News & Articles

David Echelbarger, CPA/CGMA Appointed to Board of Directors at First National Bank of Michigan

Posted on Fri, Sep 06, 2019

Kalamazoo based First National Bank of Michigan appointed David G. Echelbarger to its Board of
Directors. Mr. Echelbarger is a Shareholder and the Managing Partner at Echelbarger, Himebaugh, Tamm & Co., P.C. (EHTC) based in Grand Rapids. Echelbarger first joined EHTC in 1987 as a tax intern and after graduating from Aquinas College in 1988 with a Bachelors of Business Administration in Accounting, he worked in the Accounting and Auditing department while developing EHTC's Technology Solutions division. In 2012, he earned the Charter Global Management Accountant (CGMA) designation, a global designation for CPAs working in business and government.

Echelbarger is responsible for the vision and direction of EHTC. As the leader of the firm's management te am, David has a significant role in managing the operations and business development at EHTC. In addition to his extensive tax and accounting experience, David has over 24 years of experience in technology consulting and implementation. He specialized in the development and implementation of automated accounting and finance systems in the areas of distribution, manufacturing, construction, professional services and non-profit organizations.

“David’s business insight, coupled with his entrepreneurial and leadership skills make him a great addition to our board,” said Daniel Bitzer, President & CEO of First National Bank of Michigan. “We are pleased that David has accepted a position on our Board, he will serve on the Information Technology Steering committee. We look forward to working with him, as his professional experiences will contribute immensely to the future of our Bank.”

Originally posted by Deb Lang, Director of Marketing at First National Bank of Michigan

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Tags: Board of Directors, David Echelbarger

Hot Midyear Tax Planning Ideas for Individuals

Posted on Thu, Jul 18, 2019

The summer months are a good time to brainstorm tax planning strategies. Some ideas will help cut your tax bill for the current year; others will allow you to minimize future taxes. Here are various short- and long-term strategies to consider. They factor in changes included in the Tax Cuts and Jobs Act (TCJA).

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Summer Loving? Think About Taxes Before You Tie the Knot

Posted on Mon, Jul 08, 2019

For many couples, summer is the quintessential time to tie the knot. The weather is warm, the flowers are blooming and nature offers plentiful backdrops for photos. But there's more than the ceremony to consider when a couple merges their lives, including taxes and other financial issues.

Though finances aren't necessarily a romantic topic, some issues are important to address before you say, "I do!" Let's start with how marriage changes your tax situation.

Beyond Taxes

Taxes are an important consideration when you get married. But there are other financial issues and administrative tasks to consider. Here's a checklist:

Contact the Social Security Administration (SSA). If getting married involves a name change for either spouse, the SSA needs to know. Updating your name with the SSA helps ensure that credit ratings and Social Security benefits follow you into your marriage.

Notify your employer (and others). If you change your name, alert your company's human resources office. They'll put your new name on your payroll check and benefits files. You may also need to supply a new bank account number if your check is direct deposited.

Other records to update include:

  • Driver's license at your state department of motor vehicles (DMV),
  • Vehicle registration at the DMV,
  • Passport at www.travel.state.gov,
  • State and local tax records,
  • Voter registration at your state or local election office (or DMV),
  • Property titles for homes and vehicles with your lender or, if paid off, at your county clerk or DMV,
  • Utility bills with the phone, cell phone, electricity, gas, water and garbage companies, and
  • Medical, dental and pharmacy records.

Coordinate workplace benefits. Consider updating your beneficiaries for employer-provided life insurance, disability insurance and retirement plan accounts. Are both spouses covered by health insurance? Getting married counts as a qualifying event that allows you to make changes to your employee benefits even if it's not open-enrollment season. If you both work and one spouse has better health insurance options than the other, you may want to add the spouse as a dependent on the more generous plan. Likewise, if one spouse doesn't have coverage, consider adding him or her to the other spouse's plan.

Review bank and financial accounts. Discuss whether you'll continue to have separate checking accounts and credit cards — or whether joint accounts make more sense. If you open a new account, you'll need to update any automatic bill payments and direct deposits for the account number.  

Consider changing titles on key assets. If one spouse already owns a home, for example, you might want to refinance it or change the title to include both spouses. But before you do, talk it over with your professional advisors. There are legal implications for who owns assets, including private business interests, real estate and vehicles.

Update insurance accounts. You may decide to change your life insurance beneficiaries after marriage. Also ask your insurance agent about possible discounts for married couples who combine auto and renter's insurance policies, as well as scheduled property riders that can be added to your renter's or homeowner's insurance policy for engagement and wedding rings.

Review deeds, wills and power of attorney documents. An attorney or estate advisor can discuss the full array of estate planning tools, such as various trusts, that might be relevant now that you're married.

This list of to-dos may look lengthy, but don't worry: These tasks are much less work than planning a wedding! Plus, the time spent taking care of these issues now may eliminate mix-ups and extra work later on.

To File Jointly or Separately?

