Categories for

This article explains the precautions to take when getting a divorce, and several tax concerns that need to be addressed to ensure that taxes are kept to a minimum and important tax-related decisions are properly made. Five issues to consider in the process of divorce include alimony or support payments, child support, personal residence, pension benefits, and business interests. Each spouse could save thousands on their home, up to $500,000 of avoidable tax, if they owned and used the residence as their principal residence for two of the previous five years. Another issue to consider if getting a divorce is deciding how to file your tax return. For more information on divorce accounting, click the link!

To view this article, click here to access the original content.

Ross Buehler Falk & Company, LLP is pleased to announce the promotion of Sean R. Smith, CPA.

Smith joined Ross Buehler Falk & Company, LLP in 2013 and has spent his entire professional career with the firm. Prior to his promotion, Smith held the position of Senior Accountant II. He now takes on new responsibilities as Manager.

“Watching Sean progress in his career has been a true pleasure,” said Jeffrey Bleacher, CPA, CGMA, managing partner of Ross Buehler Falk & Company, LLP. “He has shown incredible dedication to our firm and our clients. He has grown his skill and knowledge over the years, and I am excited to see him excel in this new role.”

Smith graduated magna cum laude from York College of Pennsylvania with a Bachelor of Science in Criminal Justice. He earned his Master of Accounting and Financial Management from the Keller Graduate School of Management of DeVry University. He is a member of the American Institute of Certified Public Accountants (AICPA), Pennsylvania Institute of Certified Public Accountants (PICPA), and the Lancaster County Chamber of Commerce and Industry. An active member of the community, Smith currently serves as the treasurer of the board of trustees of the Lancaster Public Library, and has formerly served on the boards of Lancaster Young Professionals and Lancaster Safety Coalition as treasurer and secretary, respectively.

Patrick Collins joined the Ross Buehler Falk & Company (RBF) team in 2022 as a manager in the firm’s tax department. In this role, he works with nearly all the firm’s tax clients, ensuring efficient returns and high-quality tax and compliance services. Patrick has extensive knowledge of the tax rules for fixed assets and business tax issues. His accounting industry experience, as well as his friendly personality and willingness to learn new skills makes him a valuable new member of the RBF team.

Patrick did not start off in the accounting field. For his undergraduate, he attended Temple University, where he studied film and media arts, graduating magna cum laude with a bachelor’s degree. His film background even earned him an IMDB credit. He worked as a production assistant on the 2011 film Bamboo Shark.

Patrick continued his education at Millersville University, eventually earning his Certified Public Accountant designation in both Maryland and Pennsylvania. He started his career in the accounting field in 2015, performing tax work for large corporations and complex partnerships with a Big Four firm. He gained further industry experience with a firm in Towson, Maryland, doing individual and small business returns, as well as trusts, estates, and nonprofit returns.

Originally from Red Lion, PA, Patrick currently lives in York with his fiancé and a menagerie of pets. The couple has one dog, one lizard, two cats, and a tank full of fish. Since moving back to the area, Patrick is thrilled by how diverse both Lancaster and York have become.

Want to get to know Parick even better? Here are a few fun facts about him:

• The last show Patrick binge-watched on Netflix was The Witcher.
• Patrick is a fan of Baltimore sports teams, especially the Orioles and the Ravens.
• Patrick likes to travel, and his favorite destinations are Ocean City, Maryland; Southern California; Southern Florida; and the United Kingdom.
• His favorite book is The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt. He has found the thought process detailed in this book to be helpful.
• In his free time, Patrick likes to read, play video games, binge-watch TV shows, try new foods, and visit museums.
• His favorite Spotify radio station is “Energy Booster Indie.” He also enjoys listening to audiobooks via Audible.

New regulations regarding financial reporting for American businesses operating both domestically and overseas will soon go into effect.

In 2021, Congress passed the Corporate Transparency Act (CTA), which is a piece of legislation aimed at monitoring potential money laundering and other illicit activities. Businesses subject to the CTA will be required to provide information to the Financial Crimes Enforcement Network (FinCEN), an arm of the Department of the Treasury. The CTA requires the filing of a “beneficial owner report,” which furnishes key information about each beneficial owner of the business: full legal name, date of birth, residential street address, and identifying numbers from legal documents (e.g., driver’s license or passport). Failure to furnish the information required by the CTA can result in hefty penalties and even imprisonment.

Recently, FinCEN issued proposed regulations that include the following details:

1. The CTA will go into effect upon finalization of the FinCEN regulations, which is expected to occur sometime in 2022.
2. The CTA reporting requirements will apply to the majority of small businesses, including corporations, limited liability companies (LLCs), limited partnerships, limited liability partnerships, limited liability limited partnerships, and business trusts. Sole proprietorships and general partnerships are not subject to the CTA, and companies with more than 20 full-time employees and $5 million in gross receipts are also exempt.
3. A “beneficial owner” is someone who own 25% or more of the company and who exercises substantial control over the company, either directly or indirectly.

