No matter how much time you invest in designing an estate plan that reflects your wishes, your efforts will be for naught if your family can’t find your documents. Here are several tips for ensuring that critical documents are readily accessible when needed:

Wills and trusts

Ask your accountant, attorney or other trusted advisor to keep your original will, living trust and other trust documents; and provide your family with his or her contact information. Be aware that it’s not advisable to place your will or living trust in a safe deposit box, however, as state law and bank policy will likely require that you present the original document or a court order to obtain access.

Financial documents 

Make it easy for your family or other representatives to find life insurance policies; tax documents; deeds to real property; bank, brokerage, retirement account and credit card statements; stock certificates; and other important documents. Also provide contact information for key advisors, such as real estate attorneys, accountants, brokers and financial advisors.

There are many options for providing your loved ones with access to this information, including:

• Renting a safe deposit box and instructing your family on how to obtain access,
• Storing documents in a fireproof lockbox and providing your family with the location and the key or combination, and
• Uploading digital backups of key documents to an online storage system. These systems provide family members or other representatives with access in the event you die or become disabled.

Health care documents 

Consider providing “duplicate originals” or copies of powers of attorney, living wills or health care directives to the people authorized to make decisions on your behalf. You might also ask your physicians to keep duplicate originals or copies with your medical records.

Efficiently and effectively managing physician or dental office operations requires you to have accurate and timely information about the results of those operations. Here are three QuickBooks reports that can provide the information you need to make good decisions to control expenses and optimize operations.

Balance Sheet with Comparison to the Previous Year or Previous Period

Monthly and Year-to-Date Profit and Loss with Previous Year Comparisons

Statement of Cash Flows

Preparing for retirement may be on your mind – and it should be. But have you thought about helping prepare your kids or grandkids for their retirement? Setting up a Roth individual retirement account for your teen can be a smart and rewarding move to consider at tax time, and you don’t have to be wealthy to do it.

High-school students with earnings from a summer job or babysitting probably aren't thinking of putting money away for decades. But you might plant the retirement-planning idea by funding a small Roth IRA for the teen—or by offering to match or put aside $2 or $3 for every $1 of taxable income the teen contributes.

There's no deduction for funding a Roth, but it differs from a traditional IRA in that you contribute with after-tax money but pay no taxes on withdrawals, meaning all growth is tax-free. A teenager working part-time will have one of the lowest tax rates, making it a good trade-off to pay taxes on contributions now rather than at retirement when the total and the tax rate will be much higher. And for your teen, that means decades of earning interest on interest which can result in a nice nest egg when they are ready to retire.

There are some requirements to establish and contribute to an IRA for your teen:

• The teen must have income from a job – allowances, even for chores around the house, don’t count.
• The IRA contribution can be as much as the teen's taxable pay from work in a given year or $5,000, whichever is less.
• The account can be set up and funded as late as the tax-filing deadline – April 15^th.

If you are self-employed, you can employ your children, pay them a salary and open a Roth on their behalf. Just make sure they do real work for a reasonable wage and you file W-2 forms reporting their earnings to the Social Security Administration.

Even with all of the benefits, it may be challenging to convince your teen to save now for retirement that is decades away. It may help to share what you have done towards your own retirement – good planning or poor. It also helps to paint a picture by providing some examples of what putting a certain amount away now and contributing to it over the years may mean in terms of real dollars for their future.

If you have questions about how best to help your teen (or you yourself) prepare for retirement, please contact us.

How do you know that your medical or dental practice is on track to achieve your practice’s financial goals—and your provider’ compensation and retirement goals? Do you have a tool that helps you gauge on a regular basis how you are performing, both in relation to the practice’s historical performance and also in relation to peers?

An electronic dashboard captures key pieces of data that enable you to identify and correct negative trends before they lead to real problems, and to also identify positive trends in the practice. Whether it is built in Excel or a more customized software tool, the dashboard should ideally be displayed on a single screen or page. Using this visual tool, busy physicians and other practice staff can quickly see where the practice stands.

What Data  Should Be in Your Dashboard?

