June 29, 2018 § Leave a comment
WEST DES MOINES, IOWA (June 29, 2018) – McGowen, Hurst, Clark & Smith, P.C. (MHC&S), a certified public accounting and professional services firm, announced today that the following 14 associates throughout the company have been promoted effective immediately.
Abby Hood was promoted from Supervisor to Manager. Abby joined the firm in January 2012 and graduated from Northwest Missouri State University.
Alex Langpaul was promoted from Staff Accountant to Senior Accountant. Alex joined the firm in July 2014 and graduated from Grand View College.
Allie Fevold was promoted from Staff Accountant to Senior Accountant. Allie joined the firm in May 2015 and graduated from Iowa State University.
Ashley Mowery was promoted from Manager to Senior Manager. Ashley joined the firm in May 2007 and graduated from Simpson College.
Ashley Sly was promoted from Supervisor to Manager. Ashley joined the firm in September 2013 and graduated from Buena Vista University.
Jeff Dick was promoted from Senior Manager to Director. Jeff joined the firm in January 2010 and graduated from Iowa State University.
Jenny Smith was promoted from Senior Manager to Director. Jenny joined the firm in November 2009 and graduated from Iowa State University.
Liz Krause was promoted from Senior Accountant to Supervisor. Liz joined the firm in June 2016 and graduated from Creighton University.
Makayla Fagen was promoted from Senior Accountant to Supervisor. Makayla joined the firm in June 2017 and graduated from Iowa State University.
Michelle Leonard was promoted from Supervisor to Manager. Michelle joined the firm in October 2013 and graduated from Northwest Missouri State University.
Mike Jensen was promoted from Supervisor to Manager. Mike joined the firm in July 2012 and graduated from Iowa State University.
Nate Beck was promoted from Senior Manager to Director. Nate joined the firm in September 2014 and graduated from Iowa State University.
Nick Finkenauer was promoted from Senior Manager to Director. Nick joined the firm in November 2012 and graduated from University of Northern Iowa.
Rob Poterucha was promoted from Senior Accountant to Supervisor. Rob joined the firm in October 2017 and graduated from Iowa State University.
As one of the most established and largest local accounting firms in central Iowa, MHC&S (www.mhcscpa.com) has provided assurance and accounting services, tax planning and preparation services, and business consulting services to individuals and businesses for nearly 75 years. In addition to the traditional service, MHC&S offers specialized services including estate planning, fraud detection, deterrence and Red Flag Reporting, QuickBooks consulting, business valuations, cost segregation studies, financial advisory services, succession planning, and more. The firm has earned the distinction of being named one of the Best Accounting Firms To Work For in the nation by Accounting Today for four of the past five years, Des Moines Business Record’s annual “Best of Des Moines Event-Accounting Category” nine of the past eleven years, as well as Des Moines Register’s top 100 Workplaces in Iowa in 2014, 2015, 2016, and 2017 in Small Business. In 2017, we also were named the Best Company in Iowa for Work/Life balance.
For more information, please contact Gina David, Marketing Director, at (515) 288-3279 or email@example.com.
June 29, 2018 § Leave a comment
On June 21, the Supreme Court issued a major decision regarding sales and use tax and how states can collect these taxes in the Wayfair case. Previously, physical presence was required in a state before a state could impose sales and use taxes as decided in the Quill and National Bellas Hess cases. In the Court’s 5-4 decision, the Court concluded that the physical presence sales and use tax nexus rule was “unsound and incorrect.” It then went on to state that the Quill and National Bellas Hess court cases “should be, and now are, overruled.”
What does this mean for taxpayers? It now means that sales to states where taxpayers don’t have physical presence (e.g. online or remote sales) could be subject to sales or use tax. Taxpayers and their advisors will have to monitor the various state rules and properly remit sales or use tax. However, many states have de minimis thresholds, so it is possible that a small amount of sales in a particular state would not be subject to theses taxes.
How does this case impact Iowa? It goes along with the bill Governor Reynolds signed into law on May 30, 2018 which requires remote sellers that exceed certain thresholds to charge the same sales tax as “Iowa main street” businesses. These changes will take effect on January 1, 2019 and only apply to businesses with remote sales of at least $100,000 or 200 or more separate sales transactions.
As always, we will keep you updated on this issue and if you have any questions, please contact us at (515) 288-3279.
June 26, 2018 § Leave a comment
On May 5, 2018, the Iowa Tax Reform Bill was passed by the Iowa House and Senate and Governor Kim Reynolds signed the bill into law on May 30th. This bill contains tax law changes that begin to impact the 2018 tax year and continue to change the tax law up to 2023, depending on whether certain tax revenue triggers are met at the state level. Below is a summary of the changes:
- In 2019, the tax rates will be reduced with a top rate of 8.53%. (See Table 1)
- Iowa individual income tax laws generally conform to federal tax code beginning in 2019.
- Iowa decouples from the Federal SALT deduction limit of $10,000.
- In 2023, subject to revenue triggers, the following will be implemented:
- Brackets will consolidate to a four-bracket system and larger rate reductions will be implemented bringing the top rate to 6.5%.
