New Legislation Extends Popular Tax Provisions

In one of its final actions, the 113th Congress passed the Tax Increase Prevention Act of 2014. This legislation extends for one year a host of popular tax provisions (commonly referred to as “tax extenders”) that had expired at the end of 2013. The President is expected to sign the legislation. All of the following provisions were among those retroactively extended, and are now effective through the end of 2014.


Deduction for qualified higher-education expenses

You may be entitled to a deduction if you paid qualified higher-education expenses during the year–this includes tuition and fees (for yourself, your spouse, or a dependent) for enrollment in a degree or certificate program at an accredited post-secondary educational institution. The deduction doesn’t include payments for meals, lodging, insurance, transportation, or other living expenses. The maximum deduction is generally $4,000. However, if your adjusted gross income (AGI) exceeds $65,000 ($130,000 if married filing jointly), your maximum deduction is limited to $2,000; if your AGI is greater than $80,000 ($160,000 if married filing jointly), you can’t claim the deduction at all.


Deduction for classroom expenses paid by educators

If you’re an educator, you may be able to claim up to $250 of unreimbursed qualified classroom expenses you paid during the year as an “above-the line” deduction. Qualifying expenses can include the cost of books, most supplies, computer equipment, and supplementary materials used in the classroom. Teachers, instructors, counselors, principals, and aides for kindergarten through grade 12 are eligible, provided a minimum number of hours are worked during the school year.


Deduction for state and local general sales tax

If you itemize deductions on Schedule A of IRS Form 1040, you can elect to deduct state and local general sales taxes in lieu of the deduction for state and local income taxes. You can calculate the total amount of state and local sales taxes paid by accumulating receipts showing general sales taxes paid, or you can use IRS tables. If you use IRS tables to determine your deduction, in addition to the table amounts you can deduct eligible general sales taxes paid on cars, boats, and other specified items.


Tax-free charitable donations from IRAs

If you’re age 70½ or older, you can make a qualified charitable distribution (QCD) of up to $100,000  from your IRA and exclude the distribution from your gross income. The distribution must be made directly to a qualified charity by December 31, 2014, and must be a distribution that would otherwise be taxable to you. QCDs count toward satisfying any required minimum distributions (RMDs) that you would otherwise have to receive from your IRA, just as if you had received an actual distribution from the plan. You aren’t able to claim a charitable deduction for the QCD on your federal income tax return.


Deduction for mortgage insurance premiums

 Premiums paid or accrued for qualified mortgage insurance associated with the acquisition of your main or second home may be treated as deductible qualified residence interest on Schedule A of IRS Form 1040. The amount that would otherwise be allowed as a deduction is reduced if your AGI exceeds $100,000 ($50,000 if married filing separately), and no deduction is allowed if your AGI exceeds $109,000 ($54,500 if married filing separately).


Bonus depreciation

You may be able to claim an additional first-year “bonus” depreciation deduction, equal to 50% of the adjusted basis of qualified property placed in service during the year. The additional first-year depreciation deduction is allowed for both regular tax and the alternative minimum tax.  The basis of the property and the regular depreciation allowances in the year the property is placed in service (and later years) are adjusted accordingly.


Expanded IRC Section 179 expensing limits

 Under IRC Section 179, if you’re a small-business owner you can generally elect to expense the cost of qualifying property, rather than to recover such costs through depreciation deductions. The maximum amount that can be expensed for 2014 now remains at $500,000 (the same limit that applied in 2013), rather than dropping to $25,000 had the legislation not passed. The $500,000 limit is reduced by the amount by which the cost of qualifying property placed in service during the taxable year exceeds $2,000,000.


Exclusion of gain–qualified small-business stock

 Generally, you’re able to exclude 50% of any capital gain from the sale or exchange of qualified small-business stock provided that certain requirements, including a five-year holding period, are met. However, the temporary increase of the exclusion percentage to 100% that applied in 2013 is now extended to qualified small-business stock issued and acquired in 2014.


Other provisions extended

 Other provisions extended by the legislation include:

The ability to exclude from income the discharge of debt associated with a qualified principal residence

  • Provisions related to employer-provided mass-transit benefits
  • Special rules for qualified conservation contributions of capital gain real property
  • Provisions relating to business tax credits, including the research credit and the work opportunity tax credit

IMPORTANT DISCLOSURESBroadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials.  The information in these materials may change at any time and without notice.

Summertime Strategies for Your Business

Summer is a great time of year for most businesses to pause for just a little while to take stock, congratulate yourself on what you’ve accomplished so far this year, and make big plans for your future.  Here are five summertime strategies to help you regroup, reassess, and rejuvenate your business.


