety of tax and crime-fighting policies enacted by several government agencies are hard to keep up with and are creating an undue burden.

Ready for more acronyms? The FBAR filing is part of the Bank Secrecy Act (BSA) that requires you to report foreign financial accounts exceeding certain thresholds to the Department of Treasury. This report, FBAR Form FinCEN Report 114, must now be filed electronically through the BSA’s E-Filing System. Those individuals with only signature authority over these accounts have until next June in 2016 to begin the electronic filing of these annual reports.

U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must also report those assets to the IRS on Form 8938 Statement of Specified Foreign Financial Assets. Again, this requirement is in addition to the FBAR filing requirement.

But wait, there's more... If you happen to be a U.S. citizen or resident who is an officer or director of a foreign corporation, you may also have additional filing requirements including a Form 5471  Information Return of U.S. Persons With Respect to Certain Foreign Corporations.  Filing a Form 5471 is required if an American has acquired (in one or more transactions) either stock which meets the 10% stock ownership requirement with respect to the foreign corporation or an additional 10% or more (in value or voting power) of the outstanding stock of the foreign corporation. A person is considered to have “acquired” stock in a foreign corporation when that person has an unqualified right to receive the stock, even though the stock is not actually issued.  To find out more click here for the IRS Form 5471 information. 

FBAR-Reminder-840x440What if you don’t file? Delinquent, insufficient or improper FBAR filings have hefty penalties. The penalties for failure to file an FBAR include a civil penalty of $10,000 for each non-willful violation. But if your violation is found to be willful, the penalty is the greater of $100,000 or 50 percent of the amount in the account for each violation – and each year you didn’t or don't file is counted as a separate violation.

While many commentators agree that income and asset holdings should be accountable, the method and overlapping reporting issues are so complicated that some experts argue it may be decreasing the will of Americans to look worldwide for employment and customers, hindering American competitiveness on the worldwide scale.

Some experts call the tax policies “inexplicably complex and overly intrusive”. One American lawyer working overseas writes that the “regulatory net applies so broadly that personal and business accounts of law-abiding Americans simply trying to comply with the rules are caught up in its paperwork net – and drowning.”

If you have questions about whether you must file a FBAR and/or other tax forms, contact us now at McRuer CPAs.  Reminder: If you need to file a report you should do so by the June 30th deadline to avoid a costly omission.*

*This information summarizes certain recent tax, legislative and/or regulatory developments that may interest McRuer CPAs clients and friends. This report is intended for general information purposes only, is not a complete summary of the matters referred to, and does not represent legal, regulatory or tax advice nor does it constitute a professional service offering to the recipient.  Recipients of this report are cautioned to seek appropriate professional advice regarding any of the matters discussed in this report considering the recipients' own particular situation. McRuer CPAs does not undertake to keep the recipients of this report advised of future developments or of changes in any of the matters discussed in this report.

 

 

04/13/2015

Financial Transaction Tax and How It May Affect You

Washington lawmakers are watching the Financial Transaction Tax (FTT) debate in Europe as Democrat party leaders have made enacting this kind of tax a central part of their economic proposals for 2015.  The effects of this debate could reach across international money markets into the pockets of common American taxpayers.

NYSEA FTT is a  monetary transactions tax usually associated with the financial sector as compared to consumption taxes that consumers pay on products and services.  Democrat Congressman Keith Ellison of Minnesota has introduced an even more specific “Inclusive Prosperity Act” which would tax the sale of stocks, bonds and derivatives.  It is part of the on-going party theme of supporting “Main Street over Wall Street.”  He claims the tax would reduce market speculation, discourage high-volume and high-speed trading, and slow down the proliferation of complex derivatives.

Republican FTT opponents argue these kinds of taxes would do little to harm Wall Street, even admitting they would raise badly needed revenue, but disagree about where the money would come from.  They claim FTTs would put financial stress on working Americans by increasing the costs of having individual, family and employee retirement accounts.  This would occur at a time when retirement plans operated by corporations are disappearing and Americans are already struggling with costs, both in time and money, associated with managing their own IRAs.  They say the new taxes would make it more difficult for common people to save and invest.

