3 Often Overlooked Real Estate Tax Breaks

Trulia for Forbes writes: Lots of people make lots of moves – real estate and otherwise – to minimize what they owe and maximize what they get back on their taxes. The first step is to make sure you’re not actually missing any tax deductions and breaks you already qualify for. The tax code is 4 million words and over 70,000 pages long, but most Americans tap into fewer than 15 pages of it when filing their returns. To make sure we’re not missing anything we’re due, here are a few of the real estate-related tax breaks that are often missed, overlooked and underused.

1. State and Local LOCM +1.53% Tax Breaks for Green Home Improvements.  As the recession recovery made it’s way into full swing in 2013, many homeowners began embarking down a path of improving their home’s energy efficiency for a variety of reasons, including cash savings on their utility bills. Many of those improvements are eligible for state, county and/or city tax credits or tax breaks. If you installed dual-paned windows, insulation, low-flow plumbing appliances, tankless water heaters or solar panels in 2013, dig up your receipts and talk with your tax preparer or visit your state, county and city government websites to research tax advantages you might already be eligible for.

2. Mortgage Interest Tax Break. Many homebuyers expressly call out the mortgage interest tax deduction as a major motivation behind their desire to own a home. Proof: in a survey conducted by the California Association of Realtors(R), 79 percent of people who bought a home in 2012 said the mortgage interest and property tax deductions were “extremely important” to their decision to buy. However, it’s shocking the amount of homeowners who still don’t take the mortgage interest deduction every year! According to the American Institute for Economics Research, only about 63 percent of home owners itemize deductions – a pre-requisite to taking the mortgage interest deduction and its cousin, the property tax deduction.

There are many reasons why homeowners don’t take advantage of this tax break – one being their income tax liability is simply so low that itemizing their tax deduction doesn’t pencil. That just means that some people’s holistic financial picture, including the income they earn and the mortgage interest they deduct, renders the standard deduction larger than the tax break they would receive by virtue of the mortgage interest and other itemized deductions. However, many homeowners who could be eligible for great benefits from itemizing don’t fully appreciate or simply don’t feel up to the task of determining whether they have sufficient non-mortgage related deductions to itemize, so they do their own taxes and just take the standard interest deduction to minimize the work.

If you have a high mortgage or property tax bill, it might be obvious that itemizing makes sense. But if not, you owe it to yourself – and your bank account – to at least try working with a tax preparer or committing to spend the time and energy it takes to explore the question of whether itemizing makes sense.

3. CODI Income Tax Exemptions. Again, 2013 was a year in which many homeowners – or former homeowners – took pains to use their newly stable incomes to heal the financial wounds of the recession. For many, this involved settling debts with former lenders on homes that were foreclosed, short sold or even retained with defaulted second loans or home equity lines of credit.

Normally, defaulted mortgage debt that is forgiven through a foreclosure, short sale, deed in lieu of foreclosure or settlement via partial payment is actually charged to a taxpayer as income. It’s called Cancellation of Debt Income, or CODI. Under the 2007 Mortgage Debt Forgiveness Relief Act (“the Act”), though, the IRS has temporarily exempted CODI from incurring income tax liability for as many as 100,000 home owners a year, to avoid penalizing home owners for these sorts of settlements and resolutions to upside-down home mortgages.

The Act expired on December 31, 2013 (though talks are ongoing about extending it into this year). If you were one of the hundreds of thousands of American home owners who was able to close a short sale or settle a defaulted home loan in 2013, chances are good that you are eligible to tax advantage of the CODI tax break when you file your 2013 return.

Intuit Supports Dave Camp Tax Simplification Proposal

Intuit Inc. (Nasdaq: INTU) today issued the following statement in support of House Ways and Means Committee Chairman Dave Camp’s proposal to simplify the U.S. tax code.

It can be attributed to Brad Smith, Intuit president and chief executive officer.

“As a company that tackles the current tax code on behalf of 26 million Americans each year, we know how complex the tax code can be. Tax reform should be focused on simplifying the tax code and making it easier for individuals and small businesses to understand their taxes.