Our accounting advisors are working diligently to remain up to date on new developments regarding the CTA and FinCEN reporting requirements. You can be confident that we will keep you apprised of the situation. Please do not hesitate to reach out with any questions or concerns.

The United States economy is nothing if not cyclical – which can be a good thing or a bad thing depending on when, exactly, you’re trying to operate a business.

According to one recent study, roughly 57% of small business owners say that they fear the U.S. economy will only get worse over the last year. Many are worried that if something doesn’t change, things could get as bad as they were in April 2020. Keep in mind that many of these small business owners are still very much feeling the impact of the onset of the COVID-19 pandemic that took place during that period of time.

But the key difference here is that nobody really saw the Coronavirus – or its long-lasting damage – coming at the time. Indeed, it took virtually everyone by surprise. Now, people have a chance to prepare themselves to hopefully mitigate as much risk from another such event as possible.

Your Business and the Economy: What You Need to Know

By far, the most important step that you can take to help protect and manage your business during an economic downturn involves paying more attention to your cash flow than ever.

Cash flow was always one of the biggest reasons why small businesses prematurely shutter their doors and the risk is even greater during the unpredictability of a downturn.

Therefore, to keep your business as healthy as possible, you need to do whatever it takes to bring in more income than you’re spending on expenses each month. This isn’t something you’re going to be able to do overnight – it’s not like flipping a light switch. You need to talk to your financial professional today to see what you can cut, if necessary, to help create a stable foundation from which to work from.

Along the same lines, if yours is a business that keeps an inventory on hand, you’ll want to take care to start reviewing your inventory management practices sooner rather than later.

Inventory is one of the biggest overhead costs for every organization and many see it as a “necessary evil.” But what they need to understand is that it doesn’t need to be nearly as large of a burden as some allow it to become.

Gather your team and see what you can do to reduce the amount of inventory you have on-site. Go over your analytics and historical reporting to make sure that you’re not producing more products than you’re actually selling. Oftentimes reducing the amount of inventory also allows you to reduce your warehousing costs as well because you’re no longer paying for products that are just sitting in a warehouse somewhere waiting to be sold.

In the run-up to any economic downturn, it is also important to double down on that which you do better than anyone else. As businesses continue to grow, they often add new products and services in the name of “diversification.” If the economy were verifiably strong, that would be a relatively decent time for experimentation. An economic downturn is not that time. Instead, focus on everything you do best and let the rest fall by the wayside for the time being. Remember that you’re not necessarily trying to grow bigger during this period – you’re trying to do what you have to in order to survive.

Finally, consider attempting to win over the customers of your competition now before things get particularly tricky in the marketplace. Figure out which of your competitors are most successful and pay attention to what they are doing. Do they have a particularly compelling value proposition? Do they know their audience better than you know yours?

Likewise, are there any gaps that you can identify that are potentially able to be taken advantage of? If you start winning over new customers today, you’ll increase the chances that they will be there for you when you truly need them tomorrow.

In the end, it’s simply not possible to avoid an economic downturn altogether. They’ve happened before and they will certainly happen again. But what you can do is make sure that you’re prepared for this inevitability, which is what these best practices are all about.

If you’d like to find out more information about what your small business can do to protect itself in the event of another economic downturn, or if you just have any additional questions that you’d like to go over with someone in a bit more detail, please don’t hesitate to contact our office today.

With gas prices soaring it has been expected the IRS would increase the mileage rate that business owners can deduct for vehicle use instead of keeping a record of actual expenses. Sure enough, the IRS recently announced a 4-cent increase in the optional mileage rate for the last half of 2022.

The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the last 6 months of 2022, also up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022.

The standard mileage rate for businesses is based on a study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. The rate for using an automobile while performing services for a charitable organization is statutorily set and has been 14 cents for over 20 years.

The standard mileage rate is determined annually by the IRS using data from a study conducted by an independent contractor of vehicle-operating expenses based on the prior year’s costs. The rate includes:

• Gas,
• Oil,
• Lubrication,
• Maintenance and Repairs,
• Vehicle registration fees,
• Insurance, and
• Straight-line depreciation.

Not included in the standard rate, and deductible in addition to the optional rate, are:

• Parking,
• Tolls, and
• State and local property taxes attributable to business use.

Sales tax paid when the vehicle is purchased must be capitalized into the business basis of the vehicle, so it isn’t separately deductible.

