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Strategies for Tax Savings Under the New Tax Law

tax saving strategy, gilmore jasion mahlerWant to save money on your 2018 tax bill? Sure you do! Things have changed dramatically with tax reform, but there are still ways to save.

Many taxpayers will benefit from the reduced tax rates and expanded tax brackets included in the new tax law. The law’s changes also make it less likely that as many taxpayers will itemize deductions. They will opt to use the higher standard deduction, which nearly doubled for individuals to $12,000 with the passage of the new law. The Married Filing Jointly standard deduction increased to $24,000 and the Head of Household standard deduction went up to $18,000.

If you’re among those who will wind up taking the increased standard deduction, be aware that payments for taxes, mortgage interest, and charitable donations will no longer yield any tax savings. But, there are still strategies for some taxpayers to reduce their tax liability while taking the standard deduction and making charitable deductions.

One way to save is using something called a Qualified Charitable Distribution (QCD) when donating to a favorite charity. A QCD allows a transfer of up to $100,000 per year from an IRA directly to a qualified charity. Here’s the catch: it is only available to those who have reached Required Minimum Distribution (RMD) age which is 70½. Any amount processed as a QCD counts towards the Required Minimum Distribution requirement while at the same time reducing the taxable portion of the distribution. By lowering both adjusted gross income and taxable income, the taxpayer has a lower federal tax liability and potentially a lower state tax liability and the charitable organization receives a contribution. 

Some important things to remember when choosing to use a QCD:

  • Notify your tax preparer that this has been done since the custodian of the IRA is not required to specially identify the QCD on form 1099-R. Otherwise the QCD may be accidentally reported as taxable income
  • If RMD payments are set up to be paid automatically, the payment may need to be halted or adjusted to leave funds available for a QCD

Another strategy that applies to taxpayers of any age is so-called “bunching” of tax deductions, or grouping them together to get the most tax benefit. If the total of your eligible medical expenses, allowed state and local tax payments, mortgage interest and charitable contributions is close to the standard deduction, it might be beneficial to bunch itemized deductions every other year so that the total exceeds the standard deduction.

Some other thoughts on “bunching”:

  • Consider getting elective surgeries and expensive dental procedures or buying new glasses all in the same year
  • Prepay real estate taxes to reach the new $10,000 limitation on state and local tax deductions
  • Double up on regular charitable donations every other year

By bunching as many deductions into one year as possible, the total may surpass the standard deduction. On the off years you can take advantage of the standard deduction.

Marie Saner, Gilmore Jasion MahlerTax Supervisor Marie Saner, EA contributed this blog. With Gilmore Jasion Mahler for 14 years, Marie works with individuals and businesses across many industries. She is a member of the Firm’s Construction Specialist Team.

 If you’re interested in receiving more tax planning ideas right to your inbox, click here to sign up for GJM’s free quarterly tax newsletter Focus.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

4 Things to Look for When Hiring a Business Valuation Professional

business valuation, jeff denning, gilmore jasion mahlerBusiness valuation is one of the most important financial decisions you can make for your business. Choosing an expert to work with should not be an impulsive decision. It is absolutely necessary to interview prospective business valuation experts to guarantee a high-quality, knowledgeable professional will handle your unique situation.

There are a few factors you should consider before committing to work with a business valuation professional.

  1. Not All Business Valuation Professionals Are Created Equal

The field of business valuation has grown substantially in the last decade. Unfortunately, with that growth have come several inadequate training programs, generic software systems, and mediocre appraisers. There are some valuation professionals who will tell you exactly what you want to hear to gain your business, without offering in-depth, comprehensive service. 

  1. Cost of Services

Costs associated with a business valuation can vary significantly. During the initial consultation, ask for an estimate of costs for your specific project. Receiving a verbal appraisal is more cost-effective than a written report. A written proposal will be much more expensive, but sometimes is the type of report a client will require. If a client is receiving an appraisal as part of litigation, costs climb even more. It is important to understand what type of appraisal you need and what type of appraisal you are willing to pay for.

Discuss costs upfront with the appraiser and be sure you are on the same page as to what the end product will be. Make sure the appraiser knows exactly what type of appraisal you need and be aware of low-cost appraisals, which can signify professional inexperience.

