Our office will be open from 8:30 AM – 5:00 PM Monday through Friday each day through the end of 2013.  We have a drop box that you can use 24 hours a day, seven days a week if you have items to drop off for one of us.

We work our “tails” off the first five months of the year and each of us work far less the rest of the year.  The best days to reach us in the office are:

• Monday and Tuesday, Brent
• Wednesday and Friday, Mike
• Thursday, Karena
• Tuesday, Wednesday, and Thursday, Lisa

Mike and Karena have kids who are out of school all summer and we alter our schedules between now and early August so we can spend time with our kids all summer.  Mike is in the office Monday, Wednesday, and Friday all summer.  Karena goes to her remote clients on Tuesday and is in the office all of Thursday.

Our office will be closed July 4th, September 2nd, November 28th, November 29th, December 24th, and December 25th, 2013.  We will also be closed January 1st, 2014.

We are looking forward to a great summer and hope you are as well!

Mike Sylvester, CPA/ABV, MBA

The most unbiased report relating to this issue was prepared by The Treasury Inspector General for Tax Administration (TIGTA).  TIGTA is a branch of the United States Treasury that has existed since 1999 and is to provide oversight to the IRS.  The TIGTA report was released on May 14th, 2013 and can be read here.

In this report the Inspector General found specifically that:

“The IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention.  Ineffective management:

1. allowed inappropriate criteria to be developed and stay in place for more than 18 months,
2. resulted in substantial delays in processing certain applications, and
3. allowed unnecessary information requests to be issued.

I have read the entire TIGTA report and followed the Congressional hearings somewhat.  I have analyzed media reports from both the right and left.  I feel that:

1. This is a major scandal because the IRS specifically targeted conservative groups. They specifically targeted groups with the name Tea Party, Patriot, and 9/12. This would not have been a scandal if the IRS had targeted all political groups.
2. Many different people at the IRS were involved including senior management.  I feel that twenty or more people at the IRS need to be fired.
3. I feel that a widespread effort was made to hide the truth from Congress by multiple senior IRS officials.  I think further investigations are necessary and I think criminal charges should likely be pursued.
4. I think that there are a lot of existing organizations (left and right) who should have their exempt status revoked.  I do not feel exempt organizations should be involved in political activity.

This scandal will hurt the IRS for at least a decade.  The IRS is going to be investigated and more problems will likely be exposed.  The IRS will then focus internally and review and modify its procedures and make them more complicated.  This will cause the IRS to become even slower than it is now (And it is unacceptably slow now).  It is also likely that the number of audits the IRS will instigate in the next couple of years will decrease.

Congress keeps making the tax code more complicated each and every year.  That being said the budget of the IRS is not expanded to meet the growing complexities of the tax code.  In many ways I feel sorry for the IRS (though not in the context of this scandal). Congress is 100% responsible for the needlessly complicated myriad of tax laws we currently have.  The IRS will soon have to deal with the penalties imposed due to Obamacare and the IRS is currently ill suited for this task.

So be prepared…

Mike Sylvester, CPA/ABV, MBA

Indiana has repealed the Indiana inheritance tax for anyone who dies in 2013 and on!  This is great news and will greatly benefit farmers and other Hoosiers who have accumulated wealth over their lives.

Indiana has a statewide corporate income tax that is levied against Indiana C corporations. This tax is levied against the corporation’s gross income.  From the middle of 1987 through the end of 2002 the tax rate was 3.4%.  It increased to 8.5% and remained 8.5% until June 30th, 2012.  Since June 30th, 2012 the rate is scheduled to slowly decrease:

• July 1st 2012 – June 30th 2013, 8%
• July 1st 2013 – June 30th 2014, 7.5%
• July 1st 2014 – June 30th 2015, 7%
• July 1st 2015 on, 6.5%

Lowering the corporate income tax rate will only benefit corporations that are C corporations.  S corporations are flow through entities and the income flows through to the owners and is taxed on the owners personal income tax returns.

The Indiana state individual income tax rate is currently 3.4%.  In 2015 and 2016 the rate will drop to 3.3%.  In 2017 the rate will drop to 3.23%.

If you have any questions about Indiana taxes please give us a call at 260-407-5000.

Mike Sylvester, CPA/ABV, MBA

The tax rate that businesses pay on the first $9,500 for each employee varies.  Most brand new companies have a rate of 2.5%.  The rate changes based on:

1. Timeliness of filing reports and payments,
2. Total wages paid,
3. If employees have made claims against your account,
4. Length of existence of your business, etc…

Businesses are to file and pay this tax quarterly on forms UC-1 and UC-5a.  I highly encourage my clients to file and pay these taxes online using the Indiana Department of Workforce Development’s Uplink website.   This website will allow you to file both the UC-1 and UC-5a forms electronically.  You can then make an electronic payment or print off a payment coupon and send in a check.   I find this website very user friendly.

You are required to file these forms even if you have no payroll for the quarter.  If you do not file them when you should you will receive nasty grams from the department and your tax rate might increase.

SBS CPA Group files over a hundred of these forms every quarter.  We have the experience to file these forms for you and help keep you in compliance.

Let us know if you have any questions by contacting us at 260-407-5000.

Brent A. Bracht

Businesses are required to file a PPT return by the 15th of May (the Indiana Allen county assessor does not allow extensions).  The forms which most small businesses are supposed to file are Form 103 and Form 104.  There are 2 Form 103′s: a short form and a long form. In some cases, filing one form over the other will result in a lower assessed value which will result in a lower tax bill.

Unlike in the past, the assessor’s office is not mailing out forms this year.  Instead, they have mailed a brown postcard reminding businesses that the forms need to be filed.  The post card has a link (www.allencounty.us/personal-property) in which you can follow to retrieve the forms needed).

