Monthly Archives: April 2016

April Tax Tips

Two tax consequences to consider if you’re refinancing a home

april tax TipsNow may be a great time to refinance, because mortgage rates are still low but expected to increase. Before deciding to refinance, however, here are a couple of tax consequences to consider:

1. Cash-out refinancing. If you borrow more than you need to cover your outstanding mortgage balance, the tax treatment of the cash-out portion depends on how you use the excess cash. If you use it for home improvements, it’s considered acquisition indebtedness, and the interest is deductible subject to a $1 million debt limit. If you use it for another purpose, such as buying a car or paying college tuition, it’s considered home equity debt, and deductible interest is subject to a $100,000 debt limit.

2. Prepaying interest. “Points” paid when refinancing generally are amortized and deducted ratably over the life of the loan, rather than being immediately deductible. If you’re already amortizing points from a previous refinancing and you refinance with a new lender, you can deduct the unamortized balance in the year you refinance. But if you refinance with the same lender, you must add the unamortized points from the old loan to any points you pay on the new loan and then deduct the total over the life of the new loan.

Is your head spinning? Don’t worry; we can help you understand exactly what the tax consequences of refinancing will be for you. Contact us today!

© 2015

Could you save more by deducting state and local sales taxes?

For the last several years, taxpayers have been allowed to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes. This break can be valuable to those residing in states with no or low income taxes or who purchase major items, such as a car or boat. But it had expired December 31, 2014. Now the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) has made the break permanent.

So see if you can save more by deducting sales tax on your 2015 return. Don’t worry — you don’t have to have receipts documenting all of the sales tax you actually paid during the year to take full advantage of the deduction. Your deduction can be determined by using an IRS sales tax calculator that will base the deduction on your income and the sales tax rates in your locale plus the tax you actually paid on certain major purchases.

Questions about this or other PATH Act breaks that might help you save taxes on your tax return? Ciuni & Panichi, Inc. can help.  Contact James Komos, CPA at 216-831-7171 or jkomos@cp-advisors.com.  We can help you identify which tax breaks will provide you the maximum benefit.

You may also be interested in:

Run a side business?  The tax implications.

Don’t neglect your own financial plan.
© 2016

Filing for a tax return extension isn’t without perils

Tax Filing Deadline – April 18

april 18Yes, the federal income tax filing deadline is slightly later than usual this year — April 18 — but it’s now nearly upon us. So, if you haven’t filed your return yet, you may be thinking about an extension.

Extension deadlines
Filing for an extension allows you to delay filing your return until the applicable extension deadline:

  • Individuals — October 17, 2016
  • Trusts and estates — September 15, 2016

The perils
While filing for an extension can provide relief from April 18 deadline stress, it’s important to consider the perils:

  • If you expect to owe tax, keep in mind that, to avoid potential interest and penalties, you still must (with a few exceptions) pay any tax due by April 18.
  • If you expect a refund, remember that you’re simply extending the amount of time your money is in the government’s pockets rather than your own.

A tax-smart move?
Filing for an extension can still be tax-smart if you’re missing critical documents or you face unexpected life events that prevent you from devoting sufficient time to your return right now.

Please contact Jim Komos if you need help or have questions about avoiding interest and penalties.  Reach Jim at jkomos@cp-advisors.com or 216.831.7171 for more information on any of our topics or to get expert tax assistance.

You may also be interested in:

The Pros and Cons of Roth IRA Conversion

March Tax Tips

© 2016

Cybercrime and Not-for-Profit Organizations

By Reggie Novak, CPA, CFE
Ciuni & Panichi, Inc. senior manager and certified fraud examiner

Is Your Not-for-Profit a sitting duck?

ReggieNovakNot-for-Profits generally have limited administrative personnel and often lack dedicated IT staffers. They also typically have smaller budgets for technology solutions such as firewalls, antivirus programs, and intrusion protection. It’s no surprise, then, that the nonprofit sector is one of the most frequently compromised by hackers.

Your Not-for-Profit’s computer network probably contains a wealth of data to entice hackers — for example, donor information, including names, addresses, credit card numbers and bank account information. Also coveted by cybercriminals are personnel data, such as employee Social Security numbers and direct deposit information, and accounting records related to payroll, payables, banking, investments and other financial functions.

Hospitals and other Not-for-Profit health care organizations that collect and store patient data, including medical records and insurance information, are particularly vulnerable. Colleges and universities also are popular targets because of their multiple networks and many users — that includes students who participate in risky online behavior such as illegal file downloading.

Is your defense strong enough?
Most Not-for-Profits are already familiar with protections such as firewalls and antivirus programs. And as long as you keep your programs current and download updates as soon as they become available, you can count on some measure of cyber security.

But your defensive strategy should extend to include policies and procedures, such as data-handling rules. Overworked staffers may neglect to weed out old files and it’s important to implement procedures for disposing of sensitive data that’s no longer needed. Key data and systems should be backed up regularly and stored in a safe offsite location. Because Not-for-Profit employees often share responsibilities, be sure to create accountability for specific jobs.
Training for staffers, volunteers and board members is critical, too. For example, your network’s users should be made aware of such issues as e-mail scams and “social engineering,” where criminals manipulate people into volunteering passwords and other information. Also educate your employees about the proper use of laptops and mobile devices.

Finally, consider taking proactive steps against an attack by hiring a “white hat” hacker. This consultant uses the latest techniques to test your network and devices for holes so that you can plug them.

Are you up for a fight?
Of course, a robust cybercrime-fighting program takes time and at least a small bite out of your Not-for-Profit’s budget. Convincing your board that such expenditures are necessary may be tough.

Increasingly, nonprofits are creating technology committees led by tech executives or other knowledgeable board members. If your board lacks tech expertise, make recruiting someone who understands the need for cyber security — and how to achieve it — a priority. Your tech committee might be tasked with creating policies, determining budgets, evaluating software and products such as cyber liability insurance, and planning how your organization would respond to a cyber attack.

If your tech committee plans to act as first responders to a cyber security incident, be sure to include a public relations expert in the group. The timing and wording of communications can significantly affect how the media and your organization’s stakeholders respond to an event.

Thwarting cyber thieves
Unfortunately, cybercrime will continue to threaten organizations of all types. Join us for a free seminar to learn more about how you can protect your organization on Thursday, April 21 at 7:30 am at the Doubletree Independence, 6200 Quarry Lane, Independence. Click here for more details and to register for the event.

Reggie Novak is a Senior Manager in the Audit and Accounting Services Group.  As a Certified Fraud Examiner, Mr. Novak can assist you with prevention services, including recommending internal controls and other measures to be implemented to prevent theft or misappropriation.  If fraud is suspected, he can investigate and present his findings and recommendations.  Contact Reggie Novak at 216.831.7171 or rnovak@cp-advisors.com for more information.

You may also be interested in:

What it takes to manage an endowment

March Tax Tips