March 20, 2017 § Leave a comment
Have you ever been pulled into the middle of a discussion with opposing views or been on the opposing side of a discussion with someone? Perhaps it was at work, home, or even a Facebook post. Perhaps you’ve even been hit square on with comments or views that are in direct opposition of what you believe, think, or feel to be true. How do you handle these situations? Do you fire comments back from a place of emotion? Do you contemplate what the other person is saying to see if there is some truth to the comments? Do you remain quiet and not voice your thoughts only to harbor resentment and ill will towards the other person?
Here are some tips to consider implementing the next time you are faced with a potentially volatile conversation.
- Choose humility. Disagreements or full blown arguments usually involve an attitude that says, “I’m right, you’re wrong.” Sometimes difficult discussions turn into debates because someone wants to “win” the conversation. Discussions that lead to mutual understanding, connection, and growth of the relationship need to involve humility. You can’t change how the other person is going to approach the conversation, but you can choose to approach it in a manner that says, “your view is important and at this point in the discussion, I’m going to put your thoughts above my own for the sake of getting to common ground.” How the conversation goes forward, first begins in your mind so learn to train yourself to think of others before yourself for the sake of the common good.
- Listen with intent. The kind of listening where you’re actually paying attention to the other person rather than thinking about what you are going to say next. You’ll know if you were able to do this or not by what comes out of your mouth. If you ask follow up questions to what the other person has just said, then you were really listening to them. If you make a statement that is contrary to what they just said, then you were formulating your argument mentally, rather than listening. Try not to share your view until you are fully able to grasp what the other person is saying. Keep asking following up questions of the other person until you are able to paraphrase back to them what you thought you heard. This has two purposes. First, it will allow you to better understand the other person’s view and know where they’re coming from. Sometimes people do not articulate what they really mean the first time but by asking follow up questions you will be better able to get to what the real issue is. Second, if there is emotion in the conversation, it calms the other person down and allows them to know that you want to understand their viewpoint rather than argue with them.
- Give the other person time to share their thoughts. Try not to interrupt when the other person is speaking. Allow the person to express themselves fully even if it takes time to do so. Keep in mind, as you are intently listening, that you may not get to express your thoughts at all at this point in the conversation. Be okay with that since if you were to get to express your thoughts at this point anyway, the other person would most likely be thinking of their retort rather than actually listening to what you are saying.
- Be empathetic. Empathy is the ability to understand and share the feelings of another. While you may not possess the ability to “share” the other person’s feelings, you can at least understand them. Showing signs that you care about what the other person is saying will redirect the other person’s conversation from one that may be combative to one that is more peaceful. If you don’t actually care about what the other person is saying, see tip #1.
- Share your opposing viewpoint and thoughts only after adequate time has been given to the other person to express themselves. Have you paraphrased back to them what you think you heard and responded with genuine interest and care? You’ll know how the rest of the conversation is going to go based on whether or not the other person asks to hear your thoughts or not. If they don’t, then consider that they may not be at a place yet to actually hear what you are going to say. Perhaps it may be best to take a break from the conversation to allow their thoughts to linger awhile. This doesn’t mean that you’re “weak” or that they “won,” it simply means that you are aware that with the level of emotion that is present, getting to a place of mutual understanding and agreement will be nearly impossible until a later time.
- Try not to make the points of disagreement personal. Rather than saying things like, “I think you’re wrong,” say things like, “I don’t see it that way.” Someone is more apt to see your point of view and even eventually agree with you, if they don’t feel personally attacked. The goal is to keep the emotion to a minimum when discussing a topic that has the potential for an emotionally explosive reaction.
- Be genuine. Don’t ever feel as though you have to keep your thoughts to yourself just because someone else doesn’t agree with them. Just know that if you blurt them all out the minute you think or feel them, the reaction of the other person may not be as favorable as what it could be had you waited and implemented tips 1-6.
- Practice listening. If you are not a natural listener then it will suit you well to practice this skill. Listening is the main skill necessary to keeping peace. Find someone you trust and tell them that you want to practice listening with them. Let them share a story and then you state back to them what you think you heard. Let them critique you and share their thoughts, in a caring manner, on how they think you listen on average. Be open to their feedback and know that it’s a skill that takes time to do well. Even small improvements in this area will make a big impact on the relationships in your life. Epictetus was on to something when he said, “We have two ears and one mouth so that we can listen twice as much as we speak.”
