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What Is A CPA?

What Is A CPA

A Certified Public Accountant or CPA is a financial advisor is someone that has passed the CPA certification exam, meets work experience requirements and stays up to date on educational courses required to maintain their CPA certification.

Types Of CPAs

  • Tax Consultants
  • Accounting Consultants
  • Financial Consultant
  • Bookkeepers
  • Business & Tax Advisors
  • Enrolled Agents
  • Decision Makers

Are Accountants & CPAs The Same Thing?

The short answer is no. All CPAs are accountants but not every type of accountant is a CPA. The main difference between a CPA and an accountant is the certification. CPA has to have the right education and experience requirements to become a certified CPA.

What Does A CPA Do?

CPAs have many jobs they can have including working for small to large accounting firms, as a CFO for a fortune 500 company and more. Simply stated, A CPA is a financial advisor with experience in helping individuals and business reach their financial goals. These goals could be anything from planning a billion dollar merger to opening a new office.

Need A Certified CPA in Arizona?

If you are looking for a certified public accountant in Arizona, Partridge & Associates can help! We have helped 1000’s of individuals and businesses throughout the Arizona area with business formationaccounting & bookkeeping, personal and business tax preparation (including small business), IRS representation and more.

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The Tax Cut and Jobs Act of 2017

Tax Cuts & Jobs Act of 2017

  • The President signed the biggest tax reform law in over 30 years
  • Most of the changes will take place in 2018, expire after 2025
  • Your tax return could look very different
  • In many business areas, the computation will be very complex and will require on-going accounting and planning prior to year-end to maximize your tax savings

Small Business Tax Return Changes

  • There could be up to a 20% deduction for individual owners of-flow through” businesses (sole proprietors, LLCs (excluding C corporations), partnerships, S Corporations, renal activity and REITS) on qualified business income. The new IR Code Section 199-A is very comprehensive and is not always easily understood. Because of its complexity and difficult interpretation, it is highly advised to consult with a tax professional – before the end of the year.
  • The new corporate income tax rate will be a flat 21% (permanent)
  • The business deduction for entertainment is eliminated
  • The 50% meals deduction now includes meals on the employer’s premise
  • Many more and enhanced business asset write-off options (including increased Section 179 deduction)
  • New Net operating rules eliminating the two-year carry back and the percentage of the loss carried forward.

Individual Tax Return Changes

  • Tax brackets have been expanded-ranging from 10% to 37% (lower top rate). There are no changes in the tax rates for long-term capital gains and dividends
  • The is no longer a deduction of personal and dependent exemptions
  • The maximum child credit is increased to $2000 per qualifying child (up to $1400 refundable) with higher income limits to qualify
  • You will no longer be able to deduct state and local taxes above $10,000 per year
  • There is a limit on new home mortgage interest deductions limited to %750,000 and home-equity loans not used to purchase or substantially improve the home are eliminated.
  • Member of American Institute of Certified Public Accountants and Arizona Society of Certified Public Accountants
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IRS Meals and Entertainment Expense Deduction Changes In 2018

IRS Meals and Entertainment Expense Deduction Changes In 2018

If you are searching for “entertainment expense deduction 2018” or “IRS meals and entertainment 2018“, this guide should help! The Tax Cuts and Jobs Act of 2017 made big changes to the expense deductions of entertainment and business meals starting in 2018.

Entertainment Expense Deduction Changes in 2018

The new meals and entertainment tax act does not allow entertainment expense deductions. Before this new tax act came into place on Dec. 31, 2017, you were allowed to deduct 50% of your entertainment expenses.

This means that any entertainment expenses paid or incurred after Dec. 31, 2017 are no longer tax deductible.

Meal Expense Deduction Changes In 2018

The meal expense deduction changed in 2018 as well where the IRS is only allowing businesses to deduct 50% of their meal deductions, vs. 2017, where you could deduct 100% of meals provided to employees.

