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Are Work Clothes Tax Deductible?

July 23, 2014

Authored By: Tara Williams is a CPA in the Logan office of Cook Martin Poulson, P.C. Tara enjoys interacting with clients and working with them to create solutions to problems. Tara is a native of Layton and earned a bachelor’s degree in accounting from Utah State University and a master’s degree in accounting from Weber State University.

Generally, clothing costs aren’t allowable as ordinary and necessary business expenses. They are characterized as nondeductible personal expenses. The IRS describes clothing that would qualify for a deduction as “required by the employer and not suitable for everyday use.” Most clothing worn to work could be required by an employer depending on the environment, but the key is that it cannot be adaptable for everyday use outside of work. Clothing that would qualify as a deduction include:

• Uniforms worn by firefighters, police officers, letter carriers, healthcare workers, professional athletes, and delivery workers.
• Clothing that protects workers from injury, i.e., glasses, hardhats, work gloves, and safety shoes. See IRS publication 529 for more information.

In a 2011 tax court case, Leyla Diaz was employed as an assistant to the operations manager at a company that owned and operated 11 Midas locations. According to Leyla, she was required by her employer to wear “standard khaki pants, a red polo shirt, and sneakers.” She explained that she did not wear her work clothing other than in connection with her employment. She attempted to deduct $1,400 of clothing and shoe expenses on her tax return as unreimbursed employee business expenses. The court ruled that because the clothing was adaptable to general use, she was not entitled to a uniform and shoe expense deduction. Had Leyla been a service technician that was required to wear a uniform and safety gear, those expenses would have been allowable.

Before taking the uniform tax deduction, keep in mind the two steps that are required for the deduction. Uniforms must be required by your employer and cannot be suitable for everyday use. If you have any questions feel free to contact your CPA at Cook Martin Poulson, PC.

America’s Small Business Tax Relief Act of 2014

July 17, 2014

Authored By Daniel Smith, Shareholder

H.R. 4457 has passed the House of Representatives on June 12, 2014. If it passes the Senate and is signed by the President, the Internal Revenue Code will be permanently amended to extend increased expensing limitations. When enacted, this act will allow certain small businesses to expense up to $500,000 of depreciable property under Section 179.

Under this pending law, limitations under Section 179 will be adjusted for inflation. Cost-of-living adjustments are to be determined each year and will be rounded to the nearest multiple of $10,000.

Businesses owners will welcome this extension of increased Section 179 deductions. Without this change the current law limits Section 179 to $25,000 in 2014 (adjusted for inflation). H.R. 4457 will give small businesses more opportunity to compete. They will be able to expense capital purchases needed for their businesses. Absent this change, small business owners are limited in the amount of current deductions they can take as deprecation.

All will welcome the passage of this law. In the coming weeks, look for the enactment of these changes to Section 179 of the Internal Revenue Code.

IRS Prevents Employers From Pushing Workers Into Health Care Exchange

July 9, 2014

Authored By: Chad Lambert, Chad works in the Logan office. He enjoys working with clients in a variety of industries to help them with individual and business taxes and payroll preparation. Chad is currently working towards his CPA certification and enjoys learning new things that will help him to better serve his clients.

Obamacare has forced many employers to think differently about providing health care for their employees. Since employers with over 50 full-time equivalent employees will be required to provide health care for workers beginning January 1, 2015, many companies have been exploring the most suitable option for their situation. For some businesses, the most reasonable option was to send employees to the health care exchange to find coverage on their own and provide a tax-free payment to employees to offset some or all of this cost. This provided health insurance to employees while reducing some of the burden on the business.

With many companies considering this option that would shift some of the responsibility of health insurance elsewhere, the IRS responded in May 2014 with a Q&A to clarify IRS Notice 2013-54. The IRS stated that plans in which employers provide tax-free benefits to employees to purchase insurance from the exchange do not satisfy federal rules. When an employer reimburses employees for premiums, the arrangement is known as an employer payment plan. “These employer payment plans are considered to be group health plans,” the I.R.S. said, but they do not satisfy requirements of the Affordable Care Act. Failure to comply with these regulations can bring about large penalties for employers of up to $100/day, per employee for a total of $36,500/year, per employee. Such penalties will eliminate employers from sending employees to Health Care Exchanges and leave them looking for another viable solution.

