News & Resources

Private Company Council Established

In 2009 a study was conducted to address how the accounting standards can meet the financial statement reporting needs of US private companies. The study found that accounting principles generally accepted in the United States of America (GAAP) often address issues that are not relevant to smaller, less complex companies, including those that are not public. Some of the most costly and complex standards to implement for a small business were the least relevant and least useful for the reader of the financial statements. 

Many small private companies are normally only required to file income tax returns but lenders and bonding companies are requiring GAAP financials which the companies do not have the accounting resources to prepare. The cost of preparing the GAAP financials for these small private companies often exceeds the benefits.   

The newly established Private Company Council will work directly with the Financial Accounting Standards Board (FASB) to give recommendations of various modifications to GAAP that would be considered beneficial for the small private company. During the first few years the council will meet several times during the year and will be open to the public. Stay tuned for updates on changes to the financial statement reporting standards for private companies as the Private Company Council implements its recommendations.

Congratulations to Katie Vachon

LMGW Certified Public Accountants, LLP would like to congratulate Katie Vachon for not only passing all parts of the CPA exam, but also being promoted to Senior Accountant. Katie is submitting her application for her CPA license and awaiting official designation from the Board of Accountancy.

Katie also has another exciting event coming up this month. She is getting married to her college sweetheart, Joe, in a ceremony that will be held in their home state of New Hampshire. Katie and Joe will enjoy a honeymoon taking in the sights of Europe. LMGW wishes Katie and Joe all the best as they begin their new life together.

Changes coming in 2013 under the Affordable Care Act

We have all heard by now that the Supreme Court has upheld the Affordable Care Act. Many of the provisions have already been enacted while it will be several years before others take effect. We have highlighted some of the important provisions that will come into effect in 2013 below. If you have any questions or concerns about how these changes may impact you please call your LMGW advisor.  

• Additional .9% Medicare tax on higher earners-An additional .9% Medicare tax will be charged on taxpayers with salary and/or self employed earnings above $200,000 for single taxpayers, $250,000 for married filing joint taxpayers and $125,000 for married filing separate taxpayers. The .9% tax is calculated on a taxpayer’s salary and/or self employed earnings in excess of the applicable threshold. This tax is also in addition to the 3.8% Medicare tax on investment income discussed below. Taxpayers should be aware that they could be subject to both taxes and will need to take them into consideration in calculating estimated tax payments in the future. For more information see our previously posted article here.  
•  Additional 3.8% Medicare tax on net investment income-Taxpayers with modified adjusted gross income (MAGI) above $200,000 for single taxpayers, $250,000 for married filing joint taxpayers and $125,000 for married filing separate taxpayers will be subject to an additional 3.8% Medicare tax on their net investment income. Investment income generally includes interest, dividends, capital gains and losses on investment property and rental income. The tax will be imposed on the lesser of your net investment income or MAGI in excess of the threshold. If your MAGI is below the applicable threshold the additional tax will not apply, even if you do have investment income. For more information see our previously posted article here.
• Higher threshold for itemized medical expenses-Under current law, medical expenses can be deducted as an itemized deduction to the extent they exceed 7.5% of AGI. In 2013 the threshold will increase to 10% of AGI for regular tax purposes. The threshold will remain at 10% for AMT purposes. If you or your spouse is 65 or older at the end of 2013 the lower 7.5% threshold will apply until 2017.
• $2,500 cap on FSA contributions-The maximum an employee can contribute to an FSA plan will be capped at $2,500 annually beginning in 2013.
• 2.3% Excise tax for medical device manufacturers and importers-Medical device manufacturers and importers will have to pay a 2.3% excise tax on taxable sales of medical devices. Devices retailed to the general public are exempt, as are hearing aids, eyeglasses and contact lenses.
• Deduction for employer Part D is eliminated– The deduction for the subsidy for employers who maintain prescription drug plans for their Medicare Part D eligible retirees will be eliminated starting January 1, 2013.

Bracing yourself for higher taxes

In 2013 a slew of new and increased taxes are set to be unleashed on individual taxpayers. Two of these taxes are the result of the 2010 Health Care legislation and will directly impact many of our clients.

Beginning January 1, 2013 an additional 0.9% Hospital Insurance (HI) tax will be imposed on “high-income” taxpayers who are defined as single individuals with $200,000 or more of wages or self-employed income per year, $250,000 for married filing joint and head of household filing statuses and $125,000 for married filing separate individuals. This tax effectively raises the current employee-portion of the medicare tax from 1.45% to 2.35% for wages or self-employed income earned in excess of the above limitations. The additional tax is required to be withheld when an individual taxpayer’s wages are more than $200,000, but that does not take into account a spouse’s earnings. Situations in which both spouses work but neither reach the $200,000 level individually may find themselves owing an additional 0.9% on their salaries come tax time. An adjustment of current withholding levels may be necessary, especially in dual income households, for taxpayers that may be subject to this additional tax. Read more

Making the most out of a Non-Profit Organization’s Tax Return

The IRS Form 990, Return of Organization Exempt from Income Tax, is one of the most important documents that a non-profit organization prepares. The 990 provides reporting to the IRS on an organization’s programs, revenue sources, contributions, expenses and governance. One of the most important things about an organization’s 990 is that it is available for public review. Potential donors often download the organization’s 990 to gather more information before deciding to make a contribution and Press will often review the form when preparing articles about the non-profit. As you can see, it’s important that the 990 is accurate and complete.  Read more