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Monthly Archives: July 2013

Berkowitz Pollack Brant’s Affiliate Provenance Wealth Advisors Recognized for Assets Under Advisement

Posted on July 29, 2013 by Richard Berkowitz, JD, CPA

FT. LAUDERDALE, FL, July 25, 2013 – Provenance Wealth Advisors, an affiliate of Berkowitz Pollack Brant Advisors and Accountants, has been recognized on the seventh annual CPA Wealth Advisor’s Wealth Magnets list. The Wealth Magnets list ranks investment advisory firms affiliated with CPA firms by assets under advisement.

 

At Dec. 31, 2012, Provenance Wealth Advisors had $1.5 billion in assets under advisement. Fewer than 20 firms in the United States have assets under management exceeding $1 billion.

 

“Our firm has grown through referrals from satisfied clients,” said Eric Zeitlin, managing director of Provenance Wealth Advisors. “We provide a comprehensive approach to income, estate, financial and investment planning. This holistic approach helps clients take advantage of planning strategies that enable them to meet their long-term goals.”

 

CPA Wealth Provider is a quarterly supplement to Accounting Today.

 

About Berkowitz Pollack Brant Advisors and Accountants

For more than 30 years the advisors and accountants of Berkowitz Pollack Brant have solved problems, provided knowledge and helped their clients make money. The firm and its affiliates Provenance Wealth Advisors and BayBridge Real Estate Group have offices in Miami, Ft. Lauderdale and Boca Raton, Florida.

 

Berkowitz Pollack Brant has been named one of the top 100 firms in the U.S. by both Accounting Today and INSIDE Public Accounting and was named one of Florida Trend’s Best Places to Work in 2012.

 

One of the largest firms in South Florida, it is comprised of talented and resourceful professionals who provide consulting services with an entrepreneurial focus. Specialty areas include domestic and international tax planning and compliance, corporate and commercial audits, forensics and litigation support, business valuation, and wealth management and preservation.

James W. Spencer CPA Joins Berkowitz Pollack Brant

Posted on July 25, 2013 by James Spencer

MIAMI, July 23, 2013 – Berkowitz Pollack Brant Advisors and Accountants announced the addition of James W. Spencer as a director in the International Tax Services practice. He focuses his work on foreign tax credits, partnerships and acquisitions, and creative strategies for international tax planning.

With more than 25 years of international and local accounting experience, Spencer has worked at several large national firms including a Big Four firm. His client base includes entrepreneurs in Latin American and Europe, international corporations and incoming foreigners who need pre-immigration tax planning assistance.

Spencer is a member of the American Institute of Certified Public Accounts (AICPA) and the Florida Institute of Certified Public Accountants (FICPA). He also dedicates his professional time to Society of Trust & Estate Practitioners. He is a frequent speaker at professional education programs and business seminars. Spencer holds a bachelor’s degree in business administration from the University of Toledo.

About Berkowitz Pollack Brant Advisors and Accountants

For more than 30 years the advisors and accountants of Berkowitz Pollack Brant have solved problems, provided knowledge and helped their clients reach their goals. The firm and its affiliates Provenance Wealth Advisors and BayBridge Real Estate Group have offices in Miami, Ft. Lauderdale and Boca Raton, Florida.

 

Berkowitz Pollack Brant has been named one of the top 100 firms in the U.S. by both Accounting Today and INSIDE Public Accounting and was named one of Florida Trend’s Best Places to Work in 2012.

 

One of the largest firms in South Florida, it is comprised of talented and resourceful professionals who provide consulting services with an entrepreneurial focus. Specialty areas include domestic and international tax planning and compliance, corporate and commercial audits, forensics and litigation support, business valuation, and wealth management and preservation.

Job Search Expenses May Lower Your Taxes by Joanie Stein

Posted on July 23, 2013 by Joanie Stein

As the economy improves, more people are considering changing jobs. Individuals who are looking for new jobs in their same line of work may qualify for tax deductions for some of their job search expenses.

Here are some of the rules around deducting job search expenses.

