Tax Planning, Staff News and What We're Thankful For

November 2019

More Thoughts on Year-End Tax Planning

In last month's e-newsletter, we shared with you some ideas on charitable giving as a function of year-end tax planning. This month, Managing Partner Ron Austin, CPA, was asked by the Daily Herald Business Ledger to contribute an article on tax-planning moves for businesses and business owners. Here's an excerpt from the article:

20% Qualified Business Income (QBI)

According to Ron, sole proprietors, LLC members, partners and S-corporations may be entitled to deduct up to 20% of their business income on the 1040 individual tax return.

This year's deduction, however, may be limited or eliminated if taxable income exceeds $321,400 for a married couple filing jointly,$160,700 for singles and heads of households and $160,725 for married people filing separately. In order to qualify under those thresholds, business owners may achieve significant savings by deferring income or accelerating deductions. Depending on the form of your business entity, you may be able to maximize the new deduction by:

increasing employee W-2 wages before year end
decreasing owner wages or
modifying any "guaranteed payment" terms in a partnership agreement

Rules for this QBI deduction are very complex but can provide substantial tax savings opportunities. We're here to help you determine how the QBI deduction might work for you and your business.

Accounting Method

Generally, it's favorable for a business to file taxes on a "cash basis" versus the "accrual basis." Under the cash basis, income actually collected in the current year is taxed. The accrual method includes income earned, whether or not it is collected. Under the new tax laws, more businesses can use the cash basis method of accounting than were allowed before.

In order for a business to be eligible for the cash basis accounting method, a taxpayer must, among other things, satisfy a gross receipts test. For 2019, the gross receipts test is satisfied if, during a three-year testing period, average annual gross receipts don't exceed $26 million. That's up from $25 million for 2018 and prior to that it was $5 million--a significant change to the tax laws. To shift income, cash method taxpayers may find it easier to:

hold off billings until next year
pay your bills early or
make certain prepayments

If you have questions about the accounting method best for you and your business, please contact us.

Expensing Business Property

The Tax Cuts and Jobs Act greatly enhanced prior limits on the decision to expense business property. For tax years beginning in 2019, the limit for expensing is $1,020,000 for a business that bought and began using business property valued at less than $2,550,000. The ability to expense property is also available for any improvement to a building's interior and for roofs, HVAC, fire protection, alarm and security systems. This method, known as the "Section 179 deduction," can be a potent tool for year-end tax planning since property acquired and used in the last days of 2019 rather than in 2020 can result in a full deduction.

100% Write-Off of Equipment

Businesses also can claim a 100% bonus first-year depreciation deduction for the purchase of new or used machinery or equipment if purchased and used in 2019. This is particularly useful if a business doesn't qualify for the Section 179 method described above.

For the full story as written by Ron for the Daily Herald Business Ledger, click here. As with most of the Internal Revenue Code, these new provisions are detailed and complex. Please contact us for more information about how we can help you plan for your business in the tax year.

Sales Tax Rate Changes for Some in Illinois on January 1

Effective January 1, 2020, some taxing jurisdictions have imposed a local sales tax or changed their local sales tax rate on general merchandise sales, according to the Illinois Department of Revenue's November 2019 bulletin.

Business district sales tax and home rule sales tax, referred to as "locally imposed sales tax," will change in the following jurisdictions: Aurora, Bedford Park, Evanston, Hamel, Lombard, Marion (Johnson County), Marion (Williamson County), Monticello, North Utica, Peoria Heights, Peotone, Streator, Tilton, Trenton and Waterloo.

Locally imposed sales tax does not apply to all merchandise. For exceptions and to learn more about this upcoming change and the rates that may apply to you, click here to read the informational bulletin which includes additional links to the Illinois Department of Revenue.

Our People Make a Difference

Our intern Iqra Majid, a student at Benedictine University, has been awarded a scholarship for a review course for the certified public accountant (CPA) licensing exam. The scholarship is offered by CPAmerica who partners with Surgent's CPA Review to offer this "Premier Pass" course, named a Top New Professional Education Product by Accounting Today .

"Please join me in congratulating Iqra on receiving this scholarship," said John Straus, CPA, partner, who supported Iqra's application with a letter of recommendation. "The CPAmerica Training Committee evaluated numerous candidates from all the firms in the association and found that Iqra's academic accomplishments and her altruistic contributions to our community distinguished her among others." Click here for a link to CPAmerica's press release.

