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Scammers keep coming up with new and more creative ways to steal information from taxpayers, according to the IRS. New scams in the form of email, text messages, telephone calls, or regular mail regularly target both individuals and businesses, and they often prey on the elderly.

“Scammers are coming up with new ways all the time to try to steal information from taxpayers,” IRS Commissioner Danny Werfel said. “Be wary and avoid sharing sensitive personal data over the phone, email or social media to avoid getting caught up in these scams.”

The biggest key to avoid getting caught by scammers: Remember that the IRS will never contact you by email, text, or social media channels about a tax bill or refund. Most IRS contacts are first made through regular mail. So, if you get a text message saying it’s the IRS and asking for your Social Security number, it’s someone trying to steal your identity and rob you. Remember that the IRS already has your Social Security number.

Here are some of the crimes the IRS has identified in recent months:

Email messages and texts that infect recipients’ computers and phones. In this scam, a phony email claims to come from the IRS. The subject line of the email often states that the message is a notice of underreported income or a refund. There may be an attachment or a link to a bogus web page with your “tax statement.” When you open the attachment or click on the link, a Trojan horse virus is downloaded to your computer.

The trojan horse is an example of malicious code (also known as malware) that can take over your computer hard drive, giving someone remote access to the computer. It may also look for passwords and other information. The scammer will then use whatever information is gathered to commit identity theft, gain access to bank accounts and more.

Phishing and spear phishing messages. Emails or text messages that are designed to get users to provide personal information are called phishing. Spear phishing is a tailored phishing attempt sent to a specific organization or business department.

For example, one spear phishing scam targets employees who work in payroll departments. These employees might get an email that looks like it comes from an official source, such as the company CEO, requesting W-2 forms for all employees. The payroll employees might erroneously reply with these documents, which then provides criminals with personal information about the staff that can be used to commit fraud.

The IRS recommends using a two-person review process if you receive a request for W-2s. In addition, employers should require any requests for payroll to be submitted through an official process, like the employer’s human resources portal.

Scams keep evolving

These are only a few examples of the types of tax scams circulating. Be on guard for any suspicious messages. Don’t open attachments or click on links. Contact us if you get an email about a tax return we prepared. You can also report suspicious emails that claim to come from the IRS at [email protected]. Those who believe they may already be victims of identity theft should find out what do by going to the Federal Trade Commission’s website, OnGuardOnLine.gov.

 

 

© 2023 KraftCPAs PLLC

If you own or manage a business with employees, there’s a harsh tax penalty that you could be at risk for paying personally. The Trust Fund Recovery Penalty (TFRP) applies to Social Security and income taxes that are withheld by a business from its employees’ wages.

Sweeping penalty

The TFRP is dangerous because it applies to a broad range of actions and to a wide range of people involved in a business.

Here are answers to a few common questions about the penalty:

What actions are penalized? The TFRP applies to any willful failure to collect, or truthfully account for, and pay over taxes required to be withheld from employees’ wages.

Why is it so harsh? Taxes are considered the government’s property. The IRS explains that Social Security and income taxes “are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount.”

The penalty is sometimes called the “100% penalty” because the person found liable is personally penalized 100% of the taxes due. The amounts the IRS seeks are usually substantial and the IRS is aggressive in enforcing the penalty.

Who’s at risk? The penalty can be imposed on anyone deemed “responsible” for collecting and paying tax. This has been broadly defined to include a corporation’s officers, directors and shareholders, a partnership’s partners, and any employee with related duties. In some circumstances, voluntary board members of tax-exempt organizations have been subject to this penalty. In other cases, responsibility has been extended to professional advisors and family members close to the business.

According to the IRS, responsibility is a matter of status, duty, and authority. Anyone with the power to see that taxes are (or aren’t) paid may be responsible. There’s often more than one responsible person in a business, but each is at risk for the entire penalty. For example, you might not be directly involved with the payroll tax withholding process in your business. But if you learn of a failure to pay withheld taxes and have the power to pay them, you are considered to be a responsible person. Although taxpayers held liable can sue other responsible people for contribution, this action is up to the individual and can’t be used to delay the TFRP payment.

What’s considered willful? There doesn’t have to be an overt intent to evade taxes. Simply paying bills or obtaining supplies instead of paying taxes is willful behavior. And just because you delegate responsibilities to someone else doesn’t necessarily mean you’re off the hook. Failing to do the job yourself can be treated as willful.