March 6, 2017 § Leave a comment
Kids are geniuses. I have four kids, which generally leads me to be around kids a lot of the time. Lately, I’ve come to realize that they often teach me much more about the world than I teach them. Hence, kids are geniuses.
This makes me think back to the book All I Ever Really Needed to Know I Learned in Kindergarten, by Robert Folghum. When I was younger, this poster was everywhere, and being around the kindergarten age, I really didn’t understand what it was all about. Now, as an adult, it makes much more sense. Here are a few of the quotes from the book:
- Share everything.
- Don’t hit people.
- Put things back where you found them.
- Don’t take things that aren’t yours.
- Say you’re sorry when you hurt somebody.
- Warm cookies and cold milk are good for you.
- Learn some and think some and draw and paint and sing and dance and play and work every day some.
- Take a nap every afternoon.
- When you go out into the world, watch for traffic.
- Hold hands and stick together.
- Be aware of wonder.
Here are a few things my kids have taught me lately that I would add:
From the 10-year-old, I have learned new responsibilities can be very exciting. Often as adults we get overwhelmed by our responsibilities and the thought of taking on more. Not a 10-year-old. Recently, he needed to be at baseball practice a few minutes after my husband and I get home from work. We needed him to cook part of dinner so he could eat before he left. Cook…on the stove…by himself. He was so excited to be given this responsibility! The idea of taking this on leads him to independence, which is something that excites a 10-year-old and makes a parent realize he will turn into an amazing adult.
From the 8-year-old, I have learned the power of goal setting and positive thinking. She is the most driven 8-year-old I’ve ever met. She is a gymnast. Gymnastics is lots of fun, but the training is difficult. She is in the gym five hours each week, and that’s not counting all the flips she is constantly doing around the house. About a month ago, she decided it was her goal to move up to the next level. She wrote her own goals and has been diligently working on them. She is also one of the most encouraging people I’ve ever met. She truly loves life and loves to keep those around her positive. She leaves encouraging notes around the house, tells others she loves them and appreciates them freely, and always has a smile to offer.
From the 4-year-old, I have learned it’s good to follow the rules…most of the time. At four, he is testing his independence. He knows the rules and recently has discovered life is often easier if you follow them. After all, spending four minutes in time out or having electronics taken away is never fun. However, he has also realized sometimes it’s not worth it to follow the rules. Sometimes it’s more fun to jump into the pool in your clothes. Sometimes you just don’t want to eat your vegetables. Enjoy life…have fun…sometimes follow what your heart wants even if your brain says it’s not the smartest choice.
From the 2-year-old, I’ve learned it’s important to forgive. The 2-year-old room at daycare can be brutal and tons of fun all on the same day. Biting is common among 2-year-olds, and there is another little boy in my son’s class who loves to bite. Inevitably, about once a week he gets bitten…hard…it leaves teeth marks. The ironic thing is that this little boy is also one of my son’s closest playmates. They love to play together. My son never holds a grudge. It’s just not something a 2-year-old does. Just play and have fun without reservation.
My list is endless. There are many times it feels like the adults of this world have become mean and disrespectful. They are ungrateful for everything they’ve been given. There is so much we could learn from the young hearts around us. Here is a parting thought from Robert Folghum’s book:
Think what a better world it would be if we all – the whole world – had cookies and milk about three o’clock every afternoon and then laid down with our blankets for a nap. Or if we had a basic policy in our nation and other nations to always put things back where we found them and clean up our own messes. And it is still true, no matter how old you are, when you go out in the world, it is best to hold hands and stick together.
February 20, 2017 § Leave a comment
Many Americans are taking on second jobs, or “side hustles.” Some do it for extra spending money, some for retirement, some simply to pay the bills. But no one side hustles more than millennials. A whopping 44% of those between the ages of 25 and 34 have taken on a second job, in addition to 39% of those between 18 and 24 years of age. It comes as no surprise: young professionals strive constantly to better their resumes and portfolios, and student loan debt is higher than ever – both on an individual and national level.
