CTM Movie Review: "The Post"
Written by CTM Partner Scott Weingart, JD, CPA
No, I am not talking about going out to have a stiff drink to relieve the stress of having to learn and apply the new tax law. On Monday, January 29th, CTM took its employees out for another “dinner and movie” night. In keeping with our tradition of only seeing movies that begin with the word “THE” (our two previous outings included viewings of The Accountant and The Founder), the movie we chose was The Post. Since we like to share information with our clients other than accounting and tax news, we are going to provide you with yet another movie review.
First, should you see this film?
Well, the quick answer to that question is maybe. To put it mildly, the movie is a little bit slow, kind of like watching sand sift through an hour glass. As is customary, we start our evening out by dining at a nearby restaurant, and I have to admit that I got a little bit sleepy after eating dinner, and then resting my behind in the theater’s comfy stadium seating. If you don’t know what stadium seating is, it is essentially a Lazy Boy chair that opens up into a bed. I soon found myself dozing off for a few minutes, only to awake and not even realize I missed anything!
Most of the movie takes place in the Washington Post newsroom, lots of dialogue between news journalists. Since the accounting profession is already sedentary in nature, I felt like I may have been watching a scene from my own office. Not a lot of action, though action doesn’t necessarily make a good movie. There are plenty of bad action movies!
This movie stars Tom Hanks and Meryl Streep. I was thinking Forrest Gump and the Devil Wears Prada team up to take down a government cover-up. Instead, we get a very stiff Hanks as The Post editor Ben Bradlee and a very melancholy Streep in the role of Katharine Graham, the first female publisher of a major American newspaper. Based on a true story, Bradlee and Graham lead The Post in a race against the NY Times to expose the truth about highly classified information concerning U.S. involvement in Vietnam - which spanned three decades and four U.S. presidents. What is at stake is the “Pentagon Papers.” If they are published, these documents would contradict everything the government had been feeding the public and expose lies and falsehoods run amuck. Sound familiar?
The movie’s theme is very relevant to what’s happening in today’s political climate, regarding freedom of the press and the power of truth. But, there are a variety of differences as well as similarities. First, let’s looks at the differences:
- In one scene, a messenger is sent to pick up and deliver documents from one location to another. He is told to “run and don’t stop for anything.” Today, this would have been handled with an email and a PDF attachment.
- It was odd seeing large 25 pound typewriters on all the newsroom desks instead of computers and monitors. I had one in college. Back then, you had to know how to spell and use “white-out” to fix your typos. Now, “spellcheck” takes care of all that for you.
- Everyone in the newsroom was wearing large tortoise shell glasses. I thought that was out of style until I realized Warby Parker made a fortune from this look.
- Cigarettes were smoked everywhere. I almost started to cough when one fella lit one up in an elevator!
- Office attire from this period looked pretty uncomfortable, starched white shirts with ties. Now, business casual permits untucked shirts and skinny jeans.
- Seeing rotary dial phones as large as footballs on the desks looked pretty funny. In another scene, a journalist was feeding coins into a pay phone. Nothing like taking your Iphone out of your pocket to make a quick call.
OK, enough with my quirky observations. Now, on to drawing important comparisons between now and then. The vast majority of journalists are primarily concerned with one thing – finding and disseminating the truth. Back then, the government used the court system to seek injunctions against the newspapers from publishing documents. Ultimately, it came down to a showdown – would the NY Times and The Post publish the Pentagon Papers despite an injunction, and risk the continuity of their publications and even jail time for the editors and publishers, or would they succumb to the pressure and obstacles emanating from the White House?
Think about the constant cries of “fake news” we hear every day coming from the White House? Should we believe what we hear? I guess that may depend on whether you align your political beliefs with the Democrats (CNN) or the Republicans (FOX). But one thing is clear from this movie and resonates from Justice Black’s Supreme Court decision, which is partially read aloud at the end of this movie and I quote here:
In the First Amendment the Founding Fathers gave the free press the protection it must have to fulfill its essential role in our democracy. The press was to serve the governed, not the governors. The Government's power to censor the press was abolished so that the press would remain forever free to censure the Government. The press was protected so that it could bare the secrets of government and inform the people. Only a free and unrestrained press can effectively expose deception in government. And paramount among the responsibilities of a free press is the duty to prevent any part of the government from deceiving the people and sending them off to distant lands to die of foreign fevers and foreign shot and shell. ... [W]e are asked to hold that ... the Executive Branch, the Congress, and the Judiciary can make laws ... abridging freedom of the press in the name of 'national security.' To find that the President has 'inherent power' to halt the publication of news ... would wipe out the First Amendment and destroy the fundamental liberty and security of the very people the Government hopes to make 'secure.' ...
So, back to my quick “maybe” answer about whether to see this movie. The Post really stands for something important. It’s a docudrama about the role of the press in holding politicians accountable. For that reason, I would recommend it. I just wish it had a little bit more flair, something that might have made me want to jump out of my Lazy Boy bed…I mean chair!
A Battle Bigger Than Any Super Bowl on Record: C Corporation vs. S Corporation.
Has the recent tax overhaul ushered in a new champion?
Written by CTM Manager Nicki Moschiano, CPA
Alright, confession out of the gate: that title was written by someone else. Not me. I'm a “girl.” A girl who couldn't give one, small, tiny, teeny, tinker's toss about football or the Super Bowl.
Ugh, God! The Super Bowl. Is that the one where all those beefy men pile up on top of each other? And then, a couple of high-priced commercials show up? And finally, you lose your $10 in the office squares pool? If that about sums it up, then there’s the fun, little, Super Bowl theme the firm wanted incorporated into this article. So now that they got their football, we’ll just call the rest of this, “the tax part of the article”......
For general business purposes, corporations appear to have only subtle differences that identify one from another – they all provide shareholders with personal liability protection, voting rights can be discriminative, stock can be sold freely to raise capital, and they have perpetual lifespans as separate entities that do not liquidate or change form upon the death of a shareholder.
The element that draws the boldest line in the sand and forces corporations to pick a lane is.... the ever-influencing, scale-tipping, TAX TREATMENT. Read More
President Trump's New Tax Law - Bottom Line Boost or Bust?
Written by CTM Partner Scott Weingart, JD, CPA
We all have heard about the proposed new tax law for months. To me, I thought it might just be "fake news," until President Trump signed the bill into law last Thursday. Now I know for sure it is real!
So let's take a good look at the Tax Cuts and Jobs Act. The bill is nearly 1,100 pages long and references various sections of the Federal Tax Code, which is 70,000 pages long (in 1913, it was only 400 pages). Sound like a good read? Probably not! That is why I am only focusing on the pertinent provisions for the typical taxpayer. When I say the word "they," I am referring to your congressmen and the president. I am going to tell you what "they" are taking away from you and what "they" are giving you. Read More
The Real Estate Tax Dilemma - Should you Prepay?
As the GOP tax bill looms on the horizon, we have received many calls and emails from our clients about whether they should prepay their 2018 real estate taxes before the end of the year to obtain an additional tax deduction for 2017. The public is hearing about this potential tax savings opportunity from the media - TV commentators, radio talk shows, Internet, newspapers as well as friends and family. The short answer to this question is that each case is different.
Here is what you need to consider:
1. Right now, the new tax law is not yet "on the books." The House and Senate have reconciled their differences and President Trump is expected to sign the bill before Xmas. However, until the new tax law is official, we recommend that you wait a few more days before you do anything.
2. Under the House and Senate reconciliation, the deduction for state and local taxes (which includes real estate taxes) would be limited in 2018 to a total of $10,000. If, in prior years, the total of your state, city and county income taxes as well as real estate taxes is less than $10,000, you probably have nothing to worry about. On the other hand, if you reside in a high income tax state or in an area where real estate taxes are high, you may get a significant additional tax deduction in 2017 by prepaying your real estate taxes if you are not in Alternative Minimum Tax (AMT) system.
3. So what is AMT? As you may or may not know, there are two tax systems that run alongside each other, each having its own set of income adjustments, deductions, exemptions and credits; the “regular” tax system and what is called the “Alternative Minimum Tax” system, or AMT. Under the AMT, state and local taxes are not deductible. This includes real estate taxes. A taxpayer ultimately pays whichever tax system produces the higher amount of tax. For most people, the “regular” system is higher, which is why many people don’t realize or have never heard of AMT - until recent years when more people have been taxed by the higher AMT system. What we are looking at for a number of our clients is if, before any extra real estate tax payments were made, AMT is/was already part of the tax equation. If the taxpayer is/was projected to pay AMT, then there is no benefit to prepaying any real estate tax. If the taxpayer is/was NOT projected to pay AMT, then prepaying would yield a tax savings.
For now, you will need to call our office and ask if you are in AMT, so we can determine if you would benefit by prepaying your 2018 real estate taxes. After a few calculations, we can provide you with a good estimate of how much income taxes you might save!
Yearend Depreciation Rules Made Simple
Written by CTM Partner Julie Babetch, CPA
Now that we are approaching the end of the year, it is time for taxpayers to make some important decisions regarding depreciation for your 2017 fixed asset acquisitions. The choices are appealing: 100% write-off per Section 179 expense, 50% Bonus Depreciation, up to a $2,500 per asset deduction under the De Minimis Safe Harbor Election (Regulation Section 263A) or just plain accelerated tax depreciation. This is your greatest opportunity to reduce taxable income and save some significant tax dollars with proper planning! Below is a quick, easy-to-understand summary of these depreciation options, followed by a real life example of how it may be used.