Financial transaction taxes in general are usually proposed at very small percentage rates, but they could affect all transactions, of which there may be dozens (or even hundreds depending upon the size and scope) per account every day.  Proponents believe the taxes would raise billions of dollars in new revenues.  While experts predict the debate will not lead to a specific action this year, the issue will remain on the burner ready to heat up in time for the 2016 Presidential race.

Worldwide, there are several types of financial transaction taxes being implemented by various organizations and regions.  Some are domestic meaning they are imposed only within one nation or financial region.  Others are multinational, and affect transactions made between countries.  Nearly 50 nations have some form of FTT today.

EU finance ministers have been fiercely debating the scope of the tax pushing for a wide tax base with low tax rates.  They have made a public commitment to start a EU FTT on January 1, 2016 with what’s called an “extra-territorial” reach across markets and nations.  Yet, the last meeting of the 28 Member States in February ended with little progress on key issues and they are not set to negotiate again until May.  Still to be worked out; who will collect the tax, the penalty for non-payment and who will be responsible for paying the penalty.

10/22/2014

2015 Tax Brackets Now Available

Federal tax return with penEstimated taxable income brackets and rates are now available for the 2015 tax year.  Each year, the IRS adjusts more than 40 tax provisions for inflation to prevent “bracket creep”.  Bracket creep is what happens when inflation causes taxpayers to be pushed into a higher income tax bracket or have a reduced value from credits or deductions even though they may have had no actual real income increase.

The IRS adjusts income thresholds, deduction amounts and credit values using the Consumer Price Index (CPI) to calculate the past year’s inflation. Yet, in a bit more complicated approach, each tax provision is also adjusted from a specified base year.

In 2015, the standard deduction will increase by $100 to $6,300 for single taxpayers and $200 to $12,600 for married couples filing jointly. The personal exemption for 2015 will be $4,000.

Also in 2015, the highest marginal income tax rate of 39.6% will be levied on single taxpayers whose adjusted gross income is $413,000 and higher and $464,850 and higher for married taxpayers.  The remaining federal income tax rates are:

  • $0-$9,225 single/$0-$18,450 married – 10%
  • $9,225-$37,450 single/$18,450-$74,900 married- 15%
  • $37,450-$90,750 single/$74,900-$151,200 married- 25%
  • $90,750-$189,300 single/$151,200-$230,450 married- 28%
  • $189,300-$411,500 single/$230,450 to $411,500 married- 33%
  • $411,500-$413,200 single/$411,500-$464,850 married- 35%

For more information on 2015 federal income tax rates, click here to see the Tax Policy Center’s Tax Facts chart.

Individual state and local income taxes are also complex and vary from state to state.  Their 2015 rates are harder to find and calculate.  To read more about 2014 state income tax rates, click here to see the latest review by a professional tax information organization.

02/18/2014

IRAs Need Updated Designated Beneficiary Forms

Individual Retirement Accounts have been around long enough now that many Americans are learning what happens when they inherit an IRA. It’s not always good news.  If the owner has not filed an up-to-date beneficiary form, the heir of the estate risks losing a major portion of the IRA value to taxes and fees. IRA-nest-egg

The Employee Benefit Research Institute (EBRI) reports the average IRA value is close to $94,000. The EBRI also says there are nearly 15 million IRA accounts held by more than 11 million people.  With total assets of more than $1 trillion, it’s important to make certain that, should the owner die, the IRA doesn’t lose its value upon transfer to a new owner.

Advisors warn that many IRA owners mistakenly believe because they have a will, the person(s) they list as their heir(s) will automatically receive the IRA to use as a savings tool or turn into cash in whatever manner they wish.  Yet, without a specific and up-to-date IRA beneficiary designation form for each IRA, the beneficiary may be forced to empty the account right away risking taxes and penalties; and may even be bumped into a higher income tax bracket.   Some states require the accounts to go through probate court when there is no beneficiary form.