Iqra is a senior at Benedictine and president of the university's Accounting Club. She will graduate in May 2020 and already has accepted a position following graduation as a staff accountant here at Mathieson, Moyski, Austin & Co. At the time of publication, Iqra is in Mecca, Saudi Arabia, serving as a volunteer for people with special needs who are performing Umrah, a spiritual pilgrimage.

We are delighted to announce the appointment of two new managers here at MMA & Co.

Mike Kuderna, CPA, has been an accountant since 2013. Mike received his bachelor's degree in business administration with an accounting and finance major from the University of Iowa in Iowa City, IA. He and his wife Emily reside in Lisle with two little boys: Michael, 16 months, and Jonathan, two months. Mike is a sports fan and enjoys playing golf and softball as well as spending time with family. He'll always be famous here at MMA & Co. for politely asking to postpone his interview because baby Jonathan arrived earlier than expected--on the same morning as the interview.

Brandon Soris, CPA, comes to us as an accountant since 2011 with a specialty in audit. He'll be contributing his audit expertise while also expanding into a tax role. Brandon received his bachelor of business administration degree with a major in accounting and finance from St. Norbert College in DePere, WI. He and his wife Katie live in Aurora with their three children: Adam, 5; Patrick, 3; and Emily, 11 months. He, too, is a sports fan and enjoys golf as well as time with his young family and extended family in Green Lake, WI.

Photo: Both Mike (R) and Brandon (L) are key additions to MMA & Co. and we welcome them to the team.

From holiday celebrations at the Carol Stream Chamber of Commerce to supporting the Rotary Gives, Feeding Our Community Wheaton Rotary fundraiser, our people are out in the community making a difference. At this year's Rotary event, held Nov. 16, nearly $50,000 was raised to give back to the community in a variety of ways. "Thank you to Mathieson, Moyski, Austin & Co., LLP, for their continued support of the Rotary's annual event," said Betsy Adamowski, executive director of the Wheaton Public Library, chair of the event and 2019 president-elect of the club.

Photo: Vince Salinas and Shannon Bachara, CPA, share a moment at the Wheaton Rotary Fundraiser.

See You Next Week!

By now you should have received your invitation for next Thursday, December 5, for our Holiday Open House and Retirement Party for Mike Moyski, CPA. The party will be held from 5:00 p.m. to 7:30 p.m. here on the fourth floor (Suite 400) at 211 S. Wheaton Ave., Wheaton, IL, 60187. If you haven't already RSVP'd, there's still time... please email Laura O'Malley, our Ambassador of First Impressions, or call our main number, 630-653-1616.

New employees... scholarships... supporting our community... you can see that we have much to be thankful for this year. Here are some of the things our team members shared they are thankful for:

Brian Eisenmenger, CPA:

"What am I NOT thankful for? I am thankful for my health and my family."

Debra Brown :

"I'm thankful for good health for my family, friends and myself."

Jake Rexilius:

"I'm thankful to finally be done with school. I'm also thankful for the opportunity to come to MMA and learn and grow as an accountant as well as the people I get to work with!"

Nataliya McDonald, CPA:

"We are thankful for our daughter Ryeesa who was born in July."

Mike Moyski, CPA:

"I am thankful for my family and all of the incredible people I have met and had the privilege of working with during my career."

Jennifer Grealish:

"In a year of great change for me I am grateful for my family and friends and their support of me. I am also very grateful that I found my job here at Mathieson, Moyski, Austin & Co, and get to continue my career with a great group of people."

Becky Howell:

"I’m thankful for lots of things….bosses with a sense of humor 😊, a job that I love, a shorter commute and those that I love."

Shannon Bachara, CPA:

"In 2019 I married my long-time boyfriend, became an official stepmom to two amazing kids and became a grandmother. I’m thankful for the abundance of love that surrounds me."

Helen Demsher, CPA:

"I'm thankful that all of my children are under one roof for the time being…"

Ron Austin, CPA:

"I'm thankful for freedom, clean water and Netflix!"

Cindy Gunderson:

"I am thankful that each new day brings another opportunity for me to share love and happiness, joy and laughter and the triumphs and defeats with my loving family and wonderful friends."