When to take Deductions
A common question we consistently receive from our clients is, "When do I get to take a deduction for a fixed asset acquisition?" The answer is, "When the asset is placed in service." It doesn't matter when the asset is paid for. Payment could be made in the current year or in the next year. As long as the asset is put in use by 12/31/17, it is a 2017 asset acquisition and it is eligible for depreciation.
Section 179 Expense Election
For certain qualifying property, the IRS allows a taxpayer to fully deduct the cost as an ordinary business expense (up to an annual dollar amount, indexed for inflation) rather than requiring the cost to be capitalized and depreciated over several years.
The property (equipment or improvements) must be used in the taxpayer's trade or business, and can be purchased new or second-hand. For 2017, the maximum amount you can elect to deduct for Section 179 property is $510,000. The $510,000 maximum is reduced dollar for dollar for every dollar the cost of all Section 179 property placed in service during the tax year exceeds the “investment ceiling.” This year, the ceiling is $2,030,000.
The annual deduction limit ($510K) applies at both the pass-through entity level and the owner level. For example, a pass-through entity can’t allocate a Section 179 deduction exceeding $510K, and an owner can’t deduct a Section 179 expense exceeding $510K (including the amount passed through by the entity).
Important: A taxpayer who owns interests in two or more pass-through entities could be allocated a (total) Section 179 deduction that exceeds $510,000. For example, if one entity allocates $250,000 to the taxpayer and the other entity allocates $300,000, the taxpayer's total allocation would be $550,000. In this case, the taxpayer has an excess Section 179 deduction of $40,000 (since the maximum deduction is $510,000). The excess is NOT treated as a carryforward. It is permanently lost. This is why proper Section 179 planning with your accountant is important (and it is even more complicated when considering that many states have different section 179 limits for state taxes).
Finally, non-grantor trusts and estates do not allow Section 179, so if there are non-grantor trust partners in a partnership, Section 179 should not be taken.
Bonus Depreciation allows your business to take an immediate first-year deduction of a percentage of the cost of eligible business property. The amount of the Bonus Depreciation deduction depends on the year when you purchase the property and put it into use. In 2017, the first-year deduction percentage is 50%, then 40% and 30% for 2018 and 2019, respectively.
Qualifying property: The property must have a recovery period of 20 years or less. The property must be new, not used property. For example, if a restaurant owner purchases another restaurant from another owner/operator, the assets purchased are considered “used” not new assets. Therefore, Bonus Depreciation is not allowed.
Improvement property: Land Improvements, such as sidewalks, parking lots and landscaping do qualify for bonus depreciation.
For other improvements placed in service in 2017, any items of Qualified Restaurant Property that are also Qualified Improvement Property (most non-structural internal improvements that don’t enlarge a building) are eligible for 50% Bonus Depreciation, as well as a 15-year depreciation period for the remainder of the cost. This special rule is a dramatic departure from the general rule that deductions for the cost of non-residential building, or improvements are allowed over a 39-year period.
Qualified Leasehold Improvements and Qualified Retail Improvements qualify for Bonus Depreciation as well.
De Minimis Safe Harbor Limit
The IRS allows some assets to be expensed immediately instead of being capitalized as an asset. The limit is $2,500 per invoice or per item substantiated by the invoice.
A McDonald’s restaurant has an MRP that costs $760,000. Let’s calculate how much depreciation can be taken and the potential federal tax savings of that deduction.
The first step is to obtain a Cost Segregation Study. This study will analyze the assets purchased, and properly separate them into categories by asset type and recovery period.
Let’s say that $350,000 of the cost is determined to be the value of the leasehold improvements, $360,000 is equipment and $50,000 is land improvements. The depreciation deductions coordinate the following way:
- Section 179 deduction is taken in the amount of $350,000 on the leasehold improvements. That now leaves $160,000 of available Section 179 (remember, the maximum allowance is $510,000).
- The remaining $160,000 of allowable Section 179 would be taken on the equipment.
- 50% Bonus Depreciation is deducted on the remaining equipment cost of $200,000, which is $100,000.
- There is still $100,000 left of depreciable equipment basis. Using the “regular” MACRS depreciation tables, the first-year percentage for 5-year property is 20%. Therefore, the final piece of depreciation on the equipment is $20,000.
- The land improvements are eligible for 50% Bonus Depreciation, which is $25,000.
- There is still $25,000 left of depreciable land improvements basis. Using the “regular” MACRS depreciation tables, the first-year percentage for 15-year property is 5%. Therefore, the final piece of depreciation on the land improvements is $1,250.
The total depreciation taken is $656,250 ($350,000 for leasehold improvements, $280,000 for equipment and $26,250 for land improvements). The potential federal tax savings, assuming a top rate of 39.6%, is $259,875!
For additional information on analyzing your depreciation options for 2017, please contact CTM CPAs and Business Advisors at (847) 444-1040 or email us at firstname.lastname@example.org.
HERE COMES 2018! IRS and Social Security Administration Release Inflation-Related Adjustments for Wages & Retirement Contributions
Written by CTM Manager Nicki Moschiano, CPA
The Social Security Administration announced that the amount of wages subject to the 6.2% Social Security Tax will be $128,700 in 2018; an increase of about 1% from the 2017 wage base of $127,200.
This means the maximum amount of Social Security Tax an individual could pay in 2018 is $7,979.40.
Good News: After you earn your fist $128,700, NONE of your wages will be subject to Social Security Tax.
Buzz Kill: There is no limit to the amount of Medicare Tax one pays on wages. Whether you earn $1 or $100M in wages, every dollar is subject to the 1.45% Medicare Tax.
The maximum amount of “pre-tax” elective deferrals is increased from $18,000 in 2017 to $18,500 in 2018. Catch-up 401(k) contributions (extra contribution amounts for individuals over the age 50) remain unchanged at $6,000. These limits are the same for employees working for schools, or state and local governments enrolled in 403(b) plans or 457 plans.
Simplified Employee Pension Plans (SEPs)
The limitation for SEP plans has increased from $54,000 in 2017 to $55,000 in 2018. This remains one of the greatest tax-savings strategies for the self-employed. In order to "max out" a SEP contribution of $55,000, a self-employed individual must have net self-employment income (income subject to Social Security and Medicare Tax) of $275,000.
Individual Retirement Accounts (IRAs)
The maximum amount of annual contributions an individual can make to his or her IRA remains unchanged from 2017 at $5,500. Catch-up contributions for individuals over age 50 also stay the same at $1,000. These amounts are the same whether contributions are made to a Roth IRA or a Traditional IRA.
There are income limitations and deductibility phase-outs for Roth eligibility and Traditional IRA deductibility. But…anyone, regardless of income level, can always make a non-deductible Traditional IRA contribution.
Smaller businesses that may not want to carry the costs and compliance burdens of sponsoring a 401(k) plan or SEP, may still look for a lower-maintenance version of retirement plan savings for themselves or to attract and retain employees. A SIMPLE IRA is a retirement plan that allows for pre-tax deferrals up to $12,500 in 2018, with catch-up contributions for those over 50 of $3,000. SIMPLE IRAs require employers to make contributions of participating workers of 2%-3% of their salary.
You’ve Got Your Start-Up Business Plan, What About Your Tax Plan?
Written by CTM Manager Nicki Moschiano, CPA
Entrepreneurs often have great instincts, ideas and determination when it comes to the daily operations of their business. However, many have little to no experience (or desire) to tackle the “back-office” business functions that are involved with starting a new venture.
The tax and accounting questions for a startup can be overwhelming:
What are the tax implications of starting a new business? What type of business entity should I form? How do I form it? What accounting method should I use? What is the appropriate sales tax to charge my customers? How do I know I'm paying the right federal income taxes for myself? How do I remit payroll taxes for my employees? How will financing the business play into my tax plan; detrimentally or beneficially? What about my personal liability if I get sued?
While the perfect set of answers are tailored from both a legal and financial perspective, here are some tax and accounting tips for early-stage business owners:
1. Choose the Right Legal Entity
The legal structure of the business will influence almost every future decision a founder will make. The choice of entity will affect how the business will be taxed, what reoccurring reporting and compliance obligations it will have, what financing deals may be available, the number of future investors allowed, available retirement plans the business may be able to adopt and personal liability protections.
Sole proprietorships, partnerships, LLCs, LLPs, S Corps and C Corps all bring different tax results...and expenses.
This is one of the most important decisions entrepreneurs face in the early stages of a start-up, and should always involve input from your CPA.
2. Keep Track Of Your Books
Or better yet, hire a Bookkeeper.
When you have your accounting foundation in place, the business is much more likely to succeed. After all, what's the point in taking on all the risk and responsibility that comes with being self-employed if you don't know your numbers on any given day? Precise, “bottom-line” numbers.
Tracking your income and expenses is critical and there is just no way of avoiding this task if you want the most advantageous tax result.
If you know you're more of a creative type and become anxious at the thought of organizing daily transactions, a good bookkeeper is worth his/her weight in gold. Leaving the accounting until the end of the year, most definitely means you will be leaving deductions on the table and technically, you can't deduct what you can't document.
So, expense and mileage-tracking apps, QuickBooks, separate business-only credit cards or any homemade method that records your business activity all facilitate your business being able to deduct everything allowable.
3. Set Up A Retirement Plan
Retirement saving is often the most forgotten about and neglected element of an entrepreneur's plan. Many small business owners think that selling the business is all the retirement plan they need, and choose to put their earnings back into their growing company. While selling a business for millions at the age of 65 is a commendable goal, it's not always bankable. All small-businesses should look into establishing a retirement plan and contributing, even if it's just a few thousand dollars each year.
