Author: FFC

News

Taming your to-do list

Post author By FFC
Post date July 20, 2018

Taming your to-do list

“Until we can manage time, we can manage nothing else.” ~Peter Drucker

Two things trip up most leaders’ attempts at managing their time. The first is the fact that the best systems and best intentions quickly run into dynamics in the real world: You’ll get interrupted, there will be an unforeseen obstacle or crisis, you’ll go through motivation and energy ups and downs, and so much more. Translating your intentions into practice often fails through small compromises you feel you must make in your day to day activities. The second is that most principles in time management focus on how you spend your time, but that philosophy just puts you on a “hamster wheel” that doesn’t move you forward. It isn’t about how you SPEND your time, it’s about how you INVEST your time.

Leadership presents some unique challenges for time management, but it presents unique opportunities as well. I’ve developed a three-step framework that that will help you get off the hamster wheel and into a position where you can make progress.

This framework has three parts: Prioritize, Negotiate, and Invest.

Prioritize —First 15 Minutes – Tell me if this scenario sounds familiar: You’re commuting to work and make a list of all the things you want to accomplish, you walk through the office doors, say “hi” to a few people, get yourself a cup of coffee, sit down at your desk, open your email…. and before you know it find yourself commuting home and thinking, “I didn’t accomplish anything I set out to do today!”

That scenario occurred because as soon as you opened your email, you made all your priorities subservient to everyone else’s. All time management starts with working on the right things, because the sad fact is you’ll never get everything done, but you can get the most important things done. Spend the first 15 minutes of your day with the door closed, with your email shutdown, and jot down a list of YOUR PRIORITIES. Just making this time to prioritize will help you better manage your time throughout the day. You most likely won’t accomplish everything on that list, but once you establish some momentum you’ll be surprised how much easier it is to spend those brief slivers of time during the day to keep it going and get them finished.

Negotiate—Fighting for Five – I am a huge fan of servant leadership, but I’m just as passionate about bringing balance to the equation. If you drop everything you’re working on every time someone pops their head in your office, sends an email, calls you on the phone, or texts you, then you’ll NEVER finish anything. One of the reasons our to-do lists are riddled with tasks in various stages of completion is this dynamic where we aren’t fighting for focus on our work.

Simply asking for five minutes, 10 minutes, or just one minute to finish what you’re working on will bring back an enormous amount of sanity to your day. Here’s the thing: nobody has a problem with you getting back to them IF YOU FOLLOW THROUGH. And if it’s an emergency, then of course you can drop what you’re working on. This is one of the most difficult paradigm shifts for leaders. So, start small, get some practice, then keep refining your approach to negotiate extra focus in your day.

Invest – The Five Essential Questions – Once you’ve finished some of your important tasks it’s critical for you to carve out a little time for investment. Delegation and employee development are the obvious places to invest those small amounts of time, but one of the most useful activities to start with is gathering information. Better information leads to better decisions, and in a practical sense shows where you need to spend time in the future. The following five questions are crucial for any leader:

“What do you see going right in the department/organization?”

“What do you see going wrong in the department/organization?”

“Where are the opportunities we need to take advantage of?”

“Where are there problems we need to fix?”

“How can I help you do your job better and more easily?”

I recommend asking your team these questions either through your regular one-on-one meetings or through email. Then revisit them 3-4 weeks later after you’ve had a chance to act on a few of the items discussed. When your team sees you acting on the feedback they’ve given, you’ll see the feedback increase dramatically the second time.

Work on the right things, fight to get them done, then carve out a little time to invest some of your time. This process takes discipline, but as you go through one cycle, then another, and another, what you’ll find is that you’re getting compound interest on those investments in time so your focus can move to higher priority tasks.

To learn more time management tips from Cameron, check out this Facebook Live interview.

Cameron Morrissey, Founder, CLM Consulting. Cameron is the bestselling author of 4 books, an international leadership coach, and leadership development trainer to companies ranging from the Fortune 500 to independent franchisees.

5 podcasts for your summer road trip

Post author By FFC
Post date July 18, 2018

5 podcasts for your summer road trip

Taking a family road trip is one of the rites of passage that we all go through during summer. The kids have their iPads and books, the dog has his bone, and that just leaves the adults to find ways to make the long hours go faster. You can either click the radio buttons a thousand times to find a station remotely tolerable, you can listen to the kids fight about who is touching who, or you can find an alternative.

Enter the podcast

A podcast is a great way to make the miles fly by. Of the more than 550,000 podcasts you can listen to, you’ll find educational, entertaining, or just plain random content. Did you know that there is a 51% chance that a flipped coin will land on the side that was facing up when it was flipped? A fun fact and I learned it from a podcast!