“We commend Chairman Camp and the House Ways and Means Committee for their efforts to address the daunting task of tax simplification and reform. Intuit is committed, like the chairman, to see the tax code simplified, reducing the burden on American taxpayers and small businesses. This is a national policy imperative and Intuit looks forward to working with him and other policymakers of both parties across the Congress as the tax reform process moves forward.”

IRS Continues Smooth Start to Filing Season (Statistics)

The IRS announced today that, three weeks into the filing season, it has received about one-third of the individual income tax returns that it expects to receive during 2014. The IRS has processed almost 98 percent of the 49.6 million returns received so far. Each week this filing season, the IRS has processed a greater percentage of the returns received than during comparable weeks last year.

More taxpayers are filing their returns electronically this year. Overall, 46.6 million returns have been e-filed this year, up one percent from the same time last year. As in prior years, the greatest increase is among individuals filing from their home computers. Almost 22 million returns have been e-filed from home computers this year, an increase of almost 7 percent compared to the same time last year.

The IRS has issued more than 40 million tax refunds this year, an increase of more than six percent compared to the same time last year. Almost 90 percent of these refunds were directly deposited into taxpayers’ accounts.

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2014 FILING SEASON STATISTICS
Cumulative statistics comparing 2/22/13 and 2/21/14
Individual Income Tax Returns:	2013		2014		% Change
Total Receipts	49,448,000		49,558,000		0.2
Total Processed	42,837,000		48,335,000		12.8
E-filing Receipts:
TOTAL	46,149,000		46,641,000		1.1
Tax Professionals	25,618,000		24,687,000		-3.6
Self-prepared	20,531,000		21,954,000		6.9
Web Usage:
Visits to IRS.gov	155,167,572		145,881,766		-6.0
Total Refunds:
Number	38,042,000		40,389,000		6.2
Amount	$113.738	Billion	$125.831	Billion	10.6
Average refund	$2,990		$3,116		4.2
Direct Deposit Refunds:
Number	34,618,000		35,694,000		3.1
Amount	$107.228	Billion	$112.628	Billion	5.0
Average refund	$3,097		$3,155		1.9

How Tax-Efficient Is Your Mutual Fund? / A few basic metrics can guide you.

Morningstar.com writes:  Tax frenzy may reach a fever pitch in April, but it's a mistake to only consider your tax bill around tax time. Whether you're just starting out or are a longtime investor looking to make changes to your portfolio, understanding a fund's tax efficiency can mean more money in your pocket in the long run. Below we'll take a look at some basic metrics that will help you gauge how tax-friendly a fund is.

What Taxes Are You Paying?

Fund investors are at a disadvantage when it comes to taxes. Stock investors pay taxes on an investment only if they have pocketed dividends or income or have sold the fund for a profit. Exchange-traded funds that track broad swaths of the market have also been quite tax-efficient over time.

But investors in conventional mutual funds can get stuck with a tax bill on their mutual fund holdings, even if they've lost money since they've held the fund. Like all investors, fund investors have to pay taxes on dividends from stocks and interest from bonds, and they also have to pay taxes on all fund distributions, including capital gains, which occur when a fund manager sells an underlying holding for more than its purchase price. 

So, what's the best way to gauge how hard a fund will be hit by taxes? High turnover can be a signal that a fund might not be tax-efficient. That's not the only thing to look at, though. Pull up a fund on Morningstar.com and click on the Tax tab on the navigation bar at the top of the page to get a glimpse of a fund's tax profile.

Tax-Adjusted Return

One of the quickest ways to understand a fund's tax implications is to compare its pretax return with its tax-adjusted return. The tax-adjusted return accounts for a fund's capital gains, dividends, and interest during the period, but it doesn't include tax consequences from selling the fund in the future. Note that Morningstar.com uses the highest federal tax rate when dealing with short-term capital gains, interest income, and nonqualified dividends (currently 43.4%, including the 3.8% Medicare surtax) and the 23.8% rate (with the surtax) for long-term capital gains and qualified dividends.