Recent cases

Here are two cases that illustrate the risks.

• A U.S. Appeals Court held a hospital administrator liable for the TFRP. The administrator was responsible for payroll, as well as signing and reviewing checks. She also knew that the financially troubled hospital wasn’t paying withheld taxes to the IRS. Instead of prioritizing paying taxes, she paid vendors and employees’ wages. (Cashaw, CA 5, 5/31/23)
• A corporation owner’s daughter/corporate officer was assessed a $680,472 TFRP for unpaid payroll taxes. She argued that she wasn’t a responsible party. She owned no stock and couldn’t hire and fire employees. But she did have the power to write checks and pay vendors and was aware of the unpaid taxes. A U.S. Appeals Court found the “great weight of evidence” indicated she was a responsible party and the TFRP was upheld. (Scott, CA 11, 10/31/22)

Best advice

Under no circumstances should you “borrow” from withheld amounts. All funds withheld should be paid over to the government on time. Contact a KraftCPAs advisor with any questions.

© 2023 KraftCPAs PLLC

Your business might be able to claim big first-year depreciation tax deductions for eligible real estate expenditures rather than depreciate them over several years. But should you? It’s not as simple as it might seem.

Qualified improvement property

For qualifying assets placed in service in tax years beginning in 2023, the maximum allowable first-year Section 179 depreciation deduction is $1.16 million. Importantly, the Sec. 179 deduction can be claimed for real estate qualified improvement property (QIP), up to the maximum annual allowance.

QIP includes any improvement to an interior portion of a nonresidential building that’s placed in service after the date the building is placed in service. For Sec. 179 deduction purposes, QIP also includes HVAC systems, nonresidential building roofs, fire protection and alarm systems and security systems that are placed in service after the building is first placed in service.

However, expenditures attributable to the enlargement of the building, any elevator or escalator, or the building’s internal structural framework don’t count as QIP and must be depreciated over several years.

Mind the limitations

A taxpayer’s Sec. 179 deduction can’t cause an overall business tax loss, and the maximum deduction is phased out if too much qualifying property is placed in service in the tax year. The Sec. 179 deduction limitation rules can get tricky if you own an interest in a pass-through business entity (partnership, LLC treated as a partnership for tax purposes, or S corporation). Finally, trusts and estates can’t claim Sec. 179 deductions, and noncorporate lessors face additional restrictions. We can give you full details.

First-year bonus depreciation for QIP

Beyond the Sec. 179 deduction, 80% first-year bonus depreciation is also available for QIP that’s placed in service in calendar year 2023. If your objective is to maximize first-year write-offs, you’d claim the Sec. 179 deduction first. If you max out on that, then you’d claim 80% first-year bonus depreciation.

Note that for first-year bonus depreciation purposes, QIP doesn’t include nonresidential building roofs, HVAC systems, fire protection and alarm systems, or security systems.

Consider depreciating QIP over time

Here are two reasons why you should think twice before claiming big first-year depreciation deductions for QIP.

Lower-taxed gain when property is sold: First-year Sec. 179 deductions and bonus depreciation claimed for QIP can create depreciation recapture that’s taxed at higher ordinary income rates when the QIP is sold. Under current rules, the maximum individual rate on ordinary income is 37%, but you may also owe the 3.8% net investment income tax (NIIT).

On the other hand, for QIP held for more than one year, gain attributable to straight-line depreciation is taxed at an individual federal rate of only 25%, plus the 3.8% NIIT if applicable.

Write-offs may be worth more in the future: When you claim big first-year depreciation deductions for QIP, your depreciation deductions for future years are reduced accordingly. If federal income tax rates go up in future years, you’ll have effectively traded potentially more valuable future-year depreciation write-offs for less-valuable first-year write-offs.

As you can see, the decision to claim first-year depreciation deductions for QIP, or not claim them, can be complicated. We can help you determine the best depreciation options.

© 2023 KraftCPAs PLLC

Companies that do business in Tennessee will face new limits to the way they collect, use, and transfer customer information as a result of the new Tennessee Information Protection Act (TIPA).