Entertainment & Meal Expense Deduction Changes Under Tax Reform

Event

(Old rules) 2017 Expenses

(New rules) 2018 Expenses

Office Picnic or Holiday Party 100% deductible 100% deductible
Business Meals with Client If tax payer is present 50% deductible (not extravagant or lavish) If tax payer is present and business is conducted 50% deductible (not extravagant or lavish)
Meals Related To Entertainment 50% deductible 0% Deduction (No deduction if business is not conducted)
Transportation to or from Restaurants For Client Business Meals 100% deductible 100% deductible
Tickets For Sporting Events 50% deductible of the face value

50% deductble of skybox expenses

100% deductible for charitable sporting event tickets

80% deductible for tickets to an education atletic event

50% deductible for any transportation to or from parking spots at sporting events

0% Deduction

0% Deduction

0% Deduction

0% Deduction

0% Deduction

Memberships To A Club Club dues offer no deduction while 50% deduction is allowed for expenses incurred at any club organized for pleasure, business, recreation or other puposes if related to business 0% Deduction
Meals That Are Provided For The Convenience Of The Employer 100% deductible if they are excludible the an employees’ grose income as “de minimis fringe benefits” 50% deductible (0% deduction after 2025)
Meals Occasionally Provided To Employees & Meals During Overtime 100% deductible if they are excludible the an employees’ grose income as “de minimis fringe benefits” 50% deductible (0% deduction after 2025)
Snacks, Coffee & Water at the Office 100% deductible if they are excludible the an employees’ grose income as “de minimis fringe benefits” 50% deductible (0% deduction after 2025)
Meals Provided In Office During Meetings of Directors, Agents, Stockholders or Employees 50% deductible 50% deductible
Business Travel Meals 50% deductible 50% deductible
Business League Event, Coference or Seminar Meals 50% deductible 50% deductible
Meals provded in a Charitable sports Package 100% deductible 50% deductible
Meals Provided As Taxable Compensation to Independent Contractor or Employee 100% deductible 100% deductible
Meals Expenses Sold to a Customer or Client (or Reimbursed) 100% deductible 100% deductible
Free Food Offered To Public 100% deductible 100% deductible

Meal & Entertainment Expense Documentation

Under the previous law, in order for a business to be able to deduct expenses for meals and entertainment, the expenses must have been directly associated with or related to active conduct of business or trade, or for the collection or production of income.

Under the new deductible rules this requirement will essentially remain the same, although in a different form that states that meals expenditures must be deductible. However, this requirement no longer applies to entertainment expenses as those expenses have been repealed altogether. This repeal will also eliminate deduction for meals if they are entertainment related.

Meals centered around entertainment fall under the purview of expenses when the activity centers around entertainment (In simpler words, just because the expenditure is a meal does not exclude it from the broader entertainment designation). Because these new rules treat entertainment related meals differently, it may be wise to establish a new information management system or documentation procedure to account for each category separately. Business meals are only deductible if they are not extravagant or lavish, and if the actual taxpayer is present with the client.

For example, it is important to make sure you conduct business with the client to be deductible, and distractions might prevent the business argument (e.g., meal expenses at cocktail lounges, night clubs, country clubs, athletic clubs, vacation, fishing or similar trips

50% Deductible Meal & Entertainment Expenses 2018

The following business expenses are 50% deductible:

  • Expenses for meals during business meetings of directors, agents, stockholders and employees. Partner meetings and office meetings now fall into this category. If there is no business conducted during the meal, it is non-deductible
  • Generally speaking, any meals during business travel, if they can be considered personal (not related to the function of the business trip) then a portion of the personal meals will be non-deductible.
  • Meals at seminars, conventions, or any other type of meeting, even if the meal cost isn’t separated from the event cost. If the cost is not separated, it must be calculated based per diem rates of that location or reasonableness.
  • Meals with other people related to businesses such as vendors, customers and clients as long as there is some benefit to the business and the tax payer is present (also not extravagant or lavish)

Meals that were 100% deductible that changes to 50%:

  • Meals provided to employees on employer’s premises to more than 1/2 the employees (for the convenience of the employer), and meals provided to employees to enable them to work overtime, weekends etc. These meals satisfy the de minimis fringe benefits 
  • Snacks at the office – donuts, bottled water, soft drinks, coffee and other beverages or snacks provided on the employer’s premisis 
  • Meals provided as a package of charitable sports tickets

100% Deductible Meal & Entertainment Expenses 2018

Meals provided for a company holiday party or picnic

Food used as part of a promotional campaign where it is given to the public for free

If the meal that is provided for the independent contractor or employee is included as taxable compensation and included on form 1099 or W-2, the expenses is 100% deductible to the employer.

Meals sold to a customer or client

Read more about how the new tax law affects you.

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Do I Need A CPA? Why Hiring A CPA Firm Is A Good Decision

Do I Need A CPA

Do I Need A CPA? Yes, absolutely you need a CPA if you want to save money, prepare your taxes correctly, plan your retirement & more.

One of the biggest reasons you need a CPA is for business taxes. A CPA can represent your business before the IRS if there is ever an audit, while an accountant can only help with IRS in a limited manner.