5 podcasts to help you survive

The Tim Ferris Show – Tim Ferris looks for productivity tips in places most people wouldn’t think of. His discussions on leadership, productivity, personal achievement, and business are born from chess strategies, sports men and women, politics and top business people.

Planet Money by NPR – The economy explained. Imagine you could call up a friend and say, “Meet me at the bar and tell me what’s going on with the economy.” Now imagine that’s actually a fun evening.

School of Greatness – Hosted by Lewis Howes, this podcast thrives on the foundation of sharing stories of greatness. He emphasizes that everyone has the potential to achieve success, regardless of what they’ve gone through in life.

Radiolab – Hosted by Jad Abumrad and Robert Krulwich, is a radio show and podcast weaving stories and science into sound and music-rich documentaries.

Wait, What, Don’t Tell Me – NPR’s weekly current events quiz. Have a laugh and test your news knowledge while figuring out what’s real and what they’ve made up.

There are several great podcasts available related to the profession, including the Journal of Accountancy and Beyond Disruption, a new series on iTunes. Each week, Beyond Disruption brings you global expert insights on leveraging disruption today and preparing our profession for tomorrow.

Tune in and turn it up

Of course, podcasts are not just for family road trips, they can make your commute to and from work each day bearable, and they can make time fly by when you are sitting at your desk or running at the gym. Another great thing about podcasts is that you can listen to them anywhere from your phone, computer, or tablet.

The key to happy listening is finding a podcast that keeps your attention and entertains you. Now off you go my friend, go pick out a podcast, throw the family in the car, and start your summer adventure!

Heidi McBurney, Communications, Association of International Certified Professional Accountants

I jumpstarted my productivity in 15 minutes – and you can, too!

Post author By FFC
Post date July 13, 2018

I jumpstarted my productivity in 15 minutes – and you can, too!

It was early January 2014. The Kansan plains were covered in a crunchy layer of frozen grass, the overcast sky giving little indication that the ice would soon melt. Staff at Swindoll, Janzen, Hawk & Lloyd – a small accounting firm – were eager to step in from the cold to start their day. But this day would start differently than others. No one opened their laptop. No one phoned clients. No one crunched numbers. Instead, everyone, from partner to administrative assistant, had their heads down in a nonfiction book of their choice. They read uninterrupted, untethered from technology, for 15 minutes. You see, this firm had taken the first step in a journey that would evolve from an experiment into a successful on-the-clock reading program. And that reading program would evolve them too.

Admittedly, The First 15 reading program took some time to get off the ground because, although everyone agreed to the merits of reading, no one had time for it. That’s when Chet Buchman, managing partner and eventual architect of the reading program, suggested paying for people to read on the clock. “You can’t control what people having going on at home…but you do have the ability to influence what happens when they’re on the clock.”

Only 10% of the firm read on a consistent basis at the program’s launch. In the last year, however, staff members read over 439 books, adding up to just over 76,000 pages. They read only nonfiction books with real life, real world application. It’s an exercise that Buchanan and his partners state has contributed to a marked increase in productivity, revenue and morale.

I was skeptical when I heard these claims. Don’t get me wrong: like many of you, I watched Reading Rainbow as a child. I get that books are cool – that they serve a real purpose. I was just having trouble connecting increased revenue and productivity to the act of reading. If anything, I thought it would cut into a firm’s bottom line. So, I decided to test this out myself. For two months, I etched out fifteen minutes from my busy schedule to read self-help books, inspirational autobiographies and collected essays on anything from technology to an insanely poetic 17^th century rumination on something as seemingly banal as urn burials.

Here’s what happened.

Increased focus

The first three or four days were rough going. Cutting my technology cord brought me significant anxiety. I’m sure you know the type: feverishly responding to texts and emails, unable to ignore news flash notifications, always searching for the next best meme. That was me, and maybe it’s you, too. But it doesn’t have to be. Like me, your fledgling days in The First 15 may cause cold sweats and unexplainable heart palpitations. But, also like me, you’ll get through it, even if you need your colleagues to steal your phone while you read. And, in less than a week, you’ll find, as I found, an exponential increase in focus. My mind stopped racing hither and thither. I didn’t bounce back and forth between the task at hand and emails, checking stocks and stalking my favorite celebrity chefs’ Instagram stories.

Confidence in communicating

The more I read, the better I became at communicating. Simply by devoting more time to the consumption of ideas, I felt less apprehensive using language to express my own – both in writing and in speaking. Previously, I’d kept quiet in meetings. I feared I’d forget my words – that I’d fumble my way aimlessly through sentences, unable to properly string words together in a meaningful way. Now, by reading the stories of others, I’ve become a storyteller myself. Moreover, I’m able to pull anecdotes and facts from the books I’ve read to support my own ideas.