1-     Mid-Year Review


If your business runs by the calendar year, 2014 is already half over.  This is a perfect time to stop and reflect where you’ve been, what you’ve accomplished, and where you want to go next.  You can make this process as informal or formal as you want.  Some firms hold complex retreats; you may simply need some quiet time on a weekend where all your family is busy doing something else.


If you’ve never done any planning and feel like you need a guide, consider the book, The One-Page Business Plan written by Jim Horan.


2-     Take a Vacation


There’s nothing better to rekindle your creative juices than to get away from the business for a while.  Summertime is when most people take vacation, so if your business is not having its busy season, this might be a good time to go away for a while.


If you’re anxious about being away from your business, you’re not alone.  In your annual planning process, plan for and block out your vacation time way ahead of time.  Book the reservations with no refunds several months in advance so that you won’t chicken out at the last minute.  There is life beyond your business, and you will be a better business owner when you take regular breaks away.


3-     Celebrate


Take time to pat yourself on the back and congratulate the people around you for the goals you’ve reached and the efforts your team has made on your behalf.  We all could use more praise and more celebrations in our lives.  Perhaps you can organize a party, or if you are not the partying type, a quiet word individually with your team can go a long way, maybe more than you know.


4-     Prune Your Projects    


Is your plate too full?  Most of us would say “yes” to that question, so the next step is to ask yourself what you can afford to stop doing that doesn’t make sense.  Is there a project or two that can wait?  If so, decide to stop stressing about not getting it done and give yourself permission to put it on the back burner for now.


5-     Focus


Ask yourself what one thing you could do today that will make all the difference in your profits, revenues, goals, or simply peace of mind.  And get that thing done.


Try these five summertime tips to rejuvenate your business.

Does Your Small Business Need a CRM?

Have you ever stayed at a hotel and then returned, finding that they have stocked your room with everything you asked for the last time you were here?  Your special allergenic pillow was already waiting for you, you were asked if you would like a dinner reservation made just like you always do the first night, and there were even extra hangars because you always need extra hangars.  None of this would be possible for the hotel if it didn’t have a CRM, customer relationship management, system in place.


Would your clients be impressed if you remembered all of the details about your last conversation, their last purchase, or their preferences?  If so, your business might benefit from a CRM system.


Businesses that have more than 30 or so clients may benefit from a system that allows you and your employees to enter detailed information about each client interaction that they have.  It can work for both current and future clients, i.e., prospects.  A CRM is basically a great big customer database at its core.  It contains master file information on a customer or client, such as name, company, address, contact info, and custom fields.  It is also transaction-driven in that you can log activity such as calls, meetings, proposal dates, and more.


A good CRM system is also integrated with your other internal systems, such as your accounting or POS system or both.  In some CRM systems, you can see invoice and payment history, so that when a client calls in, you can also peek to see whether they owe you money or what goods they ordered that they may be calling about.


There are literally hundreds of CRM systems to choose from.  The gold standard for large companies is; however, some small businesses use it as well.  SugarCRM is the largest open source CRM, meaning its programming code is available to the public.  ZohoCRM is one of the largest small business CRMs and offers a suite of products for small businesses.  And Act! is also very popular and plays well with social media.


Before choosing a CRM, decide what you want it to do and how you will be using it.  One of the most important aspects of profiting from a CRM is to make sure it gets used, and that takes some habit-changing from you and your staff.  Once you have your requirements, you can evaluate the software options available, and choose the one that works best for you.


When your clients start talking about how great your service is and how much attention you pay to the details they care about, you’ll know your CRM is paying off for you.


ALSO, don’t forget to Subscribe to my newsletter for information to help you make and keep more money.

101+ Small Business Income Tax Deductions

Brochures /Flyers
Business Cards
Copy Editor Fees
Direct Mall
Email Marketing/Newsletter
Graphic Designer Fees
Internet Ads (Facebook/Google/etc)
Leads/Mailing Lists
Marketing Services
Networking Event Costs
Print Ads: Newspapers/Magazine
Promotional Materials
Radio Ads
Television Ads
Web Design
Web Hosting & Domain Fees

Continuing Education
Books (Sales Books, Etc)
Continuing Education Seminars
Magazine Subscriptions
Newsletter Subscriptions
Sales Training/Coaching
Textbooks/Reference Books
Trade Publications

Business Mileage or
Actual Auto Expenses
• Car Washes
• Depreciation/Lease Payments
• Gas
• Insurance
• Interest
• Licenses/Registration
• Maintenance
• Repairs
• Tires
• Parking
• Tolls