IRA owners should fill out what is a very simple beneficiary form separate from their will.  That way, when the owner dies, the designated beneficiary is able to determine the best distribution strategy over his or her lifetime.  A new beneficiary form is needed any time an IRA account is changed or updated, or the account is moved to a new custodian.

Typically, IRA beneficiaries must take distributions during their lifetime.  Inherited traditional IRAs require taxes to be paid on distributions.  Rollover, SEP, and SIMPLE IRAs are treated the same way. Beneficiaries are not required to pay taxes on distributions from an inherited Roth IRA.

Generally, surviving spouses have several choices including even disclaiming up to 100% of the IRA assets, which, besides avoiding extra taxable income, enables their children to inherit the IRA assets.  But, if the spouse decides to take a lump sum distribution, or begins distributions on a traditional IRA, taxes must be paid.

Non-spouse beneficiaries have fewer choices.  Among them, including taking the lump sum amount and paying a large share in federal taxes; disclaiming all or part of the assets for up to 9 months after the previous owner’s death; or begin taking taxable distributions from the account.

If you inherit an IRA, you cannot roll it over into your own IRA. You must also make certain it is re-titled as an inherited IRA.  If you move the IRA to a new custodian, make certain it is made as a “trustee-to-trustee” transfer or it will be considered as a taxable total distribution, thereby, ending the account as an IRA.  There are deadlines for your actions and you can even face the dreaded 50% penalty if you don’t make a required withdrawal in time.

To ensure you leave as much of your IRA asset as possible to whom you choose, or if you inherit an IRA, consult your financial advisor for the best steps to take to lessen the taxes and maximize the advantages of these retirement accounts.

If you have any questions about your financial savings plans, beneficiaries and the tax consequences of your choices, please contact us at McRuer CPAs.

02/14/2013

Worst States for Tax Rates

New “tax climate” rankings have been released giving a state-by-state view of the overall impact of all types of taxes on your pocketbook.   The range of the tax impact in the Midwest goes from average to not-so-good.

The Tax Foundation’s 2013 State Business Tax Climate Index compiles information for Upside down money out of pockets lawmakers and economists who use the results to compare their state’s tax rates to other states as they debate the effects of tax rate increases. 

The numbers are also used to see how attractive one state may be compared to another as competition to lure job-producing businesses heats up.

The new report shows overall (with #1 being the best ranking and #50 the worst) Missouri ranks #16, Kansas #26, Nebraska #31 and Iowa #42.

The rankings include the combined impact of individual income taxes, sales taxes, unemployment insurance taxes, property taxes and corporate taxes.  Some states benefit by not charging one or more of the major taxes.

The top ten states with the lowest overall tax impact are: #1 Wyoming, #2 South Dakota, #3 Nevada, #4 Alaska, #5 Florida, #6 Washington, #7 New Hampshire, #8 Montana, #9 Texas, and #10 Utah.

The states with the worst overall tax impact are: #46 Rhode Island, #47 Vermont, #48 California, #49 New Jersey and #50 New York.

The numbers show the state with the most improved ranking is Maine, moving from #37 to #30, which benefited in part from a repeal of their alternative minimum tax.  Michigan jumped from #18 to #12 following the implementation of a flat 6% corporate income tax replacing a complicated system that was accused of offering unfair tax preferences. 

As debates rage over how to increase jobs and turn around sagging economies, the Tax Foundation warns attention needs to be paid to what’s happening across state borders.  The report says, “They need to be more concerned with companies moving from Detroit, Michigan, to Dayton, Ohio, rather than from Detroit to New Delhi.”

To check out the overall tax ranking and an explanation of what you are paying in your state, click on these links for an individual summation:

Missouri

Kansas

Iowa

Nebraska

The Impact of State Taxes

Here's an interesting article from The Fiscal Times titled "The 10 Worst States for Taxes".  To find out more about specific tax rates in Midwestern states, check out our blog titled, "Worst States for Tax Rates" that details the states with the best and the worst overall tax impact.  We also provide you links to review data on Missouri, Kansas, Iowa and Nebraska.

02/13/2013

Guns and Taxes

Gun trainingWhat do guns and taxes have in common?  More than you may realize.