Improved memory

Do you remember that movie Still Alice, starring Julianne Moore? It’s about a woman with early onset Alzheimer’s. After watching it, I was sure I suffered the same affliction. Of course, it couldn’t be that – with a smartphone doing all my remembering for me – I’d allowed my memory muscle to atrophy! But, as it turns out, that’s exactly what had happened. Reading, especially if it’s relegated to just 15 minutes a day, forces the brain to pick up where it left off the day before. It’s forced to up its memory game. I found this tremendously beneficial. As mentioned, I grew more confident speaking, no longer fearing I’d forget simple words. Plus, I went from a networking zero to a networking hero, with a new knack for remembering people I met – and some facts about them.

A new, improved addiction

Ultimately, 15 minutes a day wasn’t enough. I didn’t want to wait a day to finish a thought, an idea, a book. I wanted to keep reading and filled any rare moment of downtime by reading a few more pages. And I got faster at reading, too, which meant I consumed more ideas, more anecdotes, more data. I went to bed at night with a book in my hand instead of an iPhone, and I’ve truly become a better person – and employee – because of it. I’m doing more work, better work, and I’m bringing innovative, cost-cutting ideas to the table. The AICPA’s Private Companies Practice Section (PCPS) has adopted The First 15 reading program, making email templates and other program tools available to PCPS members. The program truly improved my performance and can do the same for you.

Brock Faucette, Manager, Corporate Communications, Association of International Certified Professional Accountants

Summer reading list

Post author By FFC
Post date July 7, 2018

Summer reading list

It’s that time of year: trips are being planned, office cubes seem emptier than normal and social media is flooded with pictures of vacation spots. But, nothing says summer to me like relaxing with a good book, so I joined forces with my colleagues to present you with a collection of books for your next trip or staycation.

We Were the Lucky Ones by Georgia Hunter

You don’t even have to be a history buff to become fully engrossed in this novel. It’s a remarkable story of one Jewish family who – torn apart by World War II – fought for survival without knowing if they’d ever see each other again. The most unbelievable part is it’s based on a true story. While the topic is a tad heavier than a typical beach read, I couldn’t put this one down!

Sonia Bauer, Senior Manager – Corporate Communications & Public Relations

Love is a Mix Tape: Life and Loss, One Song at a Time by Rob Sheffield.

Focusing on rock music, journalism and a girl named “Renee,” this stunning memoir uses the music of the 90s as a backdrop to a bittersweet love story. It’s the perfect family vacation read because it reminds us to appreciate the life experiences and loved ones that make up the story of our lives. Just be prepared for the emotional roller coaster – no other book has made me laugh out loud and cry uncontrollably in a single chapter.

Allison Carter Fanney, Communications Manager – Tax

The Eyes of the Dragon by Stephen King

The novel was a departure for King at the time, setting aside his usual horror genre to create a fantasy world of power struggles in a medieval setting more than a decade before the series of novels that spawned “Game of Thrones.” It’s a quick read and lots of fun.

Adam Junkroski, Lead Manager – Communications, Tax, PFP, S&C

Luckiest Girl Alive by Jessica Knoll

It’s a mystery novel that goes back and forth between the main character’s traumatic high school experiences and the current time period, where she’s a magazine editor who’s determined to convince everyone that she has a perfect, glamorous life – even though she’s seriously struggling underneath it all. The author does an excellent job of weaving the two timelines together, but be warned that there are some tough scenes in the book.

Michelle Lewis, Lead Manager – Communications, Quality Initiatives

The Little Stranger by Sarah Waters

This book is an unconventional gothic novel. It’s a ghost story – or is it? Are the residents of a crumbling English estate truly experiencing paranormal activity, or will the country doctor called to care for the family uncover a more logical, far more sinister explanation for the strange goings on? Read the book before the movie adaptation hits theaters August 31.

Brock Faucette, Corporate Communications Manager

What book are you most looking forward to reading? Tell us in the comments below!

Liz Rock, Associate Manager – Enterprise Social Media, Association of International Certified Professional Accountants

Is hiring a CPA worth it in 2018?

Post author By FFC
Post date July 5, 2018

Is hiring a CPA worth it in 2018?

When people hear I’m a CPA who specializes in tax, the question invariably comes up — what do I think about the new Tax Cuts and Jobs Act (also known as “tax reform”)? I’m not one to talk about politics, so to be neutral, I say “it’s certainly an exciting time to be a CPA in tax.” No question, many of the provisions of tax reform bring added complexity to areas of the law that were not simple to begin with.