Your dashboard should include a mix of revenue and expense items. Following are three key performance indicators related to billing and collections that we recommend, and that you should be able to generate directly from your billing software.

1.  Gross charges and net collections.

While gross charges measure total monthly and year-to-date productivity, the percentages of those charges that are collectible vary depending on the types of services, payer contracts, payer mix of the practice and other factors. By looking at trends in this data, practice administrators and physician owners should more easily and promptly spot trends in the production and billing and collection processes that need further review.

For example, the graphs for gross charges and collections should generally correlate; as gross charges increase, collections should increase at a proportional rate. Keep in mind that collections usually lag behind charges by 45 to 60 days. If charges and collections don’t correlate, then the practice would need to evaluate the reason for the non-correlation. The practice, for example, should evaluate its payer mix and payer contracts.

There could be numerous other trends in the data that might be cause for concern.  A decline in charges, for instance, might indicate a decline in provider productivity, which would need to be further analyzed. Likewise, a decline in the percentage of collectible charges might indicate that collection performance is lagging.

2.  New patients.

The health and vitality of any medical or dental practice depends on a steady stream of new patients. Each practice needs to evaluate which new patient metrics are most meaningful. In addition to the number of new patients, another important factor of practice health is the type of new patients. For example, since obstetrics patients are generally more profitable than gynecology patients, an OB-GYN will want to see the proportion of OB patients rising. Generally, careful records related to new patient referral sources and contractual changes are good sources of information on trend changes in this key practice indicator.

3.  Accounts receivable aging.

Monitor the breakdown of the accounts receivable balance between the aging categories (current, 31-60 days, 61-90 days and over 90 days). Approximately 50 to 60 days in accounts receivable is a typical goal for many practices. Collecting promptly is imperative because a dollar collected today is more valuable than a dollar collected in the future, and it is more difficult to collect a balance due the longer the accounts age. Because the collection ratio of accounts receivable that are older than 120 days is low, most medical practices shoot for no more than 15 to 18 percent of AR in this category.

Get Some Perspective

A point-in-time metric provides a limited understanding of your practice’s performance. A dashboard that measures trends from year to year, as well as in relation to peers, provides a much richer view of your practice’s health. Benchmarking data is available from MGMA and AMA, as well as subspecialty groups like the American Society of Clinical Oncology.

Dashboards also can drive behavior change. Consider creating a dashboard for each physician, as well as highly paid mid-levels, to show exactly how each provider is influencing the bottom line. When you uncover problems—such as low billing performance in relation to the number of patient visits—dig deeper to get to the bottom of it. Perhaps that doctor has been coding the procedures incorrectly and needs a refresher on proper coding.

Accurate and timely information about key financial performance indicators can allow your practice to catch negative trends early so you can re-route instead of being stranded on the side of the road. Contact us to find out how we can help you create a dashboard to monitor the metrics that fuel your practice’s growth.

In our desire to provide you with the timely instructions to comply with existing IRS guidance on the tangible property regulations, we asked you on Friday, February 13, 2015 to mail in provided Form(s)  3115 to the IRS. Ironically, later on the same day, the IRS provided long-awaited guidance and relief.

Under this new guidance taxpayers are still required to file Form(s) 3115 if they have at least $10M in average gross receipts over the last three years and at least $10M of total assets in 2014. 

However, for anyone not meeting the $10M threshold, there is no longer a Form 3115 filing requirement. 

If you received a Form 3115  from us and have not yet mailed it to the IRS, we ask that you not file the form in light of this new guidance and wait until your tax preparer reaches out to you directly. If, however, you already mailed in a Form 3115 that is no longer required, do not worry – there is no harm in this. 

If you are a taxpayer that is still required to file a Form 3115 under the new guidance and have not received the form from us, know that we will still prepare the form and either send it to you in advance of or with your tax return. 

Thank you for your cooperation  and PATIENCE in this process and please let us know if you have any questions.

One of the most common inquiries clients have for their accountants is “What documents do I need to save, and for how long?” Retaining, organizing, and filing old records can become a burden, both at the business and individual levels. As we all strive to achieve a more "paperless" process, how do we determine what warrants taking up valuable office and storage space and what does not?