State and local taxes aren't included in the calculation because they vary across the country. The tax-adjusted return also factors in sales charges that you pay from buying the fund, so you can get a sense of how much money you're losing to fees and taxes when comparing it with the pretax return.

Meanwhile, the "% rank in category" helps you see how a fund's tax-adjusted return stacks up against its peers. It works in the same way as the category rank for total returns: A ranking of 1 is most desirable and means that the fund's tax-adjusted return is at the top of the category while 100 means it's at the bottom. It's worth noting that a fund can have a good tax-adjusted return not because it's been tax-efficient but simply because it has a high pretax return. However, you'll want to be careful about funds with big gaps between their pretax and tax-adjusted returns.

Morningstar.com provides tax-adjusted returns for several time periods, including three-, five-, and 10-year periods. Although longer time periods are generally more meaningful when it comes to evaluating funds' performances and characteristics, in some cases it might be useful to look at the shorter time periods. For example, many funds have had very low or even negative returns during the past five years, making the tax statistics less valuable simply because capital gains have been few and far between and funds have had capital losses to offset their meager gains.  

Tax-Cost Ratio

Another useful metric is tax-cost ratio, which measures how much a fund's annualized return is reduced by the taxes investors pay on distributions. Morningstar calculates the tax-cost ratio in-house on a monthly basis, using load-adjusted and tax-adjusted returns for different time periods. 

Think of tax-cost ratio as you would an expense ratio: The lower it is, the easier a fund is on the wallet if you own it in a taxable account. A tax-cost ratio of zero means that the fund didn't pay out any taxable distributions for the period. That's not to say that you should buy a fund just because its tax-cost ratio is low or zero, however. It could have plenty of other things wrong with it, such as poor management, a bad record, or high fees.

On the flip side, many good funds pay out distributions, so you shouldn't necessarily avoid a fund just because it has a tax-cost ratio. Just be careful to keep funds with high tax-cost ratios in nontaxable accounts such as 401(k)s and IRAs.

Potential Capital Gains Exposure

Whereas tax-adjusted returns and tax-cost ratios look at funds' tax efficiency in the past, a fund's potential capital gains exposure helps you gauge how big of a future tax bill you could possibly face. It measures how much a fund's underlying holdings have appreciated in value, adding up capital gains that haven't yet been distributed to the fund's shareholders and dividing that number by the fund's total net assets.

A positive PCGE means some of the fund's investments have gone up in value and could cost shareholders come tax time if the manager sells any of those securities and distributes the gains to shareholders. A negative PCGE means the fund's underlying holdings have lost money, so taxes shouldn't be an immediate concern.

PCGE is especially important for investors looking to buy a new fund. If a fund has a high PCGE, investors can get stuck paying taxes on capital gains that occurred before they were even shareholders. On the other hand, funds with negative PCGEs may be tax-efficient because the losses can offset future gains.

It's helpful to look at a fund's turnover alongside its PCGE. A fund with high turnover (generally more than 100%) could chew through its tax losses pretty quickly, lessening the tax benefit.

You can subscribe to Morningstar here.

Seven Facts about Dependents and Exemptions

There are a few tax rules that affect everyone who files a federal income tax return. This includes the rules for dependents and exemptions. The IRS has seven facts on these rules to help you file your taxes.

1. Exemptions cut income.  There are two types of exemptions: personal exemptions and exemptions for dependents. You can usually deduct $3,900 for each exemption you claim on your 2013 tax return.

2. Personal exemptions.  You can usually claim an exemption for yourself. If you’re married and file a joint return you can also claim one for your spouse. If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer.

3. Exemptions for dependents.  You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative that meets certain tests. You can’t claim your spouse as a dependent. You must list the Social Security number of each dependent you claim. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information, for rules that apply to people who don’t have an SSN.

4. Some people don’t qualify.  You generally may not claim married persons as dependents if they file a joint return with their spouse. There are some exceptions to this rule.

5. Dependents may have to file.  People that you can claim as your dependent may have to file their own federal tax return. This depends on many things, including the amount of their income, their marital status and if they owe certain taxes.

