Intuit Helps Accountants Find Freedom in the Cloud / New, Free QuickBooks Cloud ProAdvisor Program provides easier access to Intuit’s leading online accounting solutions

Intuit (INTU) today announced the launch of the Intuit QuickBooks Cloud ProAdvisor Program, a free program designed to help accounting professionals start and grow their practice using Intuit’s leading online financial and employee management solutions. The announcement was made at the 2013 Midwest Accounting & Finance Showcase in Rosemont, Ill.

A benefit of the Intuit QuickBooks Cloud ProAdvisor Program is free access to several of Intuit’s web-based products, including QuickBooks Online Accountant, Intuit Tax Online and Intuit Online Payroll for Accountants. The program also includes access to a “My Company” file in QuickBooks Online Plus for the accounting professional’s use and Intuit’s QuickBooks Online advanced product training and certification to further distinguish one’s online expertise.

“Online accounting and tax solutions are the future of the industry,” said Stephanie McGuire, tax accountant at McGuire & Associates, a CPA firm in Bozeman, Mont. focused on tax, accounting, and business consulting services for individuals, small and non-profit businesses. “The availability of this free program knocks down any remaining barriers accountants may have when it comes to using and learning Intuit’s online solutions.”

QuickBooks Online is the number one cloud accounting solution for small businesses, with 1.3 million paying QuickBooks Online users worldwide.

“'The Cloud' is no longer a new concept, it’s a necessary platform for accounting professionals to leverage in order to launch and grow their practices and better meet their clients’ needs and expectations,” said Luis Sanchez, director, North America ProAdvisor Programs, at Intuit. “It’s essential that we provide accounting professionals with access to the tools they need to serve the growing number of their small business clients using online solutions. With the QuickBooks Cloud ProAdvisor Program, accounting professionals can easily launch or move their entire practices online and experience the added flexibility and efficiencies of anytime, anywhere access.”

Everything You Need to Launch and Grow Your Online Practice

In addition to QuickBooks Online Plus and QuickBooks Online Accountant, members of this new program receive five free uses of Intuit Tax Online and one year free of Intuit Online Payroll for Accountants for one client. The Intuit QuickBooks Cloud ProAdvisor Program also includes:

• Advanced Training: Enhance your product familiarity and expertise as well as achieve certification for QuickBooks Online to make your practice stand out to clients and prospects.
• Referral Directory Listing: Attract new clients by listing your practice on the Find-a-ProAdvisor website and further differentiate yourself with QuickBooks Online certification.
• Marketing Tools: Create and launch personalized marketing campaigns for clients and prospects using Intuit’s marketing tools and co-branded templates.

Pricing and Availability

The Intuit QuickBooks Cloud ProAdvisor Program is available today and can be accessed at http://accountants.intuit.com/index-cloud-solutions.jsp. The program is free to new members. The benefits of this new Intuit Cloud program are included and available to current members of the Intuit QuickBooks ProAdvisor Program.

Xero culls personal finance product / Xero will axe a software tool designed to help people manage their personal finances.

Tom Pullar-Strecker writes: Xero will write down $700,000 after deciding to axe a software tool designed to help people manage their personal finances.

The company said 12,000 people used its personal financial management tool, Xero Personal, but it had not "taken off" as the company had hoped.

Those customers had not been included in Xero's customer tally of businesses using its cloud-based accounting product, which stood at 193,000 at the start of the month.

"A few years ago, independent personal financial management looked like a complementary space to accounting, especially for small-business owners," chief executive Rod Drury said.

"While a valuable service with many fans, we haven't seen a mass market of consumers willing to pay for PFM products. The market just hasn't taken off for any players and relies on advertising-based models that aren't our business."

Xero would "wind down" development work on Xero Personal and axe the service on November 30 next year, he said.

Xero Personal contributed $600,000 towards Xero's total annual revenues of $39 million in the year to March.

Withdrawing the product would not affect the company's forecast of posting at least 80 per cent revenue growth this year, it said.

Existing Xero Personal users would be able to continue to use the service after their annual expiry date at no additional charge until it was shut down.

"In coming weeks, information will be provided to assist customers in exporting their data and considering alternatives," Xero said.

Do the Tax Benefits of 529 Plans Outweigh Their Higher Costs?

Kailin Liu for Morningstar writes: Three case studies demonstrate that the benefits are greatest to higher-income families who live in states with generous 529 tax deductions.   Many families want to save for college, but untangling the tax benefits associated with 529 college-savings plans can be difficult. Families might have an especially hard time weighing 529 investments' higher expense ratios with their tax-free investment gains and state income tax benefits.

