by Dr. Mario West | Dec 31, 2018 | Blog
There are concerns due to the taxes and the government shutdown. There are changes to the taxation codes due Bipartisan Act of 2018 and Jobs Act of 2017. Let me clarify the updates and status of the tax issues, thus IRS policy updates. This can cause some delay in refunds and payment issues.
Tax Codes Updates
Tax Form Updates
Tax Code Updates
Publication 535 and QBI
In mid-December, final regulations (1545-BO71 and 1545-BP12) were sent to the Office of Information and Regulatory Affairs (OIRA), under the Office of Management and Budget, for final review. The Department of Treasury did not designate the final regulations as economically significant. That means OIRA has 45 days to review the regulations. With the shutdown, it’s unclear if it will take longer for approval.
In the meantime, the IRS released a draft version of Publication 535, Business Expenses. Despite what the initial QBI proposed regulations stated, the publication notes that brokerage services, including arranging transactions between a buyer and a seller for a commission or fee such as stockbrokers, real estate agents and brokers, insurance agents and brokers, and intellectual property brokers are included as a “specified service trade or business” (SSTB) and would qualify for QBI. Please note, this publication is not final, nor are the regulations. Details could change.
2019 W-4 Released
In September, following feedback from the payroll and tax communities, the Treasury Department and the IRS announced that it’ll incorporate important changes into a new version of the Form W-4, Employee’s Withholding Allowance Certificate, for 2020. The final 2019 W-4 is similar to the final 2018 version.
The IRS continues to strongly urge taxpayers to review their tax withholding situation as soon as possible to avoid having too little or too much withheld from their paychecks.
Tax Form UPDATE
Deprecation and Section 179 Expenses
Revenue Procedure 2019-08 provides guidance on deducting expenses under Section 179(a) and on deducting depreciation under Section 168(g). These rules, as amended by the TCJA, generally apply to tax years beginning after 2017.
Section 179 allows taxpayers to deduct the cost of certain property as an expense when the property is placed in service. For tax years beginning after 2017, the TCJA increased the maximum Section 179 expense deduction from $500,000 to $1 million. The phase-out limit increased from $2 million to $2.5 million. These amounts are indexed for inflation for tax years beginning after 2018.
The Section 179 deduction applies to tangible personal property such as machinery and equipment purchased for use in a trade or business, and if the taxpayer elects, qualified real property. The TCJA amended the definition of qualified real property to mean qualified improvement property and some improvements to nonresidential real property, such as roofs; heating, ventilation and air-conditioning property; fire protection and alarm systems; and security systems. Revenue Procedure 2019-08 explains how taxpayers can elect to treat qualified real property as Section 179 property.
For tax years beginning after 2017, the TCJA also expanded the list of businesses that must use the alternative depreciation system under Section 168(g) (ADS). A farming business can elect out of the interest deduction limit of Section 163(j). If it does, the business must use the ADS for a property with a recovery period of 10 years or more. A real property trade or business can also elect out of Section 163(j) limit. If it does, the business must use the ADS for nonresidential real property, residential rental property, and qualified improvement property. Revenue Procedure 2019-08 explains how electing real property trades or businesses or farming businesses change to the ADS for property placed in service before 2018, and provides that it is not a change in accounting method.
Finally, the TCJA changed the ADS recovery period of the residential rental property. For property placed in service after 2017, the recovery period is 30 years. It was formerly 40 years. Revenue Procedure 2019-08 provides an optional depreciation table for residential rental property depreciated under the ADS with a 30-year recovery period.
Upcoming Filing Deadline for Wage Statements
Wage statements and independent contractor forms must be filed with the government by Jan. 31. An extension of time to file is no longer automatic. The IRS will only grant extensions for very specific reasons.
The PATH Act includes a requirement for employers to file their copies of Form W-2 and Form W-3 with the Social Security Administration by the end of January. This deadline also applies to certain Forms 1099-MISC filed with the IRS to report non-employee compensation to independent contractors.
Failure to file these forms correctly and time may result in penalties.
by Dr. Mario West | Dec 27, 2018 | Blog
One of the several concerns of the market as of late has been how would retailers do this holiday season? With economic data indicating a slowdown and the Fed continuing to raise interest rates, a question has been how quickly will Main Street and consumer spending become affected?
Mastercard SpendingPulse, which provides insights into overall retail spending trends across all payment types, including cash and check, reported Wednesday that holiday sales increased 5.1% to more than $850 billion this year, representing the strongest growth in the last six years. Meanwhile, online shopping posted 19.1% increase year over year. The Mastercard Spending Pulse report tracks holiday shipping from November 1st through December 24th and is viewed as a broad indicator of the busiest shopping season of the year.
By category, the Mastercard SpendingPulse reported the following information:
- Total apparel had a strong season with a growth rate of 7.9 percent compared to 2017, recording the best growth rate since 2010. The category followed through on a strong momentum that started during the back-to-school season and accelerated through fall right up to Christmas.
- Home improvement spending continued to surge across the U.S. with spending during the holiday season up 9.0 percent. This trend started before the holiday season and helped the sector power through to a strong finish.
- Department stores finished the season with a 1.3 percent decline from 2017. This follows two years with growth below 2 percent, some of which can be attributed to store closings. However, the online sales growth for department stores indicated a more positive story, with the growth of 10.2 percent.
So how was business for the largest e-commerce company in the U.S., Amazon (Click Here)?