Side hustles today are a little different than they used to be. Thanks to technology, the entire job market is evolving, and second jobs are no exception. Some still opt for the classics: waiters and waitresses, bartenders, baristas, etc. But many millennials are looking for the freedom of doing their own thing on their own terms in their own homes (or wherever they can plug in a laptop). Now, people are opting for other jobs like driving with Uber, designing websites, hosting with AirBNB, blogging, freelancing and so much more.
But don’t cozy into your couch to start working on your side hustle just yet. There’s a lot of work that can go into making this extra job successful. Here are some items to consider before getting going:
- Be careful that you don’t lose money. Earning extra money appears glamorous, but keep in mind that with any business comes expenses. Whether these expenses come in the form of maintaining your car or home or purchasing supplies, materials or software, they will still affect your bottom line. Keep accurate records of every cent those goes into and comes out of your hustle. Consider opening a separate bank account just for your side hustle.
- Yes – this money counts toward your overall taxable income, and with a side hustle, none of those taxes are coming out throughout the year like they might at your day job. Fortunately, you can deduct expenses you put into the work, but keep a good chunk of money aside for those taxes. Uncle Sam may take as much as 50% of your extra earnings in both income and self-employment taxes.
- Speaking of taxes, you’ll need to file a Schedule C at tax time to report these earnings and expenses. Keeping up-to-date, accurate records will make this much easier on both you and your tax preparer. Again, consider opening a separate bank account and using an accounting program.
- Don’t let it affect your primary job. Do you have the time and energy to commit to another line of work? Does your side hustle conflict with the work your employer does? Remember that this is extra income; don’t let it jeopardize your base income.
- Likewise, don’t let it affect your home life. How will this lack of free time affect your personal relationships with friends, significant others or kids? Weigh the pros and cons of money versus time, and make sure what you make per hour is really worth it.
For those of you readers who work with and/or supervise individuals with side hustles, it can be an interesting experience, but if they are careful and mind the ideas above, it will hopefully never come between them and their job. Simply respect that they have goals outside of work, and having that extra job or income is a means of achieving that goal. But if it interferes with their performance, don’t hesitate to speak with them about it.
Side hustles can be difficult, interesting, and somewhat scary, but they offer individuals and communities many growth opportunities. If you need a small job done, there’s likely someone in your community who can do it well and for a good price, and shopping local is always a great idea.
February 1, 2017 § Leave a comment
It seems like I get an alert daily telling me about another scam that is trying to trick us into giving out our personal information or into downloading a virus or malware onto our computers. This past week I heard of two more scams that are targeted at small businesses. I am passing a few of these current scams on to you and am hopeful that you will pass them on to others to keep anyone else from becoming a victim of one of them.
QuickBooks Software Scam
Victims of this scam receive an email with the subject line “QuickBooks Support: Change Request.” The email says that they want to confirm that you have made a change to your business name. Of course, the issue is that you have not requested a change, but they provide a link that you can click on to cancel the request. Your first instinct may be to click on that link and cancel the request. Unfortunately, this is what will cause you trouble – this one click will allow malware into your device, giving scammers access to your information. This may allow them to acquire your passwords or your identification information, leading to identity theft.
With this scam, which is making its way across the nation for the second time, a scammer impersonating a corporate officer sends an email to the payroll department or HR department of your company. The email is requesting a list of employees, SSN’s or copies of W-2s. This W-2 scam first appeared last year. The scammers tricked payroll personnel into disclosing employee names, SSN’s and income information. With this information, the scammers were able to create income tax returns and fraudulently file for tax refunds. The email sent in this scam actually contained the name of the CEO and company name, so beware of this type of email and double check to make sure it is authentic.
This one is a new scam that I just heard about yesterday. An email is sent – supposedly from TurboTax – saying that you have a refund pending, but you have to submit a tax refund request and to click on the link for the refund. This exposes your personal information to the scammers and can lead to tax fraud or identity theft.
IRS Payment Scam
This scam is not a new one. I have received calls from clients for over a year regarding this scam. However, I still get calls so I wanted to remind you of it. In an email or phone call the scammer will tell you that he/she is with the IRS. They may even give you a badge number. They will say that you owe taxes and will demand payment immediately. They may request bank information or want to be paid with prepaid phone or money cards. Do not be intimidated by these messages. The IRS will not email and will not demand payment over the phone. The IRS always corresponds via mail.
