Tax Planning vs. Tax Prep — There Is a Difference

Tax Planning vs. Tax Prep — There Is a Difference

Tax planning is not the same as tax preparation. Tax preparation is the process of preparing and filing your tax return each year. Unless you file an extension, this is typically a once-a-year event that must be completed by April 15. For most people, tax prep involves a trip or two to our office: first to drop off any necessary financial documents and then a second time to review and sign your return.

Tax planning, on the other hand, is a year-round process designed to help you make smart, tax-advantaged decisions that impact your personal and business finances. Whether you’re an individual or a business owner (or both), you can take advantage of the tax planning services that we provide here at Premier CPA Services. With two full-time CPAs on staff, we are uniquely qualified to provide you with in-depth experience and knowledge of tax law.

For example, we can help you maximize deductions, offset investment gains, determine your maximum retirement plan contribution, and help you decide the best time to make capital expenditures. By spending just a small amount of time with your CPA, you can minimize your tax liability on next year’s return when tax preparation comes into play!

It all starts with a phone call to set up a year-end meeting. Just call us at 706-632-7850. But please do it soon — we have limited appointment times and they fill up fast!

Tax Law Changes Simplify Accounting for Small Businesses

Tax law changes that were part of the Tax Cuts and Jobs Act (TCJA) now allow more small businesses to use the cash accounting method, which is the simplest approach. The cash accounting method is a more immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.

Prior to the TCJA, a “C” corporation wasn’t eligible to use the cash method of accounting unless it had average annual gross receipts for the previous three years of no more than $5 million. Beginning in 2018, the TCJA increased this threshold — to $25 million for 2018 and $26 million for 2019 — with inflation indexing in future years.

Of course, a few special rules apply:

  • Gross receipts are aggregated for a single employer.
  • A corporation less than three years old uses the gross receipts test for the period in which it’s been in business.
  • Gross receipts for a tax year of less than 12 months must be annualized using a specific formula.

If a small business meets the new gross receipts test, they can also take advantage of these other simplifications:

– Exemption from requirements to account for inventories, capitalize certain costs and account for long-term contracts using the percentage-of-completion method.

– Exemption from the requirement to keep inventories by now requiring the accounting for inventory as non-incidental materials and supplies, or by using an accounting method conforming to its financial accounting statement.

– Exemption from Section 263A uniform capitalization (UNICAP) rules.

– Extension of exception for “small construction” contracts to use a completed-contract method, the exempt-contract percentage-of-completion method or any other permissible method.

If you think your business can take advantage of these new rules, contact us today and we can help you make the change go more smoothly.

The information provided here by Premier CPA Services PC is for general information only. It does not constitute legal, accounting, tax or other professional advice or services, and is presented without any representation or warranty as to the accuracy or completeness of the information. Please contact us for information as it relates to your circumstances.
The Fight Against “Bracket Creep”

The Fight Against “Bracket Creep”

Sounds pretty scary, doesn’t it? Well it is. Each year, the IRS makes adjustments for inflation to more than 40 different tax provisions. The idea is to prevent what is known as “bracket creep.” Without these annual adjustments, you could find yourself creeping into a higher income tax bracket — or lose value from credits and deductions.

In the past, the IRS used the Consumer Price Index to set the annual adjustments. Under the recent tax reform legislation, the IRS will now use what is known as the Chained Consumer Price Index (C-CPI), also known as chain-weighted CPI or chain-linked CPI.

C-CPI will be used to adjust income thresholds, deduction amounts and credit values accordingly. The chart here from the Tax Policy Center shows inflation-adjusted income limits for the various tax brackets.

Questions on Where You Stand?

We’re always here to answer your tax questions, so please call us at 706-632-7850 or email Donna here.

CPA (squared)

With two CPAs and a full-time staff, we can provide you with experienced, hands-on guidance for all your accounting and financial needs — year-round.

⇒ Tax Preparation & Planning
⇒ Accounting & Bookkeeping Services
⇒ Payroll Processing & Business Tax Filing

Tax Season Is Almost Here!

Tax Season Is Almost Here!

Get Ready for Tax Season!

Are you ready for tax time? There are a couple of steps you can take now to alleviate some of the stress of filing your return. Plan to get organized early. Begin by putting together a tax folder with W-2s from your employer, 1099s for other income you may have earned, bank and other financial statements and receipts for things like medical bills and charitable donations.

A meeting is not required; if you have not had any changes, you are welcome to drop your documents off at the firm and we will prepare your return. If you have questions, a tax preparer can contact you to discuss them.

Organizers can be prepared after January 6. If you would like one, please email Sandy or call the office at 706-632-7850.

 

Make an Appointment Today!

We are now taking appointments for the 2017 tax season. We ask, as a courtesy to other clients, that you only schedule an appointment to see Jackie during tax season if you have had significant changes during 2016 or you are a new client for the 2016 tax year.

Call us today to set up your appointment at 706-632-7850 or email Sandy to request a time.