ARM Mid-Year Tax Planning Series (1 of 4): Take a Look at Your Investments

The 2016 federal income tax rates on long-term capital gains and qualified dividends are 0%, 15%, and 20%, with the maximum 20% rate affecting taxpayers with taxable income above $415,050 for single taxpayers, $466,950 for married joint-filing couples, and $441,000 for heads of households. High-income individuals can also be hit by the 3.8% NITT, which can result in a marginal long-term capital gains/qualified dividend tax rate as high as 23.8%. Still, that is substantially lower than the top regular tax rate of 39.6% (43.4% if the NITT applies).

Holding on Longer Can Lower Your Taxes. If you hold appreciated securities in taxable accounts, owning them for at least one year and a day is necessary to qualify for the preferential long-term capital gains tax rates. In contrast, short-term gains are taxed at your regular rate, which can be as high as 39.6% (43.4% if the NITT applies). Be sure to consider this when evaluating your investment portfolio. Whenever possible, try to meet the more-than-one-year ownership rule for appreciated securities held in your taxable accounts. (Of course, while the tax consequences are important, they should not be the only consideration for making a buy or sell decision.)

Sell the Right Shares. Generally, when you sell stock or mutual fund shares, the shares you purchased first are considered sold first, which is good news if you are trying to qualify for the long-term capital gain rate. But, there may be situations where you’re better off selling shares that have been held a year or less rather than those held longer. Selling recently purchased shares at little or no gain (because you purchased them at a higher price) may be better than selling shares held for more than one year if that sale would produce a significant gain. Whenever you want to sell shares other than those you purchased first, you must properly notify your broker as to the specific shares you want sold.

House Republicans Release Tax Reform Blueprint

On June 24th, House Republicans released “A Better Way—Our Vision for a Confident America,” their blueprint for tax reform proposals.  The blueprint would “simplify, flatten, and lower tax rates for families and individuals.

Among the individual income tax proposals, the blueprint would:

  • Eliminate the alternative minimum tax (AMT), estate tax and generation-skipping transfer tax
  • Reduce the number of tax brackets from seven to three and lower the top marginal rate from 39.6% to 33%
  • Ensure that taxpayers currently in the 10-percent bracket will always pay less tax than under current law
  • allow for a 50% deduction of net capital gains, interest and dividend income leading to an effective tax rate of 6%, 12.5% or 16.5%, depending on the tax bracket
  • simplify tax filing to a fourteen line, “postcard” sized form

Among the business income tax proposals, the blueprint would:

  • limit the tax rate for small business and pass-through entities to 25%
  • reduce the corporate tax rate to a flat 20%
  • provide for the immediate expensing of the cost of business investments
  • allow net operating losses (NOLs) to be carried forward indefinitely and increased by an interest factor while eliminating NOL carrybacks
  • simplify the international tax rules and eliminate most of the Subpart F rules

Additional details regarding the tax reform proposals can be read here (PDF).

Tax Refunds May Be Delayed in 2017 Due to Increased Identity Theft

Millions of taxpayers will have a longer wait for tax refunds next year due to the increasing tax refund fraud. Identity thieves are finding ways to file fraudulent tax returns using another person’s name and Social Security number in order to claim a tax refund before the actual taxpayer files their own tax return. To give perspective, the IRS estimates that it paid $3.1 billion to identity thieves in tax year 2014. During that same time, the IRS prevented an additional $22.5 billion in fraudulent refunds from being paid to identity thieves.

Congress and the IRS have worked together to develop a plan in the hopes of hindering the fraud. Their goal is to be a step ahead of the scammers. The only problem is that millions of taxpayers may have to wait longer to receive their refund next year.

The “Protecting Americans from Tax Hikes” Act was signed into law on December 18, 2015. One of the tax provisions included states that the IRS must wait until February 15 to issue refunds to taxpayers who claimed the earned-income tax credit (EITC) or the child tax credit (CTC). Since the EITC is a refundable credit, it has been an easy target for identity thieves. In 2013, an astonishing 24% of the EITC payments were paid erroneously.

In 2016, the IRS asserted it was delivering 90% of refunds in less than three weeks. In 2017, that number is expected to fall dramatically due to the Congress-instructed postponement. Tax firms are beginning to notify their clients who claim the EITC and CTC so that they may plan ahead for the delay.




May 2016, New York – Eric Mulchaey and William Vasil of Ary Roepcke Mulchaey, P.C. (“ARM”) were among the 175 accounting firm members attending BKR International’s Americas Regional Meeting in Toronto, May 20-24.  ARM is a member of BKR International, a Top 5 leading global association of independent accounting and business advisory firms. For more than 25 years, BKR has connected members and their clients with global experts and resources.

Keynote speaker Jennifer Wilson, of ConvergenceCoaching, discussed innovative strategies on developing an inspired and motivated team of professionals, while Wendy Nemitz, co-founder of Ingenuity Marketing Group, presented techniques for identifying, qualifying and keeping the best clients.  Both consultants agreed that having the right clients goes hand-in-hand with keeping the right talent.

