Monthly Archives: October 2017

Maximizing Financial Relief for Losses–
Before the Storm Hits

iuWhen one hears of a hurricane threat or other severe weather warning, often times the natural reaction is to go into planning mode. People generally make sure that they have enough food for a certain length of time, cars are filled up with gas, the generator is in working order and important belongings and documents are packed up to grab quickly in the case of evacuation. However, other than a possible trip to the bank to withdraw extra cash to have on hand and making sure that credit cards are handy, financial planning for such disasters is often unheard of.

The IRS, not often thought of as the go to place for assistance, does offer financial relief to taxpayers for casualty losses. However, in order to benefit, one must file an insurance claim timely. The taxpayer is responsible for providing an appraisal of the fair market value of the damaged property immediately before and after the loss. It is important to consider items of value in addition to a house, such as artwork, collectibles, electronics, etc. The value of the loss(es) can also be supported by the amount that is incurred to repair the damaged property as long as it is brought back to the same state as it was before the damage(s) took place. The preservation cannot be disproportionate to the loss or unwarranted and must not amount to more than the fair market value of the property before the disaster.

To claim a loss in the year of occurrence, one would do so on their individual tax return. To calculate the deductible amount, take the difference of the fair market value before and after the loss, less $100 per casualty, less any reimbursement received by the insurance company. Then, reduce that amount by 10% of your adjusted gross income. The result is the portion of the loss which is deductible on your tax return.  There are other considerations to take into account though, including, but not limited to, basis, multiple losses and whether there is a reasonable chance of recovery.  Additionally, be aware that if reimbursement from the insurance company is received subsequent to filing the tax return, the reimbursement should be recognized as income to you in the year in which it is received.

The treatment for deducting losses in connection with hurricanes and other natural disasters goes beyond the general overview of what is being shared here. In fact, the rules change and more options are available when a loss occurs under a declared federal disaster. Business losses also must be considered and reporting for relief is done so differently than for individuals.  If faced with the unfortunate situation of incurring any type of casualty loss, it is best to reach out to your CPA.

If the proper steps are not taken ahead of time, maximizing the relief of losses can be challenging and limiting. Please plan properly for hurricanes and other natural disasters. Not doing so will  complicate your ability to financially recover from your loss!

Lenore C. Sanchez, CPA

 

Should I Upgrade My QuickBooks?

iu-1“If it ain’t broke, don’t fix it…” can easily become one’s mantra when using QuickBooks for business accounting.  As users, once we establish a procedure for entering financial transactions, we have little reason to deviate from our norm and seek out alternatives. There is a downside to practicing our mantra, Intuit, the developer of QuickBooks stops supporting a product three years after its release.  For example, support of QuickBooks 2014 products ceased on May 31, 2017.  This means those users no longer receive software updates and cannot call Intuit for technical support of their 2014 product. But, does any of this matter to your business? At some future time, the lack of support will affect every business that chooses not to upgrade the program.

Change can be scary but upgrading QuickBooks can be swift and painless, frequently with a great upside – new features that may save you and your business time and money!  Did you know you can schedule reports in QuickBooks 2017?  The new Scheduled Report feature will automatically send a password-protected PDF attachment by email at a scheduled time. Schedule sales reports to be sent daily to your sales staff or weekly financial reports to be sent to owners. Take advantage of this new feature and others by upgrading your QuickBooks. Although Intuit does not offer upgrade pricing, they frequently offers pricing incentives to encourage upgrading to the latest version of QuickBooks.

If you are unsure if you should upgrade, contact a GKG QuickBooks ProAdvisor at 845-356-6100 to discuss if a new version will benefit your business.  A GKG QuickBooks ProAdvisor can also discuss with you your current version and if there are features that you may benefit from using but are not currently aware of.