The law, effective July 1, 2025, will require companies to obtain consent for the processing of sensitive personal data and will allow consumers to opt out of data sales, targeted advertising, and other significant sales and marketing initiatives. Tennessee joins eight other states with consumer data privacy laws, but like Iowa, Utah, and Virginia, it narrowly defines the types of disclosures involved and provides a 60-day grace period for businesses to resolve compliance issues.

The bipartisan legislation passed unanimously in both houses of the Tennessee legislature and was signed into law by Gov. Bill Lee.

Businesses impacted

Specifically, the law will apply to businesses that post more than $25 million in annual revenue and:

• Control or process the personal information of 175,000 or more Tennessee consumers, or
• Control or process the personal information of 25,000 or more Tennessee consumers and obtain more than 50% of gross revenue from the sale of that information.

Noncompliance is punishable by a fine of $7,500 per violation, although a business found in violation will have 60 days to comply before fines are levied. Companies with existing consumer privacy policies can be exempt if the programs “reasonably conform” to the National Institute of Standards and Practices (NIST) Privacy Framework or “other documented policies, standards, and procedures designed to safeguard consumer privacy.”

Who’s protected?

The TIPA will require companies to obtain consent from a consumer to collect and process sensitive information such as race, ethnic origin, religious affiliation, mental or physical health, sexual orientation, precise geolocation, genetic and biometric data, and citizenship and immigration status.

The privacy rule applies to any Tennessee resident “acting only in a personal context” and does not shield the personal data of individuals acting in a commercial or employment role. The privacy laws also will not shield data collected by government agencies, insurance companies, nonprofit organizations, financial institutions, higher education facilities, and businesses already subject to the Health Insurance Portability and Accountability Act (HIPAA) or the Health Information Technology for Economic and Clinical Health Act (HITECH).

If you’re unsure whether your business will be subject to new TIPA regulations, reach out to an advisor with our risk assurance and advisory services team for guidance.

© 2023 KraftCPAs PLLC

You might assume that you don’t need to make estate planning moves because of the generous federal estate tax exemption of $12.92 million for 2023 (effectively $25.84 million if you’re married).

However, if you have significant assets, a living trust could help you avoid probate, the court-supervised legal process intended to make sure a deceased person’s assets are properly distributed. Probate often involves red tape, legal fees, and putting your financial affairs into the public domain. You can avoid this with a living trust, also known as a family trust, grantor trust, or revocable trust.

How they work

You establish the living trust and transfer legal ownership of assets for which you wish to avoid probate to it, such as your main home, a vacation property, antique furniture, etc.

In the trust document, you name a trustee to be in charge of the trust’s assets after you die and specify which beneficiaries will get which assets.

You can be the trustee while you’re alive. After that, you can designate your attorney, CPA, adult child, sibling, close friend, or financial institution to be the trustee.

Because a living trust is revocable, you can change its terms or even unwind it completely while you’re alive and legally competent. That’s why it’s called a living trust.

For federal income tax purposes, the existence of the living trust is ignored while you’re alive. As far as the IRS is concerned, you still own the assets that are in the trust. So, on your tax return, you continue to report any income generated by trust assets and any deductions related to those assets, such as mortgage interest on your home.

For state-law purposes, however, the living trust isn’t ignored. Done properly, it avoids probate. And that’s the goal.

When you die, the living trust assets are included in your estate for federal estate tax purposes. However, assets that go to your surviving spouse aren’t included in your estate — assuming your spouse is a U.S. citizen — thanks to the unlimited marital deduction privilege.

At least for now, you probably don’t have to worry about a federal estate tax bill with today’s huge exemption. But that exemption is scheduled to go down drastically in 2026 unless Congress extends it. If Congress fails to do so, you may need to revisit your estate plan.

A few caveats 

A living trust has several benefits, but mind these details or you won’t get the expected probate avoidance:

• When you fill out forms to designate beneficiaries for life insurance policies, retirement accounts, and brokerage firm accounts, the named beneficiaries can automatically cash in upon your death without going through probate. If the distribution provisions of your living trust are different from your beneficiary designations, the latter will take precedence. So, keep beneficiary designations current because your living trust’s provisions won’t override them.
• If you co-own real estate jointly with right of survivorship, the other co-owner(s) will automatically inherit your share upon your death. It makes no difference what your living trust says.
• You must transfer legal ownership of assets to the living trust for it to perform its probate-avoidance magic. Many people set up living trusts and then fail to follow through by transferring ownership. If so, the probate-avoidance advantage is lost.