“Since people will always be the lifeblood of every organization, our Americas Regional Conference featured panels and experts sharing ideas on innovative ways to recruit, train, and retain the best staff,” said David Goldner, Chairman of BKR’s American Region and managing partner of Gross, Mendelsohn & Associates, in Baltimore.  “We also learned how a firm’s clients can have a significant impact on our ability to retain people.  We must ask ourselves, ‘Are we adding these clients because they fit with our firm based on a clear strategy, or is the decision purely a financial one?’ It’s an important question to ask, especially for firms having trouble retaining staff.”

Other topics included professional updates by officers of both the American Institute of CPAs and CPA Canada, as well as technical and technology updates to keep members on the cutting edge of key legislative developments and technology trends.

Consultant Carl George, of Carl George Advisory, analyzed the results of BKR’s annual management report – its 2016 Member Firm Analysis –  one of the industry’s most comprehensive surveys of accounting firms and available only to BKR members.  The Analysis covers a wide variety of management, profitability, and innovative information and benchmarking statistics that BKR members can use to implement and improve strategies in their own firm.

“Collaboration at BKR meetings has always been our greatest strength,” said BKR Executive Director Maureen Schwartz. “Our members genuinely care about one another other and are always happy to help each other.  And, BKR’s policy of allowing only one member firm in each principal city or market area has clearly demonstrated our commitment to insure that our members share information and ideas with their peers, not their competitors.”

Eric Mulchaey said, “Our firm leaders always come back from BKR conferences with new ideas on how to help our clients and grow our firm, from new tax planning ideas and resources to help us better understand our clients’ businesses, to consultants who can pull it all together so that we can hit the ground running instead of trying to recreate the wheel from scratch.  Content covers technical and management issues, as well as leadership development and staffing trends to keep our profession strong.  But, at the end of the day it is up to us to go back to our firms and actually implement these new ideas and strategies.  Collaboration and innovation in themselves are only a small part of the equation – they must be followed up by execution for the firm to move forward and be successful.”

About ARM

Ary Roepcke Mulchaey makes it a point to know your markets, capabilities and expectations so that we can anticipate and respond to your rapidly changing business needs. We have the experience, resources and knowledge to build on your organization’s assets while ensuring that your values and vision drive the process.

Responsive, resourceful and practical, we are always looking out for your interests and providing proactive advice, often ahead of market trends. We measure our success by one essential benchmark – client satisfaction. We pride ourselves on the number of long-term relationships we have with our clients, many of whom have been with our firm since our founding in 1979.

About BKR

BKR International is one of the Top 5 leading global associations of independent accounting and business advisory firms, representing the expertise of more than 160 independent accounting and business advisory firms in over 500 offices and 80 countries. For more information, visit:


DOL Overtime Rules

On May 19, 2016, after being introduced almost a year ago, President Obama announced the publication of the Department of Labor’s (DOL) new overtime rules under the Fair Labor Standards Act, which will be effective starting December 1, 2016. These new regulations are expected to extend overtime pay protections to over four million workers during the first year of implementation, which in turn is expected to cost employers over one billion per year in increased wages. Fundamental modifications include the exempt salary increasing to $47,476, which is over double the previous threshold of $23,660. This ceiling is now set to be updated routinely every three years, beginning on January 1, 2020.

The Office of Management and Budget has examined and approved the new rules, however the document has not been published in the Federal Register as of yet. These revisions do not require Congressional approval, but the Republican majorities in the House and Senate have been encouraged by 17 state CPA societies, including The Ohio Society of CPAs to take action to alleviate the outcome. The state CPA societies have united with the Partnership to Protect Workplace Opportunity to resist and dispute the efforts of the DOL. The goal of these groups is to induce Congress into considering the substantial impact and negative effects the new regulations would have if they are put into action.

Due to the new rules not becoming effective for another six months, employers should have enough time to prepare and plan how the impact will effect staffing and budgets. To read more about the new rules, please use this link here.

Top Accounting Firm

AdvisoryHQ recently compiled a list of the top nine accounting firms in Columbus and we are happy to see that we made the list!  You can view the article by AdvisoryHQ by clicking here.

Below is an article excerpt relating to our firm:

Key Factors That Enabled This Firm to Rank as a Top 2016 Accounting Firm

Below are key factors that enabled Ary Roepcke Mulchaey to rank as one of 2016’s top CPA firms in Columbus, OH.

Personalized and Responsive Services

Professionals at Ary Roepcke Mulchaey work to get to know your market so that they can anticipate your needs and provide the best services possible. The firm strives to maximize your bottom line while respecting your expectations, values, and vision.

Services are proactive and often ahead of market trends. Staff members are responsive, resourceful, and practical and always measure success by the most important factor: client satisfaction.

This office has an internal policy to respond to client inquiries within a 24-hour period. In addition, it keeps in touch with clients year round, ensuring the highest level of attention and customer service.