It is important to remember that Indiana businesses pay the PPT in arrears. Thus, you will receive a tax bill for the PPT form you filed on May 15, 2012 in the early spring of 2013.

You can amend a timely filed PPT form up to 6 months after the due date.

Also, something that I find very amusing: there is no common sense or practical instructions (besides the Indiana tax code written in legal speak) on how to file the forms. Every year, our firm has discussions with the Allen County Assessor’s office
regarding this and to understand the form because of the lack of formal guidance.

Additionally, the Allen county government has hired an NC audit firm to conduct audits of personal property assessments.

Are you in compliance with these filings?  Do you have questions or need help preparing these returns?  Our firm prepares over 150 of these tax returns every year for our clients.  It is our job to file these returns appropriately.

Please call Brent today at 260-407-5000 to discuss your tangible business personal property taxes!

Brent Bracht

We can take the following tax approaches to deducting expenses relating to this very painful condition.

Actual cost of medical expenses

1. Includes the diagnosis, cure, mitigation, treatment and prevention, (includes X-Rays, pain management, etc…)
2. You deduct the expenses in the year of payment,
3. If you use a credit card, the year the expense is charged is the year it needs to be deducted,
4. Medical Insurance is deductible.

Transportation

1. Any bus, train, taxi or plane fares,
2. Medical mileage rate:  the mileage rate for 2013 for medical has increased from $.23 to $.24 per mile,
3. All expenses for tolls and parking,
4. Trips:  $50 per night for overnight medical travel,
5. You CANNOT take any expenses for meals.

These expenses are deductible if you itemize on your personal tax return.  Additionally, only the amount which is over 10% of your adjusted gross income would be deductible.

Please let us know if you have any questions.

Brent A. Bracht

If you drop your taxes off to SBS CPA Group before April 1^st, we will do everything we can to get your taxes completed on time.  We generally get most people who drop off the first week of April completed on time, however we make no guarantees.  With tax season being compressed as it was by congress and the IRS, we have been behind all season therefore, if you drop off late, we may need to file an extension for you. 

Remember an extension is only an extension of time to file your taxes.  If you owe taxes you still have to pay your taxes by April 15^th.  If you need to file an extension, please give SBS CPA Group a call.

Karena Sylvester

You are supposed to report your gambling winnings on line 21 of your 1040.  However, the IRS allows you to take a deduction to the extent of your winnings as an itemized deduction.  What this means – if you win $1,000 in your March Madness pool and you bet $5 to join, you pay tax on $995.  If you get the booby prize and you win $1, you would only get to take $1 of your $5 bet because you cannot take a deduction for more than your winnings.

 The IRS does let you take all of your gambling losses combined, so take your $1,000 of winnings down to the casinos and blow it all so you don’t have to pay any tax on your winnings.  Oh, but before you do that, make sure that you are itemizing your deductions because if the $1,000 gambling loss does not make your itemized deductions larger than the standard deduction you will lose out on your deduction and your $1,000 of winnings.

And before you spend all your winnings at the casino, make sure you save at least $44 to pay your Indiana taxes on those winnings because Indiana does not give you any deductions for losses.  Even if you won the money in Las Vegas you still have to pay tax on it in Indiana if you are an Indiana resident.

Ever heard the adage – there is no such thing as a free lunch?   I guess there isn’t such a thing as free money either.  So I guess I will get back to preparing tax returns and skip the brackets again this year. 

Karena Sylvester

If you need an extension of time to file, please give SBS a call.  If you have a corporate tax return and you think you will owe tax, please make sure you have made your EFTPS tax payment by March 14th.

1. Open an Indiana 529 plan.  Whether your kids are young or already in college, the 529 plan is a great way to get a 20% Indiana tax savings up to $1,000.  If you are currently in college all you have to do is contribute your total tuition costs plus $1 first to the 529 and then disburse the tuition payment to your college.  You have to keep your account open for at least a year – thus you keep $1 in your account to keep it open and ready for the next semester.
2. Use your 529 plans to pay for your books, computers, and other materials you need to purchase for your college education.  The rules are broader for disbursements from a 529 plan then they are for education credits.
3. Apply for as many grants and scholarships as you can.  Scholarships are tax free money to you.  You can search the internet until you turn bleary eyed searching for scholarships, there are so many available.  Try a site such as collegescholarships.org or scholarships.com.  Not only is free money always nice, it looks good on your college applications.
4. Make sure you are taking full advantage of your college tax credits.  You only get to take the American Opportunity credit for four years while you are an undergraduate.  So if you paid for college courses while your student is still in high school, take the lifetime learning credit so you can max out the American Opportunity Credit while your student is going to college full time.
5. Don’t short change your own future while trying to secure your children’s future.  When applying for financial aid, what you have saved for your retirement does not count against you.
6. If you are a low income Indiana resident make sure to check out Indiana’s 21^st Century Scholar program at www.in.gov/ssaci.gov to enroll in the program and get your student a full ride to an Indiana college.
7. US EE Savings bonds and educational IRA accounts are still out there and can still be used to pay for college costs.  Any earnings on these investments are tax free as long as they are used for college.
8. Sign up for Upromise and get free money for college.  You can register your grocery cards and your credit cards and merchants will give you rebates to invest in a 529 plan for your student’s college.  Again, this is tax free money to you.
9. Don’t forget about the Indiana college contribution credit.  If you make a charitable contribution to an Indiana College or University you get a college credit for 50% of your contribution up to a $100 credit ($200 if married filing joint).
10. You also get a deduction for any student loan interest you pay (for student loans or parent loans), so make sure you give SBS your statements so we take the deduction for you.