More planning may be needed 

Living trusts do nothing to avoid or minimize the federal estate tax or state death taxes. If you have enough wealth to be exposed to these taxes, additional planning is required to reduce or eliminate them. Contact a KraftCPAs advisor for more information.

© 2023 KraftCPAs PLLC

The statement of cash flows is arguably the most misunderstood and underappreciated part of a company’s annual report. But it can also provide valuable insight to stakeholders who understand its uses and potential weaknesses. The guidance on divvying up cash flows among operating, investing, and financing activities is often confusing.

Here’s an overview to help clarify what’s involved.

3 types of cash flows

The statement of cash flows customarily shows the sources and uses of cash and its equivalents. The term “sources of cash” refers to money that’s entering the business. Conversely, “uses of cash” refers to money that’s exiting the business.

Under U.S. Generally Accepted Accounting Principles (GAAP), the statement is typically organized into three sections:

Cash flows from operations. This section usually starts with accrual-basis net income. Then it’s adjusted for items related to normal business operations, such as:

• Gains or losses on asset sales
• Income taxes
• Stock-based compensation
• Net changes in accounts receivable, inventory, prepaid assets, accrued expenses, and payables

It’s also adjusted for depreciation and amortization — a noncash expense meant to reflect the wear and tear on equipment and other fixed assets. The bottom of this section shows the cash provided (or used) in the process of producing and delivering goods or providing services. Several successive years of negative operating cash flows can be a warning sign that a business is struggling and may be worth more dead than alive.

Cash flows from investing activities. If a company buys or sells property, equipment or marketable securities, the transaction shows up in this section. It reveals whether a business is reinvesting in its future operations — or divesting assets for emergency funds.

Business acquisitions (and disposals) are generally reported in this section, too. However, contingent payments from an acquisition are classified as cash flows from investing activities only if they’re paid soon after the acquisition date. Later contingent payments are classified as financing outflows (below). Any payment over the liability is classified as an operating outflow.

Cash flows from financing activities. The third section shows the company’s ability to obtain funds from either debt from lenders or equity from investors. It includes new loan proceeds, principal repayments, dividends paid, issuances of securities or bonds, additional capital contributions by owners, and stock repurchases.

Noncash transactions are reported in a separate schedule at the bottom of the statement of cash flows or in a narrative footnote disclosure. For example, if a business purchases equipment directly using loan proceeds, the transaction typically appears at the bottom of the statement, rather than as a cash outflow from investing activities and an inflow from financing activities. Other examples of noncash financing transactions are: 1) issuing stock to pay off long-term debt, and 2) converting preferred stock to common stock. No cash changes hands, but investors and lenders want to understand these transactions.

In addition, U.S. companies that enter into foreign currency transactions customarily report the effect of exchange rate changes as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents.

Get it right

It’s not always clear how to classify transactions under GAAP. Managers may be especially confused about how to classify transactions that have aspects of more than one type of activity, such as taxes paid on investment gains, redemptions of employee stock options, sales of receivables, and dividends received from investments, installment sales, and purchases. Sometimes it’s unclear from the guidance whether the cash flow should be split into two activities or allocated to one specific activity.

If you’re unsure how to report an item on the statement of cash flows or disclose it in the footnotes, discuss it with your KraftCPAs advisor.

© 2023 KraftCPAs PLLC

Hiring independent contractors is a common solution for business owners to reduce payroll costs — especially during times of staff shortages and inflationary pressures. If you’re among them, be careful that these workers are properly classified for federal tax purposes. If the IRS reclassifies them as employees, it can be an expensive mistake.

Determining whether a worker is an independent contractor or an employee for federal income and employment tax purposes isn’t always easy. If a worker is an employee, your company must withhold federal income and payroll taxes and pay the employer’s share of FICA taxes on the wages, plus FUTA tax. There also may be state tax obligations, not to mention health benefits and other financial perks.

On the other hand, if a worker is an independent contractor, these obligations don’t apply. In that case, the business simply sends the contractor a Form 1099-NEC for the year showing the amount paid (if it’s $600 or more).

Employee or contractor? 

