HSPG & Associates

Achieving the right balance of working capital: Working capital — the funds your company has tied up in accounts receivable, accounts payable and inventory — is a critical performance metric. During times of rising inflation and interest rates, managers search for ways to free up cash and eliminate waste. However, determining the optimal amount of working capital can sometimes be challenging. Balancing [...]

Achieving the right balance of working capital Working capital — the funds your company has tied up in accounts receivable, accounts payable and inventory — is a critical performance metric. During times of rising inflation and interest rates, managers search for ways to free up cash and eliminate waste. However, determining the optimal amou...

Attention Americans living and working abroad: The clock is ticking toward the deadline to file your federal income tax return. The due date is June 15 if your tax home and residence are outside the U.S. and Puerto Rico, or you’re serving in the military outside the U.S. and Puerto Rico on the regular tax filing date. You’ll need to attach a statement to your return indicating which situation applies. If you can’t meet the deadline, request an extension to Oct. 16, 2023, by filing Form 4868 (https://bit.ly/43BIlmG). Military members may qualify for an additional extension of at least 180 days. The IRS encourages taxpayers to remit any tax due electronically. Payments must be in U.S. dollars.

Working capital refers to the funds tied up in three key balance sheet accounts: 1) receivables, 2) payables and 3) inventory. As inflation and interest rates rise, efficient working capital management is critical. The amount your company needs depends on the costs of your sales cycle, upcoming operating expenses and current debt repayments. Essentially, you need enough working capital to finance the gap between payments to suppliers and creditors and payments from customers. There’s no magic formula for reducing working capital requirements. But we can help brainstorm ways to expedite collections, trim inventory, and postpone payables, without compromising supply chain relationships.

The IRS is renewing its efforts to alert business owners of misleading claims involving Employee Retention Credits (ERCs). Indeed, there continues to be a barrage of broadcast advertising, direct mail solicitations and online promotions about ERCs. “Aggressive promoters are wildly misrepresenting and exaggerating who can qualify for the credits,” the IRS said. In response, the IRS has increased compliance work and its Criminal Investigation division is working to identify fraud and promoters of fraudulent claims. Businesses caught improperly claiming ERCs may face action from the IRS and be subject to penalties and interest payments. For more information: https://bit.ly/43cSN49

Beware of the gray areas in accounting: Accounting and auditing standards have come under scrutiny in the wake of recent high-profile bank failures. Investigations are currently underway about what went wrong with Silicon Valley Bank and Signature Bank. But it's likely that some “gray areas” in the accounting rules were exploited to make these organizations appear more economically secure in their year-end [...]

Beware of the gray areas in accounting Accounting and auditing standards have come under scrutiny in the wake of recent high-profile bank failures. Investigations are currently underway about what went wrong with Silicon Valley Bank and Signature Bank. But it’s likely that some “gray areas” in the accounting rules were exploited to...

Financial misstatement may result from managers using the gray areas in financial reporting to their advantage. Andrew Fastow, the infamous former CFO of Enron, often speaks publicly about financial statement fraud. He recently advised the PCAOB to amend the accounting and auditing rules to help prevent corporate fraud. Instead of fixating on intentional fraudulent entries, Fastow warned that the focus should be on “fraud that occurs by exploiting loopholes for the ambiguity and complexity in the rules.” Matters susceptible to misstatement include accounting estimates and the going concern assessment. Contact us to address questions about reporting these complex matters.

You’re required to pay taxes as you earn or receive income during the year, either through withholding or by making estimated tax payments. For estimated tax purposes, there are four payment periods. The due date for 2023’s next quarterly payment is Thursday, June 15. (The first payment was due April 18, and the last two payments are due Sept. 15 and Jan. 16, 2024.) Farmers, fishermen and people whose income is earned unevenly over the course of a year may have different rules. If you don't pay enough tax during the year, either through withholding or estimated tax payments, you may owe a penalty for underpayment of estimated tax. Questions? We can help.

The IRS electronically matches the information you report on your tax return with what’s reported by others on documents such as W-2s and 1099s. If there are discrepancies, your return may be flagged for closer scrutiny by the IRS. When we prepare your return, be sure to tell us about all income, even if you didn’t receive a form. Just because you didn’t receive a form doesn’t mean the income wasn’t reported to the government. The payer may have failed to send yours, or it may have gotten lost in the mail. If you receive an incorrect 1099 or W-2, ask the payer to issue a corrected copy. In some cases, you may want to file an amended tax return. We can answer any questions.

Although many college students are off for the summer, it’s a good time to consider the education tax breaks you may be able to claim on your 2023 tax return. There are many possibilities that can help offset the rising costs of higher education, including the American Opportunity Tax Credit (AOTC). The AOTC provides a credit of up to $2,500 for post-secondary education expenses, per eligible student (not per tax return). So, taxpayers who are paying qualified expenses for more than one student may be able to take up to the full $2,500 for each one. The credit phases out at certain income levels. Contact us to learn how to get the maximum tax breaks available for your education expenses.

Have you ever discovered an overlooked deduction on a federal tax return that has already been filed? Or did you ever realize that you didn’t report income or reported too much? An amended tax return may be the answer. Amended returns generally must be filed within three years from the date you filed the original return, or within two years after the date you paid the tax, whichever is later. However, there are exceptions to this rule. For example, when it comes to amending a tax return to claim a loss for worthless investments or nonbusiness bad debts, you have up to seven years. We can answer questions about your situation.

Taxpayers who make charitable donations to tax-exempt organizations may be able to claim a deduction on their federal tax returns. However, to receive the deduction, you must donate to “qualified” organizations. To learn if the organization you’d like to make a donation to is eligible to receive tax-deductible charitable contributions, use the IRS’s Tax Exempt Organization Search tool (access it here: https://bit.ly/41or4fd). This online tool allows you to search for an organization’s tax-exempt status and filings. The IRS periodically updates its list of qualified organizations, and it just announced five organizations that are no longer eligible. Contact us with any questions.

Have you recently made energy efficient updates to your home? The IRS is reminding homeowners that they may qualify for expanded home energy tax credits under the Inflation Reduction Act. Specifically, the Energy Efficient Home Improvement Credit may provide a tax credit of up to $3,200 for homeowners who made qualified energy efficient improvements after Jan. 1, 2023. The Residential Clean Energy Credit is available to qualifying taxpayers who made investments in certain energy improvements to their homes, including solar, wind, geothermal, fuel cells and battery storage. To learn more: https://bit.ly/44GhaZa