There are essentially 4 types of retirement plans for businesses: IRA-Based Plans (SEP and Simple IRA plans), Profit Sharing Plans, Other Defined Contribution Plans like 401(k) Plans and finally, Defined Benefit Plans.
Depending on how the business is legally structured and retirement plan adopted, for 2017, contributions can be as high as $54,000; with the exception of a properly accounted for Defined Benefit Plan. These actuarial plans allow up to $215,000 in tax deductible contributions!
Retirement plans not only allow the owners unmatched current-year tax benefits, they allow assets to grow with tax-free compounding until ultimately distributed and attract valuable employees. Every start-up should consider a retirement plan and we can help navigate the nuances with you.
4. Planning Larger Equipment Purchases
Both first-time and experienced business filers get tripped up by which expenses are considered capital expenditures vs. supplies. Supplies include things that are deemed to be “used up” during the year (paper, pens, toner cartridges). Capital expenditures are typically higher-value items that will last significantly longer than one year; for example, office or manufacturing equipment, furniture and certain building improvements.
When it comes to these items, there are a couple options: You can write off (depreciate) a portion of the cost for each year the asset is in use. This might be advantageous for businesses that want to save some of the depreciation expense for future years when anticipating higher income or suspecting rising tax rates.
Alternatively, the IRS also allows businesses to write off the entire cost of an asset purchase in the first year, with special rules for real estate. Assets that qualify would allow a business up to $510,000 of immediate deduction in 2017. You can write off several purchases as long as the total does not exceed the $510,000, and the total cost of ALL purchases does not exceed $2,030,000.
Taking the immediate write-off would not be advantageous in tax years where losses already exist before depreciation. This is always an important part of yearend tax planning for businesses big and small.
5. Set Aside Money For Your Individual Quarterly Taxes
Even the newest business owners are required to pay taxes on a quarterly basis. There is a special rule that if you had zero tax liability in the year that precedes your first year in business, you wouldn't have to pay any tax owed until filing time (April 15th). However, paying an entire year's worth of tax in one lump sum could completely derail a founder’s cash-flow plans.
The best way to stay on top of your quarterly tax obligation, and not fall into the cycle of paying last year's tax liabilities with current-year profits is to get into the practice of automatically setting aside a percentage of each payment of revenue (just like what happens when someone is an employee). Then, we can help you take stock of your profit/loss statement at each quarterly interval and advise you what to pay accordingly.
Finally. Establish a Relationship with a Certified Public Accountant
Find a CPA you trust and meet with them to discuss all of the above. Your accountant, besides being the “wet blanket in the room, always trying to be careful,” is really meant to quarterback all tax, accounting and financial issues that may arise; and not just for the business, but for the owner, personal liabilities, as well.
Having an ongoing and year-round dialog is what we're here for and truly an element to all successful startup (and long-term) businesses.
We take pride in setting small businesses up to thrive and watching them grow from a solid numbers-based foundation. With proper tax and accounting planning, we can guide you every step of the way.
The Senate Serves Back!
Written by CTM Partner Scott Weingart, JD, CPA
Late last Thursday, the Senate released its version of the GOP tax plan. While the goal was to arrive at a largely unified plan so that it would be possible to pass the new tax legislation before the end of the year, the Senate plan contains some major differences that might make it difficult to reconcile with the House plan.
Below is a brief recap of some of the major differences: - Read More
Let the Games Begin!
Written by CTM Partner Scott Weingart, JD, CPA
Last Week, the House of Representatives released the "Tax Cuts and Jobs Act." You may have heard House Speaker Paul Ryan state that the average U.S. family will save between $1,100 and $1,200. Well, that's probably not you! We wouldn't necessarily call the bill "tax simplification." It's loaded with changes - eliminating long time deductions as well as certain taxes, phasing out old tax provisions, phasing in new tax provisions, and then, introducing new tax concepts – which will make your head spin. The good news is that this bill is a long way from becoming final. Much debate and negotiation will take place. In the end, the bill that actually becomes our new tax law will probably look completely different than what we have to open the game.
Without going into extreme detail, we have summarized some of the highlights of the "Tax Cuts and Jobs Act": - Read More
The New Tax Plan - Just Don't Spend Your Tax Savings Yet
Written by CTM Partner Scott Weingart, JD, CPA
That is, if you get any tax savings. On September 27, 2017, President Trump released a nine page tax plan with the intent of creating "significant and meaningful" tax reform, the purpose of which is to "level the playing field and extend economic opportunities to American workers, small businesses, and middle-income families."
The plan itself is somewhat vague at this time. Many details still need to be filled in. Here is the framework, what we know so far:
Corporate Tax Rate - will be lowered from 35% to 20%. Trump backed down from his early campaign promise of a 15% corporate tax rate.
Pass-Through Entity Tax - People who own their own businesses would have business profits taxed at a 25% rate instead of having the income flow through to their personal tax return and taxed at individual rates. This change might affect income from Subchapter S corporations, limited liability companies and partnerships.
Elimination of Certain Business Deductions - No real detail provided here, other than "streamlining" of business tax breaks.
Repatriation Tax - Any assets held by U.S. companies overseas would be considered repatriated and taxed at a one-time lower rate, the purpose of which being to bring corporate profits back to the United States.
New Individual Tax Rates - There would be three tax rates for individuals - 12%, 25% and a top rate of 35% (down from the current top tax rate of 39.6%).
Possible Higher Fourth Tax Bracket - President Trump has insisted that the taxes for the wealthiest do not decrease. As a result, he has raised the possibility that there will be a rate higher than 35% if the "tax-writing committees wish."
Larger Standard Deductions - For individuals, the standard deduction would increase from $6,350 to $12,000. For married couples, the standard deduction would increase from $12,700 to $24,000.
Elimination of Itemized Deductions - The only deductions that would be preserved would be for mortgage interest and charitable contributions. Gone would be the deductions for state and local income taxes and real estate taxes.
Repeal of the Alternative Minimum Tax (AMT) - The repeal of this tax to ensure that a minimal level of tax be paid by limiting certain deductions and imposing a 26% or 28% tax rate has long been discussed, but finally implemented into President Trump's tax plan.
Increase the Child Tax Credit - The proposal would make the first $1,000 of the credit refundable and increase the income level at which the credit is phased out.
Eliminate the Estate Tax - This has been discussed many times by the Republican party, but it is finally included in President Trump's tax reform proposal.
For more information on how President Trump's proposed tax plan might affect you or your business, contact us at (847) 444-1040.
Worried About Getting Audited by the IRS? A Closer Look at the Odds
Written by CTM Manager Nicki Moschiano, CPA
Ever wonder how the Internal Revenue Service determines which tax returns it audits? Through a series of checkpoints, the IRS can easily identify those returns it feels needs further examination.
When an income tax return is filed, it is first subject to computer review. The review involves a comparison to “statistical norms,” developed by the IRS from auditing random samples of returns as part of its National Research Program. Information found outside of these statistical norms are what people often call “red flags.” Red flags are irregularities that jump off the page, or items that are not reflective of what other returns with similar income and deduction activity show. Even “reporting inconsistencies” relating to other facts such as where a taxpayer lives or their occupation may fall outside these norms, triggering a red flag on a return at the computer-screening level. Once a return is caught by this screening process, an auditor is then assigned to review the return. The auditor may accept it, or note that something is questionable. Returns with questions are then assigned to an examining group.
People often ask what specific items on a tax return typically catch an auditor's eye. Here are some of the usual suspects:
- Unreported income: Failure to report interest and dividends, non-employee compensation (1099-MISC), K-1 items, gambling winnings, etc. may trigger a letter and bill from the IRS — or it could generate an audit.
- High mortgage interest: The maximum amount of qualified home indebtedness is $1.1 million (including a home equity loan). A mortgage interest deduction in excess of a certain percentage of the $1.1 million could indicate an excessive deduction.
- Unrealistic charitable contributions: The IRS publishes data on the average amount of charitable contributions for various income levels. If you take a deduction for an amount that is materially larger than the averages, you could get a letter.
- Self-employed individuals: If you file a business return such as a Schedule C, or receive money from 1099’s with non-employee compensation, you might be under higher scrutiny.
- Travel and entertainment: Because of the record-keeping requirements and the fact that some deductions can be personal, this is always a ripe area for the IRS.
- Auto usage: Again, the IRS is well aware that many taxpayers fail to keep the required records, making it a fruitful area for an IRS adjustment during an audit.
- Home office: If a portion of your home is used for business, you can deduct the expenses and depreciation associated with the space. However, there must be an evident business connection and the space must be used exclusively for business. The IRS can look into one or both of these requirements and make you prove them to be true. The auditor has room to work in this area and, in general, the higher the percentage of the home claimed for business, the greater your audit chances.
- General “Lifestyle” Audit: Going back to those statistical norms, if the IRS compares what you report in income to the average income for your profession or general cost of living in your neighborhood, you may catch their eye. For example, if you report $10,000 of income and you live in a neighborhood where the average income is $100,000, they may question how you are able to live beyond your means.
- Foreign bank accounts: Indicating that you have a foreign bank account on Schedule B could increase your chances of an audit. But not checking the box, when you should, could also increase your chances. The IRS pays more attention to this area each year and continues to get information on many foreign bank accounts from other countries around the world.
Now let's talk about the likelihood of your return actually being selected for an audit...
First, even if your return does have one of triggers noted above, your chances of it being selected for an exam are extremely low.