Some individuals will continue to feel comfortable using tax preparation software, but there are circumstances where “you don’t know what you don’t know,” requiring you to call in the help of a CPA. A great CPA can provide much more value than just the peace of mind that comes from knowing that your forms are correct. They can provide planning and tax advisory services, consultation, business and international accounting, forensic accounting, business valuation and more.

Read on to learn four reasons why it’s worth hiring a CPA.

To better understand your big financial picture

There are a variety of questions to determine if a CPA is right for helping you assess your overall financial well-being:

Do I have a clear grasp of my financial situation and how the new law will shape it?

When will I reach my savings or investment goals? Should I set new ones now?

How does tax reform affect decisions such as selling my house, retiring, taking a sabbatical, supporting a favorite charity, or sending my kid (or me) to college or grad school?

Figuring this out on your own is tough. Having a trusted adviser in your corner who knows all about your circumstances and looks at the big picture can make a critical difference. A CPA can help you start thinking about strategic timing and next steps, so you don’t miss out on important opportunities.

To help you save for the big stuff

If saving up for education expenses, a baby or retirement seems daunting, you’re not alone. Some frequently asked questions in this area are:

My spouse wants to go to grad school. Can we swing this?

What is the best way to contribute to my children’s’/nieces’/nephews’/grandchildren’s college costs?

Am I saving enough to retire early? Is that even possible?

A CPA will help you strategize, whether you’re saving for school or saving for retirement. For example, under the new law, 529 funds can be used to pay private school tuition. A CPA can recommend the best way to fund the 529 and how and when to use it. A CPA can also assist in evaluating investment options that would be the most tax efficient to maximize your return in retirement.

To make the most of your retirement

Your ideal retirement might be sipping a cocktail on the beach, or it might be trekking across America in an RV. Either way, there are specific questions to ask yourself in order to make the most of this next life stage, such as:

When should I start receiving Social Security benefits? What are the tax implications?

What is the best way to draw down retirement funds to minimize taxes and prevent financial problems?

Is my estate planning in order?

Knowing how to handle Social Security benefits is critical. In 2017, 50% of married couples and 71% of single people aged 65 and older relied on Social Security for at least half of their income. A CPA can fill you in on what you need to know and work with you to develop an action plan.

Similarly, he or she can work with you and other professionals to create an estate plan that honors your wishes and minimizes taxes for your beneficiaries. Tax reform greatly reduced the number of taxpayers subject to federal estate tax, but only through 2025. If your state taxes estates, you will need to take that into consideration. Thinking about the distribution of your assets can be difficult; however, you can enjoy the peace of mind that comes with knowing everything is in order.

To prepare you for whatever life can throws at you

We all know the reality of the Forrest Gump quote – “Life is like a box of chocolates: you never know what you’re going to get.” Here are some important questions to consider before “life happens”:

If a natural disaster hits my home or business, do I have a plan for financial recovery?

Am I handling my health care expenses correctly to save the most money?

If I am injured or become seriously ill, do I know how I can pay the bills?

So, if your particular box of chocolates sticks you with the coconut-filled one you hate, how can a CPA help? Many CPAs are knowledgeable about insurance, such as long-term disability and property, and can advise you on what you need to be prepared. And if they don’t offer this service directly, they most likely partner with an expert in the area so they can oversee your full financial picture. They also know about the tax incentives related to health care that may help you save and pay for medical expenses.

Next step: Making the Decision

If you’re not sure you’re on the right financial path, or what your path should even be, seriously consider contacting a CPA. To quote entrepreneur and business philosopher Jim Rohn, “You cannot change your destination overnight, but you can change your direction overnight.”

Of course, as a CPA, I’m biased. I’m extremely proud of my profession and believe deeply that people will benefit from our expertise. So let me share a more impartial comment from Manny, one of our readers in response to a much earlier blog, Is Hiring a CPA Worth it?: “Hiring a CPA may be a little costly in the beginning but will pay off in the long run. Tax planning and account management can be really confusing. Having a business and personal adviser will help save your time and money.”

For more information on working with a CPA, visit 360finlit.org. And to find one near you, visit cpasdotax.com.

