W is finally complete.

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1 ROR Tax Professionals, LLC Tax Season Newsletter January 2017 SPECIAL DATES OF INTEREST: Tax Season (February 1 through April 18, 2017) Office Hours Monday Thursday 8:00 am to 6:00 pm Friday-Saturday 8:00 am to 5:00 pm Business Tax Returns are due March 15, 2017 Individual Tax Returns are due Tuesday April 18, Businesses that file an extension are due September 15, 2017 A Year When the Dust Finally Settles W is finally complete. hat has happened this year? Highway 100 reconstruction The bridge that connects Highway 7 and County Road 25 is open for use. (Be sure to exit County Road 25 EAST, not Highway 7 WEST.) We are fully settled into our office suite on the first floor. Our website has been updated with more handy resources to help you year-round. We have a full year s experience with a program that allows you to sign and pay without coming to our office! We have a new product to allow you to upload your documents and RETRIEVE them and your tax returns later 24 hours a day, 7 days a week, 365 days a year! Teamed Up and ROR-ing to Go! Individual Income Tax Returns on extension are due October 16, ROR continues to strive to make your ROR experience the ROYAL TREAT- MENT. We will be designating 2 preparers to care for your tax return from beginning to end. We are pairing up preparers so that every return is reviewed by another professional. Everything from scanning your documents, to entering your information, to reviewing, invoicing, assembling, ing for e-signature or calling to tell you it is ready for pickup, will be done by your pair of professionals. Any questions you have can be answered by your personal team. Hazzah! 1

2 Tax Season Newsletter January 2017 New Identification Requirements for Children - by Denise Nix Would it surprise you to know that the IRS has new requirements for us to document each person claimed in a return? This year we are required to verify and obtain documentation for all children claimed on a return. Your tax preparer will ask for a copy of each child s Social Security Card to keep on file for the children claimed on your tax return. For those of you with child related credits, for instance, the American Opportunity, Earned Income, and Additional Child tax credits, we will require documentation, like mail from the child s school or the doctor s office to verify the residency of the child. Please bring these items in with you to your tax appointment, we will scan them into your file and then give them right back to you. Is the ACA Here to Stay? - By Denise Nix That is the looming question since the November election. Presidentelect Trump promised to repeal and replace Obamacare with his own new program, and expand the use of Health Savings Accounts. The future of the Affordable Care Act is uncertain. The one thing we know for sure is that it is here for the upcoming 2016 tax filing season. So, again this year we will be looking for your Forms 1095 (A, B or C) and asking you questions regard- ing your health insurance coverage. The IRS has extended the due date for providing the 1095 forms to individual taxpayers. Large employers, those with 50 or more full-time employees, now have until March 2, 2017 to provide Forms 1095-B or 1095-C to individuals. This is a 30-day extension from the original due date of January 31. As a result of this extension, you may not receive your Forms 1095-B or C by the time you are ready to file your 2016 tax return. While information on these forms may assist in preparing your return, the forms are not required to file. The short answer is you do not have to wait for the forms to file your 2016 tax return. 2

3 Safe Harbor Elections for Landlords and Small Business Taxpayers -by Matt Pagel T axpayers with rental property or real property in a trade or business should be aware of the 2013 final repair regulations which added a safe harbor election if the average annual gross receipts for the three preceding tax years is $10 million or less. This safe harbor election allows qualifying small taxpayers to not apply the improvement rules to an eligible building property if the total amount paid during the tax year for repairs, maintenance, improvements, and similar activities performed on the eligible building doesn t exceed the lesser of $10,000 or 2% of the unadjusted basis of the building. To be eligible that building must have an unadjusted basis of $1 million or less. By making this election, the taxpayer is able to fully deduct improvements in the year rather than add them to a depreciation schedule. This is a big benefit to those with rental property which would otherwise not be able to utilize the Section 179 deduction. Another important election for these taxpayers is the De Minimis Safe Harbor Election. Beginning January 1, 2016, this election allows corporations, S corporations, partnerships, LLCs, and individuals filing a Form 1040 with Schedule C, E, or F to fully deduct small dollar expenditures for the acquisition or production of new property or for the improvement of existing property, which otherwise must be capitalized under 263(a). This means if a business makes an asset purchase of $2,500 or less, they may elect to fully deduct this expense in the year of purchase rather than add the asset to a depreciation schedule. Both elections require proper reporting and substantiation. The benefits of making these elections can be significant and taxpayers should discuss them with their tax professional as a part of their tax planning. Piercing the Corporate Veil - by Matt Pagel A serious concern for any business owner pertains to legal liability in a lawsuit. If your business is being sued, are your personal assets protected? This is why the formation of a Limited Liability Company (LLC), Limited Liability Partnership (LLP), or Corporation may be a good idea. These business entities may provide the kind of protection business owners are looking for, unless the court finds grounds for piercing the corporate veil. Continued on Page 4 3