  • The job search must focus on the same industry and may be deductible whether or not new employment is obtained.  Costs of seeking employment in a different trade or business cannot be deducted. 
  •  Any payments for work done on spec or reimbursements from potential employers cannot be deducted. 
  • Fees paid to employment and job placement agency fee are deductible, as are the costs of preparing and mailing copies of correspondence to prospective employers. 
  • Travel expenses are deductible but only if the primary reason for a trip is to look for a new job.
  • Job search expenses are not deductible if there is a substantial break between the time a job ends and a new search begins. 
  • First-time job hunters cannot deduct search expenses.
  • Taxpayers should claim qualified job search expenses as miscellaneous itemized deductions. Job seekers can deduct only the amount of total miscellaneous deductions that exceed two percent of their adjusted gross income.
  • Taxpayers should claim qualified job search expenses as miscellaneous itemized deductions. Job seekers can deduct only the amount of total miscellaneous deductions that exceed two percent of their adjusted gross income.
  • Taxpayers should claim job search expenses as miscellaneous itemized deductions. Job seekers can deduct only the amount of total miscellaneous deductions that exceed two percent of their adjusted gross income.

An experienced tax professional can help navigate the opportunities created by job search deductions.

About the Author: Joanie Stein CPA is a senior manager in the Tax Services practice of Berkowitz Pollack Brant. For more information, call (305) 379-7000 or e-mail info@bpbcpa.com.

Tax Tips for Newlyweds by Laurie Jennings

Posted on July 19, 2013 by Laurie Jennings

 

It is wedding season! In these happy occasions, a change in marital status and its impact on taxes is often overlooked.

 

Here are several tips for newlyweds that will save time and confusion down the road.

 

Newly married individuals who change their names must file the appropriate paperwork with the Social Security Administration. The name on a tax return must match what the SSA has on file. There is a simple form called SS-5 required to apply for a name change. Find it at SSA.gov.

 

 

 

Employers also need to be notified of a name change so that W-2s are correct at the end of the year.

 

 

 

If both spouses work, they should check the amount of withholding to be sure that the amount of federal income tax withheld from their respective paychecks is appropriate. The IRS website at IRS.gov has a Withholding Calculator tool. Complete form W-4 to change the amount of withholding.

 

 

 

The IRS and US Postal Service both have change of address forms in the even one or both individuals move.

 

 

 

A couple who is married as of December 31, even if they we on December 30, is considered married for the entire year.

 

 

 

For more tips for newlyweds, contact your tax preparer.

 

 

 

About the Author: Laurie Jennings, CPA, is a senior manager in the Tax Services practice of Berkowitz Pollack Brant. For more information, call (305) 379-7000 or e-mail info@bpbcpa.com.

 

The Affordable Healthcare Act and What it Means for Employers by Adam Cohen

Posted on July 16, 2013 by Adam Cohen

 

We recently published detailed white paper that outlines the personal and employer requirements associated with healthcare reform. The paper covers the new Medicare tax, coverage requirements, minimum standards and potential fines. If you are interested in receiving a copy of the report, please e-mail info@bpbcpa.com. 

With six months to go before the Affordable Healthcare Act kicks in, we find that many employers are still confused about the rules and penalties related to providing health insurance.

Beginning in 2015 (a delay from the original deadline of 2014 which was announced  on July 2, 2013) companies with more than 50 employees who work 30 or more hours per week face penalties of up to $2,000 per employee if they do not offer insurance coverage. These parameters mean that 96 percent of all employers are exempt from these rules.

Large businesses that comply with the mandate can still be fined if their plans cost workers more than 9.5 percent of their income or if their insurance doesn’t cover at least 60 percent of medical costs.

One state health exchange employee notes that companies with fewer than 25 workers that offer insurance may qualify for tax credits. At Berkowitz Pollack Brant we are watching the issue closely and monitoring states in which our clients are headquartered for information about insurance exchanges. If you have questions, don’t hesitate to call us.

 

About the Author: Adam Cohen, CPA, is an associate director in the Tax Services practice of Berkowitz Pollack Brant. For more information, call (954) 712-7000 or e-mail info@bpbcpa.com.