  1. Professional Designation

Business appraisers come from a variety of backgrounds and possess different experience. To verify the professional has adequate education in the field, ask for their credentials. There are five accreditation program designations that are considered top-notch:

  • ASA (Accredited Senior Appraiser)
  • ABV (Accredited in Business Valuation)
  • CVA (Certified Valuation Analyst)
  • AVA (Accredited Valuation Analyst)
  • CBA (Certified Business Appraiser)

If the professional does not have one of these professional designations, they should not be entrusted with your business.

  1. Ask When You Will Receive Your Appraisal

This is a question to weed out other potentially inadequate appraisers. Ask how long the appraiser will expect the process to take and the steps involved. They should not offer an estimate until they have visited the site, performed personal interviews, and performed a hands-on inspection of company records.

If they offer a quick quote created from their “professional opinion” or generic software, cross them off your list of potential appraisers. It is better to hire someone who is willing to take the time to do things properly, rather than hire someone who may be unqualified or underprepared.

If you are actively searching for a business valuation expert, feel free to reach out to me at 419.794.2000 for a consultation.

Jeff Denning, CPA, ABV, CFF contributed this blog. Jeff has over 20 years’ experience in the field. He is ABV certified, and has heavy experience in litigation. Jeff’s multi-industry experience will guarantee that you receive the best business valuation service, regardless of business type.

Learn more about Jeff’s expertise in business valuation and forensic accounting, and get a better understanding of the process of business valuation in this video explainer from Jeff.  You can also sign up for Gilmore Jasion Mahler’s free quarterly newsletter The Expert with a focus on business valuation and litigation support. Just click here for quick and easy sign up.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm's professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities

How to Prepare for the New Lease Accounting Standards

Lease accounting standardsNew lease accounting standards will go into effect for public companies for years beginning after December 15, 2018 (2019 year-end) and for private companies for years beginning after December 15, 2019 (2020 year-end). Those affected by the changes should be aware of the details and begin planning for implementation now. Planning will include heavy training for accounting departments as well as vendors and customers.

New Lease Accounting Rules

The Financial Accounting Standards Board has issued new rules to improve the financial reporting of leasing transactions. New requirements dictate that companies leasing facilities and equipment to others recognize the assets and liabilities of leases. Balance sheets must record the transaction details. Prior to this implementation, capital leases were the only type to require such documentation.

Establish a Committee

To guide the transition process, affected companies should establish committees to attend training events and become knowledgeable about the new standards. The group should be comprised of both accounting personnel and cross-functional project managers. The committee can then work to implement the process in a way that will work for the organization.

Educate Dealers, Vendors, and Customers

The Equipment Leasing and Finance Association has created a helpful white paper outlining the new method’s changes and benefits. Stakeholders should engage in conversations directly with the companies and receive this reading material for reference.

Corporate Accounting Teams

There are three factors for companies to consider, in addition to those listed above:

1. Accounting teams will need to identify all leases, preparing a current and accurate inventory. Once complete, the accounting team will be able to determine which leases the new mandate affects. It is also important to break out leases that are less than a year (and not reasonably certain that they will be renewed) as they may not be required to be capitalized as a right of use asset.

2. Accounting departments will need to examine how the new rules will change financial reporting and transactions, specifically for the company. In addition to examining basic paperwork changes, teams will also need to determine possible ripple effects, including those on taxation and business processes. It is important to accurately record the leases by breaking out the lease and non-lease components.

3. Accounting teams will need to determine whether current accounting systems can adequately handle the required changes. If accounting software or systems cannot handle the change, the team will need to work toward a solution. To assess the current systems, determine how easy it will be to create the proper accounting procedures. Not all software is designed to handle the change to the leasing standards. There is software that purports the use of algorithms to extract lease components from contracts to help with the efficient review of the contracts for lease components.

Making the Transition Smooth

The key to making the transition smooth for everyone is to plan early. Ensure everyone is onboard and educated before changes take place. With cross-functional collaboration, employees will be able to identify potential challenges and opportunities. Begin planning now to ensure a smooth process by meeting with your lessors to discuss the impact of the new leasing standards.

Whether you have a small business or a huge conglomerate, contact Gilmore Jasion Mahler to find out how we can help you prepare for the new lease accounting standards.