Your marital status at year end determines your tax filing options for the entire year. If you're married on or by December 31, you'll have two federal income tax filing choices for 2019:

  • File jointly with your spouse, or
  • Opt for "married filing separately" status and then file separate returns based on your income and your deductions and credits.

There are two reasons most married couples file jointly.

1. It's simpler. You only have to file one Form 1040, and you don't have to worry about figuring out which income, deduction and tax credit items belong to each spouse.

2. It's often cheaper. The married filing separately status makes you ineligible for some potentially valuable federal income tax breaks, such as certain higher education credits and, generally, the child and dependent care credit. Therefore, filing two separate returns may result in a bigger combined tax bill than filing one joint return.

Risks of Filing Jointly

Filing jointly isn't a sure win for one big reason: For years that you file joint federal income tax returns, you're generally "jointly and severally liable" for any underpayments, interest and penalties caused by your spouse's deliberate misdeeds or unintentional errors and omissions.

Joint-and-several liability means the IRS can come after you for the entire bill if collecting from your spouse proves to be difficult or impossible. The IRS can even come after you after you've divorced.

However, you may be able to claim an exemption from the joint-and-several-liability rule under the so-called "innocent spouse" provisions. To successfully qualify as an innocent spouse, you must prove that you:

    • Didn't know about your spouse's tax failings,
    • Had no reason to know, and
    • Didn't personally benefit.
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Tags: Filing Taxes, Getting Married, Income Tax

Myths and Truths about Business Valuation

Posted on Thu, May 16, 2019

The business valuation profession has grown rapidly since 1980. Over the decades, it has developed from a rudimentary process into a highly sophisticated mix of art and science to determine the value of a business or business interest. However, many business owners and investors fail to understand the valuation process and its results. Here are some common business valuation myths and the underlying truths.

Myth: You appraised the "fair market value" of my business. When I sell my business interest, this is the price I will receive.

Truth: Fair market value (FMV) is different from a transactional (or strategic) value. FMV is hypothetical. If you look at the definition, FMV requires consideration of the universe of hypothetical buyers and sellers. The resulting value determination can be looked at as a "most likely" value given the hypothetical considerations. A transaction value, on the other hand, is a verifiable amount, a price at which the business actually changes hands and not an estimate of value that is the result of FMV. Transactional value may be significantly higher (or lower) than fair market value, depending on the circumstances.

Myth: As a business owner, I have the best idea of what my business is worth.

Truth: While the business owner might know the most about their business, that knowledge alone isn't enough to qualify the owner to value the business. Valuation has developed into a profession with accreditations, standards, and professionals with experience and knowledge in how to determine the value of a business. The valuation professional also is an objective third-party. Business owners tend to view their businesses differently than outsiders -- often through "rose-colored" glasses. Owners need to understand how outsiders view the business -- because it's hypothetical investors that determine FMV.

Myth: If a business is worth $1 million, my 10 percent interest should be worth $100,000.

Truth: Owning a minority (or less than controlling) interest in a business diminishes the interest's value from the pro rata value of the entire business. A minority interest cannot determine policy, set compensation for officers and other owners, or decide when and whether to sell the business or significant assets of a business. There are many other items that cannot be controlled by a minority owner. The diminished value can be materially less than the pro rata value, depending on the facts and circumstances.

Myth: The owner's contributions to a business enhance the value of the business.

Truth: An owner's contributions often enhance the value of a business, but there's a major exception. Owners may possess talents, relationships or other intangible assets -- often referred to as "personal goodwill" -- that cannot be transferred to buyers. Owners who contribute personal goodwill diminish the value of the business to an unrelated party. For example, if the owner has contacts with long-term customers that are not likely to transfer to a new owner, the business will likely lose those customers when the current owner leaves the business. That, of course, will reduce the value of the business.

Myth: Value is value, so I can use a valuation report for multiple purposes. For example, I could use a report that is prepared for estate planning purposes to get a loan, settle a divorce or support value on a gift tax return.

Truth: A business valuation is prepared for a specific business as of a specific date and for a specific purpose. If any of those parameters change, the valuation is no longer valid. Different purposes for a valuation might require a different standard or basis of value. For example, the valuation of a minority interest for gifting purposes cannot be used to determine the asking price of the business when the owner wants to sell the entire business two years later. It's important that the user of a valuation report understand its use limitations.

To attain a better understanding of business valuation, owners and investors should discuss the valuation process and various options with an EHTC appraisal professional. Please contact Erik Olson at ErikO@ehtc.com or by calling (616) 575-3482.

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Tags: Valuation, Business Valuation, Business Owner

IRS Announces Changes for Personal Use of Employer-Provided Vehicles

Posted on Tue, May 14, 2019

The free use of a company car is one of the best perks an employee may receive as part of a compensation package. But the benefit to the employee isn't completely "free" under current tax law. Essentially, personal use of a company car is treated as a taxable noncash fringe benefit, subject to income tax obligations.