This proactive and client-centered approach has fostered many long-term business relationships. In fact, many clients have worked with Ary Roepcke Mulchaey since its inception.

Qualified Team

This firm boasts 16 accounting professionals and support staff members. Its qualified Columbus, Ohio accountants have experience working within the “Big Four” accounting firms.

Each staff member brings a unique set of specializations to the table, creating a deep well of knowledge and experience available for clients to benefit from.

Tax Professionals

CPAs at this firm get to know clients personally so that services move beyond simple preparation and filing of taxes. Clients also receive personal time, attention, and expertise of qualified CPAs and firm senior partners.

This dedicated team of Columbus accountants has experience working with a variety of clients, including small, medium, and large private businesses as well as public companies.

Thank you AdvisoryHQ for considering us in your list of top accounting firms in Columbus, OH!



ARM Featured by Ohio Secretary of State

ARM CPA was one of 7 Ohio CPA firms featured on the Ohio Secretary of State’s website.  “There are over 85,000 CPAs in Ohio representing small businesses and job creators across the state,” Secretary Husted said. “CPAs help position businesses to flourish in the global economy and also work with public officials to simplify the tax code and create policies that make sense for business in Ohio.”  Click here to view our Secretary of State business profile.



2016 RMDs

A critical date is approaching for many people who attained age 70½ in 2015. By Apr. 1, 2016, you must commence making required minimum distributions (RMDs) from your regular IRAs. Also, if you were a participant in a qualified retirement plan (e.g., 401(k) plan), you must begin taking distributions by Apr. 1 of the calendar year following the later of the year in which you: (a) reach age 70½, or (b) retire (except for 5% owners, who are subject to the same rules as IRA owners).  Please call our office if you have any questions.

Roth IRAs

Contributions. For 2015, you can contribute up to $5,500 to a Roth IRA (as long as you have compensation for the year at least equal to the contributed amount). The $5,500 limit will be increased when the cost-of-living index warrants it. Individuals age 50 or older can make additional contributions of $1,000. Thus, the limit is $6,500 a year for people who will be age 50 (or older) before the end of 2015.

However, the maximum contribution allowance must be reduced by any contributions (deductible or nondeductible) you make to “traditional” IRAs.

There are some limits on Roth IRA contributions. For single taxpayers, if adjusted gross income (AGI) is $131,000 or more, no regular contribution can be made to a Roth IRA. If AGI is between $116,000 and $131,000, the $5,500 maximum contribution is phased out (reduced) according to a formula. For married taxpayers filing jointly, no contribution can be made if AGI is $193,000 or more, and the $5,500 maximum (per spouse) is phased out for AGIs between $183,000 and $193,000. For married taxpayers filing separately, the allowable contribution is phased out for AGIs between $0 and $10,000.

You may be allowed a credit against your income tax equal to a percentage of your Roth IRA contribution if your AGI doesn’t exceed certain levels (which are much lower than the phase-out AGI levels above).

Contributions can be made to Roth IRAs even if you are a participant in a qualified plan and even if you reach age 701/2 .

Distributions. “Qualified” distributions from a Roth IRA are tax-free. Thus, you can avoid tax on Roth IRA earnings forever (i.e., even at distribution). A distribution is qualified if made: once you reach age 591/2 , upon death or disability, or (up to $10,000 per lifetime) for first-time homebuyer expenses. However, a distribution is not qualified if made within the five-year period beginning with the first tax year you made a contribution to a Roth IRA.

A nonqualified distribution is treated first as a nontaxable return of contributions. To the extent a nonqualified distribution exceeds contributions it is taxable and is also subject to a 10% penalty under the regular early withdrawal rules (i.e., the penalty will not apply if the distribution is made once you reach age 591/2 , or upon death or disability, or in other limited circumstances).

Qualified rollover contributions. You may be able to roll funds over from a regular IRA into a Roth IRA so the post-rollover income can grow tax-free in the Roth IRA. (Converting a regular IRA into a Roth IRA is treated as such a rollover.) You can roll funds over from a regular IRA to a Roth IRA regardless of your AGI (unlike in years before 2010). Any funds rolled over to a Roth IRA will be taxed under the regular IRA distribution rules (as if there were only a distribution and no rollover). The 10% early withdrawal penalty will not apply to the rollover. However, if rolled over funds are withdrawn within the five year period that renders them taxable, the 10% penalty will apply to the withdrawal.

Ordering rules apply if a Roth IRA contains conversion amounts (possibly from different years) as well as other contributions. The regular Roth IRA contributions are treated as withdrawn first and then converted amounts, starting with amounts first converted. Withdrawals of converted amounts will be treated as coming first from amounts already included in income. Earnings are treated as withdrawn after contributions. For these purposes, all Roth IRAs will be treated as a single Roth IRA.

Please contact our office with any questions.

IRS sees surge in electronic tax scams

E-mail and texting scams designed to dupe U.S. taxpayers into providing personal data have surged 400% so far this year, the IRS warned last week.   Click here to read the full story published by The Ohio Society of CPAs.