Business Travel
Car Rental
Dry Cleaning/Laundry (while traveling)
Taxi, Train, Subway, Bus

Business Meals & Entertainment

Answering Service
Cell Phone
Fax line / Efax
Internet Service
Office Telephone
Toll Free Number Equipment

Business Equipment
Cell Phone/Smart Phone
Cleaning Equipment (Vacuum)
Equipment Repair
Hard Drives/Thumb Drives

Employee Wages
Clerical Support
Family Members (Kids/Spouse)
Payroll / Unemployment Taxes
Sales Agents

General Liability
Workers comp

Office or Home Office
Mortgage Interest/Rent
Real estate and personal property taxes
Security System

Office Expenses
Client Refreshments (coffee,water,soda)
Janitorial expenses
Office Furniture
• Desk
• Filing Cabinets
Office Supplies
• Envelopes
• Folders
• Paper
• Pens
• Postage
• Stationary
• Toner/Ink
Office Rent
Online Storage of Business Files

Professional Fees
Association Dues/Fees
• Professional association
• Chamber of commerce
Bank Fees
Bookkeeping Fees
Insurance License
E&O Insurance
Legal fees
CPA / Tax Planning & Preparation

Qualified Plans
Defined Benefit Plan
Self Employment Pension {SEP)
Simple lRA
Solo 401k

Start up Expenses
Costs Incurred before going into business.
Costs to setup LLC or Corporation

Fringe Benefits
Section 105 medical expense reimbursement plan
Section 125 cafeteria plan


“Stop wasting money on taxes that you don’t have to pay!”
We’re different. We don’t just record history by putting the correct numbers in the correct boxes on your tax return and calling it a day. We help you write history with a complete lineup of court-tested, IRS-approved concepts and strategies to give you the tax savings you really want.
Call (918) 742-2705 for your free “1040 Analysis.” We’ll find the mistakes and missed opportunities that may be costing you thousands, then show you how proactive tax planning can rescue those wasted dollars!

Your Average American Earning $200,000+

News from the desk of Ron Wilburn, CPA

IRS Reveals How “High Income” Earners Pay No Tax


The IRS “Statistics of Income” Division last release for high-income tax returns was SOI Bulletin Spring 2012. While we don’t expect it to challenge the latest John Grisham thriller on the bestseller list, the Bulletin actually appeals to an even bigger audience – anyone who wants to pay less tax!

The big news in this issue was this: in 2009, 3,924,489 Americans reported “adjusted gross incomes” of $200,000 or more. 20,752 of them paid zero federal income tax. Zip. Zilch. Nada.

Paying no tax is hardly remarkable. According to the Washington-based Tax Policy Center, this year 47% of Americans will pay no federal income tax. That’s because their income is so low, or because they qualify for enough exemptions, deductions, and credits to eliminate any liability. But making $200,000 and paying no tax – now, that’s an accomplishment. How did they do it?

According to the IRS, here are the items that produced the largest tax effects on high-income returns:

Interest paid (including mortgage interest and investment interest)
Taxes paid
Charitable contributions
Casualty and theft losses
Partnership and “S corporation” losses
Tax-exempt interest
You probably don’t want to count on “casualty and theft losses” to bail yourself out of a big tax bill. But you can count on one thing. Very few of those 20,752 lucky winners sat down to file their taxes and discovered their zero tax bill by surprise. Almost all of them did it through careful planning.

Do we sound like a broken record with the “P” word? Sorry, but that’s just too bad. Planning really is the key to minimizing your taxes. So, while we can’t promise planning will eliminate your tax entirely, we can tell you it gives you your best shot.

Are your friends, family, or colleagues grumbling about unhappy April 15 surprises? You can be a hero by helping them avoid those surprises. Let them know that we can help, with the right plan and the right concepts and strategies for them. And if you don’t have a plan of your own . . . well, you know where to find us!

Follow us on Twitter at @WilburnCPA and let us know how we’re doing.

Thanks for a great year.


Ron Wilburn
Wilburn CPA


Creating Bank Rules in Xero Beautiful accounting software

There are two types of bank rules in Xero

  1. Spend Money Rule – applies to debit transactions
  2. Receive Money Rule – applies to credit transactions

Spend Money Rule

We will now explain how to create a spend money rule in Xero that will divide an amount between two or more general ledger accounts. 

Let’s say you use your auto in your business and after tracking your mileage for the IRS in a log book, you determine the business use of your automobile is 75%.  Each time you buy gasoline at QuikTrip you don’t want to have to manually code the transaction.  You can setup a spend money rule that will automatically code 25% of the expenditure to owner’s draw, and the other 75% to automobile expense.