6. No exemption on dependent’s return.  If you can claim a person as a dependent, that person can’t claim a personal exemption on his or her own tax return. This is true even if you don’t actually claim that person as a dependent on your tax return. The rule applies because you have to right to claim that person.

7. Exemption phase-out.  The $3,900 per exemption is subject to income limits. This rule may reduce or eliminate the amount depending on your income. See Publication 501 for details.

You can get Publication 501 at IRS.gov or order it by calling 800-TAX-FORM(800-829-3676). Use the Interactive Tax Assistant at IRS.gov to find out if a person qualifies as your dependent.

Additional IRS Resources:

• Interactive Tax Assistant
• Publication 501, Exemptions, Standard Deduction, and Filing Information

Rapid cloud-computing growth boosts MYOB numbers

Paul Smith for Australian Financial Review writes: Accounting software maker MYOB has flagged rapid growth in its cloud-computing business and ongoing investment in product development as key contributors to an annual result which showed increased revenue and an improved profit performance on the previous year.

The company, which has become embroiled in an increasingly heated battle with sharemarket darling Xero for the lucrative small business technology market, reported an annual net loss after tax of $14.1 million, a 5 per cent improvement on the $14.8 million loss in 2013.

This came on the back of revenue of $246.6 million, up 13 per cent on the previous year.

The loss was explained by chief financial officer Richard Moore as being a result of the need to amortise expenses related to previous acquisitions.

The company also reports an adjusted net profit figure, which he said it uses internally to judge progress.

On this metric, MYOB reported a net profit of $28.9 million for the year, up 6 per cent from $27.2 million the previous year.

MYOB chief executive Tim Reed said it had been a transformational year for the company as it passed a landmark figure of 20 per cent of users moving onto its cloud-based products.

He also said its $NZ136 million ($126 million) acquisition of New Zealand-based BankLink had performed better than expected, and had contributed materially to the company’s performance.

The financial results announcement came a fortnight after the company announced a range of new products, including PayDirect, a mobile app, which lets business owners take card payments, send receipts and manage their invoicing and contacts on a smartphone.

Mr Reed said the number of customers using the cloud-hosted version of the company’s product had increased from 7 per cent last year to 22 per cent at present.

In addition, half of all new product registrations were for its cloud products, up from 25 per cent a year earlier.

“Generally in technology adoption curves, once you pass that 20 per cent point, uptake tends to start moving more rapidly and we expect to see the pace of that uptake increase in our install base,” Mr Reed said.

Acknowledging the need to invest in research and development in a bid to ward off competition, he said MYOB had increased spending in this area by 20 per cent to $36 million.

He said continuing investment in improved mobile offerings would continue in 2014.

MYOB boosts full-year earnings as cloud take-up increases

MYOB has strengthened its position as New Zealand’s leading business solutions provider by lifting revenue for the year to December 2013 by 13% to A$246.6m and delivering EBITDA of A$120.9m, up 14%.

Today’s financial results announcement arrives one fortnight after the company announced it will launch a series of innovative cloud solutions in 2014 for businesses and their advisors.

In FY2013 MYOB maintained its cash conversion rate at more than 80%, with strong cash flow generation and continued improvement in debt covenants. Operating expenses increased by 10% due to ongoing investment in cloud innovation - at its core, making cloud accounting easy for every business - the acquisition of BankLink and rapidly growing the MYOB sales/support team to meet rising client demand for an expanding product suite.

CEO Tim Reed said the strong full-year result was driven by the company’s strength across all accounting platforms and client groups coupled with a healthy contribution from the BankLink business acquired in mid-2013.

"The evolving needs of small and medium businesses have driven a significant increase in sales of our cloud accounting solutions, which now account for half of all new product registrations. That has grown significantly in the past year, up from 25% one year ago," he said.

"While we believe cloud technology provides tremendous benefits to SMEs, different businesses have different needs. That is why we pride ourselves on offering a choice of cloud solutions, starting with MYOB Essentials, which is great for those new to accounting software, and MYOB AccountRight, which makes it easy for businesses to move from the desktop to the cloud. We have also invested in innovative mobile solutions, and are confident all our solutions offer better value than alternatives.

