Category: Accounting
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What to do if your W-2 includes taxable health benefits
Summary: Employer-paid health benefits included as W-2 taxable wages is an accounting error that appears to flourish this year due to misinterpretation of tax laws surrounding the Affordable Care Act by small business accountants. The error financially hurts employees by overstating tax liability and reducing eligibility for various tax credits. Fix the error by talking to…
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Why are tax attorneys so expensive?
The Wall Street Journal ran an article this week about the number of attorneys billing at $1,000 to $1,500 per hour. It turns out that there were more tax attorneys in the list than any other type. Why? In my own practice, the primary consideration in setting a fee is an estimate of the likely…
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Three benefits of operating as an LLC
If you are self-employed, there may be at least three benefits of operating your business as a Limited Liability Company (LLC). In most states the cost is roughly about $200 to form a LLC and about $100 per year to maintain it. The potential benefits are: Liability protection – This is the usual reason, to…
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Who is responsible when the payroll service screws up?
A new legal case might give some insight to responsibility for compliance with the maze of federal, state and local laws controlling electronic banking and payroll transactions Most small businesses that pay employees or contractors use a third-party payroll accounting service to handle the required record-keeping and tax payment transactions. These services are inexpensive, typically…
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Control the cost of divorce with peaceful resolution techniques
A checklist of financial planning issues to consider in collaborative divorce Divorce is expensive and almost always a losing proposition for both parties from a financial perspective. Financial stress during the marriage is increasingly cited as one of the reasons that married couples seek a divorce. An expensive divorce only makes this problem worse. During…
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Reviewing income tax returns for accuracy and opportunity
Reviewing income tax returns for accuracy is valuable because it can avoid processing delays, prevent errors that would cause audits and trigger penalties. There is a second potentially more valuable reason to review a tax return. and uncover opportunities for tax planning to reduce tax burdens in the future. Many accountants, including myself, offer a…
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Employer health insurance payments are not wages
Employer-paid health insurance may not be included in employee wages. Doing so, even in error, does not alleviate the employer from possible excise taxes under ACA. This errant accounting practice also creates additional employer tax penalty liabilities for improper reporting of wages. This afternoon I attended a continuing professional education webinar where a fabulous tax expert…
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Explaining the Health Insurance Penalty
Accountants and tax preparers complain that they have been put in the position of enforcing the Affordable Care Act’s insurance mandate without compensation or training as health insurance agents. They are absolutely correct and this system has produced in some bizarre results. This was illustrated when one accountant wrote to me “I have clients that…
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OnlineAdviser gets a makeover
As I reviewed my first year in business (2015) it was obvious that I had 3 distinct problems with the business model and my personal habits. It was not completely unexpected. I operate a different and largely untested type of accounting practice under the brand name OnlineAdviser that relies almost exclusively on online technologies. While I…
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The problem with accountants
Accountants generally enjoy a reputation as the ‘most trusted adviser’. But the problem is that we do our work, get out and move on. That work might be the income tax return, bookkeeping work, or some other well-defined engagement. General financial advice is too often an unplanned side benefit of our work. Accountants who don’t define and…