Michael Brough Gilmore Jasion MahlerGilmore Jasion Mahler Partner Michael Brough contributed this blog. Mike is a partner in the Gilmore Jasion Mahler assurance department with over 13 years of public accounting experience. Mike is a member of GJM's Manufacturing Specialist Group and works with clients in many other industries as well, including government and nonprofit.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

How Well Do You Know Ryan?

Ryan Avery Gilmore Jasion MahlerHow well do you know GJM Senior Audit Associate Ryan Avery? You may have worked with Ryan for a while, but you’re sure to learn something new. Enjoy this Q&A.

Name and title: Ryan Avery, Senior Audit Associate

Describe your role at GJM. I work in our audit and risk assurance practice where I work closely with our clients to help them better understand the company’s potential risks and assist them with meeting reporting deadlines. I often have the privilege to help mentor our young staff and interns while on the job.

When did you start at GJM? I started right out of college with GJM in September of 2013.

Why did you choose the accounting industry? What first led me to the accounting industry was watching my uncle as a kid who was a financial advisor. He was always very successful, and I wanted to be like him when I grew up. When I got to high school, the only business class that was offered was accounting. Therefore, I decided to try it and enjoyed the challenges of my accounting classes throughout college and my internships.

GJM is quite involved in the community. Any particular programs or volunteer work you’ve enjoyed being involved in here? I have really enjoyed being a part of the Big Brothers Big Sisters Christmas party that GJM puts on ever year. I love seeing the excitement on the kids’ faces throughout the event.

What do you like best about the accounting profession? My favorite part of the accounting profession is that I am always learning new things. I am constantly learning not only from my co-workers but from our clients as well. I really enjoy getting to work with so many different types of people and seeing the logistics of many businesses.

Ryan Avery Gilmore Jasion MahlerAre you from the Toledo area originally? If not, where are you from? I was born in Toledo, raised in Perrysburg, and currently reside in Monclova. Northwest Ohio has always been home!

What do you like about living in Northwest Ohio? My favorite part about living in Northwest Ohio is most of my family lives in the area. With only having one sibling, it was nice growing up with my cousins around as well. I feel so blessed having such a close and supportive extended family.

Where did you go to school? I completed both my undergraduate and Masters of Accountancy degrees at Bowling Green State University.

Do you have any pets, hobbies, family? My wife says that I knew what I signed up for when I married her given that she is a self-diagnosed crazy cat lady. Currently we have six cats, three indoor and three outdoor. Our outdoor cats do a good job of keeping the mice out of the hay, which is great for our two horses. We enjoy taking them for rides at Oak Openings and to the ice cream shop. Our farm still felt like it was missing something, so in June we are getting a blue heeler to help keep everyone in line.

How do you like to spend your free time? When I am not hanging out with my animals, I am usually reading the latest Dave Ramsey or other business development books. I enjoy waking up early to meet up with my 5:30 am workout group. Recently, I have taken up woodworking. My wife loves this hobby, so I can build her more cat towers.

Are you involved in any community organizations, do any volunteer work? I am very excited to be leading a Financial Peace University class at my church this spring. My wife and I have recently started volunteering with our church at Vision Kitchen.

What is something people may be surprised to find out about you? I am always up for a challenge, which is why I think I enjoy doing extreme mud runs such as the Tough Mudder and Spartan races. I have also completed two 50-mile ultra-marathons. One of my goals is to complete a 100 miler in the near future.    

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm's professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities

Construction Industry Workforce Challenge

A major financial concern for many Gilmore Jasion Mahler (GJM) clients in the construction industry is finding good people to do the work. You'll often hear about the workforce shortage in manufacturing, but it is also having a profound impact on contractors. GJM Partner Bob Bobek, CPA lead's the firm's Construction Specialist Group, working with many clients in the industry. 

If you're interested in more articles and information impacting your construction business, be sure to sign up for Gilmore Jasion Mahler's free quarterly e-newsletter On-Site. You may also want to sign up for Focus, GJM's e-newsletter offering tax updates and strategy for businesses. Just click here for quick and easy sign up.

Bob Bobek Gilmore Jasion MahlerBob Bobek is GJM's lead Audit Partner and has over 30 years of public accounting experience. As the lead of the Firm's construction team, Bob is very active with industry associations including the Association of General Contractors of Ohio (AGC), Ohio Contractors Association (OCA) and the Construction Financial Management Association of Northwest Ohio (CFMA).

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm's professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.