April Walker, CPA, CGMA, Lead Manager Tax Practice & Ethics, Association of International Certified Professional Accountants

8 tips to help recent grads establish financial independence

Post author By FFC
Post date July 3, 2018

8 tips to help recent grads establish financial independence

Schools out for summer! And, for some, school is out for good. In honor America declaring their independence, here are 8 tips from the American Institute of CPA’s National CPA Financial Literacy Commission to help recent college grads declare their own FINANCIAL independence now and for the future:

1. Have a plan to repay student loan debt. While paying off significant debt takes time, establishing and sticking to a plan will put you on a good path toward your financial independence. The AICPA’s 360 Degrees of Financial Literacy website has free resources to help create a plan to reach your financial goals.

2. Avoid carrying balances on credit cards. Try to budget your purchases to allow you to pay your credit card in full each month. If you already have balances, start to set aside some funds each month to pay them down. Credit card interest can mount up quickly, especially when you just pay the minimum each month. Money which could otherwise contribute to your financial independence is instead going to the credit card company. Be sure you know the pros and cons of owning a credit card

3. Manage your credit score. Financial independence includes the ability to carry an apartment lease or finance a car on your own, without a co-signer who may be required if your score is too low. Your credit score can be dinged by things like late payments, balances near the limit on one or more cards, or a collection of relatively new cards (like those that are sometimes offered in stores with the promise of a quick discount on that day’s purchases.)

4. Keep your monthly costs manageable. When combined with expenses like groceries and utilities, monthly costs such as rent, car payments, gym memberships, cell phones bills and electronic subscriptions can approach and even eclipse your income, leaving no room for savings. Think about what you can comfortably afford when taking on recurring bills and plan your spending.

5. Consider roommates instead of living by yourself. Use the extra money to pay down student loans, other debt, or fund your retirement.

6. Build an emergency fund. It’s a good idea to have enough cash and “liquid” type investments (like money market funds) to cover at least six months’ worth of ongoing expenses. An unplanned gap between jobs or major expense, like a car repair, can come along when you least expect it.

7. Make sure you have adequate insurance. If disaster strikes – you suddenly lose your job, your car is in a fender bender, a flood damages your apartment and all your belongings – the right insurance can protect you from a loss that you can’t afford to pay for. Check with a professional insurance agent to be sure you have proper coverage.

8. Take advantage of employer matches. It’s never too early to start saving for retirement. You may not have much extra to put away each month at this time of your life, but you should be sure that you are contributing to your employer 401K or 403B matches – That’s “free” money!

Jon Lynch, Manager, Public Relations, Association of International Certified Professional Accountants

An insider’s look at avoiding ethical violations

Post author By FFC
Post date July 2, 2018

An insider’s look at avoiding ethical violations

Ethical dilemmas can occur at any time during the career of a tax practitioner. Sometimes, the practitioner doesn’t even know they did anything wrong. As a former IRS Office of Professional Responsibility attorney, cases just like that would come across my desk.

A vast majority of these cases came from simple misunderstandings of ethical responsibilities — practitioners were not aware they were violating Circular 230 or the practitioner just had a bad day and made a one-time mistake. Review these stories and learn a little more about how easy ethical violations can happen if you aren’t paying close attention. (Note: details have been changed to protect the privacy of those involved).

When an engagement letter becomes an opportunity for tax evasion.

One case that comes to mind involves a practitioner who performed a lot of tax controversy work as a solo practitioner. While he maintained a best practice of using engagement letters, a major issue occurred in each of his engagement letters when representing clients to resolve corporate tax debt. He used a standard engagement letter he found somewhere online that disclosed a tax debt action plan. This action plan stated that he would help close the client’s corporation, re-open a new corporation for the client and request the IRS close the case on the old corporation as “Currently-Not-Collectible – Defunct Corporation.”

This is known as creating alter-egos and can be seen as a tax evasion technique.

This case was originally referred to the OPR from IRS collections. After OPR requested additional engagement letters under Circular 230 section 10.20, it appeared he was using similar language in most of his engagement letters for this type of representation.

The practitioner didn’t understand what he put in his engagement letters. After discussion with the practitioner, we found he didn’t actually utilize that action plan in most situations. While it was a best practice by the practitioner to utilize engagement letters, the better practice is to not only use them, but read them and have an understanding of what they disclose before providing them to a client.

The AICPA Tax Section has a variety of engagement letters to help guide you. And for more on how engagement letters can land you in hot water, check out this blog post about when engagement letters help, and when they can hurt.

When lack of due diligence lands you in hot water.

Each year a CPA prepared the tax returns for a Schedule C construction business that was the only reportable income on the client’s Form 1040. And each year, the business would run $100,000 or so of losses with a minimal amount from non-cash expenditures.

The practitioner would only report the 1099-MISCs the client received as gross receipts. For the year that came under IRS scrutiny, the tax preparer reported only about $50,000 of gross receipts from the 1099-MISCs. Upon audit, the actual gross receipts were closer to $200,000.

