CPA Blog

Divorcing couples should understand these 4 tax issues

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Published: Monday, 30 November 2020 09:28

Written by Phillip Strickler, CPA.CITP

When a couple is going through a divorce, taxes are probably not foremost in their minds. But without proper planning and advice, some people find divorce to be an even more taxing experience. Several tax concerns need to be addressed to ensure that taxes are kept to a minimum and that important tax-related decisions are properly made. Here are four issues to understand if you’re in the midst of a divorce.

Issue 1: Alimony or support payments. For alimony under divorce or separation agreements that are executed after 2018, there’s no deduction for alimony and separation support payments for the spouse making them. And the alimony payments aren’t included in the gross income of the spouse receiving them. (The rules are different for divorce or separation agreements executed before 2019.)

Issue 2: Child support. No matter when a divorce or separation instrument is executed, child support payments aren’t deductible by the paying spouse (or taxable to the recipient).

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Inventory management is especially important this year

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Published: Monday, 30 November 2020 09:24

Written by Phillip Strickler, CPA.CITP

As year-end draws near, many businesses will be not only be generating their fourth quarter financial statements, but also looking back on the entire year’s financials. And what a year it’s been. The COVID-19 pandemic and resulting economic fallout have likely affected your sales and expenses, and you’ve probably noticed the impact on both. However, don’t overlook the importance of inventory management and its impact on your financial statements.

Cut back as necessary

Carrying too much inventory can reflect poorly on a business as the value of surplus items drops throughout the year. In turn, your financial statements won’t look as good as they could if they report a substantial amount of unsold goods.

Taking stock and perhaps cutting back on excess inventory reduces interest and storage costs. Doing so also improves your ability to detect fraud and theft. Yet another benefit is that, if you conduct inventory checks regularly, your processes should evolve over time — increasing your capacity to track what’s in stock, what’s selling and what’s not.

One improvement to perhaps budget for here: upgraded inventory tracking and ordering software. Newer applications can help you better forecast demand, minimize overstocking, and share data with suppliers to improve accuracy and efficiency.

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Tax responsibilities if your business is closing amid the pandemic

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Published: Monday, 23 November 2020 09:26

Written by Phillip Strickler, CPA.CITP

Unfortunately, the COVID-19 pandemic has forced many businesses to shut down. If this is your situation, we’re here to assist you in any way we can, including taking care of the various tax obligations that must be met.

Of course, a business must file a final income tax return and some other related forms for the year it closes. The type of return to be filed depends on the type of business you have. Here’s a rundown of the basic requirements.

Sole Proprietorships. You’ll need to file the usual Schedule C, “Profit or Loss from Business,” with your individual return for the year you close the business. You may also need to report self-employment tax. 

Partnerships. A partnership must file Form 1065, “U.S. Return of Partnership Income,” for the year it closes. You also must report capital gains and losses on Schedule D. Indicate that this is the final return and do the same on Schedules K-1, “Partner’s Share of Income, Deductions, Credits, Etc.”

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Should you go phishing with your employees?

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Published: Monday, 23 November 2020 09:23

Written by Phillip Strickler, CPA.CITP

Every business owner is aware of the threat posed by cybercriminals. If a hacker were to gain access to the sensitive data about your business, customers or employees, the damage to your reputation and profitability could be severe.

You’re also probably aware of the specific danger of “phishing.” This is when a fraudster sends a phony communication (usually an email, but sometimes a text or instant message) that appears to be from a reputable source. The criminal’s objective is either to get recipients to reveal sensitive personal or company information or to click on a link exposing their computers to malicious software.

It’s a terrible thing to do, of course. Maybe you should give it a try.

An upfront investment

That’s right, many businesses are intentionally sending fake emails to their employees to determine how many recipients will fall for the scams and how much risk the companies face. These “phishing simulations” can be revealing and helpful, but they’re also fraught with hazards both financial and ethical.

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