The IRS received 148 million individual income tax returns for the 2015 calendar year. Of this amount, a little over one million were examined – that's 0.7%! However, don't get too happy about that less-than-one percent chance. It varies based on what information is in your return, and even more importantly, the amount you make. Ironically, there is a curve to the trend; low-income taxpayers and high-income taxpayers both have much higher chances of getting audited than middle-income taxpayers.
Higher-income taxpayers are IRS targets because they are often involved with complex entities that provide greater opportunities for aggressive tax planning. Errors on these returns typically result in a considerable amount of extra tax revenue being collected.
On the other hand, Earned Income Tax Credit fraud has run wild for years, so lower-income earners are also more in the cross-hairs of the IRS audit-selection process than middle-class Americans.
Here’s a breakdown of your chances of being audited, depending upon your income:
|Adjusted Gross Income Levels on Individual Returns:||Chance of Being Audited|
|No Adjusted Gross Income||3.3%|
|$1 under $25,000||.8%|
|$25,000 - $50,000||.5%|
|$50,000 - $75,000||.4%|
|$75,000 - $100,000||.5%|
|$100,000 - $200,000||.6%|
|$200,000 - $500,000||1.0%|
|$500,000 - $1,000,000||2.0%|
|$1,000,000 - $5,000,000||4.6%|
|$5,000,000 - $10,000,000||10.5%|
|Partnerships and S-Corporations||.4|
|Corporations with assets under $250,000||.7%|
|Corporations with assets between $250,000 and $10,000,000||1.0%-1.6%|
|Corporations with assets over $10,000,000||.4.7%-20%*|
*Corporations with assets over $5 billion have percentages as high as 78%.
Of the above audits, 55%-80% of them resulted in more tax owed; of course, with interest and penalties. In a counter-intuitive outcome, the lower-income returns were closer to 80%, while the returns with incomes over $1,000,000 were adjusted closer to 55% of the time.
There is one other fact to consider in conjunction with the low percentages of getting audited: the Internal Revenue Service has been struggling with continued budget cuts each year since 2011. IRS Commissioner John Koskinen said that the budget is now $900 million below what it was in 2010, further stretching the IRS’s already lean resources.
But what if these low odds don't work in your favor?
In the event that your return is selected for an exam, the IRS will start by sending a written notice through the mail. If you don't remember anything else, know that the IRS will NEVER initiate an audit over the phone. 100% of the time, they will contact you in writing.
If the specific items in your return are straightforward, their letter may simply ask you to mail documentation back to them. This is referred to as a “correspondence audit” and occurs 70% of the time. If there is a business involved, or several income items or deductions are in question, they may want to meet in person. These are called, “field audits” and done the other 30% of the time.
An accountant can help a great deal in either of these situations, and most often provide a better outcome for you than going it alone. There is a form you would sign called a Power of Attorney, and as soon as it's filed, you're removed from the equation. We become the middleman, fielding all questions the examiner may have, securing more time to comply with their requests, and helping you organize your response.
We will advise you on what support to provide and how to arrange your documents to substantiate what was reported on your return.
After the IRS looks at what you've provided, they will make a determination as to any additional amounts owed, or issue a “no-change” letter. You would have appeal rights and could request a conference or hearing with which we can help as well.
We know what you're thinking after reading all of this: “It's a great time to buck the system!”
Not really. And the truth is, no one wants an audit hanging over them or lingering for months. If that letter does arrive, contact CTM immediately. You never have to concede the contested issues, but there are time limits on your rights. Above all, the most important defense is good offense. We can work with you to plan, strategize and ultimately prepare an income tax return that is as close to “audit-proof” as possible; getting those odds even more in your favor.
For more information on avoiding an IRS audit, or navigating the audit process, contact us at (847) 444-1040.
Teaching Your Children About Taxes
Written by CTM Partner Scott Weingart, JD, CPA
OK, let's face it, taxes may not be the most interesting topic you would want to share with your kids. At some point in their lives, as they evolve towards becoming an adult, the responsibility to understand and file their own tax returns will eventually be theirs. The parent cannot take ownership of this task forever.
As a tax preparer, I am amazed every year when my clients tell me "they will be sending me their kids’ tax documents soon." I am not talking about 10 year olds. I am talking about young adults who have graduated college and have embarked on their careers. I always encourage my clients to have their adult children deal directly with me. I tell them I would be happy to work with their children and teach them about taxes. This past weekend, I ran into a client at a party and she actually thanked me for working with her kids this past tax season. It was a "win-win" for both of us: Her kids got educated in basic income taxes and I, perhaps, got new clients!
Having two boys in their early 20's, neither of whom is going to become an accountant, I am well aware that they don't know much about their tax returns. This past year, I made sure they gathered their tax documents (W-2's and 1099's) and sent them to me. Once I completed their tax returns, I went over the numbers with them and had them sign efile authorizations, just like any other CTM client. At a minimum, they now understand why they owe taxes with their return or why they are getting a refund (they told me that refunds are preferred). I was able to provide them with a basic overview as to a responsibility they either didn't know about or was a great mystery to them. This filing responsibility is now theirs, every year by April 15th.
Now that I have addressed this topic with my kids, it's on to my next task - teaching them that cell phones and cell phone service are not free. It's just a matter of time before I move them off my plan!
Renting Out Your Vacation Home - Tax Considerations
Written by CTM Partner Julie Babetch, CPA
Many of our clients own a second home, and sometimes, it is a good idea to consider renting it out as long as the circumstances are right. It might be a nice way to pick up some extra income. Understanding the tax rules ahead of time can help you take advantage of tax breaks and avoid any surprises at tax time. Below is a brief outline of the tax rules you should be aware of if you decide to go down this path:
The 14-Day Rule: Short-Term Rentals
This is one of the very few times you can make money tax free. If you rent out your home for 14 days or fewer during the year, you do not have to report the rental income on your tax return. In addition, there is no limit to how much you can charge. The house is considered a personal residence, and you can deduct mortgage interest (up to $1 million of acquisition indebtedness) and real estate taxes. However, you cannot deduct any rental expenses or take any depreciation deduction.
EXAMPLE: Mr. and Mrs. Stone have a vacation home in Naples, Florida. Although they stay at their vacation home every winter, they rent out the home for 14 days each summer to their friends, Mr. and Mrs. Rockwell. The money paid by the Rockwells to the Stones is tax-free rental income, and the Stones do not have to report this income on a Schedule E tax form.
The tax rules become a little bit more complicated if you rent out your home for more than two weeks each year, but use it for personal purposes, too. In this case, you must report all rental income, while only deducting a portion of your expenses, depending on the costs associated with your personal use versus your rental use.
If you use the vacation home for more than 14 days or 10% of the total days it was rented to others (whichever is greater), the IRS considers the property a personal residence. In this situation, rental expenses, such as insurance, property taxes and mortgage interest, up to the level of rental income, may be deducted, but rental loss may not be deducted – only zeroed out. Any excess will carry forward to future tax years.
EXAMPLE: Mr. and Mrs. Stone rented their vacation home out to the Rockwell family for 50 days. They used the house for personal purposes for 25 days. In this case, 25 days is greater than: the greater of 14 days or 10% of the total days the property was rented to others at a fair rental price-5 days (10% of 50 days). Therefore, the Stones must report the rental income. They can deduct the expenses up to the income and carry forward the unused deduction to the next year.
Full-Time Rental (Limited Personal Use)
If you use your vacation home for 14 days or fewer, there is no “deemed personal use” and the IRS considers you a landlord. You must report all rental income. However, you may deduct rental expenses, such as fees to property managers, insurance premiums, repairs and maintenance, mortgage interest, property taxes, utilities and depreciation. Your expenses can exceed your income and may be further deductible, subject to the passive activity loss rules.
The key here is to limit your personal use to 14 days or fewer and with a taxpayer-friendly rule, it is very doable. The IRS does not consider days spent on repairing, maintaining, “winterizing”/getting your home ready for summer “personal use days.” The law states, however, that the time devoted to working must be “substantial.” There is no definition of “substantial” but keeping logs of time, tasks, and meetings with repairmen is crucial. Family members can even be present enjoying the home while you work to get it ready.
EXAMPLE: Mr. Stone owns a cabin in the mountains that he rents for most of the year. He spends a week at the cabin with family. Mr. Stone works on maintenance of the cabin 3 to 4 hours per day (and keeps records of his work) and spends the rest of his time with family hiking, fishing and relaxing. The main purpose of being at the cabin that week is to do maintenance work and get the cabin ready for renters. Therefore, the use of the cabin for the week by Mr. Stone and his family will not be considered personal use days.
As you can see, well-documented maintenance and limited use of a vacation home can allow a taxpayer to enjoy the home for personal purposes while still benefiting from property-related tax deductions.
The vacation home tax rules can be confusing. They are loaded with counting days of personal use compared to rental use. If you need help in this area, please be sure to contact your CTM partner or manager for guidance.
Tax Season Secrets Revealed: CTM Accountants Spill the Beans
Written by CTM Marketing Leader Debra O'Malley
Although we have plenty of work to do year-round, there’s nothing that quite compares to “tax season” at CTM – where our full time accounting staff spends several months preparing hundreds of tax returns for our clients. For more than four decades, CTM has prepared its staff for the January to mid-April marathon by ensuring they are adequately trained and up-to-date on the latest IRS provisions. But it’s our creative initiatives and mid-season antics that help boost morale and maintain a high level of productivity throughout this race. For example, on multiple occasions, we’ve hired a professional massage therapist to give employees 15-minute back massages to help alleviate the pressures. We’ve also rolled out our “Shamrock Shake Break” or “Dairy Queen Dream” for a tasty after dinner treat. Most recently, we started hosting a “dinner-and-a-movie” night, where we all meet for dinner at a local restaurant and then see a select movie at the theater afterwards.