Of course, every family saving for college is slightly different: Families save varying amounts, invest in different ways, and are subject to different levels of federal and state taxation. Nonetheless, we sought to determine when the federal and state income tax benefits of saving for college through a 529 plan outweigh the higher costs often associated with 529s. Thus, we thought it might be useful to create case studies of three fictional families with different income levels. 

Federal Tax BenefitsBefore we get into the case studies, let's briefly review the tax benefits associated with investing in a 529, first at the federal level.

529 investments carry two layers of federal tax benefits. The first is tax-deferred compounding: Similar to investments held in IRA and 401(k) accounts, investors don't pay taxes on investment income as long as they hold the account--whether it be in the form of dividends, capital gains, or bond income. This is in contrast to income and gains from investments held in taxable accounts, which investors must pay taxes on each year. The tax rate on long-term capital gains and qualified dividends held in taxable accounts ranges from 0% to 20%, depending on income level. Meanwhile, the tax rate on short-term capital gains and bond income held in a taxable account is taxed at the investor's ordinary income tax rate, which can be as high as 39.6%.

Tax-free withdrawals for qualified college expenses are the second federal tax benefit of investing in a 529 plan. Thus, investors in 529s avoid having to pay taxes on appreciation in their investments when they begin pulling the money out of their accounts to pay for college.

The value of 529 plans' federal tax benefits depends on household income and the type of investments used for college savings (for example, how much of the portfolio is allocated to stocks and how much to bonds). Investors in low tax brackets who buy and hold capital-gains-producing assets such as equities will see less of a federal tax benefit from investing in a 529 plan than those in higher tax brackets and who therefore will owe more in taxes. Likewise, a family in a high tax bracket that invests primarily in tax-inefficient assets (such as bonds) within a taxable account will derive a much greater benefit from investing in a 529 than will a family from a lower tax bracket.

State Tax BenefitsUsually, investors in 529 plans can deduct at least a portion of their contribution amounts from their state income taxes if they invest in their own state's plan. Naturally, state tax benefits associated with 529 plans depend on where the investor lives. Some states offer quite generous 529-related tax benefits, while others offer no benefits at all.

Case StudiesTo help quantify the value of state and federal tax breaks for 529 savers with different financial and tax pictures, consider the following case studies. In all three situations, we compared the costs and benefits of investing within a 529 with investing in a taxable account for college savings. We made slightly different assumptions to measure federal tax benefits and state tax benefits.

To find federal tax benefits, we assumed the following:

• Each family contributed to one member's 529 account each year for 18 years without any changes to their income level over time.
• They make no withdrawals during the 18-year period.
• Their 529 investments gained exactly 6% per year.
• Their 529 investments were no more than 35 basis points more expensive than a comparable open-end mutual fund. (We used a 35-basis-point differential because Morningstar's 2013 529 College-Savings Plans Industry Survey found that, on average, the difference in price between 529 funds and comparable mutual funds did not exceed 35 basis points.)
• Each family has a different household income and subsequently different long-term capital gains tax rates, which we note for each family.

To find state tax benefits, we assumed the following:

• Each family contributed 5% of its household income to its 529 account. State income tax rates vary for each family based on income and are noted.

Note that we did not make any assumptions about financial aid in this article.

Family Finances: The WilsonsMyrtle and George Wilson have a combined household income of $50,000 and a state income tax rate of 3%. They will save $2,500 in their 529 account this year.

Federal Tax Benefits: The Wilsons' combined household income of $50,000 puts them in the 0% tax bracket for long-term capital gains. That means that if they bought and held investments in a taxable brokerage account, they'd owe no tax at the time of the sale when they sold the holdings to pay for college. However, any bond income, nonqualified dividends, or short-term capital gains would be taxable at their ordinary income tax rate of 15% (assuming they file jointly) in the year in which they receive them. Because 529 investments frequently have higher total expense ratios than comparable mutual funds, investing in lower-cost mutual funds held in a taxable account may make more sense from a price perspective. However, the case for the Wilsons investing in a 529 rather than a taxable account becomes stronger if they were to shift their taxable investment portfolio toward bonds and cash as college draws near, as is typically recommended. In that case, the income distributions from their investments would be added to their household's taxable income, and the federal tax benefits of the 529 would increase.

State Tax Benefits: If the Wilsons live in a state that offers a state income tax deduction for investing in their home 529 plan, the state tax savings could tip the balance in favor of using a 529 plan. Even in a state with a relatively low deduction cap of $1,000, the Wilsons would receive at least $30 (3% of $1,000) off their state income tax for their $2,500 investment. $30 back for a $2,500 investment is like a 1.2% boost to returns. Thus, that benefit outweighs the 529's higher costs.