Unfortunately, the practitioner did not perform due diligence by questioning the gross receipt totals, despite there not appearing to be a source of funds to support the large losses each year. The business could sustain these losses for several reasons — such as the client receiving a large inheritance or gift — but the practitioner never questioned the client on funding sources for these large cash losses.

When credit card receipts don’t tell the whole story.

A similar situation deals with Form 1099-K, which only captures credit card receipts and not any cash receipts. Practitioners often fail to look at the 1099-K reported amount, and instead consider the industry and make an analysis of whether the gross receipts cash to credit card ratio makes sense.

For example, a fast food restaurant received a 1099-K for $99,000. On the fast food restaurants return, they report gross receipts of $100,000. This means, the restaurant received $1,000 in cash, or alternatively, one percent of sales were in cash. This percent appears low for the industry, so the practitioner should question the client about gross receipts and the low cash to credit ratio, then document his conclusions.

“Practitioners cannot ignore facts that don’t make sense.” This is usually known as willful ignorance. One of the best examples of ignoring facts deals with hobby losses. Practitioners will frequently prepare tax returns for multiple years where a sole proprietorship or other entity will generate a loss year after year. The practitioner often fails to review the past several years of tax returns to see if losses were generated in prior years. While it is fine to prepare a tax return with an entity that has had losses for several years, it’s the practitioner’s responsibility to use due diligence and consider the activity under the hobby loss rules and document their conclusion.

To help with these situations, practitioners should lookout for what the IRS refers to as “LUQs:” Large, Unusual or Questionable items, on tax returns. Anything that appears to be a LUQ on a tax return would require documentation on the position the practitioner uses.

Where to go to learn more

While practitioners can make ethical mistakes without even realizing it, there are common sense measures they can take to reduce the chances of making them. Review these AICPA resources to help stay on top of IRS procedures and rules, communicate with the IRS and resolve IRS account issues.

Nick Preusch, CPA, JD, LLM, tax manager, PBMares, LLP. Nick is a member of the AICPA Tax Practice Responsibilities Committee.

Ones and zeros aren’t always heroes

Post author By FFC
Post date June 29, 2018

Ones and zeros aren’t always heroes

In 1984, an entire profession that had survived more or less intact for 600 years found itself facing a monumental, earth-shattering change. It was that year Apple Computer released the Macintosh. Laughably underpowered by today’s standards, it nonetheless represented the literal future of computing with its graphical user interface (something the consumer market had never seen before) and suite of creative software.

Quickly following its release, industrious programmers took advantage of the available printing abilities of the machine—robust for its time—and created the first desktop publishing software. Just like that, businesses, government agencies, churches and even families who once turned to professional print houses to design, typeset and print everything from flyers and post cards to catalogs, were able to bring at least the design portion of the equation in-house. Suddenly, everyone was a “designer.” It was a game-changer for markets, but it also led to a lot of truly awful design and typesetting, perpetrated by amateurs with little to no training in visual arts.

In that same vein, today’s technologies have made planning tasks such as investing and doing taxes as simple as clicking a few buttons and answering a few questions. “Define your risk tolerance!” “Tell us about your business income!” And then minutes later, the tablet or phone or desktop will crank out a very official-looking plan or return. Congratulations, you’re an expert!

Only no. No, they aren’t. Also, they might just have put their finances in severe jeopardy. And that stings a bit more than misspelling Aunt Vera’s name on the family reunion invitations they printed at home.

Don’t misunderstand, this isn’t to say these programs are bad. The efficiency, speed and control individuals can take in helping plan their own finances is good in many ways. The problem that creeps in is the lack of oversight by trained professionals.

“Oh, I do my own taxes on the internet,” and “I bought 50 shares of company X at noon and sold them that same afternoon for a profit,” are common things to hear around the watercooler or at parties. Leaving aside that people are unlikely to brag they’re being audited or lost money they didn’t have on a bad investment. There are innumerable silent ways their unguided tinkering could cause damage. The mistakes or poor decisions amateurs make when handling their personal finances might not be bank-busting horror stories. They could be as simple as failing to properly protect income and assets, not strategically planning around a life transition such as divorce or retirement or paying too much income tax due to lack of smart, proactive planning.

As a CPA, your familiarity with your clients’ personal and financial status can help you provide that added guidance. Your clients enjoy the feeling of control these technologies give them, and there’s really no reason to steer them away completely. Instead, let them know the value you can add to what they’re already doing.

As sophisticated as finance programs have become, they cannot alert users to the consequences of their choices. They don’t often suggest options, alternatives, or take into account factors such as goals, life stage and upcoming transitions. Those remain in the realm of trained professionals.

