With more than 3.8 million words in the tax code, you probably need help from a pro.
The tax code is some 3.8 million words. You probably need some help with it.
You may want to turn to Bruce Bolick, CPA, who began his career in accounting in 1973.
“Taxes are my ‘specialty,’” Bolick says. “I do not do audit work.”
Bolick holds a BBA in Accounting from McMurry University and an M.S. in Accounting from Texas Tech. He is also a Certified Public Accountant, holding his certification in Texas.
Although he opened his CPA practice in Salado in 2012, he is no newcomer to town. He opened Plaza Video in Salado Plaza Shopping Center in August 1986 operating it until 1989.
In fact, when the Fleischers bought the Salado Village Voice from the Dayton Kelley family in 1988, the only inhabitants of Salado Plaza besides the IGA Village Foods were Plaza Video and Mill Creek Professional Suites, which housed the newspaper office in those early years.
He and wife Tina have lived here in Salado since August 1987. Both their sons are Salado High graduates.
Bolick taught accounting, finance and general business courses full-time at University of Mary Hardin Baylor for 22 years. He has taught an additional nine semesters on a part-time basis for UMHB and Southwestern University for a semester before opening the local CPA practice.
With the beginning of the new year, tax deadlines are already upon small business owners.
IRS tax forms 1099 and W-2 must be prepared no later than Jan. 31 for amounts paid in 2016. These same forms must be prepared and transmitted using Form 1096 and W-3 to the IRA or the Social Security Administration no later than Feb. 28.
“If your business has inventory,” Bolick advises, “make sure you have an ending inventory amount for Dec. 31, 2016.”
“You can still do a physical count now and calculate the Dec. 31 amount by adjusting for purchases and sales since Dec. 31,” he adds.
Non-corporate taxpayers get a couple of days breathing room this year. Because April 15 falls on a Saturday and April 17 is a federal holiday, the deadline for personal tax returns to be postmarked is April 18.
But don’t think that means you can put it off until then. Prepare now and throughout the year for getting your taxes done early.
Even if you file early this year, it may be Feb. 27 before those first refunds are available. This is because of new anti-fraud protection safeguards.
Even those who don’t pay a lot in taxes should be wary of tax scammers. “The IRS will never call you on the phone so you can get your refund faster or demand payments for back taxes,” Bolick said of the ubiquitous tax scammers who prey on people’s naive and trusting nature.
“I even had a client with a fraudulent phone call saying the IRS no longer accepted personal checks,” Bolick said, “and wanting him to go purchase pre-paid debit cards to pay his taxes.”
“The IRS will never email you asking for payment or helping you get your refund faster,” he adds.
Bolick advises those who will be using a tax preparation software to do their own taxes to be sure to have their 2015 income tax returns available. As a safequard, these “software programs will require the taxpayer to enter their 2015 adjusted gross income from their 2015 return before they can file their 2016 return,” Bolick said.
For the retiree, Bolick says that “unless you need the cash immediately — for medical bills or other emergencies — it is not tax smart to take a large, single, lump-sum distribution from your retirement account or annuity.”
He adds that it is tax foolish in at least three ways.
“This large amount will cause you to greatly increase you tax bracket/rates,” Bolick says. “Thus you will pay more taxes than you would have if you took a smaller amount—possibly as much as 10%-12% or more on ALL your income.”
“A large increase in your income will cause the taxpayer to pay more for Medicare premiums,” he said.
“The increase in income because of the large retirement distribution could cause additional taxes related to Alternative Minimum Tax,” he said. “This is true especially if the taxpayer or spouse is self-employed.”
Instead, retirees should take the distribution over a period of at least two years to minimize the tax consequences. “This should be discussed with the custodian of the retirement plan and your tax professional,” Bolick said.
There are few changes in the tax law between 2015 adn 2016 returns. Among those changes: “Increases in the Standard Deduction and Personal Exemptions are based on the Consumer Price Index,” Bolick said. “Since the CPI did not increase by a significant amount in 2016, the Personal Exemption amounts for 2016 are the same as 2015 with the exception of Head-of-Household which increased by $50.”
The exemption amount for an Estate increases to $5.45 million (was $5.25 million). “This means that a decedent’s estate must have assets in excess of this amount before an estate return must be filed,” he explained.
“The Annual Gift Exclusion for 2016 and 2017 is still $14,000 per person per year,” Bolick said, adding “A gift (made out of love or affection) has no income tax consequences—no deduction for giver or income for the receiver.”
IRA contribution amounts and limits have not changed.
Tax implications due to the ACA include an increase in penalties for 2016 tax returns for those with no health insurance. “The penalties are based on amount of income,” according to Bolick. “The greater the amount of income, the great the penalty for not having insurance.”
No one can predict what the changes will be for 2017. “If Obamacare is repealed, what will its replacement look like?” Bolick said. “Your guess is as good as mine.”
To find out more about Bruce Bolick CPA, call him at (254) 718-7299 or visit his office at 560 North Main, Suite 4, Office 3 across from the Salado Civic Center. His email firstname.lastname@example.org.