The Short Answer for the Wilsons: The Wilsons' household income is too low to see any clear federal tax benefits from investing in a 529 plan, but state tax benefits could easily make 529 plans worth the extra cost if they choose to invest in their home state's plan.

Family Finances: The McKeesLucy and Chester McKee have a combined household income of $150,000 and a state income tax rate of 8%. They will save $7,500 in their 529 account this year.

Federal Tax Benefits: The McKees' combined household income of $150,000 subjects them to a 15% long-term capital gains tax rate. To measure the effect of this tax on their investment, suppose that they invest $1,000 per year for 18 years in a 529 account and enjoy a 6% return each year. (For the sake of this example, we'll set aside the fact that the McKees are actually contributing at a much higher level than this.) At the end of the 18 years, their ending balance is $32,760 and their investment gain is $14,760. Their withdrawals would be tax-free, assuming they used the 529 money for qualified college expenses. If they held their college savings in a taxable brokerage account that generated an identical gain, they'd owe long-term capital gains of $2,214 (their $14,760 gain taxed at their long-term capital gains tax rate of 15%), lowering their effective net balance to $30,546. This is roughly equivalent to the McKees paying 67-68 additional basis points per year in annual expenses. The McKees may also incur additional tax costs by saving for college in a taxable account if their investments kick off ordinary income, dividends, or capital gains while they're in accumulation mode. At a minimum, their total savings from the federal tax benefits would exceed 67-68 basis points per year total. Because the price differential between a mutual fund available outside a 529 and comparable funds within a 529 tends to be around 35 basis points or less, the McKees come out ahead by investing in a 529 plan.

State Tax Benefits: Because the McKees clearly get enough federal tax benefits from using a 529 plan to make it a sound choice for college savings, any additional state tax benefits are the proverbial icing on the cake. The dollar amount of the McKees' state tax benefits increases with state deduction limits. To illustrate, for their $7,500 investment they would receive at least $80 back under a $1,000 deduction limit (assuming an 8% tax rate) and at least $600 back under a $10,000 deduction limit, which add up to a performance boost of 1.07% and 8%, respectively, versus saving in a taxable account.

The Short Answer for the McKees: The McKees' household income is high enough that their savings from avoiding federal capital gains and income tax bills clearly tips the scales in favor of a 529 plan. Any state tax benefits are an added bonus.

Family Finances: The BuchanansDaisy and Tom Buchanan have a combined household income of $500,000 and a state income tax rate of 10%. They will save $25,000 in their 529 account this year.

Federal Tax Benefits: The Buchanans have the highest household income of our three families, and they also pay the highest capital gains tax rate of 20%. The Buchanans, like the McKees, are contributing more than $1,000 per year. But let's assume for illustration purposes that they invest $1,000 per year with the same 6% return as the McKees and end up with the same ending balance of $32,760. Like the McKees, they gained $14,760 from their $18,000 investment. If they held the money in a taxable account and that $14,760 were taxed at 20%, they would pay $2,952 in capital gains taxes, lowering their ending balance to $29,808. This is roughly equivalent to the Buchanans paying 91-92 extra basis points per year in annual expenses. Because the price differential between a mutual fund available outside a 529 and comparable funds within a 529 is almost never this high, the Buchanans definitely keep more of their money by investing in a 529 plan. To the extent that investments in a taxable account would subject them to additional income, dividend, and capital gains taxes on a year-to-year basis, investing in a 529 would be even more beneficial.

State Tax Benefits: Similar to the McKees' situation, any state tax benefits are an extra bonus for the Buchanans. Similarly, the dollar amount of the Buchanans' state tax benefits increases with state deduction limits. To illustrate, for their $25,000 529 contribution they would receive at least $100 back under a $1,000 deduction limit, at least $1,000 back under a $10,000 deduction limit, and at least a cool $2,500 back under a deduction limit of more than $25,000. (Only five states offer a deduction limit of $25,000 or more.)

The Short Answer for the Buchanans: The Buchanans' household income is high enough that investing in a 529 plan to avoid capital gains and income tax exposure definitely makes financial sense. Any state tax benefits are an added bonus.