Records should be preserved only as long as they serve a useful purpose or until all legal requirements are met. To keep files manageable, it is a good idea to develop a schedule so that at the end of a specified retention period, certain records are destroyed.

At Stockman Kast Ryan + Co., we have developed a Records Retention Schedule we think you will find helpful. Although it doesn't cover every possible record, it does cover the most common ones. As always, please feel free to ask us should you have specific questions or concerns.

Our goal, this year as in every year, is to complete our clients’ tax returns as early and accurately as possible. Using the month of February to enter tax information you provide to us, rather than waiting until March or later once you have received ALL of your tax information, will help us to meet this goal.

There are several ways you can help us better serve you and meet your desired timelines for the completion of tax returns:

• As early as January, send in the tax information you have that is not generated by or dependent on third parties. For business returns or individuals with Schedule C, this could include items such as financial statements, fixed asset purchases/dispositions, bank statements, etc. In the case of individuals, information such as W-2s, itemized deductions, rental activity income and expenses, non-brokerage account income sources, etc. could be provided.

• Once you have received the awaited forms, such as 1099s, Schedule K-1, etc., send them in promptly.

• Sign and return electronic filing authorization forms promptly. We will greatly increase the use of e-signatures for getting tax returns processed and e-filed more quickly than in years past.

• If your tax information is late in arriving and an extension would be acceptable to you, we would appreciate your consideration of that alternative. If you have questions or concerns regarding this option, we are more than happy to discuss the process of extending with you.

We enjoy serving our clients, and we will do everything possible to meet your needs and provide first-class service. If you would like to discuss your situation for this upcoming tax season, please do not hesitate to contact us via phone or email. 

On Oct. 30, the IRS issued its cost-of-living adjustments for 2015. In a nutshell, with inflation remaining in check, many amounts increased only slightly, and some stayed at 2014 levels. As you implement 2014 year end tax planning strategies, be sure to take these 2015 adjustments into account in your planning.

Individual income taxes

Tax brackets will widen and personal exemptions will increase slightly for 2015.

Tax-bracket thresholds increase for each filing status but, because they’re based on percentages, they increase more significantly for the higher brackets. For example, the top of the 10% bracket increases by $150 to $300, depending on filing status, but the top of the 35% bracket increases by $3,625 to $7,250, again depending on filing status.

The personal and dependency exemption increases by only $50, to $4,000 for 2015. The exemption is subject to a phaseout, which reduces exemptions by 2% for each $2,500 (or portion thereof) by which a taxpayer’s adjusted gross income (AGI) exceeds the applicable threshold (2% of each $1,250 for separate filers).

For 2015, the phaseout starting points increase by $2,425 to $4,850, to AGI of $258,250 (singles), $284,050 (heads of households), $309,900 (joint filers), and $154,950 (separate filers). The exemption phases out completely at $380,750 (singles), $406,550 (heads of households), $432,400 (joint filers), and $216,200 (separate filers).

Your AGI also may affect some of your itemized deductions. An AGI-based limit reduces certain otherwise allowable deductions by 3% of the amount by which a taxpayer’s AGI exceeds the applicable threshold (not to exceed 80% of otherwise allowable deductions). For 2015, the thresholds are $309,900 (up from $305,050) for joint filers, $284,050 (up from $279,650) for heads of households, $258,250 (up from $254,200) for singles and $154,950 (up from $152,525) for separate filers.

AMT

The alternative minimum tax (AMT) is a separate tax system that limits some deductions, doesn’t permit others and treats certain income items differently. If your AMT liability is greater than your regular tax liability, you must pay the AMT.

Like the regular tax brackets, the AMT brackets are annually indexed for inflation. For 2015, the threshold for the 28% bracket increased by $2,900 for all filing statuses except married filing separately, which increased by half that amount.

The AMT exemptions and exemption phaseouts are also indexed. The exemption amounts for 2015 are $53,600 for singles and heads of households and $83,400 for joint filers, increasing by $800 and $1,300, respectively, over 2014 amounts. The inflation-adjusted phaseout ranges for 2015 are $119,200–$333,600 (singles and heads of households) and $158,900–$492,500 (joint filers). (Amounts for separate filers are half of those for joint filers.)