While these “perks” can’t erase the grueling 55-hour plus work week schedules, they do offer a nice diversion to help take the edge off. To gain a better understanding of what it’s like to work at CTM during this hectic time, we asked several of our employees to tell us what they like about tax season, what they don’t like about tax season and what, if anything, would they change. Below are a few comments from employees who have worked at the firm anywhere from two to more than 20 tax seasons.
“I like that we get the chance to reconnect with people we may only talk to once a year. It gives me an opportunity to catch up on what is happening in their lives.”
“I like the camaraderie among staff and partners during our dinner breaks in the kitchen.”
“By the time I leave the office, there isn’t much traffic on the road, so I can get home faster.”
“I really like the work!”
“We are so busy, that the days go by much faster.”
“I like the flexibility with my work schedule so I can decide how I want to spread out my hours during the week.”
“I like the Happy Half Hours on late Friday afternoons.”
“I like the variety of dinner options offered this year.”
“I don’t like the lack of time available to spend with family, friends or interests outside of the office.”
“I don’t like the stress it brings nor do I like dealing with the stress of others.”
“I don’t like the recently imposed March 15th deadline for filing partnership returns.”
“The first week is kind of rough, but after a while, you get used to the new norm.”
“I don’t know what I would change. It kind of comes with the territory of being an accountant.”
“I would give people the opportunity to become more specialized, so if you like doing one area of tax work, you can focus on doing that.”
“Hire more interns to help with certain projects.”
CTM Movie Review: "The Founder"
Written by CTM Partner Scott Weingart, JD, CPA
CTM recently had another "dinner and a movie" night. We try to make our movie viewing selections inspirational. You may recall that we previously went out as a firm to see the Ben Affleck thriller, "The Accountant." What a way to motivate accountants to do their best during tax season! This time, the movie of choice was the pseudo biography about McDonald’s founder, Ray Kroc, starring Michael Keaton. How good was Michael Keaton in his role? Let's just say that he was so convincing, you probably would forget that he was Michael Keaton and just see him as Ray Kroc. Now, if this movie doesn't cause all of us to visit a McDonald's drive-thru for a quick burger and fries, I don't know what would!
The movie picks up at the beginning of Ray Kroc's career as a milkshake mixer salesman. He travels across the country visiting quick service drive-in restaurants, unsuccessfully delivering his sales pitch to reluctant business owners. Eventually, he receives a telephone call from a super busy burger joint in San Bernardino, California, operated by the McDonald brothers – Richard James “Dick” McDonald and Maurice James “Mac” McDonald. He decides to pay them a quick visit and comes away thoroughly impressed by their restaurant operation. Instead of making people wait in their cars for a roller-skating waitress to deliver the goods, the McDonald brothers operate their restaurant with a walk up window. Perhaps this does not seem like a radical idea, but it certainly was a departure from the standard service concepts of that time.
Also unique was the focus on four simple products: burgers, fries, soft drinks and milkshakes. Contrast this menu with the typical laundry list of items sold by a quick service restaurant today and it makes you long to go back to a simpler time where the focus was on what one really does well. And that is how McDonald's got started. Their product was unique and they were good at selling it. Imagine people lined up outside the restaurant for an opportunity to buy a hamburger.
Of course, Ray Kroc took this idea and "supersized" it. Expansion through franchising was his brainchild. The McDonald's brothers were reluctant to move forward with this idea and per historical accounts (and in the movie) were constantly at odds with Mr. Kroc. Achieving product uniformity and precision in the kitchen were critical. In one movie scene, Mr. Kroc is amazed by the McDonald brothers’ development of the Speedee Service System. The McDonald brothers bring their employees to a park and recreate a kitchen setting using chalk on the pavement. They tirelessly direct their employees thru a mock kitchen scenario where they move like ballet dancers to accomplish their tasks. All of the equipment has to be precisely laid out in order to get the most efficient production out of the kitchen and employees.
Does the beginnings of the McDonald's restaurant translate into the McDonald's of today? Well sort of. One thing is clear, the idea of having the restaurants owned by wealthy, non-working investors does not work. In the beginning, Mr. Kroc allowed some of his country club buddies to own and operate a few of the restaurants. He quickly found that without an "in-the-restaurant partner," things could quickly get out of hand as the operating standards and food product started to vary dramatically from the original concept. That is why today, McDonald's franchisees are fully invested in the restaurant concept, giving up whatever they did in their prior careers.
Ray Kroc was an unrelenting, tireless businessman who would stop at nothing to get his way. He may have taken advantage of many people along the way (including the McDonald brothers, whom he coaxed into selling their ownership interests in their restaurants for a small, perhaps unfair, price), but without his drive and determination, the McDonald's brand would not be what it is today, one of the largest, most successful restaurant franchises in the world.
Recently, one of our employees shared an email from a relative whose dad used to do business with Ray Kroc back in the day:
“Yes, my dad was his meat supplier when he started. My dad was already working 6 days a week, and then Ray would call our house every Sunday, needing more meat immediately. I remember one Sunday, we were in the car leaving to go to (grandma’s), when my dad heard the phone ringing inside the house. My mom kept saying "don't answer it!" He did, and we all had to pile out of the car so he could go to work. As a favor, Dad also supplied their hamburger buns (because he could buy them cheaper than Ray could), and sold them to McDonald's at his cost. Ray made so many demands and broke so many promises, that eventually, my dad concluded that if he continued to sell [to] McDonald's Ray Kroc would end up owning him, so when Ray made one more costly demand, Dad told him to call his bun guy. Possibly the best decision he ever made, as McDonald's subsequently bankrupt several meat companies. Ray would demand a contract to buy for a specific cost, in order to keep prices consistent. But then if costs dropped, he'd break the contract. Of course if costs went up he'd take you to court to enforce the contract.”
So, draw your own conclusions from this story. The movie was definitely worth seeing, especially if you are in the restaurant business, or just plain like quick service food. One thing is certain - CTM employees are definitely charged up after seeing this movie, and ready to work another tax season!
Review Your Tax Returns
At CTM, we strive to prepare your tax return correctly. Sometimes, however, there are items on your tax return that we cannot possibly know. By spending a few minutes taking a quick look at a draft of your tax return before it is filed, you can save a lot of work to correct an inadvertent error or omission.
Last year, the extended tax deadline for filing personal returns was October 17, 2016, and many returns went down to the wire. Unfortunately, by the next day, we were already correcting some tax returns.
- In one case, a tax return was rejected from Efile because a client's 22-year-old daughter had filed her own tax return earlier in the year, claiming an exemption for herself. As a result, her parents could not claim her as a dependent, so their tax return had to be amended.
- In another case, a client contacted us after their return was Efiled and advised us that their son, born in October 2015, was not listed as a dependent on their tax return. Of course, we did not know they had welcomed a new child, so we had to amend their return to claim an additional dependency exemption for their son.
In both cases, amended returns could have been avoided if the client had reviewed the draft of the tax return. It is not good tax planning to wait until the last minute to file a return, if avoidable. But if that is the case, it is always prudent to take a look at your return to make sure it is accurate before we release it for Efile.
Key Due Dates for Federal Tax Returns
In 2015, President Barack Obama signed several pieces of legislation that included revenue provisions impacting the 2017 filing due dates for 2016 Federal Tax Returns. Click here to see the revised deadlines.
Trump Tax Plan – What’s In Store?
Written by CTM Partner Scott Weingart, JD, CPA
Now that Donald J. Trump has been elected the 45th president of the United States, we are likely to see some changes to our current tax code next year. Many of our clients have been asking us what is in store, so we decided to write a brief summary highlighting some of the potential changes on the horizon. We emphasize the words “potential changes,” because President-elect Trump by himself does not have the authority to unilaterally change our tax code. These changes have to be approved by Congress, so the end results are likely to be very different from the proposed changes outlined in Trump’s tax reform plan.
Trump’s first tax plan came out in early September 2015. This tax plan was revised almost a year later in 2016. On its face, Trump’s tax plan would substantially lower individual income taxes and the corporate income tax, though the largest benefits in dollar and percentage terms would go to the highest-income households. Overall, these lower tax rates would result in almost a $6.2 TRILLION reduction in government revenues over the next decade. On the flip side, it is projected that federal debt would rise by at least $7.0 TRILLION over the first decade.
Individual Income Tax Changes
Right now, the tax code contains seven tax brackets, with a top tax rate of 39.6%. Trump’s plan would consolidate these tax brackets into three (12%, 25% and 33%), with the top marginal income tax rate of 33% being reached when taxable income hits $112,500 for single filers and $225,000 for married filers. The tax rates on long-term capital gains and qualified dividends would remain the same as they are now – 0%, 15% and 20% - depending on your income level. What is also interesting is that while Trump’s original tax plan included a zero tax bracket for certain taxpayers, this feature no longer exists in his recently modified plan. Trump’s lowest bracket now requires single taxpayers with taxable income under $37,500 and married taxpayers with taxable income under $75,000 to pay 12% (which is actually greater than compared to current tax law).
In addition to changing the income tax rates and tax brackets, Trumps plan would also make other changes that would impact taxes. Right now for 2016, personal exemptions are worth $4,050 and the standard deduction is worth $6,300 for single taxpayers and $12,600 for married filers. The exemptions and itemized deductions are subject to phase-out depending on your income level. The Trump plan would completely eliminate personal exemptions, but would increase the standard deduction for single filers to $15,000 and married filers to $30,000. Itemized deductions would be capped at $100,000 for single filers and $200,000 for married filers. Perhaps most importantly, the Alternative Minimum Tax (AMT) that affects so many middle income taxpayers would be completely eliminated. And, to further reduce taxes, the Net Investment Income Tax of 3.8% on investment income such as interest, dividends and capital gains (which was passed as part of the Affordable Care Act) would also be eliminated.
