Provided by Drake Software

IRS Allows Deduction for Local Lodging Expenses



New Rules Allow Deductions

Regulations issued under T.D. 9696 finalize rules the IRS put into effect in 2012 allowing employees to deduct certain expenses paid or incurred for local lodging as business expenses.

Normally, lodging expenses a taxpayer incurs while not traveling away from home are considered personal expenses under Sec. 262(a) and are not deductible. However, under the new rules, local lodging expenses that meet certain criteria will be considered ordinary and necessary business expenses and therefore deductible under Sec. 162.

To be deductible, local lodging expenses must meet a facts-and-circumstances test under Regs. Sec. 1.162-32(a) or qualify for a safe harbor under Regs. Sec. 1.162-32(b). Local lodging expenses paid by an employer on behalf of an employee may be deductible under Sec. 132 as a working condition fringe benefit if they meet the new tests. If an employee is reimbursed by the employer for local lodging expenses, the reimbursement amount may be excludable from the employee’s income if the expense allowance arrangement qualifies as an accountable plan under Sec. 62(c).

One factor considered under the facts-and-circumstances test is whether the expense is a “bona fide condition or requirement of employment imposed by the taxpayer’s employer.” Examples given in the regulations to illustrate the facts-and-circumstances test include employees who are required to stay at a local hotel during a work-related training session; professional athletes who are required to stay at a local hotel before a home game; an employee who is relocating for work and looking for a new home; an employee who has to stay at a hotel near the office while working long hours; and employees who occasionally are on call for a night duty shift and stay at a local hotel.

Under the safe harbor, local lodging expenses will be treated as an ordinary and necessary business expense if:

  • The lodging is necessary for the employee to participate fully in or be available for a bona fide business meeting, conference, training activity, or other business function;
  • The lodging does not exceed five calendar days and does not occur more than once each calendar quarter;
  • The employer requires the employee to remain at the activity or function overnight; and
  • The lodging is not extravagant or lavish and does not provide a significant element of personal pleasure.

In response to a comment, the final regulations clarify that expenses that do not qualify for the Regs. Sec. 1.162-32(b) safe harbor may nevertheless be deductible under the facts-and-circumstances test.

Taxpayers may apply the new rules to any tax year that is still open.

 

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Source: IRS Regulation at 26 CFR Part 1. [TD 9696].

Lower Tax Refunds?



ACA Credits Could Mean Lower Tax Refunds

The Affordable Care Act (ACA) is already proving to be confusing and costly for consumers, with widespread premium increases and plan cancellations. Now, the Centers for Medicare and Medicaid Services (CMS) is warning tax preparers that their clients could face lower refunds in the coming tax season due to excessive tax credits on their 2013 returns.

CMS initially accepted the consumer’s estimates of income and other data, but subsequently verified that data through independent sources. That process revealed some 1.2 million households with income-related data mismatches, and another 966,000 individuals with citizenship or immigration data matching issues, as of May 30th. [Read more...]

Two Styles; One Successful Practice



Facing Challenges – Creating Solutions

The Challenge: Melding two management styles and different levels of experience into a single, client-focused tax practice.

The Solution: Recognizing that clients have differing needs, firms need a careful blend of professionalism, responsiveness and quality. Plus strong partnerships both inside and outside of the firm.

If there is such a thing as a romantic tax practice, it surely is a cornerstone of Tom and Beanna’s Whitlock Tax Service, LLC in Reno, NV. A Texas boy away from home for the first time to attend trade school in Oklahoma City, he met Beanna when she was still in high school – the two of them children of Air Force service members. He grew up in in Paris, TX (“Only I thought he meant he grew up in Paris, France,” laughs Beanna.”) but moved to the larger city for school. She asked if his intentions were honorable, and they were married just out of high school. This marks their 46th year together. [Read more...]

What is SEO, & Why Should Tax Preparers Care?