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Tags: Vehicle, IRS, Tax Cuts and Jobs Act (TCJA)

Handle with Care: The Nanny Tax Rules

Posted on Wed, May 01, 2019

When you hire a nanny, housekeeper or other domestic worker, pay close attention to the tax rules.

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Tags: Independent Contractor, Domestic Workers

Master the Fundamentals of Estate Planning

Posted on Mon, Apr 29, 2019

For many people, mapping out an estate game plan is something they intend to think about later. But too often, later never comes.

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Exploring the Cashless Movement in Retail

Posted on Fri, Apr 26, 2019

Cash as a form of legal tender isn't yet as obsolete as 8-track tapes and VCRs. But it's definitely less popular with certain demographic groups than others.

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Understanding IRS Audit Guidance

Posted on Wed, Apr 24, 2019

IRS examiners usually do their homework before meeting with taxpayers and their professional representatives. This includes reviewing any relevant Audit Techniques Guides (ATGs) that typically focus on a specific industry or audit-prone business transaction.

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Tags: Audit, IRS Audit, IRS

Medical Costs: Can I Really Get a Tax Break for That?

Posted on Mon, Apr 22, 2019

It's difficult for many people to write off medical expenses because of the limits imposed under the tax laws. But you may qualify by including every expense allowed. Some of the qualified procedures may surprise you.

ELIGIBLE

NOT ELIGIBLE

A weight-loss program undertaken at a physician's direction to treat obesity or a condition such as heart disease. A weight-loss program to maintain your appearance. Meal replacements, diet foods and supplements that are substitutes for the food that you would normally consume.
Treatment at a drug or alcohol clinic. Smoking-cessation program and prescribed drugs for nicotine withdrawal. Trips your doctor recommends to rest or improve your morale
Acupuncture Marriage counseling
Dentures, hearing aids and orthopedic shoes. Household help, even if recommended by a doctor.
Admission and transportation to a medical conference if the conference concerns the chronic illness of you, your spouse, or a dependent. (Meals and lodging aren't deductible.) The collection and storage of DNA, unless you can show how DNA will be used for diagnostic testing. 
Lamaze classes for a mother-to-be. Maternity clothes.
Teeth cleaning and orthodontia Teeth bleaching and toothpaste
A wig purchased on physician's advice for the mental health of a patient bald from disease. Hair transplants
Contact lenses and peripheral materials as saline solution and enzyme cleaner. Retin-A for wrinkles
Nursing services at home or a care facility, including giving medication, changing dressings, bathing and grooming. Nursing services for a normal, healthy baby. (But you might be able to take a credit for child-care expenses.)

For example, most insurance plans won't cover laser eye surgery, such as radial keratotomy or "Lasik," because they consider it a cosmetic procedure. But it generally qualifies for a medical deduction and as an expense in a flexible spending account. (The IRS used to disallow Lasik as a deductible medical expense.) With the cost running into the thousands in most parts of the country, it's a considerable outlay. 

As with most tax laws, the medical rules can be tricky. You can't deduct over-the-counter vitamins but the U.S. Tax Court has ruled that medically prescribed vitamins to treat a specific condition are allowed.

There are also many exceptions to the general laws. For instance, you can't write off the cost of unnecessary cosmetic surgery to improve your appearance. That generally means no face lifts, electrolysis or liposuction. But you can deduct cosmetic surgery that's needed to improve a deformity directly related to a congenital abnormality, an injury from an accident, or a disfiguring disease.

A list of some other expenses that are eligible or ineligible for tax breaks appears in the right-hand chart. Here's a rundown of the basic rules:

Flexible spending accounts (FSAs). These tax-advantaged accounts generally have a "use-it-or-lose-it" feature on money left at the end of the year. So plan to empty your account by buying eyeglasses, filling prescriptions, getting a dental checkup or spending money on the eligible items listed in the chart. Note: Some FSAs allow participants an extra two-and-a-half-month grace period to use up the money in accounts if the employer properly amends its plan.

 

Medical deduction. Medical and dental expenses that are not reimbursed by insurance are deductible to the extent your annual total exceeds 10% of your adjusted gross income in 2019 (up from 7.5% in 2018). This can be a difficult threshold for many taxpayers to meet. To qualify for medical deductions, you must also itemize. 

When adding up your medical costs, don't forget the cost of traveling to your doctor or medical facility for treatment. If you go by car, you can deduct a flat rate, adjusted by the IRS each year, or you can keep track of your actual out-of-pocket expenses for gas, oil and repairs. 

With either the actual costs or the cents-per-mile method, you can add in the amounts paid for parking and tolls. If you must travel out of town for medical treatment, you may also qualify to write off some of the cost.

Each year, take a look at your medical expenses. If you are close to — or exceed the threshold — you may want to get as many expenses as possible into this year. Otherwise, you may as well postpone elective expenses until next year when you have another shot at a deduction.

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Tags: FSA, Tax Break, Medical