Click the “Go to banking” link from the dashboard, then click “Bank Rules”.  Click “Create Rule” and choose Spend Money Rule.

Line 1. When money spent on the bank statement matches [  ANY  ] of the following conditions…

Description,  Contains,  QT

Line 2. Set the contact…


Line 3. Automatically allocate fixed value line items…

no entry required

Line 4. With the remainder, allocate items in the following ratios…

Description = gasoline,  G/L Account = Automobile expense,  Percent = 75%

Add a new line, and input the following

Description = personal gasoline,  G/L = Owner’s draw,  Percent = 25%

Line 5. Set the reference…

Set this to either “from the reference” or “by me during bank rec”

Line 6. Target a bank account…

Choose your desired business bank account.

Line 7. Give the rule a title…

Name the rule something like “QT gasoline allocation”.

Next time a bank statement item is downloaded with QT in the description field, this rule will automatically code the amount to the correct general ledger accounts and percentages.  You just accept it and you’re done recording and reconciling the transaction.  It should save you at least 50% of the time required to do it manually each time.  You can setup bank rules for numerous scenarios and each time you setup a new bank rule, it saves you time from now on and the reconciliation process gets faster and faster.

Check back often for more ideas to streamline your use of Xero beautiful accounting software, or better yet subscribe to our newsletter.

Want to talk to someone about how Xero can help your business?  Call us at (918) 289-8212.

IRS Tax deduction for business use of automobile

What is needed to take a tax deduction for using your auto in your business?

There are two methods that you can use to calculate the tax deductible amount.

  1. Standard Mileage Rate
  2. Actual Expenses

Standard Mileage Rate  Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56.5 cents per mile for business miles driven.
  • 24 cents per mile driven for medical or moving purposes.
  • 14 cents per mile driven in service of charitable organizations.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

Actual Expenses  You cannot deduct amounts that you approximate or estimate.  You must have a record of the actual amount of each expense. Receipts, canceled checks, entries on your bank statement will all be sufficient to prove the amount of expense.  You also need to provide the business destination and purpose.

Business and personal use.  If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose.

Auto Mileage Log Book   Keeping a mileage log book of your business miles and then comparing your business miles to all other miles driven will give you the business use percentage for the vehicle.  The IRS allows you to keep an adequate record for parts of a tax year and use that record to prove the amount of business or investment use for the entire year. You must demonstrate by other evidence that the periods for which an adequate record is kept are representative of the use throughout the tax year.


You use your car to visit the offices of clients, meet with suppliers and other subcontractors, and pick up and deliver items to clients. There is no other business use of the car, but you and your family use the car for personal purposes. You keep adequate records during the first week of each month that show that 75% of the use of the car is for business. Invoices and bills show that your business use continues at the same rate during the later weeks of each month. Your weekly records are representative of the use of the car each month and are sufficient evidence to support the percentage of business use for the year.

Smartphone Mileage App  There are some really cool apps available for your smart phone that will use the built in GPS feature to automatically calculate your miles driven for a particular trip.

  • Use the iPhone GPS to accurately track miles traveled.
  • Create an acceptable IRS mileage log
  • Email the log file to yourself so you can add to a spreadsheet
  • Enter purpose and destination

For those of you currently using Xero Beautiful accounting software, once you know your business use percentage, you can setup rules in Xero to automatically code the personal use portion of expenses to owner’s draw and the business use percentage to automobile expense.  To learn more click here.

Affordable Care Act and Health-Care Reform

Health-Care Reform: Looking Back and Ahead



Three years ago, on March 23, 2010, President Obama signed the Affordable Care Act (ACA) into law. While several substantial provisions don’t take effect until 2014, many of the Act’s requirements already have been implemented, including:

  • Insurance policies must allow young adults up to age 26 to remain covered on their parent’s health insurance.
  • Insurers cannot deny coverage to children due to their health status, nor can companies exclude children’s coverage for pre-existing conditions.
  • Lifetime coverage limits have been eliminated from private insurance policies.
  • State-based health insurance Exchanges intended to provide a marketplace for individuals and small businesses to compare and shop for affordable health insurance are scheduled to be implemented by October 1, 2013.
  • Insurance policies must provide an easy-to-read description of plan benefits, including what’s covered, policy limits, coverage exclusions, and cost-sharing provisions.
  • Medical loss ratio and rate review requirements mandate that insurers spend 80% to 85% of premiums on direct medical care instead of on profits, marketing, or administrative costs. Insurers failing to meet the loss ratio requirements must pay a rebate to consumers.
  • The ACA provides federal funds for states to implement plans that expand Medicaid long-term care services to include home and community-based settings, instead of just institutions.
  • The ACA provides funding to the National Health Service Corps, which provides loan repayments to medical students and others in exchange for service in low-income underserved communities.
  • Medicare and private insurance plans that haven’t been grandfathered must provide certain preventive benefits with no patient cost-sharing, including immunizations and preventive tests.
  • Through rebates, subsidies, and mandated manufacturers’ discounts, the ACA reduces the amount that Part D Medicare drug benefit enrollees are required to pay for prescriptions falling in the donut hole.