Websites are Competing for a Position on the First Page of the Search Engine Results

 

Search Engine Optimization (SEO) is the process organizations use to increase their visibility on the first page of a search engine’s unpaid listings. Generally, websites at the top of a search receive increased traffic and improved exposure for their products and services.

But optimizing a web site is hardly an easy matter. There are more than 150 different search engines. Each uses its own system to rate websites, and each will yield a different set of rankings for any given site. Even were the firm to concentrate on only the top four search engines in the US – Google, Bing, Yahoo!, and Ask – it would have to deal with four entirely different optimization systems. Finally, the search engine providers are painfully aware that search engine optimizers are trying to “game” their systems to improve their clients’ ranking, and tweak their systems on a regular schedule to prevent this. [Read more...]

Drake’s Nashville Office is Open!



We are excited to announce that our Nashville office is open!

 

We already have a development team working out of the new location, and are in the process of recruiting for call center representatives.

 _MG_1610 The nearly 75,000 square-foot facility provides plenty of room for expanding our development and call center operations over the next few years.

Central Time Zone

One of the benefits to the new location is establishing a presence in the Central time zone. Up until now, all software facilities have been based in the Eastern time zone. “We support clients all over the country, so having a call center in the Central time zone helps us support customers on the West Coast,” said Phil Drake, CEO of Drake Software. [Read more...]

Drake e-Signatures



Drake Software e-Signature

As a tax preparer, do you think about the time it takes to sign returns and other documents? They are, after all, just signatures. But multiply those legal signatures across hundreds of tax returns in a single month, add in the cost of paper and printer ink, and the losses in time and profits can become substantial.

In the 1990s, businesses began to seek alternatives to the use of fax machines to create legally-acceptable signatures for contracts, authorization forms, consent forms and bank applications. Technology, business needs and consumer interest have now converged and are driving the use of e-Signature technology in many industries, including tax preparation. [Read more...]

Ethics – What Would You Do?



That’s the question posed on the news magazine and hidden camera television show of the same name.

Broadcast on ABC News since 2008 as part of the Primetime series, and hosted by newsman John Quiñones, it features cast members acting out scenes of conflict or illegal activity in public settings while hidden cameras videotape the scene, and the focus is on whether or not bystanders intervene, and how. It airs on a number of cable and satellite channels, including ABC News, OWN, HLN and ID Network.

But if the ethical challenges on the television show are hypothetical, the ones that can affect tax and accounting professionals are very real. The penalties for unethical conduct are likewise very real – ranging from loss of reputation and formal censure to fines and prison terms.

Ethical conduct should be simple — obey the laws and regulations, deal fairly with clients and peers, and foster a climate of ethical conduct within your own firm. It is not that simple, for four reasons: [Read more...]

IRS: Publication 1304 (Individual Tax Stats) For 2012 Now Available



Statistics of Income

The Internal Revenue Service today announced the availability of Statistics of Income—2012,

Individual Income Tax Returns Complete Report (Publication 1304). U.S. taxpayers filed 144.9 million individual income tax returns for tax year 2012, down 0.3 percent from 2011. The adjusted gross income less deficit reported on these returns totaled $9.1 trillion, which is an 8.7-percent increase from the prior year. [Read more...]

Staying in Touch During the Off-Season



Whether Seasonal or Year-Round Practice

Whether you have a seasonal tax practice or a year-round practice geared primarily toward tax preparation, staying in touch with your clients during the off-season is essential for a strong retention rate the following year.

There are a variety of ways to keep your name in front of your clients during the off-season: membership in civic organizations, sponsoring community events (Memorial Day, July 4th, Labor Day, etc.), social media, and newsletters (paper and/or electronic). [Read more...]

NATP’s Annual Tax Software Survey Results



NATP’s Annual Tax Software Survey

 

The National Association of Tax Preparers (NATP) has released its annual survey of tax preparation software, “Sorting Out Software.” The NATP survey used a different methodology than the 2014 AICPA Software Survey (included in another post), but Drake Software again leads the tax software vendor’s list with impressive scores. [Read more...]