To see the IRS Q&A “Employer Health Care Arrangements” click the link below:

http://www.irs.gov/uac/Newsroom/Employer-Health-Care-Arrangements

Business Consultants: Why You Need Them

July 7, 2014

Oprah Winfrey had Barbara Walters, Steve Jobs had Bill Campbell, while Mitch Albom had Morrie Schwartz. Many industry performers and famous people have a mentor, coach, or consultant. Great mentors share their experiences and challenge you to become more than what you think you can be. Coaches help unleash your potentials and guide you through the uncertain path, while consultants offer to share their expertise in a specific field.

There’s a thin line separating mentors, coaches, and consultants, but all of them share one goal: to help a person or organization be the best they can be. Business mentors, coaches, and consultants play an important role in helping an enterprise succeed.

Hundreds, if not thousands of industry leaders can attest that having someone to consult during critical points in business is one of the keys to achieving goals.

A Great “Necessity”

More companies are recognizing the importance of having a helping hand and consultants have somewhat become a necessity in business. Consultants bring a high level of technical knowledge and expertise to the table. They help you see the “big picture”, identifying opportunities for improving business in ways you would not have figured out on your own.

Not Just Business Consulting

Consultants today not only provide technical expertise, but sometimes act like mentors and coaches, too. They sometimes provide expert advice based on experience and empower business owners to reach their greatest potentials. Some help startups set goals effectively and make short-term and long-term plans for their companies, while others assess an organization’s performance.

Taking Your Business to the Next Level

Business consultants help take companies to the next level. They provide the expertise needed to improve efficiency. They help accomplish special projects, offer an objective point of view, and provide assistance in dealing with complex issues your organization faces. They are a “safe pair of hands.”

Even if you think you’re an expert in your field, chances are you don’t have all the skills needed for the job quite just yet. You need some help. For quality business consulting and bookkeeping services, contact us. We’ll help advance your business and bring your company to the next level.

CFO Consulting Services now offered at Cook Martin Poulson’s Logan Office with Value Added Fee Arrangements

July 1, 2014

Authored by Troy R Martin, shareholder in the Logan Office.

For the last 8 years, our Salt Lake office has been offering CFO Consulting Services. CFO Consulting services help small business owners obtain accurate information, increase cash flow, manage growth, forecast cash flow, financial budgeting, the proper use of leveraging, assist with strategic planning, manage human resource issues, corporate governance, business agreements, and much more. http://www.cookmartin.com/wp-content/uploads/2013/07/cfo_card.pdf

CFO consulting services help us achieve our firm vision statement. “We are on purpose not just on task! Our purpose is to help people, businesses, and communities achieve greatness. We use our professional skills to make a difference in people’s lives.”

We have been offering CFO Consulting Services in the Logan office, but have not officially called it CFO Consulting. Educating our Northern Utah clientele about all the services we offer, will allow us to assist them in addressing critical issues in their business that keep them awake at night.

On our local newspaper, The Herald Journal, published an article May 7, 2014 about Jack’s Pizza announcing the sale of the restaurant and the struggle of other local businesses closing. Under the comment section of the online version of the paper, the following comment was made; “Yet another undertow is the necessary role of accountants. Most here (in Logan) seem to suck a business dry on fees, but offer little or no financial strategy and tactics. The only stake they have is if they do the numbers, they get to charge the fees.”

We would have loved the opportunity to help Jack’s Pizza and any other business in Northern Utah and South East Idaho address their critical issues. We are willing to invest in clients to help them achieve their goals and individual greatness. In addition to launching our official CFO Consulting Services in our Logan office we are also creating a pricing plan for clients to meet their needs and to encourage them to call and engage our services. Any one of our professionals will meet with our client or prospective client and fill out our “Critical Issue Checklist.” http://www.cookmartin.com/wp-content/uploads/2012/09/critical_checklist.pdf

CMP will then, with the help of the client, develop a program to help address the critical issues as well as provide all the typical CPA services for a monthly fee.

We believe this will encourage clients to use our services more often and they won’t be worried about being “nickel and dimed” for services performed. In addition, we will be designing a similar package for new and startup businesses.

Other exciting services now being offered by CMP are; On-Line QuickBooks consulting and conversation, Business Valuation Services, Research and Development Credit documentation and calculation, and Cost Segregation Studies for Real Estate.

Cook Martin Poulson is a full service regional accounting firm with offices in Logan, Salt Lake City, and Tremonton.

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