You are your clients’ trusted adviser. Embrace this role and help them understand there’s immense power in your expertise. But first, they have to know you have it. If you aren’t sure how to start talking to clients about your planning services, visit our Planning and Tax Advisory Services webpage to get tips and access to free resources and tools.

And if you truly want to demonstrate expertise, you have options. Show your knowledge a la carte by earning a certificate in your focus area(s). Or, better yet, become a CPA/PFS and be recognized, with this CPA-exclusive credential, as someone who can provide your clients with the most respected guidance in financial planning.

Technology will always allow us to do more, faster. But it can’t help guide your clients in making the best decisions for where they are in their lives. For that, they need you.

Adam Junkroski, Lead Manager, Communications–Tax, PFP and S&C, PA, Association of International Certified Professional Accountants

Goooooooooal: Planning your way to financial victory

Post author By FFC
Post date June 28, 2018

Goooooooooal: Planning your way to financial victory

Have you ever been to the gym the first week in January? It’s usually packed with folks looking to improve their health. Many of these newcomers are there as part of their New Year’s resolution, while others may be trying to rebound after a particularly indulgent holiday season. And that’s a noble pursuit. However, very few of them are likely to still be going to the gym a few months later. I’m not a psychologist, but it seems to me that human nature responds to a setback or feeling of being stuck in a rut with a flurry of positive changes. Unfortunately, once our memory of what caused us to want to make those changes fades, we tend to slip back into our old ways.

I sat down with Neal Stern of the AICPA’s National CPA Financial Literacy Commission to talk about how Americans can make some positive changes to their financial plans – and stick with them for the long term.

James Schiavone: First, let’s start with the good news. As the economy has continued to recover, we’re seeing more Americans feeling comfortable enough financially to achieve some major life accomplishments, including getting married, having children and buying homes. What advice would you give for someone trying to determine if their finances are secure enough to make these big decisions?

Neal Stern: It’s important to give thought to how you will stay above water when the economic roller coaster is on the next downswing. If you’re not already using a budget, there’s no better time to start than when you’re on solid footing. Next, you should work to build up your savings so that you have at least six months of your income in an emergency fund. When thinking longer term about home ownership and having children, make sure your current income can comfortably cover your costs of living, including a realistic estimate of what the new commitment will add.

JS: A lot of people have trouble developing a month budget – can you explain how this is the first step towards reaching financial goals?

NS: A budget gives you a view of how much of your income is left over after recurring expenses, like rent or mortgage and car payments, and provides a roadmap to help you make better spending decisions. When you know what’s available after paying everything that’s already on your plate – including paydowns of student loans, credit cards, and other debt – you can set a realistic target for savings each month. There are many free online tools to help you get started on your budget on the AICPA’s 360finlit.org website.

JS: In our recent Harris Poll, it was troubling for me to see that fewer Americans reported putting less money on their credit cards. What are some strategies to make sure you’re not carrying a balance and why is that important?

NS: If you can’t pay off your credit card bills in full each month, that’s a warning sign that you’re outspending your income. Once you have a balance, it can grow rapidly, fueled by interest charges. If you carry a substantial credit card balance and are faced with a job loss, you may struggle to make the minimum payments while also trying to cover your costs of living. Mapping out and sticking to a realistic budget can help you keep your spending from going into the red zone, and a solid emergency fund can prevent unexpected expenses from turning into credit card balances that you can’t pay off.

JS: Once someone has their finances on track and feels like they’re in a good place – paying down debt, putting aside some savings – how can they stay the course without feeling like they’re denying themselves?

NS: A budget that leaves nothing for the things you enjoy is as unrealistic as a starvation diet – it won’t work for very long and may lead to the financial equivalent of a pizza and ice cream binge when you ditch it out of frustration. If your budget doesn’t allow for some fun, take a hard look at your recurring costs. For example, if your rent is soaking up too much of your income, it may be time to consider downsizing.

JS: It can sometimes feel like our financial goals are competing with one another. How would you advise someone prioritize paying off student loans, saving for a down payment on a home and putting away money for retirement?

NS: First, don’t be overwhelmed. It’s important to strike a balance that fits your personal situation and allows some progress on each front. If buying a home is your goal, keep in mind that it may be difficult to handle student loan payments at the same time as a mortgage and the other costs of home ownership. Plus, mortgage lenders typically consider your existing debt payment obligations, which includes student loans. It’s important to remember that having the down payment in hand doesn’t necessarily mean that you’re ready to buy. And while retirement may seem a long way off, if your employer offers a 401(k) or similar plan with a contribution match and you’re not contributing at least enough to take full advantage of it, you’re leaving “free money” on the table.

