Sadly, the money that we defer from taxes in our 401(k)s and IRAs during our working lives must eventually leave the shelter of the retirement umbrella whether we like it or not. What is a required minimum distribution? The discussion below is not relevant to inherited retirement accounts. For more on that topic, please contact your accountant.
Required: For all retirement accounts except Roth IRAs, the account owner is required to begin taking distributions by April 1 of the year after turning 70 ½. However, postponing until the year after 70 ½ will mean that two distributions will be required in that year. These distributions are taxable income to the recipient [except for Roth 401(k) distributions] so proper tax planning is required.
One of the most important aspects of maintaining a healthy business is ensuring that the business has strong cash flows. The cash conversion cycle (CCC) is the time span between a business disbursing and receiving cash. The cycle can begin in a variety of ways including performing research and development or purchasing inventory. The cash cycle ends when cash is received for the goods or services provided. It is important for a business to properly manage its CCC in order to ensure that bills are paid on time and adequate inventory levels are maintained.
What is the recommended Quickbooks company file (.qbw) size?
The recommendation is that a Quickbooks company file (.qbw) size for Pro/Premier should not exceed 150Mb. For Enterprise the file should not exceed 1GB. If the file is larger than the recommended size, it is at high risk for: slower processing of entries and creating reports, crashes, loss or corruption of data, and faulty backups.
To reduce the size of the company’s file, a process called “archive” or “condense data” is needed. This must be done cautiously AFTER a careful backup of the current Quickbooks file. This process will remove all of the entries prior to a period specified by the user. Ideally you would keep the records for the last 4 or 5 years, and any periods before that would be archived.
To find out the size of your Quicbkooks file, log into Quickbooks, then hold down the Ctrl key and number one (Ctrl 1). A box will appear and the file size is listed on the left section of the box. The file size is listed in kilobytes (K) where 1,000K equals 1 megabyte (Mb).
Check out more Quickbooks tips here.
On July 15, 2017, an eager boatful of coworkers, family and friends of Capaldi Reynolds & Pelosi paddled in the 2nd Annual
Gilda’s Club of South Jersey Dragon Boat Festival at Lake Lenape in Mays Landing. We joined hundreds of other participants from other local organizations and businesses for a day of fellowship and a little healthy competition. Our group was able to edge out our competition and finish second in both our heats. Our time improved dramatically in our second heat. Look out next year!!
The beautiful venue enhanced the experience along with the perfect weather. In between heats there was lively music, exercise and dance performances and even an authentic Chinese Dragon Dance Show. Competition also occurred on land as well as teams pulled their hardest during the Tug of War. Our palates were satisfied as delicious food options were also offered.
Taxes on Gifts from Parents
My parents gave me a gift of $100,000. How do I pay the taxes due?
The good news is that you don’t owe any taxes on gifts that you receive. Gifts are not considered income for either federal or New Jersey income tax purposes. However, if you are making a gift, contact your accountant about any reporting requirements.
Contact us to learn more.
Spending a little bit of time thinking about your expenses for the year might lead to lower taxes. We often see taxpayers cheat themselves when it comes to the following:
- Medical expenses for themselves and their dependents. These are harder to deduct for federal income tax purposes than in the past. First you must not be taking the standard deduction and then expenses must exceed 10% of adjusted gross income (for those born before 1/1/52, 7.5%). For New Jersey, however, the threshold is 2% of New Jersey gross income. Expenses include everything from eyeglasses and hearing aids to long term care insurance. A partial list of deductible expenses can be found at:
If you use part of your home regularly and exclusively for business you may be entitled to a deduction for the expenses associated with maintaining that work space whether you are self-employed or an employee. However, for an employee expenses are deductible only if the space is used for the convenience of the employer.
This deduction is most valuable to the self-employed because it is a deduction against self-employment income. For employees the business use of a home is a miscellaneous itemized deduction, grouped with other deductions that must exceed 2% of adjusted gross income to be added to itemized deductions.
Beginning January 1, 2017 the rate drops from 7% to 6.875%. Next year there will be another decrease to 6.625%. There has been no change in the items subject to sales tax.
Periodically we will highlight a ratio or benchmark and demonstrate how you can use it to better understand your business
The disclaimer: Benchmarks and ratios, blindly applied, can be dangerous. Benchmarks can be useful in understanding areas to investigate, but it’s important to understand what’s being compared and why variances might exist.
The Ratio: Current Ratio
The current ratio is one of many financial ratios used by business analysts to assess the health of a business. The current ratio is calculated by taking a business’s total current assets (cash, accounts receivable, inventory, etc.) and dividing that by a business’s total current liabilities (accounts payable, accrued expenses, current portion of long-term debt, etc.). For example, if Calvin’s Clam Bar has $100,000 in current assets and $50,000 in current liabilities, then its current ratio is 2:1.
There are many types of IRAs. This article will discuss Traditional IRAs, Roth IRAs and non-deductible IRAs, available to individuals (or a spouse of an individual) with earned income or collecting alimony.
The first criterion to consider is your age. If you are over 70 ½ at the end of the tax year, the only IRA to which you can contribute is a Roth IRA.
If you or your spouse is covered by an employer retirement plan, there are limits to the amount that can be contributed to a traditional (deductible) IRA. If you are the covered employee, your ability to contribute to a traditional IRA begins to phase out for 2016 at $98,000 of modified adjusted gross income (AGI) and is completely phased out at $118,000 if married filing jointly. Filing separately won’t help unless your AGI is less than $10,000. However, the phase out range is $61,000-$71,000 if you’re filing single or head of household. If your spouse is covered by a retirement plan it will affect your ability to fund a retirement plan beginning at AGI of $184,000 with a complete phase out at $194,000. Filing separately again is not a viable strategy since the ability to make a contribution phases out completely at $10,000.