- The income tax starting point will shift to federal taxable income, fully incorporating federal. itemized and standard deduction amounts.
- AMT will be eliminated.
- Pass-through deduction will be increased to full value of federal deduction.
- Iowa Corporate income tax rates decrease beginning in 2021 with the highest rate of 9.8%. (See Table 3)
- Corporate AMT will also be eliminated in 2021.
- Section 179 increases the expense limit to $70,000 in 2018 with a $280,000 phase-out and $100,000 in 2019 with a phase-out of $400,000.
- Iowa will continue to decouple from bonus depreciation.
- In 2019, taxpayers will be allowed to deduct 25% of their federal qualified business income deduction from their Iowa taxable income. This percentage increases to 50% in 2021 and increases again in 2022 to 75%. If the revenue triggers are met in 2023, the deduction percentage will become 100% of the federal deduction.
- In 2018, Iowa will temporarily decouple from the Federal repeal of like-kind exchanges (also impacts individuals). Iowa will partially couple with the federal rules in 2019 and will completely couple in 2020.
- Beginning in 2021, the Iowa capital gain deduction only will apply to net capital gain from the sale of real property used in a farming business if sold to lineal descendants or other certain relatives. Note that this change will only occur if the two revenue triggers are met.
- The geothermal energy systems credits are eliminated effective January 1, 2019.
- Retroactive modifications were made to the Research Activities Tax Credit for tax years beginning on or after January 1, 2017.
- The bill clarifies the base amount used to calculate the credit.
- The taxpayer must claim the federal research tax credit for the same research and during the same tax year.
- The taxpayer must be engaged in one of the following industries: manufacturing, life sciences, software engineering, and aviation and aerospace. Specific industries are explicitly excluded including agricultural production, finance, real estate, and transportation companies.
- Note: This bill was passed after the original passthrough and individual tax return deadlines for 2017 calendar year taxpayers. Due to this bill being retroactive, research activity tax credits reported on 2017 tax returns may no longer qualify or may need to be recalculated under the new modifications.
- The sales tax base is widen by charging sales tax on digital goods, ride sharing, and subscription services along with the full amount of hotel rooms and car rentals (including booking fees).
- Sales tax nexus will include economic nexus (activity to customers within a state) and click-through nexus (focuses on location of the computer purchasing rather than where the seller may be).
If you have questions, please feel free to contact us at (515) 288-3279. Thank you!
June 25, 2018 § Leave a comment
‘An estimated 2.6 million soap bars are discarded every day from hotel rooms alone in the United States, and an estimated 1.4 million deaths can be prevented each year by handwashing with soap.’
I recently attended the Iowa Society of CPA’s annual meeting with guest speaker Derreck Kayongo, Founder of the Global Soap Project, a nonprofit organization. He was born in Uganda and later immigrated to the United States, after being a refugee in Kenya. His story for the organization all started when he came to the United States and stayed in a hotel for the first time. He was shocked when he learned that literally millions of bars of perfectly good soap are thrown away after just one day of use. Knowing that soap was a rare commodity in Uganda and other impoverished countries, Derreck made this problem his mission, and he went to work to determine how the soap could be recycled to combat child mortality around the world, as hygiene-related illnesses cause more than 1.4 million deaths worldwide. Derreck now works with hotels to collect the discarded soap, and reprocesses it into new, larger bars that are given to 32 countries in need. Derreck shared about the roadblocks in making this dream a reality. It took a lot of time and effort, but he was dedicated to its mission and persevered until his dream was accomplished, helping to save lives, one bar of soap at a time.
I left the annual meeting wondering how I can impact the world in a positive way. Derreck’s mission was started through a simple bar of soap. To be the change requires thoughtful, committed people, willing to meet a need.
In closing, the Global Soap Project’s Facebook page includes this inspirational quote:
Each new day is a NEW BEGINNING
To learn more about ourselves,
To care more about others,
To laugh more than we did,
To accomplish more than we thought we could,
And be more than we were before
June 21, 2018 § Leave a comment
Have you checked your current withholdings lately? No one likes surprises when it comes to paying taxes.
Typically, during your first week of employment you complete a stack of ‘new hire’ paperwork, including a federal W-4 form for income tax withholding. Unless you had a major life event or tax surprise, they most likely haven’t changed since your first paycheck. Now may be an ideal time to review and evaluate your current withholdings due to the new tax law. The changes could mean surprises – good and/or bad – for you and many other taxpayers when filing their 2018 tax returns. Here are a few things to consider:
- Review your paystub: If you’re in a salary position have you compared your old federal withholding to the updated federal withholding? How much did the withholding change? Take the change and multiply it times the number of pay periods. An extra $20 or $40 per paycheck adds up. On a semimonthly pay period that’s $480 -$960 annually. Are you spending that approximately $500-$1,000, how you would like? Or has it been spent as quickly as it entered your bank account.