Here are most of the reasons why you need a CPA:

  1. To Stay Current With Tax Law
  2. To Lower Your Audit Risk
  3. To Report Income Correctly
  4. For Starting A Business
  5. Filing Taxes
  6. To Reduce Taxes
  7. To Stay Current With Tax Benefits
  8. To Avoid Making Mistakes
  9. For Help With Filing Back Taxes
  10. To Save Lots Of Money

1. To Stay Current With Tax Law

CPAs or Certified Public Accountants can help you stay current with tax law.

For example: Meal and entertainment expense deductions changed this year. In 2017 you could write of 50% of meals and entertainment. Well, that law changed in 2018 and entertainment is no longer tax deductable.

Just knowing this fact at the beginning of the year could help you avoid spending thousands on entertainment only to find out at the end of the year that they are not tax deductible.

2. To Lower Your Audit Risk

Business owners earning $200,000 or more per year are far more likely to receive an audit. Having a certified public accountant on your side during an audit can be extremely valuable.

3. To Report Income Correctly

It’s not that tough to file taxes when you only have one W-2. Reporting everything to the IRS correctly if you have multiple sources of income can be confusing. Certified public accountants are trained to handle these scenarios with ease.

4. For Starting A Business

CPAs can help with starting a business, business formations, registering businesses and developing accounting systems. Furthermore, they can also help with obtaining business licenses, and finding business insurance.

5. Filing Payroll Taxes

Not only can CPAs help with starting a business but they can also help you with filing taxes for you and your employees. They can help with income taxes (W-2, W-4 forms), Employee eligibility forms (I-9), reporting of new hires to the ANHRC and more.

6. To Reduce Inheritance Tax

If you own a large sum of money or property, you should know that inheritance taxes can cost you! A CPA will advise you of current tax law and help reduce taxes for the present and the future.

7. To Stay Current With Tax Benefits

Did you know that making a large financial gift might be tax deductible. A CPA can help you understand what kinds of gifts or charitable acts are tax deductible so you can help others and save money at the same time.

8. To Avoid Making Mistakes

If you are not that good with numbers, getting a CPA is one of the smartest decisions you can make. Accountants are number gurus! They will help you catch mistakes you’ve made and fix them for you.

9. For Help With Filing Back Taxes

If you owe the IRS back taxes, contact a CPA immediately as they can help you negotiate with the IRS to lower your tax debt and come up with a payment plan to get it paid back. It’s not as scary dealing with the IRS when you have a certified public accountant on your side.

10. To Save Lots Of Money

The most important reason to hire a CPA is because they can save you lots of money. A certified public accountant are great when it comes to business planning, preparing business taxes and retirement planning. Set your business up for success by hiring a CPA today!

Partridge & Associates Are The CPA’s For You

Our CPA firm has over 35 years of tax and accounting experience and has served thousands of businesses and families throughout the Scottsdale and Phoenix areas. We are proud that our CPA firm has the highest standards of education, training and expertise available. We are pleased to say that we are one of the most creative and dynamic CPA firms in tax planning and strategies.

Written by David Thomas

Victims of a Disaster, Fire or Theft May Be Able To Claim a Casualty Loss Deduction

If you suffered damage to your home or personal property last year, you may be able to deduct these “casualty” losses on your 2016 federal income tax return. A casualty is a sudden, unexpected or unusual event, such as a natural disaster (hurricane, tornado, flood, earthquake, etc.) fire, accident, theft or vandalism. A casualty loss doesn’t include losses from normal wear and tear or progressive deterioration from age or termite damage.

Here are some things you should know about deducting casualty losses:

When to deduct. Generally, you must deduct a casualty loss on your return for the year it occurred. However, if you have a loss from a federally declared disaster area, you may have the option to deduct the loss on an amended return for the immediately preceding tax year.

Amount of loss. Your loss is generally the lesser of 1) your adjusted basis in the property before the casualty (typically, the amount you paid for it), or 2) the decrease in fair market value of the property as a result of the casualty. This amount must be reduced by any insurance or other reimbursement you received or expect to receive. (If the property was insured, you must have filed a timely claim for reimbursement of your loss.)

$100 rule. After you’ve figured your casualty loss on personal-use property, you must reduce that loss by $100. This reduction applies to each casualty loss event during the year. It doesn’t matter how many pieces of property are involved in an event.

10% rule. You must reduce the total of all your casualty or theft losses on personal-use property for the year by 10% of your adjusted gross income (AGI). In other words, you can deduct these losses only to the extent they exceed 10% of your AGI.

Have questions about deducting casualty losses? Contact us!