Deductions and Grants – Yours For The Taking!
Sep 08, 2014
You could be a manufacturer – at least in the sense of qualifying for the domestic production activities deduction (DPAD). DPAD is a deduction equal to 9% of the net income generated from eligible activities. To be eligible you have to manufacture, produce, grow, or extract property within the United States.
Activities of the dental office that could potentially qualify might include: on-site production of crowns, inlays, onlays, and other restorations using CEREC technology. Operation of in-house labs to produce retainers, study models, and appliances could also qualify.
That said you still avoid the medical device excise tax, since most domestically made dental devices avoid the tax because they are not required to be listed with the FDA. These items are not expected to be taxed: crowns, bridges, dentures, veneers, and orthodontic appliances (retainers etc). As you recall, the excise tax on medical device manufacturers is a 2.3% tax on taxable medical devices intended for humans.
On a separate note, you could also qualify for the Ohio Workers’ Compensation safety grants! The items available for the Safety Grant have changed – they now include items that would assist healthcare offices of all kinds in patient care. To be eligible, you must be current on your BWC premiums, demonstrate a need for a safety intervention, and have active BWC coverage with four past payroll reports for private employers. To get started, review the link on BWC’s website. Gather your information and schedule a visit by a BWC safety consultant before you complete the application. Refer to our blog post from March 25th.
There are significant changes coming to Ohio’s Workers’ Compensation program in 2015. William Vaughan Company will be hosting a free seminar part of our Client Knowledge Series called Modernizing the BWC to be held on September 23, 2014 at Stone Oak Country Club – sign up here!
Categories: Healthcare & Dentistry
Most Common Tax Return Mistakes
Sep 04, 2014
A majority of tax returns are e-filed to the IRS, making your return on your refund much faster … unless, you do one of these common mistakes that can delay your return from being processed.
Double check not only your social security number, but also your spouse and children’s social security numbers. Transposing these numbers are very common.
Another common error is misspelling your name or having the wrong name. If your name has changed due to marriage or divorce, make sure you do a change of name with the Social Security Administration before you file your tax return. Just changing it with your employer on your paycheck does not change it in the IRS system. The IRS recommends you change it with Social SecurityAdministration even before you ask your employer to change it for paychecks and W-2’s.
Many people are confused with their filing status when it comes to head of household, mainly when you are divorced with kids. If both parents claim head of household and both claim the kids … there will be delays.
Errors in figuring credits or deductions, such as the child and dependent care credit, or the earned income tax credit, or if you are over 65 and/or blind will also delay processing.
Receiving your refund through electronic direct deposit is the safest and fastest … unless you enter the wrong bank account numbers. Double check the routing and account number to make sure they are correct.
People are 20 times more likely to make errors doing manual pen and paper returns compared to people who use tax software and e-file. Many are errors from either arithmetic or transferring figures from line to line or form to form. Always double check your figures with a calculator.
Should you have received a Misc/Interest/Dividend 1099 Form? If you haven’t received it, check with the company. Your copy may have gotten lost in the mail, while the IRS will still have received their government copies. If you do not claim the income on your return, the IRS will send you a notice asking for the missing tax you owe on the unreported income. This could also result in penalties and interest.
If you are mailing your return, remember to sign and date your return. If you are e-filing, make sure you use the correct Electronic filing pin number that you used the prior year.
If you are unable to file your tax return on-time, make sure to fill out an extension and mail it to the IRS. You will also need to pay in any tax that you might owe, but it gives you an extra 6 months to file the return.
The best way to avoid common mistakes is to not wait until the last minute to work on your taxes. Even giving it to your tax preparer within the last few days before the deadline is an easy way to end up getting a delay in your return being processed due to missed items or mistakes.
By: Sandra Stone, Accountant
Categories: Uncategorized
Is a Central Body a Must for Cost Accounting Professional Growth?
Sep 03, 2014
When you think of cost accounting as a profession, you quickly realize it is not really recognized like you would a lawyer, nurse, teacher, etc. I believe one of the items of importance related to the transition of cost accounting to a profession, has to do with the creation or utilization of an existing entity to be the central clearinghouse and sponsoring entity for cost accountants and cost accounting as a profession.