"I believe it is this combination of making it easy, enabling on-the-go business and delivering better value that has led to such a rapid adoption of our online accounting solutions by existing clients."

Key FY2013 Highlights Strong growth driven by BankLink acquisition contribution and cloud subscription uptake:

Revenue of A$246.6m and EBITDA of A$120.9m, up 13% and 14% respectively

Recurring revenue increased to 92% of total revenue, up from 88%

Strong cash flow conversion (80%+) Debt covenant metrics continue to improve

22% of paying base now actively use cloud files, up from 7% 52% of all new product registrations in December 2013 were for cloud accounting, up from 25% in December 2012

Ongoing investment and innovation in talent and new generation products:

Investment in research and development of A$36m, up 20%

Strategic increase in sales force to support MYOB product launches

Staff headcount increased to 1,000, up 18%

Forthcoming release of MYOB PayDirect mobile payments app as a category first

Increased focus on micro business with BankLink and upcoming launch of MYOB Essentials

Supporting approx. 1.2 million businesses and 40,000+ accountants and other partners in Australia and New Zealand, MYOB generated more than 2.5 times the revenue of its nearest competitor.

Along with last year’s acquisition of renowned accounting solutions provider BankLink, MYOB introduced an application programming interface (API) for its cloud-enabled desktop product for SMEs, AccountRight Live, and another for its business management solution for mid-sized businesses, EXO Business. It also launched conversion services for potential clients to easily switch from a competitor accounting solution.

Natasha McDowall, director of accounting firm Tael Solutions, said, "In the last six to 12 months people had started to move back to MYOB because MYOB products have more features for a lower price."

In 2014 MYOB will broaden its cloud-based business management offering for SMEs and accountants, including launching a mobile payments app, an app that integrates deeply with AccountRight Live and an API for LiveAccounts, its browser-based accounting solution for start-ups and smaller businesses. It will also continue enhancing its existing products as it expands its software development and in-field teams (the latter increasing on what is already the industry’s largest) and increases its market-leading research and development investment.

Mr Reed said MYOB was in a strong, sustainable financial position as it grows its client base and continues to deliver superior innovative products and services.

"In servicing 1.2 million client businesses and over 40,000 accountants and other partners across Australia and New Zealand, we already generate more than two-and-a-half times the revenue of our nearest competitor. And we have the largest professional partner network across both markets," he said.

"In 2014 we’ll meet the needs of micro, small and mid-sized businesses even further by developing and taking to market cutting-edge, easy to use solutions that provide great value to business owners. We’ll ensure they have what the need at their fingertips whether they’re working from the office, at home, in a café, on the road or elsewhere."

Even Though IRS Executives Do Not Know It, Employee Travel Reimbursements Can Be Taxable

Kevin E. Packman for Holland & Knight writes: On Tuesday, February 18, 2014, the Treasury Inspector General for Tax Administration (TIGTA) issued a report reviewing the long-term travel of certain IRS executives and found that nine of the thirty one executives whose records they studied made mistakes on their taxes.¹ The mistakes pertained to the taxability of travel reimbursements they received. The IRS was found to have failed to apply its own rules to long-term taxable travel of its executives. As a result, the IRS failed to withhold the appropriate amount of taxes on the travel reimbursements to these executives, and the executives failed to pay the correct tax. The issuance of the report is a wonderful time to remind taxpayers that not all business travel related reimbursements are tax free or deductible for self employed taxpayers.

Business travel comprises a large portion of many taxpayers' jobs. While traveling many taxpayers receive a daily per diem from their employers for things such as lodging and food, and others may receive reimbursements for such expenditures. These benefits are generally not taxable. For taxpayers who are self employed, Section 162(a) of the Internal Revenue Code permits them to deduct 100% of lodging expenses, 100% of travel expenses, and 50% of their meals incurred away from home in the pursuit of a trade or business. A taxpayer's home is their principal place of business. However, the deduction is limited to expenses incurred while "away from home." Yet, if a taxpayer is deemed to be away from home for more than one year, then the expenses are no longer deductible because the taxpayer will not be treated as temporarily away from home. Long-term taxable travel, is thus, extended business travel in excess of one year.