The Trump plan would include major changes in the area of childcare. There would be an above-the-line deduction for children under the age of 13 as well as for the eldercare of a dependent (though there would be caps for taxpayers with total income over $250,000 single or $500,000 married). The childcare exclusion would be available for families who use stay-at-home parents or grandparents as well as those who use paid caregivers, and would be limited to a max of four children per taxpayer. The eldercare exclusion would be capped at $5,000 per year, but would be increased each year for inflation.
The Trump plan would offer spending rebates for childcare expenses to certain low-income taxpayers through the Earned Income Tax Credit (EITC). All taxpayers would be able to establish Dependent Care Savings Accounts (DCSAs) and make an annual contribution up to $2,000 for the benefit of specific individuals, including unborn children. To encourage lower-income families to establish DCSAs for their children, the government would provide a 50% match on parental contributions of up to $1,000 per year.
Business Tax Changes
The corporate income tax rate would be cut from a top rate of 35% to a top rate of 15% and eliminate the corporate alternative minimum tax. In addition, pass-through entities would be taxed at a 15% rate commensurate with traditional corporations (compared to having the pass-through income taxed at the highest individual income tax rates of 39.6% under current law or 33% under the proposed Trump plan). In the area of controlled foreign subsidiaries, there would no longer be the opportunity to defer income. However, the foreign tax credit would be preserved. Trump’s tax plan would provide the opportunity for a one-time deemed repatriation of all foreign profits currently deferred at a rate of 10%. Finally, the deductibility of interest expense would be capped at a certain level. Firms engaged in manufacturing in the U.S. may elect to expense capital investment and lose the deductibility of corporate interest expense. This would require an election and once made, can only be revoked within the first three years of the election.
The estate tax would be completely eliminated. However, appreciated property held until death and valued over $10 million would be subject to a capital gains tax (so no step up to fair market value). To prevent potential abuse in the area, the contribution of appreciated assets into a private charity established by the decedent or the decedent’s relatives would be disallowed.
Overall, the Trump plan is projected to cut the average tax bill in 2017 by $2,940 and increase after-tax income by 4.1%. However, the highest-income taxpayers (0.1 percent of the population, or those with incomes over $3.7 million in 2016 dollars) would experience an average tax cut of nearly $1.1 million, over 14% of after-tax income. Households in the middle fifth of the income distribution would receive an average tax cut of $1,010, or 1.8% of after-tax income, while the poorest fifth of households would see their taxes go down an average of $110, or 0.8% of their after-tax income.
The center for Federal Tax Policy at the Tax Foundation projected that the original Trump tax plan would have grown long-run GDP by 11.5%. The Tax Foundation’s new estimates for the revised Trump tax plan is that the U.S. economy would experience an increase in long-run GDP by 6.9%. Will any of the changes discussed in this article come to fruition? Maybe – but it is almost certain that Trump’s tax plan will go through many revisions by Congress next year. So, don’t go spending those extra tax dollars just yet!
Valuation Discounts May Be a Thing of the Past
Written by CTM Partner Julie Babetch, CPA
Family Limited Partnerships (FLP’s) have been used as part of family wealth transfer planning for quite some time. They can be used to manage and control family assets, particularly as part of a succession plan for family businesses. The majority owners of these partnerships have the ability to gift smaller partnership interests to family members at a reduced value by using valuation discounts.
The type of valuation discounts that are typically applied are the “minority interest, “lack of marketability” and “lack of control.” These discounts can sometimes in total reach 35% or higher. When applied to the value of a gift, these discounts provide significant estate and gift tax savings by reducing the value of the transferred interests.
Let’s look at an example. Under current law, a married couple with $10,000,000 worth of assets held in an FLP may decide to gift 30% of the partnership to their kids. If no discount were applied to value the 30% ownership interest, the interest might be worth $3,000,000. If an appraiser was hired and he or she decided to apply, say a 25% combined discount for lack of marketability and lack of control, the 30% interest might only be worth $2,250,000. These combined discounts could result in decreasing the 30% ownership interest by $750,000 and potentially saving up to $300,000 in gift tax.
Unfortunately, on August 2, 2016, the Treasury department decided to crackdown on the aggressive use of valuation discounts. The newly proposed Treasury Regulations under IRC Section 2704 are expansive, and they would severely limit the use of valuation discounts for any type of FLP or other family business transfer, where the family would retain control before or after the gift occurs (or bequest in the case of transfer after death).
What does this mean? Under the new regulations, the gift of the limited partnership interest in our example may have to be valued at or very close to $3,000,000, and the remaining 70% interest may have to be valued at or very close to $7,000,000.
The Proposed Regulations must go thru a 90-day public comment period, which will last thru November. After that, a public hearing will take place in December. Finally, Treasury would need to re-evaluate these provisions before final issuance (which in turn would not take effect until 30 days thereafter). Time is of the essence if you are planning to gift business interests to family members. It is a good idea to get this done before the end of 2016 and before the regulation becomes final!
Judge Grants Injunction Against New Overtime Rule
Written by CTM Accounting Manager John Gillham
On May 2016, the U.S. Department of Labor issued the final Overtime Rule, which included a provision providing overtime pay to employees with annual salaries under $47,476. This rule was set to go into effect on December 1, 2016. However, last week, a U.S. District Court Judge granted an Emergency Motion for Preliminary Injunction, which effectively prevents this rule from being implemented and and enforced. The U.S. Department of Labor is currently considering legal options to reverse this decision.
At this point, it is unclear how this situation will play out. The courts still have to review the merits of the case objecting to the Final Overtime Rule. Congress may step in and pass legislation, possibly with a lower salary threshold. At the very least, it appears the Overtime Rule will be delayed past December 1st. And it is likely the case won’t be resolved until after the new President takes office. This creates additional uncertainty.
Many employers have already taken steps to comply with this Final Overtime Rule. It may be advantageous to keep any changes you made in place for now. Because everyone’s situation is different, we suggest you contact us at (847) 444-1040, to discuss all your options or answer any questions you may have.
Ransomware: The Newest Threat to Your Business
Written by CTM IT Manager Ken Root
According to recent statistics (including a report released by Kaspersky Lab, an international software security group), 2016 could be the year that cyber-criminals wreak the most havoc on businesses worldwide. Attacks on businesses were 5 ½ times higher in the 1Q 2016 compared to the same period in 2015. Cyber-criminals are targeting more and more businesses regardless of their size or the type of computer systems they are using.
It is estimated that cyber-criminals collected $209 million in the first quarter, and by the end of the year, they will collect approximately $1 billion. The actual amount will probably be larger because many organizations choose not to report these crimes.
So, what is this latest threat that will cause all this turmoil and financial loss? It is called Crypto-ransomware or ransomware for short.
This malicious software locks the files on your computer and then demands payment, reportedly as high as $17,000, to receive the key to unlock your files. Typically, payment must be made in a virtual currency, like Bitcoin, which is often times not traceable. The locked files include those on your network drives that your computer has access to, so it can affect multiple computers. Newer variants of ransomware will delete these files if you do not pay within the time specified.
How Ransomware Works
Ransomware attacks come in the form of ads on websites, as well as emails containing attachments and links. Website Ads will attempt to trick a person into thinking they have no anti-virus protection, they have visited an illegal website, the copy of their operating system is illegal or local law enforcement has detected illegal activity, etc. Fraudulent Emails use topics such as “you haven’t paid a bill,” “your friend sent you a request/file,” any current event (e.g., Zika virus, Brexit, Politics, etc.), free goods or services or emergency broadcasts, etc. Attackers will use anything they can think of to trick the recipient into opening the email and clicking on a link or attachment. In both delivery methods, they typically use company and government logos to make them look legitimate.
Protecting Your Assets
There are a number of things you should do to protect yourself against this threat:
- Be sure you are running the most recent version of your computer’s operating system.
- Add a firewall to the equipment your Internet Service Provider provides you. This firewall should not be older than two years old and be what is referred to as a “Next Generation Firewall” by many security appliance manufacturers. The firewall includes virus and intrusion protection and other security measures to stop threats before they get into your business.
- Backup your files every night. Backing up to disk and/or the Internet is the preferred method.
- Each computer should have a security software package, including a firewall running on it. Be sure that this software is continually being updated.
None of the above solutions can protect you or your business from every attack. An important element of defense is a human firewall. Everyone in your organization must be alert and consider whether they should click on a link or attachment before doing so. There are several training solutions available from various sources that will help your employees detect what to open. The most effective companies send frequent tests so employees can see what the latest attacks look like without doing damage to your Information Technology system.
If ransomware users are successful in an attack against you, there are typically two options to resolve this threat, either 1) pay the ransom fee, or 2) restore your system from backup. A recent poll of Spiceworks members, an IT community website, revealed almost all IT professionals choose not to pay the ransom.
If you have further questions about ransomware, contact CTM’s Information Technology Manager Ken Root at email@example.com.
School’s Out, Now What? Your Child's Summer Camp Expenses May Be Eligible for Tax Credit!
Did you know that bringing little Johnny to that pricey summer sports camp may turn out to be more advantageous than you think? Of course, it’s beneficial for keeping him active during the lazy, hazy days of summer, and it is a safe place for him to play while you’re at work, but this annual summer ritual may also be good for your bottom line…on your tax return.