Who qualifies as an “employee?” Unfortunately, there’s no uniform definition of the term.

The IRS and courts have generally ruled that individuals are employees if the organization they work for has the right to control and direct them in the jobs they’re performing. Otherwise, the individuals are generally independent contractors. But other factors are also taken into account, including who provides equipment and who pays expenses.

Some employers that have misclassified workers as independent contractors may get relief from employment tax liabilities under Section 530. This protection generally applies only if an employer meets certain requirements. For example, the employer must file all federal returns consistent with its treatment of a worker as a contractor and it must treat all similarly situated workers as contractors.

Section 530 doesn’t apply to certain categories of workers.

You can ask the IRS, but …

You can use Form SS-8 to ask the IRS to determine whether a worker is an independent contractor or employee. You should also be aware that the IRS has a history of classifying workers as employees rather than independent contractors. Filing Form SS-8 can also raise classification concerns with the IRS and unintentionally trigger an employment tax audit.

It may be better to properly set up a relationship with workers to treat them as independent contractors so that your business complies with the tax rules.

Workers who want an official determination of their status can also file Form SS-8. Dissatisfied independent contractors may do so because they feel entitled to employee benefits and want to eliminate their self-employment tax liabilities.

If a worker files Form SS-8, the IRS will notify the business with a letter. It identifies the worker and includes a blank Form SS-8. The business is asked to complete and return the form to the IRS, which will render a classification decision.

Reach out to our tax services team us if you’d like to discuss how to classify workers at your business. We can help make sure your workers are properly classified.

© 2023 KraftCPAs PLLC

Are you getting ready to retire? If so, you’ll soon experience changes in your lifestyle and income sources that can have numerous tax implications.

Here are four tax and financial issues you might contend with when you retire:

Taking required minimum distributions. These are the minimum amounts you must withdraw from your retirement accounts. You generally must start taking withdrawals from your IRA, SEP, SIMPLE, and other retirement plan accounts when you reach age 73 if you were age 72 after December 31, 2022. If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025, for 2024. Roth IRAs don’t require withdrawals until after the death of the owner.

You can withdraw more than the minimum required amount. Your withdrawals will be included in your taxable income except for any part that was taxed before or that can be received tax-free (such as qualified distributions from Roth accounts).

Selling your principal residence. Many retirees choose to downsize to smaller homes. If you’re one of them, and you have a gain from the sale of your principal residence, you may be able to exclude up to $250,000 of that gain from your income. If you file a joint return, you may be able to exclude up to $500,000.

To claim the exclusion, you must meet certain requirements. For example, during a five-year period ending on the date of the sale, you must have owned the home and lived in it as your main home for at least two years.

If you’re thinking of selling your home, make sure you’ve identified all items that should be included in its basis, which can save you tax.

Getting involved in new work activities. After retirement, many people continue to work as consultants or start new businesses. Here are tax-related questions to ask if you’re launching a new venture:

• Should it be a sole proprietorship, S corporation, C corporation, partnership, or limited liability company?
• Are you familiar with how to elect to amortize start-up expenditures and make payroll tax deposits?
• Can you claim home office deductions?
• How should you finance the business?

Taking Social Security benefits. If you continue to work, it can have an impact on your Social Security benefits. If you retire before reaching full Social Security retirement age (65 years of age for people born before 1938, rising to 67 years of age for people born after 1959) and the sum of your wages plus self-employment income is over the Social Security annual exempt amount ($21,240 for 2023), you must give back $1 of Social Security benefits for each $2 of excess earnings.

If you reach full retirement age this year, your benefits will be reduced $1 for every $3 you earn over a different annual limit ($56,520 in 2023) until the month you reach full retirement age. Then, your earnings will no longer affect the amount of your monthly benefits, no matter how much you earn.

Speaking of Social Security: You could have to pay federal tax on your benefits. Depending on how much income you have from other sources, you may have to report up to 85% of your benefits as income on your tax return and pay the resulting federal income tax.

Tax planning is still important

As you can see, you might have to make many decisions after you retire. We can help maximize tax breaks so you can keep more of your hard-earned money.

© 2023 KraftCPAs PLLC

You’ve probably filed your 2022 tax return with the IRS by now, and you might think you’re done with taxes for another year. But since questions may still crop up about the return, here are quick answers to three questions we hear a lot this time of year.