Supreme Court’s DOMA Ruling Creates Income Tax and Estate Planning Opportunities for Married Same-Sex Couples by Edward Cooper

Posted on July 08, 2013 by Edward Cooper

 

The U.S. Supreme Court’s recent decision to overturn the core of the Defense of Marriage Act (DOMA) will narrow the financial gap between gay and straight couples.

 

Because of the ruling, married same-sex couples will be entitled to a myriad of federal benefits and protections they did not have before, including healthcare, retirement savings, Social Security and transfers of property.

 

The Supreme Court considered two cases related to same-sex marriages. One was a dispute over a California ballot measure banning the practice. The other was a challenge to part of the 1996 federal Defense of Marriage Act, which defines marriage as solely a union between a man and a woman.

 

The court stopped short of declaring a constitutional right for gays to marry nationwide, or even ruling directly on California’s voter-approved ban.

 

Same-sex couples have the right to marry in 12 states and the District of Columbia. Florida is not one of the states that currently recognizes same-sex marriage.

 

The finances and estate plans of same-sex couples are often complicated by the division between federal and state law in places that recognize their marriages. While they’ve been able to receive employee benefits and file taxes jointly under their state’s laws, the federal government treated them as though they are single.

 

The DOMA matter hinged on the issue of federal estate taxes. It involved a New York resident who sued the federal government over a $363,000 estate- tax bill imposed after her spouse died. She sought to claim an estate tax exemption for surviving spouses, which allows unlimited amounts to be transferred from a decedent to his or her surviving spouse without incurring estate taxes.

 

The government refused to allow the exemption on the grounds that she did not qualify as a spouse under DOMA. The Supreme Court ruled against the government by ruling that DOMA violates the constitutional rights of equal protection incorporated in the Fifth Amendment.

 

Although the court’s decision on the DOMA matter decided an estate tax case, its implications will impact how same-sex married couples can treat their finances and estates in a number of ways. Such couples’ finances were often complicated by the division between federal and state law in places that recognize their marriages.

 

There are more than 1,100 places in federal law where a protection or responsibility is based on marital status. The ruling striking down DOMA will not be effective until 25 days from the decision (decided June 26, 2013), but even when effective, federal agencies, including the IRS, may need and take some time to change forms, implement procedures, train personnel, and efficiently incorporate same-sex couples into the spousal-based system.

 

Summarized below are a few of the many tax issues potentially affecting married same-sex couples now that DOMA has been invalidated. In all likelihood, there will be specific guidance forthcoming from the IRS before the next income tax filing deadline for tax year 2013.

 

Estate and Gift Taxes

 

One of the most significant benefits for married couples is the ability to pass unlimited amounts of money without it being considered a taxable gift. For example, a same-sex spouse would be able to use the unlimited estate-and-gift marital deduction and preserve their unified credit. The unified credit allows each person to either gift now or bequeath up to $10.5 million in 2013 for married couples or $5.25 million per individual to relatives and loved ones other than their spouse without having to pay gift, estate or generation-skipping transfer taxes.

 

The effective use of both the marital deduction and unified credit enables a couple to defer federal estate taxes owed until the death of the surviving spouse and, with more sophisticated planning, may avoid the estate tax for transfers to future generations utilizing gifting opportunities that married gay people haven’t been able to use in the past.

 

For many married same-sex couples the ruling will simplify the titling of financial accounts and let them arrange their finances and effectuate sound estate planning in ways that previously were only available to opposite-sex marriages.

 

Income Taxes

 

A 2004 government report identified 198 separate Internal Revenue Code provisions tied to marital status, highlighting the dramatic impact of marriage on personal taxes.

 

Most experts believe that the IRS will instruct married same-sex couples to file their 2013 income taxes as “married,” whether jointly or separately, rather than as “single” or “head of household,” provided that the IRS recognizes the marriage.

 

For those marriages recognized by the IRS, tax preparation should be simpler and less time consuming than it was with DOMA. The questions that have faced married same-sex couples at tax time, such as “who claims which child” and “how much of the mortgage deduction or charitable deduction do we each take,” are eliminated for married same-sex couples who may now take these deductions together in one joint return.

 

The ability to file a federal joint tax return may save some married gay couples money, A couple filing a joint return where one spouse has taxable income of $70,000 and the other $30,000 would see a $1,625 tax savings compared with filing two individual returns.