Education- and child-related breaks

The maximum benefits of various education- and child-related breaks generally remain the same for 2015. But most of these breaks are also limited based on the taxpayer’s modified adjusted gross income (MAGI). Taxpayers whose MAGIs are within the applicable phaseout range are eligible for a partial break — breaks are eliminated for those whose MAGIs exceed the top of the range.

The MAGI phaseout ranges generally remain the same or increase modestly for 2015, depending on the break. For example:

The American Opportunity credit. The MAGI phaseout ranges for this education credit (maximum $2,500 per eligible student) remain the same for 2015: $160,000–$180,000 for joint filers and $80,000–$90,000 for other filers.

The Lifetime Learning credit. The MAGI phaseout ranges for this education credit (maximum $2,000 per tax return) increase for 2015; they’re $110,000–$130,000 for joint filers and $55,000–$65,000 for other filers — up $2,000 for joint filers and $1,000 for others.

The adoption credit. The MAGI phaseout ranges for this credit also increase for 2015 — by $3,130, to $201,010–$241,010 for joint, head-of-household and single filers. The maximum credit increases by $210, to $13,400 for 2015.

(Note: Married couples filing separately generally aren’t eligible for these credits.)

These are only some of the education- and child-related breaks that may benefit you. Keep in mind that, if your MAGI is too high for you to qualify for a break for your child’s education, your child might be eligible.

Retirement plans

Many retirement-plan-related limits increase slightly in 2015; thus, you may have opportunities to increase your retirement savings:

Your MAGI may reduce or even eliminate your ability to take advantage of IRAs. Fortunately, IRA-related MAGI phaseout range limits all will increase for 2015:

Traditional IRAs. MAGI phaseout ranges apply to the deductibility of contributions if the taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan:

• For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
• For a spouse who participates, the 2015 phaseout range limits increase by $2,000, to $98,000–$118,000.
• For a spouse who doesn’t participate, the 2015 phaseout range limits also increase by $2,000, to $183,000–$193,000.
  • For single and head-of-household taxpayers participating in an employer-sponsored plan, the 2015 phaseout range limits increase by $1,000, to $61,000–$71,000.

Taxpayers with MAGIs within the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.

But a taxpayer whose deduction is reduced or eliminated can make nondeductible traditional IRA contributions. The $5,500 contribution limit (plus $1,000 catch-up if applicable and reduced by any Roth IRA contributions) still applies. Nondeductible traditional IRA contributions may be beneficial if your MAGI is also too high for you to contribute (or fully contribute) to a Roth IRA.

Roth IRAs. Whether you participate in an employer-sponsored plan doesn’t affect your ability to contribute to a Roth IRA, but MAGI limits may reduce or eliminate your ability to contribute:

• For married taxpayers filing jointly, the 2015 phaseout range limits increase by $2,000, to $183,000–$193,000.
• For single and head-of-household taxpayers, the 2015 phaseout range limits also increase by $2,000, to $116,000–$131,000.

You can make a partial contribution if your MAGI falls within the applicable range, but no contribution if it exceeds the top of the range.

(Note: Married taxpayers filing separately are subject to much lower phaseout ranges for both traditional and Roth IRAs.)

Gift and estate taxes

The unified gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption are both adjusted annually for inflation. For 2015 the amount is $5.43 million (up from $5.34 million for 2014).

The annual gift tax exclusion remains at $14,000 for 2015. It’s adjusted only in $1,000 increments, so it typically increases only every few years. It increased to $14,000 in 2013, so it might go up again for 2016.

Is tax relief on your horizon?

With the 2015 cost-of-living adjustment amounts trending slightly higher, you have an opportunity to realize a little bit of tax relief next year. In addition, with many retirement-plan-related limits also increasing, you may have the chance to boost your retirement savings. If you have questions on the best tax-saving strategies to implement based on the 2015 numbers, please give us a call. We’d be happy to help.

Provisions affecting businesses

Provisions affecting individuals

An ongoing battle