According to IRS Publication 503, Child and Dependent Care Expenses, some of the costs (up to 35% of $3,000 in qualifying expenses) associated with sending your child to camp may be claimed as a credit on your taxes so long as the following criteria is met:
- You (and your spouse if you are married filing jointly) are working, or are looking for work.
- Your dependent child is under the age of 13 (with some exceptions).
- The camp you send your child to is a DAY camp - not an overnight camp.
Other expenses, such as physicals and immunizations, may be included if they are associated with camp preparation requirements
The Child and Dependent Care Tax Credit varies depending on your earned income for the tax year. To claim the credit for camp expenses, you will need to complete and attach Form 2441 to your federal tax Form 1040, Form 1040A or Form 1040NR. You will be asked to include your child’s social security number as well as identify the name, address and tax ID number of the camp provider on Form 2441.
For further information about the Child and Dependent Care Tax Credit, please contact CTM CPAs and Business Advisors, Ltd. at (847) 444-1040.
Transportation Fringe Benefits – A Win-Win for Employers and Employees
Written by CTM Accountant Ewelina Klaczynska
Qualified transportation fringe benefits or “Commuter Tax Benefits” are employer provided programs that allow employees to set aside pre-tax dollars for their monthly qualified mass transit, van- or carpooling and work-related parking expenses. These monthly benefits are excluded from the employees’ wages and are a source of twofold savings: (1) The employer can lower its payroll taxes paid on employees’ wages, and (2) Employees can lower their gross income, pay less in both payroll and income taxes, and take home some extra money each month.
Transportation fringe benefits were originally enacted into law in1993 under the federal tax code § 132(f), yet not until 2015, have these benefits been made permanent. Over the last 22 years, Congress has been extending commuter benefits on a year-to-year basis, making them uncertain and less appealing to employers. By passing The Protecting Americans from Tax Hikes (PATH) Act in December 2015, Congress made the monthly tax-free commuter benefits permanent and increased the exclusion amounts from $130 to $255 per month for the 2016 tax year and beyond. This strengthened incentive will hopefully encourage more employers to establish or expand their transportation programs offered to their employees.
Who is eligible?
An employee can take advantage of transportation fringe benefits only through an employer offered program. Transportation benefits are not available to sole proprietors, partners, independent contractors, and two-percent shareholders of S corporations.
What transit and parking expenses qualify?
Eligible transportation expenses include:
- Payments for mass transportation service such as train, subway and bus fares that is provided either by public or private transit operators;
- The cost of transportation in a commuter highway vehicle, such as vanpooling, with the seating capacity for six passengers and at least 80% of the mileage use for transporting employees; and
- Parking expenses, if (1) a vehicle is parked in a facility that is near the employee’s workplace, or (2) at a location from where the employee commutes to work by train, carpool, etc.
In addition, bicyclists may qualify for $20 per month in bicycle commuting reimbursement for expenses incurred for the purchase of a bicycle, bicycle improvements, repair and storage. However, the bicycle commuting benefit may not be combined with transit, commuter highway vehicle or parking benefits.
What are the current monthly exclusion amounts?
For 2016, the maximum monthly pre-tax contribution for transit, commuter highway vehicles and/or qualified parking expenses is $255.00. Bicycle commuters may not take out money in advance for pre-tax benefits. However, they may be reimbursed up to $20 per month for each month a bicycle is used for transportation, and the reimbursed amount is not taxable.
What are the types of programs the employer can offer?
Participating employers may either offer tax-free transportation benefits as a subsidy where the employer funds directly the cost of employees’ commuting or parking, or allow the employees to pay for transit passes and parking with pretax dollars through a salary deferral up to the limit allowed by law. Alternatively, the commuter benefits program can be a combination of these two options as long as the combined monthly exclusion does not exceed statutory limits. Employers usually offer the benefits in the form of prepaid transit cards, parking vouchers or debit-cards. Or, they can simply reimburse their employees for qualified expenses.
What are the savings?
Transportation fringe benefits are a win-win for employers and employees as both can realize significant savings by utilizing the monthly exclusion amounts.
For example, assuming that the employee is in the 28% tax bracket, pays 3.75% state income tax and 7.65% in FICA withholding, the monthly savings would be $101 and annual extra dollars would total to $1,212!
How do I get started?
If you are a commuter paying for either monthly transportation or parking, check with your employer to see if it offers transit and parking tax-free benefits. If so, sign up to take advantage of these great savings. Otherwise, you can encourage your employer to establish a transit benefit program.
If you are an employer, your ultimate choice whether to participate and how to roll out the program may largely depend on the area in which you are located. While most of the transit operators in the metropolitan areas offer attractive sale programs for employers, some local communities may not have such well-established services. In addition, the benefits you may offer for parking expenses may vary. If you operate in a large urban area, your employees will certainly appreciated these extra dollars for the parking in the city, but if you are located in the suburbs there might be more free parking available for your employees. You should talk to your employees to find out their communing habits and needs as well as contact your local transit agency for available fare programs and research the parking options close to your office.
“Enhanced” Food Inventory Donation
Written by CTM Partner Scott Weingart
Did you know you may be able to deduct more than $1 with a proper donation of food inventory? In December 2015, congress passed and President Obama permanently signed into law the enhanced deduction for charitable contributions of food inventory to tax-exempt charitable organizations. Previously, this enhanced deduction was only available to C-corporations. Now, S-corporations and limited liability companies are eligible to claim the “enhanced” deduction.
What is the “enhanced deduction”? A business may deduct the smaller of (a) twice the basis of the donated food or (b) the basis of the donated food plus one-half of the foods’ expected profit margin, if it were sold at fair market value. Let’s look at an example in terms of numbers. Suppose you have food product that cost you $500 that you would sell on your shelf or off your menu for $1,000. Assuming this food product was appropriately donated, your deduction would be the lesser of:
- Twice the basis of the inventory ($500 x 2) = $1,000…...or
- The basis plus ½ the profit margin ($500 + (1/2 x $500) = $750
So in the above example, the tax deduction could be $750, much better than a $500 deduction under normal circumstances. Keep in mind that the inventory contribution must be of “apparently wholesome food” (defined by the Bill Emerson Good Samaritan Food Donation Act). In its simplest terms, “apparently wholesome food” means food intended for human consumption that meets all quality and labeling standards imposed by federal, state, and local laws and regulations. Here are some commonly asked questions about these donations:
Are there any forms that a donor needs to fill out?
Yes, Form 8283 for noncash donations must be filed with the tax return. You will also need to obtain a written receipt from the charity.
What are the record keeping requirements with respect to the items donated?
Like any contributions, you should keep documents that support both the cost of the items donated and their fair market value, or selling price.
Are there any limitations on the deduction?
Yes, the annual cap on the deduction is limited to 15% of taxable income.
Can food inventory be donated to any charity?
Any charity is possible as long as the food is used to feed the hungry. The food cannot be sold in the charity’s thrift shop and then the proceeds used for a different charitable purpose. Many charities are not set up to take food inventory donations, so for that reason, it makes sense to deal work with a specific charity that is set up to accept food inventory donations.
The National Restaurant Association (NRA) has long been an active voice in supporting this charitable giving measure. According to the NRA, 83 percent of restaurants made a charitable contribution by donating food to individuals or charitable organizations. This favorable tax policy is a critical tool in alleviating hunger because it helps offset costs associated with preserving, storing and transporting food inventory donations.
In summary, if you are in the food business, the next time you are faced with expiring product or waste, consider donating your food inventory to a charity. You will help feed those in need instead of sending food to a landfill. Your tax incentive is now a permanent part of the law!
Expiring Tax Provisions
Once again, we near the end of the year with lots of uncertainty in the area of tax incentives. It’s about this time that we prepare income tax projections for our clients and many of these tax projections are going to have multiple scenarios. Why? Because congress has not yet voted to extend many tax incentives that expired at the end of 2014. Here is just a brief sampling of some of the more popular expiring incentives:
- $250 deduction for teachers when buying books, supplies, computer equipment and other materials used in their classrooms.
- Exclusion from gross income discharge of qualified principal residence indebtedness income.
- Deduction for state and local general sales taxes in lieu of a deduction for state and local income taxes.
- Above the line deduction for qualified tuition and related expenses.
- Ability to distribute up to $100,000 in qualified charitable distributions from an IRA without including the distribution in income.
- Research and development credit, which provides a 20% tax credit for qualified research expenses over a base amount.
- Allowing a 15 year life instead of a 39 year life for qualified leasehold improvements, qualified restaurant buildings and improvements and qualified retail improvements.
- Bonus depreciation which provides a depreciation deduction equal to 50% of the adjusted basis of qualifying property in the first year it is placed in service.
- Increasing the Section 179 expense limit to $500,000 and expanding the definition of Section 179 property to include qualified real property.
- Various energy tax provisions that include credits for different types of qualified energy property.
When looking back at past history, Congress has acted at the last minute. For the 2014 tax year, Congress passed the extenders at the end of December, which were made retroactive to the beginning of the year – but not past the end of the year. For the 2013 tax year, Congress waited until January 2014 to extend these incentives retroactively to the beginning of 2013. What will happen this year is anyone’s guess. Right now, both the Senate and the House of Representatives have differing bills circulating that would extend all or some of these tax incentives retroactively to the beginning of 2015. It’s another year of wait and see.