Hard numbers were not provided, but Amazon announced on Wednesday that it had a record-breaking holiday season. The company also said Prime Membership (a key driver of the Amazon Flywheel) grew by tens of millions between free trial offerings and paid membership.
“This season was our best yet, and we look forward to continuing to bring our customers what they want, in ways most convenient for them in 2019. We are thrilled that in the U.S. alone, more than one billion items shipped for free this holiday with Prime,” said Jeff Wilke, CEO Worldwide Consumer in a press release. “Thank you to our employees all around the world who are committed to bringing our customers the widest selection of products with low prices and fast and free delivery options throughout the holidays and all year long.”
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by Dr. Mario West | Dec 23, 2018 | Blog
CEO, Retro Sample
Retro Sample is a Digital Audio Producer and Engineer based out of Atlanta, GA. He’s been diligently working with local talent throughout the Atlanta area for 4 years adding; Music production, Audio Engineering, Photography, Visuals, and Promotion. He looks forward to Scoring Movies, Video games, Commercials, and Television in the near future.
Winner is drawn each month
by Dr. Mario West | Dec 21, 2018 | Blog
GDP Looking Up, Government Shutdown Looks Down
I’ve been in banking, finance, and international accounting for 20 years plus. The economy is slowing down due to political tension, plus outside world economic slowdown is coming to US shores. The tariffs and trade wars are showing up in the GDP number now.
At the time this was written, the market is negative and is well off the highs made earlier this morning when Federal Reserve Bank of New York President John Williams was interviewed on CNBC.
We found this interview to be a step in the right direction. Williams made the right type of comments regarding future policy, saying that we are, “listening to not only markets but everybody that we talk to, looking at all the data and being ready to reassess and re-evaluate our views.”
Williams also added, “We did not make a decision to change the balance sheet normalization right now but as I said, we’re going to go into the new year with eyes wide open, willing to read the data, and re-assess the economic outlook and take the right policy decisions.”
These comments represent a far more dovish tone compared to the damage Powell did on Wednesday. With regards to the second statement, it strongly contrasts Powell who shut down the idea of a change in approach to the balance sheet. How the Fed has handled the unwinding of the balance sheet is in unprecedented territory, however this and the combination of rising interest rates may be producing too tight of a monetary policy.
Where do we stand overall? We view this as a step in the right direction, but we still need to see more. What he didn’t do is repudiate the judgment that the economy is still strong. He is still on the wrong side and that led to us giving up the gains. We need to see more officials share this dovish, data dependent, and not blinded by the risks of a slowing economy tone.
On Friday morning, before the opening bell, the Bureau of Economic Analysis reported, in its “third” reading (based on a more complete set of data than the second reading released last month on Nov. 28), that real Gross Domestic Product — GDP adjusted for inflation, our best gauge for economic growth — increased at a seasonally adjusted annual rate of 3.4% in the third quarter of 2018, a tick short of expectations for a 3.5% increase and below the 3.5% advance estimated in the second reading. This follows an unrevised 4.2% annual rate in the second quarter of the year.
The headline reading was reduced as a result of downward revisions to personal consumption expenditures (PCE) and exports, factors partially offset by an upward revision to private inventory investment.
Regarding PCE, a crucial metric given the importance of consumption to U.S. economic growth, we note that on a seasonally adjusted annual basis, the PCE index came in at +3.5 from the preceding period, below the +3.6% increase expected by analysts and down from +3.6% previously reported.
All in all, despite the minor revisions we believe the reading points to a strong U.S. economy that, while slowing, continues to grow. That said, we note that this is a backward looking estimate and the indications of a slowdown, however minor, are not to be ignored. It is for this reason we believe the market has seen so much volatility on the back of Fed Chair Jerome Powell calling for two more rate hike in 2019.
Looking ahead, the “advance” estimate on fourth-quarter GDP estimates will be released on Jan. 30.
digging even deeper into the GDP data can view the official release here.
by Dr. Mario West | Dec 21, 2018 | Blog
CEO, Pearson & Associates
Mr. Christopher R. Pearson is a United States Army Veteran, Small Business Owner and Motivational Speaker who makes his home in Falls Church, VA. Mr. Pearson is the CEO of Pearson & Associates where he has built a network of over 6800 entrepreneurs throughout the United States and personally ensures all are core to his mission and remain coachable to allow themselves to progress in their careers.
Mr. Pearson prides his career on helping family businesses, non-profit organizations and building solid relationships by providing education and information resources.
During his off time, Mr. Pearson serves as a community activist and volunteer to teach individuals about their legal rights, how to protect them and identity theft protection.
COO, Leverage NOW Consulting
Marcellus Boulware is Director and Regional Manager of the Southern Maryland market for LegalShield. He directs all marketing and sales strategies, overseeing the growing market programs, consumer and field marketing activities, advertising, public relations and e-commerce. Since joining LegalShield in 2012, Marcellus has implemented a number of measures to increase market awareness in the identity theft area expand ID Shield brand recognition.
As a trained and certified professional in identity theft management Marcellus takes the lead within organizations and educate their employees, ensure compliance with regulations, and, assess the risks. Marcellus works with the local sheriff’s department in his community to create awareness about the dangers of identity theft.
Marcellus’s passion is to service the military community and their families, as a prior U.S. Army soldier, he proudly served in the United States Old Guard, Third Infantry Division at Fort Myer, VA. Marcellus currently resides in the Southern MD area with his wife, daughter who attends Penn State University. In his spare time Marcellus enjoys reading to further develop his knowledge and serve his community.
- Home Base Business Supplement $9.95
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