These scammers are getting more sophisticated and creative every day. Be especially careful during the tax season as many of these scammers use the information they get from you to file returns and get hefty refunds. Here are a few tips to help spot phishing emails:
- Check the reply email address. Make sure it is on a company domain rather than a generic address.
- Consider how the organization/individual normally contacts you. For instance, the IRS does not use email. Do not reply to any email saying it is from the IRS.
- Read the message carefully. If the message does not sound like the person they claim to be, check with that person independently before clicking on any link or sending personal information with a reply. I have received several emails with the correct email address, but could tell it was not legitimate by the language used in the email.
- Check the destination of links before actually clicking on them. Hover over them to see where they lead. Be sure the link points to the correct domain for the company name, not a variation. Scammers are becoming more creative. For instance, using IRS.com rather than IRS.gov or a slight variation of a company name.
- Be very cautious of any email asking for your personal information or wanting you to click on a link. Be sure to have company procedures informing employees not to clink on links from unexpected sources and who to contact to verify an email if they are uncertain about it.
Hope these tips will help you to stop and think before you or your employees get caught up in a phishing scheme! Scammers are always coming up with new tricks, so stay on the look-out. You can never be too cautious…
January 23, 2017 § Leave a comment
As you begin to gather your information in order to prepare your tax return, it is a good time to review the record keeping requirements for deducting charitable contributions. The IRS rules for substantiating deductions for charitable contributions are strict.
There are a few general tiers of gift amounts which require different levels of documentation in order to make sure a deduction is adequately substantiated. Regardless of the dollar amount, it is always best to keep as many timely records as possible.
A donor will not be allowed any deduction for a contribution of cash, by check, or any other monetary gift regardless of the amount unless the donor retains either (1) a bank record that supports the donation or (2) a written receipt or communication from the charity showing the name of the donee organization, date, and amount of the contribution.
Charitable cash handouts – such as cash placed on church collection plates – will not result in any deductions unless the donor obtains a qualifying receipt or written communication.
Donors must get a written acknowledgment from the charity if the value of the contribution (in cash or other property) is $250 or more – a cancelled check or other reliable records are not sufficient proof. (The taxpayer can obtain one written acknowledgement for multiple gifts of $250 or more to the same charity.) The acknowledgment must be obtained no later than the due date (or extended due date, if applicable) of the tax return for the year the contribution was made. If the return is filed before the due date, the donor must possess the acknowledgment when the return is filed. If the required written acknowledgment is not properly completed and timely obtained, the charitable contribution can be disallowed in its entirety.
If a taxpayer gives cash, the amount should be noted on the acknowledgement. If the gift is property, the acknowledgment must describe the property, but the charity does not have to value it. (Determining the value of the property is the responsibility of the donor.) Gifts of property must be in “good” condition in order to be claimed as deductions. It is a good idea to take a picture of the property that is being donated and keep it with your tax records in the event you have to substantiate the deduction in the future.
The written acknowledgement must also contain a statement of whether or not the donee organization provided any goods or services in consideration, in whole or in part, for any of the cash or other property transferred to the donee organization. If a donor received anything from the charity in return, the acknowledgement must include a good faith estimate of the value of the goods and services the donor received (for example, the value of a charity dinner dance or athletic event tickets) and a disclosure that only the “net” amount is deductible. If only intangible religious benefits (for example, admission to a religious service) are received, the acknowledgment should so indicate, and no valuation of such benefits is required.
When a taxpayer donates property value at more than $500, Form 8283 must be attached to the return. The taxpayer must also keep written records that include:
- a written receipt of letter from the charitable organization showing the organization’s name, the date and place of the contribution, and a detailed description of the property; or
- if it is impractical to obtain a receipt, reliable written records containing the following information:
- the organization’s name, the date and place of the contribution, and a detailed description of the property
- the fair market value of the property at the time contributed
- the property’s cost
A donor who contributes property, other than publicly traded securities, valued at more than $5,000 during the tax year must obtain a qualified written appraisal and attach to his or her return a completed Section B of Form 8283 signed by the appraiser and the donee organization.
As indicated previously, the IRS rules for substantiating deductions for charitable contributions are strict. There are many court cases where charitable contributions have been denied (and in some cases penalties imposed) where the substantiation requirements were not met.