Comments

1-3 of 3 Comments

islandhopper

6 hours, 4 minutes ago

• Flag

Would be interesting to test the tradeoffs between using your state fund, with tax benefits but higher expenses, with an out of state program with lower expenses.
My daughter has been contributing to a New Hampshire 529 because Vanguard offered that tied to a credit card that contributed as well.
I advised them to transfer the maximum Idaho state deductible amount to their home state of Idaho 529 over a number of years ( the Idaho max is more than they contribute annually). Does that make sense?

researcher

16 hours, 22 minutes ago

• Flag

What would the tax effect be if the assets were placed in an UGMA/UTMA account for the child until age 21, and taxes paid on the gains as withdrawals are made? Since the child will not be earning wages until their teens, would the tax benefit of the asset being in the child's name outweigh the benefit of the 529 plan?

yogibearbull

19 hours, 36 minutes ago

• Flag

Interesting that the tax benefits of 529s for low income families are marginal. Yet the 529s are promoted for contributions as little as $25/mo.

Deducting capital asset expenses / Question: I will be expanding my business in 2013 and expect to purchase a significant amount of furniture, fixtures and equipment. Will I be able to deduct all these purchases on my 2013 tax returns?

Barry Dolowich writes: Question: I will be expanding my business in 2013 and expect to purchase a significant amount of furniture, fixtures and equipment. Will I be able to deduct all these purchases on my 2013 tax returns?

Amswer: You will be able to deduct part or all of your expenditures in 2013 to help offset your income, reducing your tax obligation. The furniture, fixtures and equipment you purchased are considered capital asset expenditures subject to specific depreciation rules. Generally, the cost of these assets must be depreciated over a specified recovery period (5 or 7 years). This means that you will be claiming a depreciation deduction (spreading the cost) throughout the respective recovery periods.

However, an expense deduction is provided for taxpayers (other than estates, trusts or certain noncorporate lessors) that elect to treat the cost of qualifying property, called Section 179 property, as an expense rather than a capital expenditure.

Section 179 property includes all personal property (not real property) used in a trade or business for the production of income. A car or truck can qualify as Section 179 property. The election, generally made on Form 4562, is attached to the taxpayer's original tax return for the year the property is placed in service. Individuals (sole proprietors) attach Form 4562 to their Form 1040, and corporations and partnerships attach Form 4562 to their respective business tax returns. Employees may make the election on Form 2106, also attached to Form 1040.

The Section 179 deduction allows you to treat part or all of the cost of the equipment and furniture as an expense, rather than taking depreciation deductions over many years. As an expense, the Section 179 amount is deductible only in the year the assets are placed in service. For this purpose, "placed in service" means the year you first used the assets for business purposes.

For 2013, the tax law allows you to treat up to $500,000 of the cost of qualifying property as a Section 179 deduction. The 2013 maximum amount is reduced by a dollar for each dollar of the cost of qualified property placed in service during the tax year over $2 million. If you take the maximum Section 179 deduction of $500,000, you can still depreciate the excess cost over $500,000 of the assets over a period of years.

Most new property placed in service during 2013 also qualifies for a bonus 50 percent first-year depreciation allowance. The bonus allowance is applied to the property's adjusted basis as reduced by any Section 179 expensing for the property, and regular depreciation is applied to the property's adjusted basis after a reduction to reflect the bonus depreciation allowance.

If you dispose of the assets on which you had claimed the Section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. Any gain on the disposition of the property is treated as ordinary income up to the amount of the Section 179 deduction and any depreciation you claimed.

The total cost of property that may be expensed for any tax year pursuant to Section 179 cannot exceed the total amount of taxable income derived from the active conduct of any trade or business during the tax year (the deduction cannot create a loss). A deduction disallowed under this rule is carried forward an unlimited number of years subject to the ceiling amount for each year. Special rules also apply for assets used for both personal and business purposes.
I recommend that you consult with your tax adviser to determine the best strategy to utilize the Section 179 deduction and/or bonus depreciation.

Foreign Tax Credit Compliance Tips

The foreign tax credit laws are complex.  Below are some quick summaries of the more complex areas of the law along with links to web pages on IRS.GOV with additional helpful resources.

Foreign Sourced Qualified Dividends and Gains

If a taxpayer receives foreign sourced qualified dividends and/or capital gains (including long-term capital gains, unrecaptured section 1250 gain, and/or section 1231 gains) that are taxed in the U.S. at a reduced tax rate, the taxpayer must adjust the foreign source income that is reported on Form 1116, line 1a.  Otherwise, the allowable foreign tax credit may be significantly overstated which can trigger a substantial underpayment penalty.

Interest Expense

Interest expense must be apportioned between U.S. and foreign source income using an asset method.  See Publication 514 for more information on the asset methods.

Other Compliance Issues

• Charitable contributions are not apportioned against foreign source income.
• The amount of foreign tax that qualifies is not necessarily the amount of tax withheld by the foreign country. If you are entitled to a reduced rate of foreign tax based on an income tax treaty between the U.S. and a foreign country, only that reduced tax qualifies for the credit. 
• If a foreign tax redetermination occurs, a redetermination of your US tax liability is required in most situations. You must file a Form 1040X or Form 1120X. Failure to notify the IRS of a foreign tax redetermination can result in a failure to notify penalty.