Tax-Related Identity Theft
According to the U.S. Department of Justice, more than 12 million people a year are victims of some form of identity fraud or identity theft. While there are differences in these terms, they refer to types of crimes in which someone illegally obtains another person's personal information, such as a Social Security or driver’s license number, and uses that information in order to commit fraud, usually for economic gain.
Identity theft is the fastest growing crime in the country. The financial loss attributed to identity theft totaled more than $26 billion in 2014, twice the amount reported in 2010.
Why is Identity Theft becoming so prevalent?
Today, many criminals are able to hack into public and private organizations databases to obtain large amounts of personal data. Organizations, both big and small are suffering significant data breaches through security failures. Furthermore, individuals are sharing more and more bits of personal information on-line, such as a pet’s name, birth dates, the name of your high school, an email address, etc., giving identity thieves enough pieces of information to recreate their profile, which can later be used for fraud.
What are the most common types of identity theft?
There are many ways a criminal may obtain and use someone’s personal information without their authorization. It may be as simple as someone stealing your wallet or going through your garbage, or as sophisticated as a hacker accessing information through a company’s unencrypted database. But what does a thief do with this information once they’ve stolen it?
Below are some of the most common types of identity theft:
- Opening a new credit card account or using an existing credit card to the fullest credit limit.
- Opening new service accounts, such as cell phone providers or other utility.
- Opening a new checking account or writing checks from an existing account.
- Obtaining loans using the victim’s information.
A growing epidemic of identity-related tax fraud.
More recently, however, there is a growing concern of identity related tax fraud. Tax-related identity theft occurs when someone uses your stolen social security number and other types of personal information to file a tax return claiming a fraudulent refund. In May 2015, the Internal Revenue Service announced that tax information had been wrongfully obtained on more than 100,000 taxpayers, with an attempt made on an additional 100,000 taxpayer accounts, after thieves illegally accessed taxpayer records using the “Get Transcript” application. These criminals were able to use the stolen information from the IRS, as well as detailed information obtained before the IRS breach, to file more than 15,000 false tax returns that closely resembled real tax returns, costing the IRS more than $50 million.
What to do if you are a victim of tax-related identity fraud.
There are several things a person can do to prevent, detect or resolve issues related to tax-related identity theft. Many government organizations and other sources provide information for individuals who have been victims of tax-related identity theft. According to the IRS’s Tips for Taxpayers, Victims about Identity Theft and Tax Returns, if you receive a notice from the IRS, indicating that you may have been the victim of tax-related identity theft, contact the number on the official letter immediately. If you suspect you may have been the victim of identity theft, but have not received an IRS notice, contact the IRS Identity Protection Specialized Unit at (800) 908-4490. In addition, you should also take some further steps to mitigate potential damages, including the following:
- Report incidents of identity theft to the Federal Trade Commission at www.consumer.ftc.gov or the FTC Identity Theft hotline at (877) 438-4338 or TTY (866) 653-4261.
- File a report with the local police.
- Contact the fraud departments of the three major credit bureaus:
- Equifax – www.equifax.com, (800) 525-6285
- Experian – www.experian.com, (888) 397-3742
- TransUnion – www.transunion.com, (800) 680-7289
- Close any accounts that have been tampered with or opened fraudulently.
Becoming the victim of identity theft can wreak havoc on a person’s life. Guarded with helpful information and taking proactive steps can help a person minimize their risk of becoming a victim of this crime. If you would like more information on how to avoid becoming a victim of identity theft, or on solutions to remedy this fraud, please contact CTM CPAs and Business Advisors at (847) 444-1040.
Succession Planning: Sustaining Your Company’s Viability
Businesses go through many changes throughout their life cycles, and savvy business owners spend a lot of time developing a growth strategy for each stage. Whether in the development stage, the startup stage, the growth/survival stage, expansion/rapid growth stage or maturity stage, businesses will not survive unless programs are designed to address the challenges presented in each stage. When there are strategic solutions in place, businesses may thrive for many, many years. So long, in fact, they exist well beyond the time of an average person’s lifespan. To assure their companies’ longevity and continued success, astute business owners, especially owners of family-run businesses, need to think about succession planning.
Succession planning is a process for identifying and developing individuals within your organization to eventually step into key leadership roles. Recognizing the strengths and weaknesses in your talent pool enables you to identify which candidates are best suited for various positions in your company. Selecting those individuals to train and develop as potential successors assures leadership continuity. It also eliminates confusion about who will carry on your legacy, and makes the transition from successor to owner much smoother.
When you consider transferring ownership, it is necessary to know what your business is worth before it is too late because your business is at a greater value when it is a continuing business as opposed to when it needs to be sold. For family businesses, a detailed succession plan will addresses key issues, such as generational transitions, alignment of family interests, business valuations and buyout agreements, interfamily disputes, and estate and inheritance issues. Without a detailed plan, your business may expire when you retire or are no longer here.
If you would like assistance with developing a succession plan for your business, please contact our office at (847) 444-1040. We have accountants with significant experience helping business owners take that next step to securing their organization’s future.
The Impact of Obamacare on Your 2014 Tax Return
Since the Affordable Care Act (aka Obamacare) was passed into law in 2010, there has been a lot of uncertainty about its impact on individuals and businesses. Five years later, we know one thing for sure, every American filing a 2014 income tax return will be required, at a minimum, to indicate whether they do, in fact, have health insurance coverage. If you do not, you may face a penalty. If you received financial assistance to help pay for your insurance premiums, you will have to do more than just check a box on your tax return.
Below is a summary of the impact of Obamacare on your 2014 tax returns, depending on how you obtained insurance coverage and whether you received any subsidies.
If health coverage was obtained through an employer or Medicare or Medicaid:
- Simply check the box on line 61 of your 1040 tax return to indicate that you and everyone in your household has had health coverage for the full year.
If health care coverage was obtained through an Obamacare Exchange AND you received Tax Credits:
- You are no longer eligible to file a 1040-EZ form. You must file a 1040 tax return.
- Because the subsidies you received were based on an estimate of your 2014 income, you will need to determine if you received the appropriate amount of financial assistance for health insurance premiums. Depending upon how much you really earned, your tax credits may have to be adjusted.
- You will receive a form 1095-A (Health Insurance Marketplace Statement). The form 1095-A shows how much your total insurance premium was and the amount of the tax credit you received each month you were covered. You will use this form to complete form 8962 (Premium Tax Credit), which will show whether you actually owe money, or have a refund coming.
If health care coverage was obtained through an Obamacare exchange and you did NOT receive any subsidies or it was purchased directly from an insurance company:
- If your coverage was purchased on an exchange, use the information found on form 1095-A (which shows how much your total insurance premium was) to complete form 8962, and check line 61 of your 1040.
- If you didn’t use an exchange to buy your health insurance, just check line 61 of your 1040 return.
If you do not have health care coverage:
- You may be subject to a penalty to be paid with your tax return, which could range from $95 to $11,000.
- If you didn’t earn enough money to pay taxes (for example, if you are a single individual under age 65 making less than $10,150), there is no health insurance mandate for you and you don’t need to file a tax return.
- There are some exemptions to the Obamacare mandate, but these exemptions must be applied for.
As you can see from the above summary, the Affordable Care Act will affect all of us in some way on our 2014 tax returns. For some, all we have to do is simply check a box on our tax return that we have health insurance coverage. For others, there may be a little bit more work to do. If you are confused or need help in this area, please do not hesitate to contact our office at (847) 444-1040. We have accountants who are well versed on the Affordable Care Act and can easily sort things out for you.
What's Going Up in the Tax World for 2015
Although many expired business tax provisions have been waiting in limbo since the beginning of 2014, most individual tax items carry an automatic increase each year. The areas which affect most of us include the following:
- The top tax rate of 39.6% will apply to single taxpayers with income over $413,200 and married taxpayers with income over $464,850. All other brackets have inched up as well.
- For those who don’t itemize deductions, the standard deduction will be $6,300 for single, $12,600 for joint returns and $9,250 for “head of household” status.
- Those who do itemize will see those deductions phased out at income levels over $258,250 (single) or $309,900 (joint returns).
- The personal exemption will be $4,000 per dependent. However, this too will be phased out beginning at income levels of $258,250 (single) and $309.900 (joint returns). Your personal exemptions will completely disappear if your income exceeds $380,750 (single) or $432,400 (joint returns).
- The Alternative Minimum Tax exemption moves to an all-time high of $53,600 (single) and $82,100 (joint returns).
- The federal estate tax exemption will rise to $5,430,000 – an increase of $90,000 over 2014.
- The limit on flexible spending accounts (cafeteria plan) contributions will rise by $50 to $2,550.
- The annual gift tax exclusion remains the same at $14,000 per year, for each donee.
Defending your computer network against cyber attacks
Written by CTM IT Manager Ken Root
In today’s computerized world, information and identify theft are a very real concern. The days of targeted cyber attacks are over. All businesses, large or small, are subject to attacks. There are many types of threats to computer networks, ranging from viruses that damage your computer to programs that slow your system down to software that steals your information. The best defense to securing your network is to use Internet Security software (antivirus software is no longer enough) and to back up the entire contents of your computer each day.
To address these issues, CTM CPAs and Business Advisors has incorporated numerous improvements to its Information Technology infrastructure at its new headquarters in Lincolnshire. These improvements include:
- Updated firewalls that scan ALL traffic for multiple types of threats using the latest threat detection technologies;
- Updated network equipment to transfer information faster;
- State-of-the-art wireless equipment that directly connects to the firewalls to ensure it is secure; and
- Core software updates to provide a better user experience.
These improvements will help ensure that the information CTM retains is secure. If you would like us to assist you in securing your network, send an email to Ken Root.