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 any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates, which may produce a better result considering the skyrocketing fuel prices. Taxpayers can also switch from using the optional mileage rate in one year to actual expenses using straight line depreciation in the next year.

Please give our office a call if you have questions about the new rates or related to switching methods or which method you should use when putting a vehicle into service.

Today, businesses have to grapple with vast amounts of data from different sources, including emails, mailing lists, customer orders, system logs, mobile apps, social media networks, etc. This data is crucial to businesses in various ways. When analyzed, a business can identify operational issues, personalize the customer experience, and manage supply chains – all contributing to better decision-making.

However, big data also has challenges, especially regarding its storage, due to both its size and other factors such as collection speed, processing, retrieval, and format. This becomes more complicated as the data keeps growing with time and cannot be stored in traditional storage devices, necessitating a need for facilities that store and process the data efficiently.

Depending on the business type, a choice can be made between storing data in a warehouse or the cloud. A data warehouse is a building facility that stores and processes data for a business. This in-house data storage offers the advantage of speed. However, when more space is needed, it will be necessary to acquire more physical storage.

On the other hand, a business may choose to opt for cloud storage. Cloud storage offers the benefit of convenience, accessibility, cost, and maintenance, which the service provider handles.

Considerations in Storing Big Data

Regardless of the means a business chooses to store its data, there are various issues to consider:

• Data details – before choosing a data storage method, it is essential to first understand the company’s data in terms of the type of data collected, quantity, storage period, retrieval speeds, use cases, etc. This helps choose a data management system that can handle the data efficiently.
• Data governance – with so much data collected and with data growing exponentially, it is likely that users can be lost in a sea of data. Therefore, a business should define a strategy that aligns with business goals to avoid collecting unnecessary data that takes up storage space.
• Data integration tools – data is collected from multiple sources, and it is necessary to have adequate integration tools that allow for different file formats.
• Cost – it is difficult to determine the actual cost of storing data. Hence, a business should not base the cost decision on the upfront cost alone. This is because other factors are involved, including operating costs, the need for scalability, training or hiring users, new technologies, and the cost of backup. Businesses must evaluate whether the initial investment in the best data storage technologies is worthwhile by looking at the potential long-term results.
• Data storage provider – before settling on a service provider, thorough research should be conducted. Some considerations when choosing from a variety of providers should include the availability of technical support to solve problems quickly, scalability, fault tolerance, pricing models, and reviews from existing customers.
• Disaster recovery plan – ensure it is possible to recover data quickly. This is crucial with attacks that deny access to data without paying a ransom. A business should consider keeping secure offsite backups.
• Enhanced security requirements – the expanding IoT network adds to the number of endpoints and devices storing or retrieving data. Therefore, big data comes with a huge responsibility to preserve data in an environment where hackers are pervasive and never stop coming up with new ways to break into systems. It is recommended to choose the safest option even when it costs more, as data security is vital for the survival of any business.
• Employee training – big data may require a business to hire new staff, such as data scientists, to help in analytics. Regardless of whether or not new team member are brought onboard, a business should consider training existing employees on handling big data and using new tools that will be introduced. Big data also requires collaboration among different departments in an organization. Data-literate employees can better interpret data, ask the right questions, and generally make data-driven decisions.
• Compliance with data security regulations – this especially applies to highly regulated industries such as finance or health. It is essential to ensure that even when outsourcing data storage and management, the service provider adheres to compliance regulations to avoid heavy fines that come with a violation.

Oftentimes, the first house a person buys is an affordable condominium, townhouse, or older single-family dwelling also referred to as a “starter home.” It might be small and lack features they dream about such as new appliances in the kitchen or dual sinks in the bath, to a large yard or a garage.

However, the key to a starter home is not to acquire your dream house, it is to build equity that you can eventually deploy to buy your dream home. It’s important not to wait until you have enough money for the ideal property. Start as early as you can and buy something affordable to get your foot in the door of homeownership.

Interest Rates and Maintenance Expenses

Buying a home when mortgage interest rates are low offers a key advantage for building wealth because it reduces your loan payment, thereby freeing up more discretionary income to put toward other investments, home upgrades, or paying down the mortgage balance.

When deciding your price range for purchasing a home, it’s also important to budget common maintenance costs, such as utilities, repairs, and upgrades, as well as homeowner’s insurance and property taxes. These costs can be substantial, yet many new homebuyers do not account for them in their budget. They only take into consideration whether or not they can afford the monthly mortgage. It is always a good idea to have a lower payment that you can well afford in order to avoid relying on savings or credit to pay for maintenance expenses as they arise. And remember, maintenance of your property is critical because it can help improve the sale price when you move, which is key to building wealth. 

