Horwich Coleman Levin, LLC

We are excited to announce that Horwich Coleman Levin (HCL) has joined Wipfli LLP!

Effective today (February 1), Horwich Coleman Levin (HCL) has joined Milwaukee-based Wipfli LLP! As the result of this combination, we look forward to offering our clients expanded capabilities and solutions to address their business challenges and leverage opportunities. Please visit horwich.com for more information.

» Horwich Coleman Levin, LLC joins Wipfli LLP Chicago, Illinois (February 1, 2017 – Noon CST) — Horwich Coleman Levin, LLC (HCL), a downtown Chicago CPA and advisory firm, announced today that it has joined Wipfli LLP (Wipfli), one of the top 20 CPA firms in the United States. This combination marks Wipfli’s fourth combination in the Chicago ma...

Few changes to retirement plan contribution limits for 2017

Retirement plan contribution limits are indexed for inflation, but with inflation remaining low, most of the limits remain unchanged for 2017. The only limit that has increased is for contributions to defined contribution plans, which has gone from $53,000 to $54,000. Limits for 401(k)s, SIMPLEs and IRAs remain at $18,000, $12,500 and $5,500, respectively. Catch-up contributions (for taxpayers age 50 or older) remain at $6,000, $3,000 and $1,000, respectively. Additional factors may affect how much you’re allowed to contribute. Check with us for more details.

HCL Holiday Party!

Why making annual exclusion gifts before year end can still be a good idea

The 2016 gift tax annual exclusion allows you to give up to $14,000 per recipient tax-free without using up any of your lifetime gift tax exemption. The assets, including any future appreciation, are removed from your taxable estate. But you need to use your 2016 exclusion by Dec. 31 or you’ll lose it. While the President-elect and Republicans in Congress have indicated that they want to repeal the estate tax, it’s uncertain exactly what tax law changes will be passed. So if you have a large estate, 2016 annual exclusion gifts are still worth considering.

HCL Staff enjoying a lunch & learn about Desktop Fitness.

Thanks to Horwich Coleman Levin, LLC for having us over to give our Desktop Fitness workshop! :-)

Can you pay bonuses in 2017 but deduct them this year?

You may be aware of the rule that allows businesses to deduct bonuses employees have earned during a tax year if the bonuses are paid within 2½ months after the end of that year (by March 15 for a calendar-year company). But this favorable tax treatment isn’t always available.

For one thing, only accrual-basis taxpayers can take advantage of the 2½ month rule — cash-basis taxpayers must deduct bonuses in the year they’re paid, regardless of when they’re earned. Even for accrual-basis taxpayers, however, the 2½ month rule isn’t automatic. The bonuses can be deducted in the year they’re earned only if the employer’s bonus liability is fixed by the end of the year.

The all-events test

For accrual-basis taxpayers, the IRS determines when a liability (such as a bonus) has been incurred — and, therefore, is deductible — by applying the “all-events test.” Under this test, a liability is deductible when:

1. All events have occurred that establish the taxpayer’s liability,
2. The amount of the liability can be determined with reasonable accuracy, and
3. Economic performance has occurred.

Generally, the third requirement isn’t an issue; it’s satisfied when an employee performs the services required to earn a bonus. But the first two requirements can delay your tax deduction until the year of payment, depending on how your bonus plan is designed.

For example, many bonus plans require an employee to remain in the company’s employ on the payment date as a condition of receiving the bonus. Even if the amount of the bonus is fixed at the end of the tax year, and employees who leave the company before the payment date forfeit their bonuses, the all-events test isn’t satisfied until the payment date. Fortunately, it’s possible to accelerate deductions with a carefully designed bonus pool arrangement.

How a bonus pool works

In a 2011 ruling, the IRS said that employers may deduct bonuses in the year they’re earned — even if there’s a risk of forfeiture — as long as any forfeited bonuses are reallocated among the remaining employees in the bonus pool rather than retained by the employer. Under such a plan, an employer satisfies the all-events test because the aggregate bonus amount is fixed at the end of the year, even though amounts allocated to specific employees aren’t determined until the payment date.

Additional rules and limits apply to this strategy. To learn whether your current bonus plan allows you to take 2016 deductions for bonuses paid in early 2017, contact us. If you don’t qualify this year, we can also help you design a bonus plan for 2017 that will allow you to accelerate deductions next year.

Ensure your year-end donations will be deductible on your 2016 return

To ensure charitable donations will be deductible on your 2016 return, you must make them by Dec. 31. A donation generally is “made” at the time of its “unconditional delivery.” The delivery date depends in part on what you donate and how you donate it: for a check, the date you mail it; for a credit card, the date you make the charge; for a stock certificate, the date you mail the endorsed stock certificate to the charity. Many additional rules apply, so contact us if you have questions about the deductibility of a gift you’ve made or are considering making.

There’s still time to benefit on your 2016 tax bill by buying business assets

Section 179 expensing allows businesses an immediate deduction for the cost of eligible asset purchases, rather than depreciating them over a number of years. For 2016, the maximum deduction is $500,000. It begins to phase out dollar-for-dollar when total asset acquisitions for the tax year exceed $2,000,000. To qualify, you must place assets in service by the end of the year. So there’s still time to make purchases and benefit on your 2016 tax return. Sec. 179 can be used for equipment, software and more. We can help you maximize depreciation deductions.

http://chicago.suntimes.com/news/cooking-up-change-competition-healthy-schools-campaign/

'Cooking up Change' competition crowns its 10th winner The Cooking up Change program was launched by the Healthy Schools Campaign in Chicago in 2007. Since then, it has expanded to include 20 other cities.

Year-end tax strategies for accrual-basis taxpayers

Accrual-basis taxpayer? One way to save tax is to properly record and recognize expenses that were incurred this year but won’t be paid until 2017 so you can deduct them on your 2016 tax return. Common examples include commissions, salaries, wages, payroll taxes, advertising, interest, utilities, insurance and property taxes. Also review prepaid expense accounts and write off any items that have been used up before the end of the year. Consult us for more details on how these and other year-end tax strategies may apply to your business.

Are you paying more income tax than necessary? Everybody pays more tax than they like. But nobody wants to pay more than necessary. To minimize your tax liability you need to plan carefully and take advantage of all deductions, credits and strategies tax law allows. This is exactly what our tax planning guide can help you do. So visit our website and look through the guide. Then contact us to talk about ways to lighten your tax burden and better achieve your financial objectives.

http://horwich.com/resource-center/tax-notes/

» Tax Notes Tax Notes HCL Tax Planning Guide With tax increases going into effect for many higher-income taxpayers this year and continued uncertainty about the economy, tax planning is more important than ever. You need to proactively look for ways to reduce your taxable income and take advantage of every tax…