Most every profession has at the center an organization that supports, controls, overseas and provides direction for that profession and its members. Such an organization would have to be in existence and take the lead in developing any such professional status for cost accountants today. I believe that such an organization would have to be structured with a highly diverse board to assist in the oversight and to guide the direction of the profession. I believe that this board would have to be made up of individuals who work in the profession, both in industry and in government. Also included would be educators recognized for their leadership and knowledge in management reporting, particularly cost accounting. As well as, members of management who use cost information such as CFOs or CEOs. In my mind, several seats on this board would have to be reserved for consultants in the industry that see a broad base of industries and cost applications. Consultants also might be in a better position to spot trends or problems before others, who are not as widely exposed to cost accounting issues in the country.
I don’t believe this organization would start out with an international flavor, so I do not see a need for International members; nor do I believe any one industry or segment of the cost accounting area of work should be the primary area of focus. By that, I mean governmental cost issues should be one of the components of the profession but not the focus. The entire organization must be balanced to address the needs of all components of the profession.
Such a board would have to be sponsored by an existing entity such as the Institute of Management Accountants (IMA) or a new entity to be formed that would be solely focused on cost accounting.
I believe the IMA would be the logical pre-existing entity to be the primary focus of this conversion to being professional, due to their past works in the cost area, as well as a number of talented members of the IMA who are well-versed in the cost area. They seem to be the most logical starting place for an entity that may be interested in leading the industry to convert to be a professional.
After the naming of the board, I believe the first order of business would be to have board meetings to begin to address the various supporting infrastructure that must be in place to support the cost accounting industry. I will discuss my view of some of those support processes in subsequent blogs.
Categories: Cost Accounting
Vacation Home Rentals & Taxes
Sep 02, 2014
If you rent a home to others, you usually have to report the rental income on your tax return. But you may not have to report the income if the rental period is short and you also use the property as your home. In most cases, you can deduct the costs of renting your property. However, your deduction may be limited if you also use the property as your home.
Here is some basic tax information that you should know if you rent out a vacation home:
Vacation Home – A vacation home can be a house, apartment, condominium, mobile home, boat or similar property.
Schedule E – You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net investment income tax.
Used as a home – If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received.
Divide expenses – If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use.
Personal use – Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also personal use.
Schedule A – Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
Rented Less than 15 days – If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income.
By: Diane Allman, CPA
Categories: Uncategorized
Reconciliation: Take a Look Around
Aug 28, 2014
I had lunch last week with a consulting colleague of mine and she was talking about her experiences which rang true to my own. One of the biggest challenges she sees is that CFOs and controllers do not feel the need to reconcile. There seems to be ample concern about detail and making sure each specific account is correct, but very minor effort going towards an overall reconciliation. Unfortunately, from management on down, no one seems concerned with the overall reconciliation.
One major issue we have both observed is that income statement items are tied-out, but inventory has not been valued in months, if not years. Cash is reconciled to the penny, but no analysis of cash flow and cash needs has been done.
I am sure some of you reading this saying, “if the above things are being done, then yes, reconciliation has been done.” I beg to differ. Reconciliation is ensuring that two sets of records agree, but in addition, you must reconcile the balance sheet and confirm that the information being recorded is complete and accurate. This type of reconciliation should be done monthly along with documentation supporting the reconciliation. An example would be reconciling the freight payable account and including freight invoices, etc. The person preparing the reconciliation should have an understanding of the account and how it is used. They also should know what documentation is needed to support the balance. Reconciliation needs to answer, What? When? Who? Why? and How Much? If you are not able to answer all of these questions then you are not doing a thorough reconciliation. As I mentioned before, often times inventory is overlooked and not adjusted. A physical count must be done and compared to the balances on the general ledger. If they do not match, an adjustment needs to be made. However, just making an adjustment without answering the vital questions is not reconciling, it is just plugging.
This issue starts at the top with management not requesting to see reports that show reconciliation and not understanding its importance. If you are not tying your actual results back to what you expected to occur, how do you ever know if you are accurate. Are you actually recovering all of your costs? The entire integrity of your system is questioned when you are not reconciling.
I truly cannot stress it enough. It is so crucial. I would compare it to every time you come up to an intersection you just go, you never actually look to your left or your right, you just assume everything is ok. Eventually, you will be completely blindsided and that blindside may be fatal. Start looking around!
Categories: Cost Accounting