If you have question concerning the document rules, please contact one of our firm members at (515) 288-3279 in West Des Moines or (515) 462-1882 in Winterset.
Dave Hurst, CPA
Partner – McGowen, Hurst, Clark & Smith, P.C.
January 17, 2017 § Leave a comment
The IRS has implemented some new restrictions for 2016 individual income tax returns filed in 2017 to help prevent paying fraudulent refunds. The information below summarizes a few of these significant changes which may alter the timing of some refunds as well as the documentation taxpayers will need to provide to their paid preparers.
The filing season for individual tax returns begins Monday, January 23. With one of the new rules for this filing season, the IRS is now required to hold refunds for any tax returns claiming an earned income credit or additional child tax credit until February 15, 2017. This delay is designed to provide additional time to review the returns before issuing the refunds related to these credits.
The earned income credit is a refundable credit that provides a benefit for low to moderate income individuals that is calculated based off your income level and household size. Individuals will need to have income from salaries, wages, tips, self-employment income or other qualifying sources to qualify for the credit.
The additional child tax credit represents a portion of the child tax credit that is refundable for certain taxpayers. It is calculated based on various factors but typically helps increase tax refunds for those taxpayers with children and low to moderate incomes.
The IRS still expects to issue most refunds within twenty-one days of filing even with the new hold back requirement. In addition to holding back certain refunds, the IRS has implemented new due diligence requirements for tax return preparers. These new requirements apply to all returns claiming a child tax credit, additional child tax credit or the American Opportunity education credit. Any taxpayers who have dependent children and use a preparer to complete their tax returns can expect additional questions this filing season in order to complete their return.
Tax return preparers will now be required to complete Form 8867 – Paid Preparer’s Due Diligence Checklist documenting that taxpayers provided evidence to support claiming the credits mentioned above. Preparers must maintain adequate records documenting how information was obtained and the identity of the person supplying the information used to prepare the return to avoid penalties.
An additional change for the 2017 filing season is the due dates for any form 1099’s with box 7 nonemployee compensation. Traditionally, Copy A of the form 1099’s that are filed with the IRS has been due at the end of February. The new due date for Copy A for the form1099’s with box 7 nonemployee compensation is now January 31.
The IRS is continually trying to limit the amount of fraudulent refunds that are issued with a wide variety of changes, and we can expect that more changes are very likely in the future as well. Do not hesitate to reach out to one of our firm members if you have any questions.
Nathan Beck, CPA
Senior Manager – McGowen, Hurst, Clark & Smith, P.C.
December 20, 2016 § Leave a comment
The 2016 presidential election included much discussion of the Affordable Care Act (ACA), or Obamacare as the Act is often called. Without revisiting the entire history of the ACA, under the Act the popular employer health reimbursement plans were defined as “group health plans subject to the act’s market reform and rules.” Suddenly, employers were not allowed to reimburse employees for the cost of acquiring health insurance on the individual market. The Act also disallowed typical 105 medical reimbursement plans and 125 salary reduction plans for health insurance premiums.
During the election cycle, Candidate Trump vowed to repeal the ACA, and Candidate Clinton called for modifications. Now, before President-Elect Trump is inaugurated, Congress has passed and President Obama has signed the 21st Century Cures Act, which includes a provision in the “Other Provisions” section, for “Exception from group health plan requirements for qualified small employer health reimbursement arrangements.”
So what does this mean to you? With the passing of the 21st Century Cures Act, there appears to be some relief to the ACA provisions. The reimbursement arrangements described above are no longer defined as a group health plan if certain requirements are met. But before you get too excited, there are strings attached. Surprise! To qualify for the ACA exception, the plan must meet several requirements, including:
- Eligible employer, as defined;
- Consistent coverage offered to all eligible employees, as defined;
- Funded 100 perfect by the employer;
- Reimbursements based on proof of coverage; and
- Reimbursements limited to $4,950 for the employee or $10,000 for family coverage.
Full definitions are beyond the scope of this writing, and more details will be available as the market digests this new law, which is effective after December 31, 2016.
The changes do seem positive for small employers and their employees. If you have specific questions about your situation, please contact us. We will, as always, try to keep you informed as the new law evolves.
Jim Smith, CPA
Partner – McGowen, Hurst, Clark & Smith, P.C.