- IRS withholding calculator: The IRS is encouraging everyone to use the withholding calculator to complete a “checkup.” This tool can assist you with basic situations. Keep in mind this tool is only as accurate as the information you provide. https://apps.irs.gov/app/withholdingcalculator
- Tax projection: This year you may consider having your tax planner/preparer complete a tax projection for you and discuss the tax law changes for 2018.
Life isn’t stagnant and your income or deductions may have changed so your withholdings may not be as accurate as prior years or when you first completed your new hire paperwork. Finding just the right level of withholding can be a balancing act.
Note: The IRS has issued a draft of the 2019 W-4 which has been redesigned for the tax changes to improve withholding accuracy.
May 23, 2018 § Leave a comment
“I just bought a new car for business. How much of the cost can I deduct?” As a CPA, this is by far one of the most frequent questions I am asked. Unfortunately, there is no easy answer. But under the right circumstances it can be a sizeable deduction and with the Tax Cuts and Jobs Act (TCJA) that passed in December last year, it just got more beneficial.
Luxury autos purchased after December 31, 2017 and that are used over 50% for business have dramatically increased depreciation limits. The information below shows the substantial increase allowed for new and used passenger vehicles acquired in 2018.
$10,000 for Year 1, under previous law $3,160.
$16,000 for Year 2, previously $5,100.
$9,600 for Year 3, previously $3,050.
$5,760 for Year 4 and thereafter until fully depreciated, previously $1,875.
If bonus depreciation is taken in the first year, then up to $18,000 could be deducted. Under prior law, bonus depreciation could only be taken on new vehicles and the maximum was $11,160.
As you can see this is a substantial increase. However, keep in mind that this deduction is only for the business use of the vehicle. If the business usage of the vehicle is less than 100%, than the above deductions will decrease based on business use. If the use is less than 50%, the taxpayer is required to use a much slower straight-line depreciation method over 6 years.
Heavy vehicles such as SUV’s, pickups and vans are not subject to the luxury auto rules stated above. To be considered a “heavy” vehicle the Gross Vehicle Weight Rating (GVWR) must be over 6,000 pounds. The vehicle will usually have a manufacturer’s label on the inside edge of the driver’s door so that you can verify the GVWR of the vehicle.
Heavy vehicles are eligible for the Section 179 deduction that allows a taxpayer to expense the full amount of the purchase price in the year of purchase. Heavy SUV’s are limited to $25,000 of Section 179 deduction whereas the other heavy vehicles can take up to $1 million in Section 179 expense. However, Section 179 can be limited since there has to be taxable business income in order to take the deduction.
The really good news from the TCJA is that heavy vehicles are also eligible to take 100% bonus depreciation in the first year making the Section 179 rules irrelevant. Bonus depreciation is now eligible to be taken for new and used assets which includes heavy SUVs, pickups, and vans that are used over 50% for business.
One caveat to watch for with vehicles owned by a taxpayer’s Corporation, is if the vehicle is used by a shareholder-employee that owns 5% or more of the company, the vehicle has to be used over 50% in business activities. No personal use of the vehicle can count toward the 50% business amount even if the personal use is charged back to the employee as compensation.
Another caveat is that vehicles are considered listed property and as such are subject to stricter reporting requirements to prove business use. Each vehicle should have a mileage log. The log should show beginning and ending mileage to determine the total miles driven during the year as well as having a contemporaneous recording of miles driven during the year for business so that the business use percentage can be calculated.
As shown, deductions for a vehicle can get rather complicated and each situation is different. However, for nearly anyone in business who owns a vehicle there are deductions that can be taken. Be sure to consult your tax advisor on your personal situation to see how to maximize your deductions.
If you have recently purchased a vehicle or are thinking of buying one soon, keep these rules in mind to possibly “drive” your vehicle deductions up and slow down your tax liability.
May 16, 2018 § Leave a comment
The business world is full of individuals indicating they are leaders. There is a multitude of various leadership styles ranging from coercive; leaders which demand compliance to servant; leaders which focus on meeting the needs of their team.
A true leader, in my mind, is someone who has the interest of their team as a main concern. True leaders know their team members and themselves well. Sometimes this is difficult. However, a true leader takes the time to show interest, concern, and attempts to understand each team member. With this knowledge, the true leader is better equipped to assist the team members to be motivated and successful.
The true leader is focused on building the next generation of leaders. This is how a sustainable business operation is built. A true leader supports team members; allowing them to make decisions. A true leader walks beside and trains team members through their failures providing growth opportunities.
A true leader maintains a positive attitude; holding their emotions in check especially in tough situations. They do this without pride standing in the way. The true leader has the confidence to know when they are wrong and move past failures. Identifying problems and providing solutions is a great trait of a true leader. Other qualities, which I believe, a true leader must possess are:
- ability to listen
- being a team player
- willing to change
- inspires others
- focused on important items
Having these qualities assists in developing a better workplace. The true leader trusts their team members to perform efficiently and independently. They build a positive culture allowing team members to be more confident and more willing to share ideas.
If you build and display these qualities each of us can be true leaders in how we relate with clients and other team members. Show your leadership talents! Step up and “Be a True Leader!”