When will your refund arrive?

The IRS has an online tool that can tell you the status of your refund. Go to irs.gov and click on “Get Your Refund Status.” You’ll need your Social Security number, filing status, and the exact refund amount.

Which tax records can you throw away now? 

At a minimum, keep tax records related to your return for as long as the IRS can audit your return or assess additional taxes. In general, the statute of limitations is three years after you file your return. With that in mind, you can generally get rid of most records related to tax returns for 2019 and earlier years. If you filed an extension for your 2019 return, hold on to your records until at least three years from when you filed the extended return.

However, the statute of limitations extends to six years for taxpayers who understate their gross income by more than 25%.

You should hang on to certain tax-related records longer. For example, keep the actual tax returns indefinitely, so you can prove to the IRS that you filed legitimate returns. There’s no statute of limitations for an audit if you didn’t file a return or you filed a fraudulent one.

When it comes to retirement accounts, keep records associated with them until you’ve depleted the account and reported the last withdrawal on your tax return, plus three (or six) years. And retain records related to real estate or investments for as long as you own the asset, plus at least three years after you sell it and report the sale on your tax return. You can keep these records for six years if you want to be extra safe.

Can you still collect a refund for a tax credit or deduction if you overlooked claiming it?

In general, you can file an amended tax return and claim a refund within three years after the date you filed your original return or within two years of the date you paid the tax, whichever is later.

However, there are a few opportunities when you have longer to file an amended return. For example, the statute of limitations for bad debts is longer than the usual three-year time limit for most items on your tax return. In general, you can amend your tax return to claim a bad debt for seven years from the due date of the tax return for the year that the debt became worthless.

© 2023 KraftCPAs PLLC

Tax credits for business owners and a three-month grocery tax holiday for consumers are among almost $400 million in tax cuts included in the new Tennessee Works Tax Act.

The tax law changes included in SB275 and HB323 were approved by the Tennessee legislature and signed into law by Gov. Bill Lee, signaling one of the largest tax cuts in state history.

For businesses, some of the biggest changes will be in franchise and excise (F&E) taxes. More than 23,000 businesses in Tennessee are expected to see their F&E tax bill eliminated thanks to a new tax exemption of a company’s first $50,000 in net earnings. Up to $500,000 of business property will now be exempt from franchise tax.

Additionally, an employer that provides paid family leave may now be eligible for as much as a 50% F&E tax credit for the next two years as part of the new legislation. The law also enacts a single sales factor apportionment for F&E tax similar to more than 30 other states, and it extends the carryforward period for F&E tax credits to 25 years, up from the previous 15 years.

Other key changes for business owners:

• The legislation raises the threshold for filing business taxes to those with gross receipts of $100,000 or more per jurisdiction; that amount previously was $10,000.
• Federal bonus depreciation provisions of the 2017 Tax Cuts & Jobs Act will be adopted.
• Tax penalties are removed for manufacturers that do not have enough on-site storage, expanding the qualifying area to a 10 mile-radius.

For consumers, a three-month grocery tax holiday will stretch from August 1, 2023, to October 31, 2023. No sales tax will be collected on food and food ingredients during that time; not included on that list are alcoholic beverages, tobacco, candy, or dietary supplements.

© 2023 KraftCPAs PLLC

If your business occupies substantial space and could eventually move or expand, keep the rehabilitation tax credit in mind – even more so if there’s a historical building involved.

The credit is equal to 20% of the qualified rehabilitation expenditures (QREs) for a qualified rehabilitated building that’s also a certified historic structure. A qualified rehabilitated building is a depreciable building that has been placed in service before the beginning of the rehabilitation and, after rehabilitation, is used in business or for the production of income (and not held primarily for sale). Additionally, the building must be “substantially” rehabilitated, which generally requires that the QREs for the rehabilitation exceed the greater of $5,000 or the adjusted basis of the existing building.

A QRE is any amount chargeable to capital and incurred in connection with the rehabilitation (including reconstruction) of a qualified rehabilitated building. QREs must be for real property (but not land) and can’t include building enlargement or acquisition costs.

The 20% credit is allocated ratably to each year in the five-year period starting with the tax year in which the qualified rehabilitated building is placed in service. Thus, the credit allowed in each year of the five-year period is 4% (20% divided by 5) of the QREs with respect to the building. The credit is allowed against both regular federal income tax and alternative minimum tax.