 

There also may be financial disadvantages from filing jointly. If both spouses earn salaries of $400,000 a year or more, the ruling may mean thousands of dollars in higher income taxes because of the so-called marriage penalty.

 

Currently, two partners, each earning $400,000 a year in taxable income, pay a lower federal income-tax rate than if they were married. That’s because the top rate of 39.6 percent starts at taxable income above $400,000 for singles and $450,000 for married couples.

 

If same-sex spouses file jointly under federal law, their combined income is $800,000, of which $350,000 would be subject to the highest federal tax rate. However, for many same-sex couples the added tax burden is of small consequence to their marriage being recognized under federal law.

 

Federal Benefits

 

The implications of the DOMA decision are enormous when at least one member of the couple is a federal employee or in the military. Many advantages will be extended to married same-sex spouses including health care, disability and death benefits that same-sex married couples were previously denied on a federal level. In addition, there are many lesser-known federal benefits that will now be available such the right for married same-sex spouses to be buried in veterans’ cemeteries.

 

Social Security

 

Some spousal provisions, annuities and rollover opportunities in pensions and other retirement accounts will now be available to married gay couples. There will also be positive impacts on accessing a spouse’s Social Security benefits, which can be significant if one spouse worked more years or had a higher salary.

 

Employer-Provided Benefits

 

The tax consequences for employee health care benefits will be impactful. Under DOMA, if people put their same-sex spouses on their insurance plan the value of any employer contribution to premiums usually was deemed taxable income for the worker, which isn’t the case for opposite-sex spouses.

 

Amended Returns

 

Josh Keller of The New York Times estimated that “at least 82,500 gay couples have married since Massachusetts became the first state to legalize gay marriage in 2004 [through 2012].”

 

The IRS has yet to provide answers to questions about the ability to amend tax returns and receive refunds. For example, if one spouse had capital losses on investments in a year that the other spouse’s gains would offset if they would have been able to file a joint federal return.

 

In other situations, individuals may want to amend a gift tax return if they made a large transfer of property or assets to their same-sex spouse and used their unified credit because the marital exemption was not previously available. This would potentially free up more of the unified credit to pass on wealth to children or other loved ones.

 

Generally, for a credit or refund of income taxes, one must file Form 1040X within three years (including extensions) after the date of filing of the original return or within two years after the date the tax was paid, whichever is later. If the original return was filed early (for example, March 1 for a calendar year return), the return is considered filed on the due date (generally April 15). However, if the taxpayer had an extension to file (for example, until October 15) but filed earlier and IRS received it July 1, the return is considered filed on July 1.

 

However, there are potential downsides of amending prior year returns, including an increased risk of audit, possible assessment of a tax deficiency and, in some instances, the burden, expense and uncertainty of litigation.

 

Undoubtedly, taxpayers and practitioners will need guidance from the Internal Revenue Service and federal agencies on questions such as whether they can amend tax returns and receive refunds.

 

The IRS has yet to provide answers to questions about the ability to amend tax returns and receive refunds. A married same-sex couple may be entitled to amend their individually filed returns, for example, if one spouse paid taxes as a result of capital gains on investments in a year that the other spouse’s losses would have offset those gains if they would have been able to file a joint federal return.

 

 

 

Furthermore, there are concerns about whether federal recognition will apply for couples who marry in a state that allows same-sex marriage and move to another state, like Florida, that doesn’t.

 

Conclusion

 

The dust has not yet settled on all of the impacts of the Supreme Court’s ruling but we are watching closely. At Berkowitz Pollack Brant and our affiliate Provenance Wealth Advisors, we can assist with navigating the new rules and taking advantage of the estate planning opportunities created by the Supreme Court’s ruling.

 

 

 

 

 

 

 

About the Author: Edward N. Cooper CPA is a director in the Tax Services practice of Berkowitz Pollack Brant. For more information, call (305) 379-7000 or e-mail info@bpbcpa.com.