For more tips and tools on how you can develop a financial plan that will stick long term, visit www.360finlit.org.

James Schiavone, Senior Manager, Public Relations, Association of International Certified Professional Accountants

IRS guidance still needed on key tax reform issues

Post author By FFC
Post date June 27, 2018

IRS guidance still needed on key tax reform issues

As a CPA in tax, you know it’s vital to stay on top of tax reform. That means you’re watching the news coverage. You’re reading the articles. You’ve subscribed to e-News and various news alerts. You’re joining webcasts and taking self-study courses.

But there’s still a lot to learn, and some information just isn’t available yet.

The U.S. saw the most significant overhaul of its tax code in more than three decades at the end of last year. And when the Tax Cuts and Jobs Act was finally signed, it set off a guidance chain reaction at the Internal Revenue Service (IRS).

While processing its typically heavy busy-season workload, the IRS also focused on issuing guidance on several high-priority changes to allow for effective implementation of the new law. The IRS continues to issue news releases, notices, instructions and other forms of informal guidance on the most pressing items.

In the meantime, the AICPA Tax Policy & Advocacy team is advocating for additional guidance and legislative changes on the topics most vital to members and the profession.

We’ve identified areas requiring immediate IRS attention and offered comments to the IRS and Treasury to influence guidance in a way that best serves you. These items affect your business, and we hope to influence any Treasury or IRS guidance in a way that serves you best.

New Qualified Business Income (QBI) deduction is causing planning issues.

The changes to the QBI deduction raise questions regarding cashflow, entity structure and other tax planning issues. As noted in a comment letter on Feb. 21, the AICPA requested guidance on six specific items affecting QBI.

One key issue at stake is defining what activities constitute qualified business income under section 199A. Our position is that the Treasury and the IRS should permit pass-through businesses to calculate QBI based on the activity level rather than the entity level, which would allow a business to segregate its non-qualified trade or business from its qualified business to calculate the deduction. Allowing the separation and aggregation of different functions of the business will benefit CPAs.

Client-related meals are still in question.

On Apr. 2, the AICPA submitted a comment letter to the Treasury and IRS that addresses guidance needed on Sec. 274, the disallowance of entertainment, certain business related meals, and qualified transportation fringe benefit expenses. It’s not clear currently if certain client-related business meals or employer-provided snacks and other food products are still deductible under the statute. Sec. 274 also eliminates the deduction for certain employer-provided transportation fringe benefits.

A sticking point for CPAs is that we don’t know if business meals with current or prospective clients are still 50 percent deductible under Sec. 274. It’s also unclear if a business meal that’s part of an entertainment activity is still deductible. For instance, if a CPA were to take a client to a meal and then to a ballgame — which is clearly entertainment — is the meal still 50 percent deductible? Our position is that if the cost of the meal is separated from the cost of the entertainment, it should remain 50 percent deductible.

Other issues of note

The AICPA identified several technical corrections that are needed to “fix” the new tax law to operate as it was intended. As we see after the passage of most legislation, technical corrections are often needed to eliminate drafting errors and unintended consequences of the law. These items include:

Individuals — charitable contribution deduction, 60 percent limitation (IRC Sec. 170, 461(l))

Individuals — excess business loss limitation for individuals and self-employed (IRC Sec. 461(l), 172)

Trusts and estates — AMT exemption increase (IRC Sec. 55)

Businesses — NOL deduction for fiscal year taxpayers (IRC Sec. 172)

Businesses — bonus depreciation applicable recovery period for real property (IRC Sec. 168)

S corporations — AAA distribution rules (IRC Sec. 1371, 1377)

International — stock attribution rules for CFCs (IRC Sec. 958) and repatriation tax impact on AMT and miscellaneous itemized deductions (IRC Secs. 56, 67, 965(c)(1) and 965(h)(6)(B)

It could take some time for Congress to address the technical corrections and for the Treasury and the IRS to release guidance on the above noted items. The AICPA is in constant contact with the Treasury, IRS and Joint Committee on Taxation to help expedite the process and put the profession first. Visit the Tax Reform Resource Center for the latest news, resources, tools and AICPA Tax Policy and Advocacy comments that you need to stay on top of what’s happening in Washington. We’re there advocating for you.

Kristin Esposito, CPA, MST, Senior Manager – AICPA Tax Policy & Advocacy, Association of International Certified Professional Accountants

Amy Wang, CPA, Senior Manager – AICPA Tax Policy & Advocacy, Association of International Certified Professional Accountants