Building Home Equity

The next step to building wealth through homeownership is to sell for a substantial profit. Home equity, which is the market price for which you can sell the home minus your remaining mortgage balance, is achieved in two ways. One way to build equity relies on the real estate market. Over time, houses generally increase in price, so most people are able to sell their home for more than they paid for it. How quickly home prices rise depends on the overall economy and your home’s particular appeal. That’s why it’s important to make an attractive location one of your top requirements. For example, even if you don’t have children or want children, buying a home in a sought-after school district will likely increase the value of your home faster. Other location features include easy access to shopping districts, major highways, and even an airport.

The second way to build equity is through the monthly payments you make on the mortgage, which reduce the balance owed. If you can afford it, adding more to your monthly payment and directing the excess toward your principal balance helps build home equity faster. Another payment option that can help build equity faster is to apply for a shorter-term loan than the standard 30-year mortgage. For example, a 15-year term mortgage features a lower interest rate and the borrower pays off the loan in half the time. Note that monthly payments will be higher, but a homeowner can save thousands of dollars in interest with a shorter-term loan.

Transaction Costs

The garden-variety advice is to remain in your home for at least five years. That’s because selling your home and buying a new one involves substantial transaction expenses, from closing costs to initiating a new loan, as well as paying commission fees to both the seller’s and buyer’s real estate agents (usually three percent each). Therefore, you need to have lived in the property long enough to build equity through payments and market appreciation to offset these expenses and still make a profit.

Sales Tax

Be aware that it is advantageous to live in your primary residence for at least two years before selling. Otherwise, your sales profit could be subject to capital gains taxes on the first $250,000 for single tax filers, and as much as $500,000 for married filing jointly. The tax rate is the same as your ordinary income tax rate if you owned the property for less than one year; after that, the capital gains rate is based on your tax bracket (15 percent or 20 percent).

Trade Up, Then Down

Over many decades, you can build wealth by buying a home and then periodically “trading up” once you attain substantial equity. The tactic of trading up means you invest your profits in a more expensive home and then begin building equity again. One way to save for retirement is to keep trading up until you retire, then downsize to a less expensive home with lower maintenance expenses. At that point, you can redeploy the profit derived from the home equity you have accumulated into a stream of retirement income.

Today’s Market

In recent years, high prices and low inventory in the residential real estate market have made it harder for young adults to buy a starter home. For those currently shut out of the market, keep saving until the market stabilizes, because the higher your down payment, the lower your monthly payments will be – and the more equity you’ll have in your home. You can still build wealth through homeownership, even if you start late.

Ross Buehler Falk & Company, LLP is pleased to announce the addition of Patrick N. Collins, CPA to their professional team.

Collins joins the firm as a Manager in the firm’s Tax Department. In this capacity, he works with nearly all the firm’s tax clients, ensuring efficient returns and high-quality tax and compliance services. Collins brings a wealth of valuable experience to the firm with over six years of accounting industry experience, including two years of corporate tax experience with a Big Four firm and four years preparing individual and small business returns at a Maryland firm.

“I am thrilled to welcome Patrick to the RBF team,” said Jeffrey Bleacher, CPA, CGMA, managing partner of Ross Buehler Falk. “His professional experience and expertise make him an exciting asset for both RBF clients and team members.”

Collins graduated magna cum laude from Temple University with a Bachelor of Arts in Film and Media Arts and pursued additional education at Millersville University. He holds his CPA license in both Maryland and Pennsylvania and is a member of the American Institute of Certified Public Accountants (AICPA), the Maryland Association of CPAs (MACPA), and the Pennsylvania Institute of Certified Public Accountants (PICPA). 

The Internal Revenue Services (IRS) recently released an increase in the optional standard mileage rates for the final six months of 2022. These rates are used to calculate the deductible cost of operating an automobile for business, charitable, medical, or moving purposes. The term “automobile” includes any car, van, pickup, or panel truck. As of July 1, 2022, the standard mileage rates are as follows:

1. For business use of an automobile, the updated 2022 rate is 62.5 cents per mile (up 4 cents from the rate effective at the start of the year).

Please note that since the Tax Cuts and Jobs Act (TCJA) suspended the miscellaneous itemized deduction for unreimbursed employee business expenses from 2018 to 2025, the standard mileage rate cannot currently be used to claim a deduction for those expenses. The TCJA did, however, include an exception for members of the U.S. armed forces reserves, state or local government officials who are paid on a fee basis, and some performing artists.

2. Driving for medical or moving purposes may be deducted at 22 cents per mile (up 4 cents from the rate effective at the start of the year). Currently, this rate is only available for active-duty members of the military.

3. The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile.

Please feel free to contact us with any questions you might have about mileage rates.