Stephen Merritt, CPA, PC | Certified Public Accountants | (757) 420-5778
233 Business Park Drive, Suite 104, Virginia Beach, VA 23462
- How the New Tax Law, CARES, Impacts Individuals
- 5 Signs You Need to Upgrade your Accounting System
- Happenings at SMCPA
How the New Tax Law, CARES, Impacts Individuals
IRS and Congress have given individuals a number of ways to build up their cash reserves and/or pay less in taxes. Here are a few opportunities for taxpayers.
Stimulus checks from the IRS
Many of you received stimulus checks in the last month as a result of new laws designed to help you weather the economic downturn. These Economic Impact Payments are not treated as income and you will not owe taxes on your payment.
If you were eligible for a larger payment than what was received, the IRS will provide an opportunity on your 2020 return (filed in 2021) to make an adjustment to get any additional money you were due. Conversely, if the IRS finds that someone received a larger payment than what they should have, the taxpayer will not be required to pay it back.
Dipping into retirement
Taxpayers have the ability to withdraw up to $100,000 from retirement accounts without paying the 10 percent penalty if the distribution is COVID-19 related (you need it to care for spouse and dependents or you experience adverse effects of quarantine/not allowed to work) from January 1, 2020 through December 31, 2020. Income is included over a three-year period, unless the taxpayer elects otherwise. If the amount is repaid, it is treated as a trustee-to-trustee rollover.
Not dipping into retirement
Required Minimum Distributions (RMDs) for retirement accounts have been suspended. If you are normally required to take a minimum distribution from your retirement account, you can skip it during the 2020 year.
Federal student loan payments are suspended through September 30, 2020 and will not accrue interest during this time period.
Employers can offer to pay an employee’s student loans and other educational assistance up to $5250 without the benefit being taxable to the employee.
Charitable contribution deductions will be reported differently on the 2020 tax return. In the past, a taxpayer would have to itemize their deductions in order to get a tax break from making a charitable contribution. For 2020, you can deduct up to $300 in cash donations without having to itemize your deductions. Additionally, the maximum limit of how much a taxpayer can deduct has been eliminated.
5 Signs You Need to Upgrade Your Accounting Systems
To maximize profits in your business, all of your business functions need to run smoothly, including your accounting department. Your accounting system is at the core of your accounting function. If it is old or lacks the features you need, your business may suffer. Here are five warning signs you can look for to determine if it’s time to upgrade or replace your current accounting system with something more cost-effective.
1. Not enough users
If your current system limits the number of users you can have in the system at any one time, this could be a major enough reason in itself to switch to a larger option. Luckily, most accounting software companies include an accountant user for free, so at least this type of user doesn’t have to count toward your total requirements.
If you’re not sure how many users you currently have a license for, we can help you check on that. It might be as easy as buying more licenses if you’re not at the maximum capacity. But if you are at maximum, it may be time to look for a better accounting system with room for you and your business to grow.
If your accounting system runs on desktop-based software that’s upgraded every year and you have not paid for or installed the upgrades, then your system is outdated. If it’s been sunsetted, that means the software vendor no longer supports the software. You are at major risk for the software crashing, getting buggy, getting hacked, or worse, permanently breaking.
The cost of getting the system current may be better spent looking for a new alternative, or moving to a cloud-based system where updates occur automatically.
3. Lack of functionality or scale
It is commonly the case that your business has grown so much that it’s outgrown your original accounting solution. That’s good news! It’s time to find a solution that will scale better for your business.
You might be missing important features that are costing you more time and money than if you were on a system that offered those features. Common time-wasting activities in accounting include too much time spent on data entry and/or Excel spreadsheets to make up for what the accounting system can’t do.
4. Lack of reporting and analytics
If you’re unable to receive the reports and analytics you want to run your business better from your current accounting system, it may be time to switch. With better data comes better decision-making and if lack of data is costing you money, then it’s time to find a more robust system.
5. Lack of integrations
Thousands of apps exist to expand accounting systems’ core functionality. If your current accounting system lacks integration capabilities or does not have apps that are built to integrate with it, you may be missing out on additional functionality. This include mobile apps; it’s quite common now to do much of your accounting work from your mobile phone.
Does your current accounting system have any of these red flags? If so, please reach out. We can help you find a best fit for your accounting needs.
Coronavirus Disease (COVID-19)
Stephen Merritt, CPA, P.C. understands the challenge the impact COVID-19 has on our community.
Our office will continue with regular business hours; however due to COVID-19 there are no client meetings. We have a handy system of passing the box thru the door, as well as following sanitary procedures.
Hours of Operation: Monday- Thursday 8:00 am till 5:00 pm.
Office is closed on Fridays from May 1- Sept. 4
Tax documents may be mailed, FAXed or emailed.
Final Returns will be mailed out.
As always, please call, we are happy to assist.
Stay safe and healthy.
Happenings at SMCPA:
Louis is ready for Cinco de Mayo!!