 

Update: Affordable Care Act by Adam Cohen

Posted on July 03, 2013 by Adam Cohen

Healthcare Reform Update: On July 2, 2013, the Obama administration announced that it will delay enforcement of the Affordable Care Act’s employer mandate until 2015. This measure would have required firms with more than 50 full-time employees to provide affordable health insurance or face a penalty of $2,000 per employees.  It was originally set to take effect in 2014.

Ninety—six percent of all US businesses have fewer than 50 employees and are already exempt from the mandate.

If you have questions about the Affordable Care Act or how it may impact your business, please call Adam Cohen in our tax department at (954) 712-7000 or e-mail info@bpbcpa.com.

Florida Businesses Are Missing Out on Significant Tax Credits by Karen Lake

Posted on July 01, 2013 by Karen Lake

With unemployment is at its lowest levels since 2008, businesses are not only growing the national labor force, but savvy employers are also realizing considerable tax benefits through federal Workforce Opportunity Tax Credit (WOTC) and state tax incentives. 

The WOTC is an often-overlooked incentive that enables businesses to reduce their federal income taxes between $1,200 and $9,600 per employee for the hiring and training of specific job candidates, including those who are veterans, disabled persons, ex-convicts and recipients of food stamps, Long-Term Family Assistance and Supplemental Security Income. For example, a private, for-profit business can receive up to $9,600 in tax credits for each disabled veteran it hires.  Moreover, because there is no limit to the number of qualified employees that a business may claim, an employer that hires 10 disabled workers could earn $96,000 in federal income tax credits.  That’s quite a significant savings, especially for small- to mid-size companies.

 

While the federal program aims to improve challenged workers’ chances of gaining employment, state governments offer addition tax incentives to businesses that create and retain high-quality, high-paying  jobs in their states.  While some businesses find the application process for these tax credits to be too tedious an undertaking, others are simply unaware that they exist.  

 

Florida’s Quick Response Training (QRT) program reimburses businesses in specific industries up to $6,000 for expenses related to entry-level job training it provides to full-time and high-earning employees.  To qualify for a QRT grant, a business must be headquartered in Florida and in operation for a minimum of two years. This program does not restrict the type of training a business provides.  Rather, employers that create jobs and institute programs intended to raise workers’ skills have the freedom to select the content, instructor and location of the training. 

 

Similarly, under the Incumbent Worker Training (IWT) program, the state government may reimburse Florida-headquartered companies for expenses related to training programs that upgrade the skills of their existing employees.  This may include continuing education or targeted instruction in the use of computer hardware and software, including elaborate billing systems or basic business-processing programs.  To qualify for an IWT grant, a business must be in operation in the state for a minimum of one year, and it must have at least one full-time employee who is a resident of Florida.

 To help keep high-wage-paying businesses in Florida, and to encourage their expansion within the state, the government offers Qualified Target Industry Tax Refunds (QTI).  This program rewards businesses’ for each full-time job they create by applying credits to their corporate income, sales and other business taxes.  For example, a company that remains in the state may receive $3,000 for each new employee it hires.

 

To further incentivize businesses to create employment opportunities and expand in the state’s rural and urban areas, Florida offers these employers tax credits of $500 to $2,000 for each new qualified job it creates.  With these Rural and Urban Jobs Tax Credits, businesses may take the tax credit against their corporate state income tax or Florida sales and use tax.

 

In addition to improving a state’s business climate and economic development, these job-creation and workforce-training tax credits support businesses’ competitiveness and improve employees’ skills and wages as well as business productivity and profits. The challenge for many businesses is the tedious and time-intensive process of applying for these incentives on their own. It requires applicants to understand the conditions of their eligibility, to gather and submit meticulous documentation, and to cross every “t” and dot every “i” on forms from the Internal Revenue Service and Department of Labor Employment and Training Administration. Moreover, it requires consistent tracking and follow-up with government representatives in order to maximize ones chances of receiving a check in hand.  

In these matters, businesses should rely on their professional tax consultants to manage the process of identifying and applying for federal and state tax incentives.  By doing so, business executives will be able to remain focused on their day-to-day business operations and avoid losing out on potential tax savings.

 

About the Author: Karen A. Lake CPA is a senior manager in the tax practice at Berkowitz Pollack Brant. For more information, call (305) 379-7000 or e-mail klake@bpbcpa.com.

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