4 Continued from Page 3 Piercing the Corporate Veil - by Matt Pagel What is limited liability? Essentially, it means there is a separation between the business owner and the business itself, they are considered to be two different persons, or entities. As a result of our Fourteenth Amendment to the Constitution, business entities are considered persons under the law. As such, they are entitled to some of the same rights as real people, such as freedom of speech. For this reason they are considered to be separate unto themselves and this creates the veil of legal protection. When the court pierces the corporate veil, the business owner is held personally liable in a suit against the business. Courts typically will not pierce the corporate veil, unless there has been some serious misconduct, like intermingling personal and corporate assets, or undercapitalization at 4 the time of incorporation. Generally speaking, such actions that could be seen as misconduct by the court will occur with smaller, closely held businesses. If you are the sole proprietor (owner) of a Single-Member LLC you may think it is perfectly acceptable to intermingle personal and company funds, like using the same checking account. However, this would be very unwise. While the LLC structure is still fairly new and there hasn t been much case law dealing with piercing the LLC veil, sharing a bank account with your LLC would certainly be one of the criteria viewed as grounds for piercing the veil. Now your personal assets could be at risk. So what was the point in forming the LLC in the first place? A diligent business owner must take measures to protect the corporate veil if they are going to truly enjoy limited liability. Separate bank accounts, financial records and bookkeeping are good places to start. Maintaining the company s solvency and following corporate formalities are some other considerations to be taken. Simply registering your business with the state as an LLC, LLP, or Corporation will not ensure the protection you may have intended. You need to know what other steps are required to keep you separate from your business and what formalities must be followed. Failure to do so may be costly and render your limited liability useless.

5 Tax Season Newsletter January 2017 H ave you discovered that you are the personal representative for an estate, or a trustee? Are you considering a trust and want to understand how it will work from a tax perspective? We can help! We are a great resource for your Trust and Estate tax return preparation and planning. Our desire is to help you minimize the tax liabilities for both your beneficiaries and your trust. We can explain how the income and expenses work in a trust or estate, as well as prepare the tax returns. We don t talk about it much, but many of us have significant experience with trusts and estates. Trusts and Estates By Michael Cassidy, We also help you consider the tax impacts of creating a trust based on your personal values and family goals, if you are considering putting a trust into place. We don t draw up the documents, but we do help you understand how the trust works from a tax perspective, how to use it best, and how you will operate it. Check us out first when you are putting a trust into place, or when you need help as the personal representative 5

6 Tax Season Newsletter January 2017 Have you met the new Year-Round Staff? George Morris I was born in Liberia. I emigrated from Liberia and studied both in Minnesota and Belgium where I earned a Masters degree in Management with emphasis in Finance. I am a family man with two daughters and two cute granddaughters. During my leisure time, I enjoy working out at the gym and spending time with my family and friends. I started my tax career with H & R Block in 2001 and later worked at US Bank / Trust Tax Services as a Tax Accountant for 12 consecutive years. I pledge to ensure that your tax liability is minimized and any refund due is maximized within the framework of the tax laws. Ray Mohr R ay is not ashamed to admit he originally hails from the northern suburbs of Chicago. However, he considers himself a MN native as he left the shores of Lake Michigan more than twenty years ago. You may recognize him as a familiar face at ROR. He worked in the back-office and assisted clients for several years. Ray spent 25 years working in the software industry, most recently with Lawson Software, as director of product development, marketing and information technology. After a brief "Ray-tirement, Ray is enjoying a second career at ROR as one of our tax professionals, working closely with Mike Cassidy and his clients. When he isn t working, Ray can be found spending time with family and friends and his 4 -legged adopted daughters, Tessa, Tivo & Taz! I pledge to treat every client as a member of my extended family, making tax time a family reunion, while going above and beyond and making getting the taxes done as efficient, reliable, accurate and enjoyable as possible! ration of royal treatment 6