For more details about the topics above, go to Foreign Tax Credit Compliance Tips.

Other References

Foreign Tax Credit

What Foreign Taxes Qualify For The Foreign Tax Credit?

Foreign Tax Credit - How to Figure the Credit

Foreign Tax Credit – Special Issues

Foreign Tax Credit - Choosing To Take Credit or Deduction

Retiring: Top 10 Tax-Friendly States

 KENT MCDILL writes:  Retiring: Top 10 Tax-Friendly States.  Not all retirees relocate, but for those that are thinking about it, individual state tax rates could help determine where the Baby Boomers will retire.

CNBC.com issued a list of the top 10 United States in terms of tax-friendly policies for Baby Boomers retiring in the near future. As CNBC writer Shelly Gigante noted, the states are not rated against each other because policies are so different from state to state. Instead, CNBC just selected the 10 states friendliest to retirees for whom taxes matter.

A recent Millionaire Corner study of wealthy investors found that only 41 percent of investors plan to relocate when they retire (or did so, if already retired). Of those that said they were going to move or already did so, 40 percent said taxes would be a factor in determining the location, but that several factors were more important, including weather (57 percent), cost of living (61 percent), proximity to friends and family (58 percent), and access to healthcare (44 percent).

The CNBC study noted that many states that have zero income tax still have other tax policies that make it less friendly to retirees, such as real estate or pension taxes. As a result, only three of the seven zero income tax states made its list – Alaska, Nevada and Wyoming. Not making the list were Florida, South Dakota, Texas and Washington.

In alphabetical order, the top 10 tax-friendly states for Baby Boomers retiring according to CNBC were:

Alabama – Senior citizens play no property taxes. Retirement income from Social Security is exempt. So is most income from pensions. There is no sales tax on prescription drugs, either.

Alaska – No state income tax, no state sales tax, and no state inheritance tax. How is that for starters? There is also a zero tax policy on retirement benefits, and every state citizen receives an annual federal tax payment that can reach the low four figures due to oil revenues. The drawback – it’s cold, and removed from the rest of the country, but that has nothing to do with taxes.

Delaware – The First State has no state sales tax, and a low state income tax. It’s property tax ranking is in the lowest five states in the union. There is no inheritance or estate tax, and up to $12,500 of retirement income is exempt for those 60 years of age and older.

Georgia – Did you know Georgia is the largest state east of the Mississippi? Still, the state income tax ranges from 1 to 6 percent, and no estate or inheritance tax. Also, the exemption for retirement income was recently boosted to $65,000 per individual.

Louisiana – The Pelican State has second lowest property tax rate in the nation, no Social Security tax, and no tax for government pensions. There is no estate or inheritance tax, either.

Mississippi – Mississippi is one of two states in the union – Pennsylvania is the other – which exempts all forms of retirement income from taxes. Medicare and Medicaid payments are also exempt.

Nevada – Income from retirement accounts and Social Security benefits are exempt, and there is no state income tax.

South Carolina – There is no tax on Social Security and homeowners over the age of 54 get a property tax break on the first $50,000 of the property’s market value. There is a retirement income deduction for residents 65 and older up to $15,000 per spouse. The state also has not inheritance or estate tax.

Tennessee – In 2016, the Volunteer State is going to eliminate its inheritance tax. There is no tax on income from salaries, Social Security or retirement income from IRAs or pensions.

Wyoming – Residential real estate is taxed at less than 10 percent of a property’s assessed value. There is no state income tax, and state sales tax is at 4 percent, except for groceries and prescription drugs, which have no sales tax.

From that list, Baby Boomers retiring have choices ranging from the Southeast, the East Coast, and non-coastal Western states. Oh, and Alaska.

Drupal Commerce/QuickBooks Online integrator

Drupal.org writes:  Module needed: Drupal Commerce/QuickBooks Online integrator  

Posted by jessepinho on August 26, 2013 at 4:12pm

Hi,

I need a module that will integrate Drupal Commerce with QuickBooks Online. Primarily, it will just need to push new orders into QBO as sales receipts (and create new QBO customers as necessary), and push updates to existing orders into QBO. I'm happy to discuss more specs and research I've already done for the module over e-mail. Please contact me via the contact tab in my profile. Thanks!

PS - This sandbox module may be of use, although it appears to have been developed for the desktop version of QuickBooks: https://drupal.org/sandbox/stephen.colson/1100862