Accounting and Tax Services Explained

EP Caine & Associates’ Guide to Tax Extenders Ending December 31, 2013

EP Caine & Associates explains intricacies of accounting and tax services to clients so they’re never caught off guard at the year’s end. Some think that there will be no changes to expiring taxes code; that there are no accounting and tax services that individuals and businesses need to be concerned about, or need to be asking their CPA about. Think again, says Ed Caine.

There are plenty of tax and accounting issues to plan for as we near the end of 2013. And we are not discussing the Alternative Minimum Tax (alt min) as this was permanently “fixed” in January 2013 (permanently fixed, that is, until Congress decides to adjust it again). We are discussing the expiring tax extenders that appear to be set for expiration come January 1, 2014.

And by asking your CPA how changes to these current items will impact your accounting and tax services that you should be addressing, you can avoid headaches later on.

What are these extenders that impact the accounting and tax services that you may be obtaining? First a definition. These tax extenders are designed to either provide direct reductions against your gross income or are deductions you obtain after your adjusted gross income is calculated. In the past Congress have extended these provisions. Yet with a short time period left before Congress recesses, nobody knows if these provisions will be extended or if Congress will just let them lapse, let them expire.

Extenders scheduled to expire at the end of 2013 include:

• The deduction for state and local taxes. This deduction impacts not only Schedule “A” deductions but could impact sole proprietors and others who take advantage of the home office deduction.
• The deduction for mortgage insurance as qualified interest. Again, this deduction impacts not only Schedule “A” deductions but could impact sole proprietors and others who take advantage of the home office deduction.
• The deduction of qualified tuition and related expenses. This deduction that is used to arrive at adjusted gross income. The elimination of this extender is significant since this is considered an above the line deduction; hence worth more than just an itemized deduction that one commonly see on Schedule “A”.
• The deduction of educator expense. This is also an above the line deduction that educators can take. It is worth up to $250.00 to that group of taxpayers. Considering that many educators spend way more than that amount out of their own pockets (and these funds are spent helping our children, the next generation), why this may be eliminated is one I cannot comprehend.
• The Work Opportunity Credit. This is a direct credit that if qualified for helps to reduce the amount of taxes owed. Part of this credit was designed to help our veterans.
• Section “179” property (bonus deprecation). This “credit” was designed to encourage businesses to spend more on equipment. Rather than have to write off the cost of such purchases over a longer period of time, business get to “expense” these cash outflows over a shorter period. The concept was designed to stimulate the economy.

There are other extenders that individual and corporations need to address with their CPA when reviewing their specific accounting and tax services that they obtain. The key is to ask an experienced CPA how to plan the accounting and tax services they receive to take advantage of a fluid and dynamic changing environment. For more information contact EP Caine & Associates at 610-525-2933 or fill out our contact form here.