Major provisions coming in 2014

Several important provisions of the ACA are due to take effect in 2014, such as:

  • U.S. citizens and legal residents must have qualifying health coverage (subject to certain exemptions) or face a penalty.
  • Employers with more than 50 full-time equivalent employees are required to offer affordable coverage or pay a fee.
  • Premium and cost-sharing subsidies that reduce the cost of insurance are available to individuals and families based on income.
  • Policies (other than grandfathered individual plans) are prohibited from imposing pre-existing condition exclusions, and must guarantee issue of coverage to anyone who applies regardless of their health status. Also, health insurance can’t be rescinded due to a change in health status, but only for fraud or intentional misrepresentation.
  • Policies (except grandfathered individual plans) cannot impose annual dollar limits on the value of coverage.
  • Individual and small group plans (except grandfathered individual plans), including those offered inside and outside of insurance Exchanges, must offer a comprehensive package of items and services known as essential health benefits. Also, nongrandfathered plans in the individual and small business market must be categorized based on the percentage of the total average cost of benefits the insurance plan covers, so consumers can determine how much the plan covers and how much of the medical expense is the consumer’s responsibility. Bronze plans cover 60% of the covered expenses, Silver plans cover 70%, Gold plans cover 80%, and Platinum plans cover 90% of covered expenses.

Cloud Accounting News

Cloud Accounting News
Volume 1, Issue 1

Three. Two. One. Xero.

Xero Certified Advisor Logo
As one of the few Xero Certified Advisors in the USA, we’re excited to debut our new monthly article designed to help you learn more about Xero, a hot new cloud accounting system that we support.  Today’s article will introduce you to the accounting software service and describe two of our favorite benefits. 
What Is Xero?
Xero is an online accounting application that is an alternative to using QuickBooks, Sage, MYOB, or another small business accounting software.  It allows a small business to invoice, bill, and track their bank balance, among other features.  The standard accounting functions of general ledger, accounts receivable, and accounts payable are included in Xero. 
You access Xero online, and all your files and the software are stored online.  There is nothing to install, no software to upgrade, and no files to back up or pass to your accountant since it’s all accessible as long as you have an Internet connection, a browser, and the account login credentials. 
The More, the Merrier
One of our favorite parts of Xero is they allow unlimited users at no additional costs.  You’re not penalized for having multiple bookkeepers, multiple employees, or just a lot of friends!
Both QuickBooks and Sage charge by the number of users, so this is a huge competitive strategy for Xero.  It makes sense when you think about it for an online product, because an increase in the number of users does not necessarily correlate with additional vendor costs.       
Beautiful Bank Feeds
The highest payback feature in Xero is its daily bank feeds.  Data entry is cut to almost nothing because all of your banking, PayPal, and credit card transactions automatically feed into Xero. 
You don’t have to pay your bank a software fee for this either.  It’s free.  Xero accesses the banking data either directly with your bank or (in the case of most U.S. banks) through a company called Yodlee which provides the feeds. 
The bank feed is super simple to set up.  All you do is choose your bank name from a drop down list, enter your user ID and password for your online bank account, and that’s it.  The transactions are entered automatically.  If something goes wrong with your bank or the feed, you can always easily import the transactions via a standard import file. 
Is Xero Right for Your Business?
If you’re already on Xero, congratulations.  Our future articles will include how-to’s and fun features about Xero and its family of add-ons.
If you’re wondering if Xero is right for you, then it’s best to discuss this with an accounting professional that knows your existing software system, your business needs, and the capabilities of Xero.  We’ll be happy to have that conversation with you. 
A few of the types of clients that are perfect for Xero include:
·       Clients who need very limited accounting features
·       Clients in services industries where there is no inventory
·       Clients that wait until tax time and get the entire year caught up in one swoop
·       Clients who hate the software they are currently using
·       Clients who are currently using Excel and re-entering everything
·       Clients who keep everything in a shoebox
If you fit into one of these categories or are just curious, be sure to reach out and give us a call at (918) 289-8212 so we can find out whether Xero is right for your business.