Heated debate on gun control is causing a re-emergence of arguments on the effect of excise taxes, sometimes referred to as “hidden” taxes, as analysts determine the economic impact of changing laws.

Early on, excise taxes were termed “luxury” taxes affecting mostly higher income individuals.   Excise tax is based on quantity and is a flat amount per item.  Some excise taxes are called “sin” taxes.

The first excise taxes were on carriages and whiskey.  Excise taxes on gasoline and telephones were called “luxury” taxes when they were first imposed.  Now most Americans consider such items necessities.  Raising these tax rates can have dramatic affects on consumer budgets as well as trigger a downturn in consumption.

Consider today’s gun control debate:   The Alcohol and Tobacco Tax and Trade Bureau collects excise taxes on firearms and ammunition from manufacturers and distributors before the products are touched by a consumer.  Numbers show gun sales alone result in annual business and excise tax collections of nearly $2.07 billion.  

Some experts say just the threat of government gun control has been an effective means of raising tax revenues as fear motivates consumers to stock up.  In the last fiscal year, the ATTTB reports tax revenues on the sale of firearms and ammunition have risen 45 percent which is the highest annual increase on record.

Yet, if prices and taxes are too high, or products are banned from the marketplace, it limits the number of people who are able to purchase products, thereby cutting sales and decreasing tax revenues.

No matter which side of the firearms debate you may be on, it’s likely you can’t escape paying excise taxes.  Among hundreds of items that fall under federal excise tax mandates are:

  • tires
  • gasoline
  • coal
  • vaccines
  • firearms
  • communications services including your telephone
  • air travel
  • heavy trucks and trailers
  • "gas guzzler" vehicles and more… 

Currently, most federal tax rates on excise taxes range from 1 percent to 15 percent or higher, when coupled with other types of taxes.

The excise tax on firearms and ammunition is generally 10 and 11 percent.   Many states collect excise taxes on top of these rates.  This is before sales taxes are calculated at the time of sale.

At a time of critical economic conditions and concerns for the country’s fiscal future, experts urge that debate about changes regarding taxation be as carefully considered as the compassion-motivated moral arguments.

04/01/2011

Give Yourself a Chance to Think

So often, busy people like you are too consumed with putting out fires to step back and consider the big picture.  It’s vitally important to give yourself a chance to think. 

Let’s face it, today we often have more to do than the day’s time allows.  It’s affecting our ability to think things through clearly and make the right decisions when it comes to our money.

There are more considerations than ever before about how we use our money and where we place it to make it grow.  Our resources are limited and varied, and there are different methods to determine how well our choices are working.  It’s confusing and hard to plan and execute how things work together.

That’s why McRuer CPAs is offering our new service package called Decision Maker Plus. It gives you the ability to gather together all your financial data and strategies in one place at the same time, to ensure everything works together to meet your goals.

Take a look at our introductory brochure on Decision Maker Plus.

Through Decision Maker Plus our team of CPAs can provide you a way to coordinate all your plans and present them in a way that makes sense to you.  We can help you analyze, plan and implement strategies to meet your goals while coordinating with your other approved professionals.

Using Decision Maker Plus gives you access to our experienced team and…

*proactive planning and strategy implementation,
*priority response communications,
*cutting-edge and highly efficient information sharing technology,
*secure online data storage and data sharing portals,
*and flexible scheduling for after hours or weekend appointments.

Our Decision Maker Plus Services include:

  • Income Tax Planning
  • Estate Tax Planning
  • Wealth accumulation and Protection Services
  • Business Startup, Planning and Expansion Services
  • Generational and Spousal Wealth Transfers assistance
  • Financial Services Incident to Divorce
  • Services for Liquidity Events
  • Education Finance Planning
  • Retirement planning and more.

Think about it. 

Do you really know if everything works together to help you?  If not, call us for a confidential consultation about your goals and we’ll give you a half hour of that consultation for free.

RSS Feed

Welcome from Scott McRuer
& the McRuer CPAs Team

Scott McRuer
Learn more about Scott

Follow Scott and his team on your favorite social media

Facebook LinkedIn YouTube