The Tax Cuts and Jobs Act, which was signed at the end of 2017, made changes to the credit. Specifically, the law:

• Requires taxpayers to take the 20% credit ratably over five years instead of in the year they placed the building into service
• Eliminated the 10% rehabilitation credit for buildings constructed before 1936

Other federal tax benefits could be available in a move or expansion, including credits based on certain energy plans and location of the site. In addition, state or local tax and non-tax subsidies might be available. A member of our tax services team can help you explore the options.

© 2023 KraftCPAs PLLC

What’s your first impression when you get a sloppy, unprofessional invoice from a vendor? You might wonder if they’re equally careless with their approach to products and services.

Appearance matters when it comes to the forms and other documents you share with customers and suppliers, so make them the best they can be. It’s a small thing to do that can make a positive impression.

Much of the interaction you have with your business contacts involves money. It makes sense, then, that QuickBooks contains tools that can help you create a design for your forms that can be consistent. Your invoices can look like your purchase order and your sales receipts can resemble your estimates. Here’s a look at a few options.

Getting Started

QuickBooks’ form customization tools allow you to control two things: how your forms look and what they include. You can modify the templates included for your invoices, estimates, sales receipts, statements, purchase orders, and bill payment stubs so they all look similar.

To get started, you’ll need to select one of the templates that QuickBooks supplies. Open the Lists menu and select Templates. In the window that opens, double click one of the templates, like Intuit Service Invoice. Click Manage Templates at the top of the window. It’s a good idea to leave the original template intact, so you should make a copy of the template that you can modify and save. If you’d rather edit the original template, though, click OK. Otherwise, click Copy, then OK. The Basic Customization window will open.

Making Design Changes

The left side of this window displays all of your design and content options. First, add your logo if you have one by clicking the Use logo box and locating it in the directory of your computer that comes up. (If you don’t have a company logo, you can create one easily and sometimes free online.)

Next, select a color scheme for your invoice by clicking the down arrow below Select Color Scheme. Click Apply Color Scheme. You can see how that would look in the right side of the window, which displays a preview as you make changes. If you want to change the fonts for your header (Title, Company Name, etc.), click each element and then click Change Font. A window containing your options here will open.

Altering Information

When you’re done with fonts, you can choose Company and Transaction Information and indicate your preferences by checking and unchecking boxes. If you get a message warning you about overlapping fields, you will have to go into the Layout Designer, where you can drag and drop your form elements around to make them fit (this isn’t particularly easy if you’ve never worked with a design tool before).

So far, you’ve only modified the very top of your invoice. You also have control over the rest of it. Click Additional Customization to see what your options are here. The window that opens contains a field selection pane on the left and a preview of your work-in-progress on the right again. There are five areas to consider. You can change the field label for each and indicate whether they should appear on the screen and/or the printed copy. The three you should be most concerned with are:

Header. More options for the top of the form, like Due Date and Ship Via

Columns. Which columns should appear in the center of the invoice (Description, Quantity, Rate, etc.)?

Footer. You’ll certainly want to add some of these, like Subtotal and Total, and maybe Sales Tax.

When you’re done customizing here, click OK, then OK again in the Basic Customization window. Your newly designed invoice will now appear in the list of templates.

Making Them Uniform

You can copy the design of one form to another to make them consistent. Go to Lists | Templates again and highlight the form you want to copy (like Copy of Service Invoice). Click the Templates button in the lower left to open the menu and select Duplicate. In the window that opens, select the type of template you want to copy to (like Sales Receipt). Click OK. When the Templates window opens again, you’ll see a Copy 2: Intuit Service Invoice. In the corresponding Type column, you’ll see Sales Receipt. You can make any adjustments necessary here.

QuickBooks is not a graphic design program, and most business owners aren’t professional graphic designers. If you’re going to use the tools, we suggest you keep your modifications simple. By all means, add a logo and work with the color scheme and fonts and maybe add or delete a few fields. But if you do too much, you risk getting tangled up in the Layout Designer.

Because first impressions count, it’s just good practice to make your forms’ designs look uniform throughout your business. Thankfully, QuickBooks makes it a little easier.

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