Revenue Ruling 93-86 was issued following the Energy Act of 1992, which contained a provision amending Section 162 to limit the deductibility of travel related expenses in excess of one year.² The Revenue Ruling reviews three scenarios involving employment away from home at a single location, and provides as follows:

1. employment will be temporary if in the absence of facts and circumstances indicating otherwise, it is realistically expected to last and does in fact last one year or less;
2. employment will be indefinite regardless as to how long it actually lasts if there is no realistic expectation that it will last for one year or less; and
3. employment, absent facts and circumstances indicating otherwise, is temporary during the period that there was no realistic possibility that it will last longer than one year, until such time that the expectation later changes.

For employment that is deemed to be temporary, reimbursements for travel expenses related to travel to that location are not taxable. Whereas, when the employment is deemed to be indefinite, then reimbursements are taxable.

Last week's report follows a TIGTA report from July 22, 2013, when it reviewed executive travel within the IRS and considered whether there were ways to reduce the $9 million that had been spent in the prior fiscal year on such travel.³ The new report includes as an appendix, a helpful flowchart demonstrating when long-term travel reimbursements are taxable. The flowchart can be accessed here.

The new report besides commenting on the errors the nine executives made with regard to the taxability of their travel reimbursements found that the IRS had released adequate guidance establishing when travel was taxable. This includes guidance to Federal Agencies on common situations involving payments and information reporting requirements taking the form of frequently asked questions and answers. Question 13 pertains to long-term taxable travel.⁴ The guidance interestingly does not broach on the taxability of any payments, rather it simply defines long-term taxable travel. It states as follows:

"[l]ong-term taxable travel is travel which lasts for more than one year, or for which there is a realistic expectation that such travel will last for more than one year, or for which there is no realistic expectation that such travel will end within one year. It includes local (daily) travel between a residence and a non-temporary work location and overnight travel away from the residence to a single location.

The realistic expectation for long-term travel is based on the current facts and circumstances. However, prior work at a work location is considered if there has not been a break of least seven continuous months since the employee's last visit to the location while on official duty."

A tax-friendly alternative to municipal bonds / Tax-free income has long been favored by investors, especially retirees.

Amit Chopra for MarketWatch.com writes: Municipal bonds have been the focus of investors who are seeking tax-free income for many years. These bonds paid a good income and relatively safe, but the downside is that in today's low interest rate environment, tax-free income from municipal bonds is very hard to achieve and can yield very little.

There is an often overlooked alternative for investors that could prove pivotal in helping retirees maintain their desired income on a tax-free basis.

Current tax laws provide a significant tax advantage for individuals investing in companies that pay a "qualified" dividend. Couples who have an income less than $72,500 and file taxes "jointly" typically pay zero taxes on the income generated from dividends. That's right, its tax-free income. For those earnings earning more than $72,500 taxes on qualified dividends are generally taxed at a maximum rate of 15% — potentially a better deal than being subject to the Alternative Minimum Tax.

Undoubtedly, there are different risks associated with dividend-paying stocks and bonds. While a stock has no maturity date and therefore has no set date at which it can be redeemed for “par value,” both stocks and bonds will fluctuate in value — stocks as are result of market conditions, bonds as a result of interest rate movements. Dividend-paying stocks won't as a rule provide "explosive" growth, but they can grow and compound faster than inflation (or a CD in a bank).

Comparably, short-term fluctuations in neither bond or stock value impact stocks' dividend payment nor bonds' interest payment. Rather, payments of dividends, as well as bond interest (or coupon as it is often referred to), is based on the overall health of the issuer and the issuers ability to make the payments.

More important, the value of bonds and, particularly bond funds, will come under pressure, given that interest rates are widely expected to rise in the coming years.

Dividend-paying stocks have another advantage to them: Dividends can increase.

There are many companies that have a strong track record of consistently raising the amount of their dividend, providing investors with a de-facto raise every time the dividend payment is raised. Choosing a creditable company with dividend paying stocks is tapping into the upside potential the stock market has to offer without having to try to "pick a winner" from unfamiliar companies that just happen to be in the news a lot.

Moreover, companies like McDonald’sMCD -1.21% , Verizon VZ +2.46% , and MerckMRK +0.16%  have all doubled their dividend since 2000 — meaning investors who have owned these stocks over those years have more than doubled their income, in addition to the capital appreciation.

You can reach Amit Chopra here.

Oliver Pursche contributed to this article.

Clear Books scoops best online accounting suite at UK Cloud Awards

to be recognised as the best in class is a great honour to the Clear Books team and our community of customers who work so closely with us

Online accounting software company, Clear Books, has been given the coveted Best Cloud Accounting Suite Award by a team of independent judges at the UK Cloud Awards 2014.

The UK Cloud Awards have been devised to recognise the best of the cloud in the UK and specifically the cloud accounting award highlights the suite that is most effectively reducing barriers to implementing effective accounting systems and controls whilst improving financial understanding and reporting to aid decision making.

Picking up the award at a ceremony at Cloud Expo, Tim Fouracre, founder and CEO of Clear Books, said: “We were delighted to be shortlisted in the accounting category as a finalist, but to be recognised as the best in class is a great honour to the Clear Books team and our community of customers who work so closely with us to help continuously improve our services.”

Clear Books was founded in 2008 and provides cloud accounting software that enables small businesses to collaborate seamlessly “in the cloud” with their accountants. With more than 5,000 small business customers signed up and more joining each day, Clear Books offers a suite of integrated cloud business software for Accounting, Payroll, HR, and Document Management.

Editors notes

About Clear Books

Clear Books is cloud accounting software used by five thousand small businesses. The software has been accredited by both the Institute of Chartered Accountants in England and Wales and the Institute of Certified Bookkeepers.

For further information, visit www.clearbooks.co.uk

It’s The Most Wonderful Time (For 990 Filings) Of The Year

Tyrone P. Thomas for Mintz Levin  writes: As the nation recovers from the latest series of winter storms, let the rise of temperatures serve as a reminder of the incoming season – tax filing season. For institutional non-profits such as colleges and universities, this means the filing of the Form 990, a required informational tax return of the IRS. This year's 990 reporting will have heightened scrutiny, particularly on executive compensation in the higher education community, in light of recent findings by the IRS from its Colleges and Universities Compliance Project.

The deadline for filing the Form 990 is the 15th day of the fifth month following the close of an organization's fiscal year. For colleges and universities operating on a calendar year tax basis, this means May 15th. Among the components required for disclosure on the Form 990 is compensation paid to directors, officers, key employees, and highly compensated employees of the organization. While institutions may have familiarity with this requirement, all should be aware of how the IRS has sharpened its toolbox to analyze responses in this area.

Last year, the IRS completed a five-year project in which it analyzed responses from questionnaires sent to 400 colleges and universities as part of its Compliance Project. In its Final Report, the IRS cited a number of areas of noncompliance in which errors resulted in wage adjustments totaling $36 million, with taxes and penalties of $7 million. The areas of noncompliance included:

• Deferred compensation which had not been accounted for as income due to payments not being conditioned upon future performance of substantial services to establish a substantial risk of forfeiture;
• Additions, deferrals and loans relating to 403(b) plans in excess of permitted limits;
• Failure to include the value of personal use of cars, houses, social club memberships and travel;
• Misclassification of employees as independent contractors;
• Failure to withhold taxes for wages paid to non-resident aliens; and
• Failure to include value of certain graduate tuition waivers and reimbursements.

With the IRS' increased knowledge of executive compensation arrangements in the higher education space and the transparency provided by the current Form 990, it is essential that institutions obtain appropriate advice on the categorization and treatment of compensation arrangements for senior leadership. The rules governing the vesting and reporting of certain benefits, particularly retention incentives and certain perquisites frequently provided to college leadership, are extremely technical in nature and lend themselves to confusion. The executive compensation group of Mintz Levin has worked with over 300 colleges and universities on compensation advice and is ready to bring your 990 filing into compliance.