CPA Tax Tip: For You High Earners, The Net Investment Income Tax

There are some taxes that sneak up on taxpayers when paying their estimated taxes such as self-employment tax, alternative minimum tax, and the net investment income tax.  The net investment income tax is added to your overall taxes, so don’t forget to include that in your computations.  Or better yet, have a CPA prepare a tax projection for you.

The IRS has simplified the net investment tax for those who earn in the upper brackets.  You may owe this tax if you have income from investments and your income for the year is more than certain limits. Here are four things from the IRS that you should know about this tax:

1. Net Investment Income Tax.  The law requires a tax of 3.8 percent on the lesser of either your net investment income or the amount by which your modified adjusted gross income exceeds a threshold amount based on your filing status.

2. Net investment income. This amount generally includes income such as:

  • interest
  • dividends
  • capital gains
  • rental and royalty income
  • non-qualified annuities

This list is not all-inclusive. Net investment income normally does not include wages and most self-employment income. It does not include unemployment compensation, Social Security benefits or alimony. Net investment income also does not include any gain on the sale of your main home that you exclude from your income.

After you add up your total investment income, you then subtract your deductions that are properly allocable to this income. The result is your net investment income. Refer to the instructions for Form 8960, Net Investment Income Tax for more on how to figure your net investment income or MAGI.

3. Income threshold amounts. You may owe the tax if you have net investment income and your modified adjusted gross income is more than the following amount for your filing status:

Filing Status Threshold Amount
Single or Head of household            $200,000
Married filing jointly                        $250,000
Married filing separately                  $125,000
Qualifying widow(er) with a child       $250,000

4. How to report. If you owe this tax, you must file Form 8960 with your federal tax return. If you had too little tax withheld or did not pay enough estimated taxes, you may have to pay an estimated tax penalty.


IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.



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CPA Tip: U.S. Taxpayers with Foreign Income

Every year we acquire international clients, and clients that work internationally.  These circumstances involve some tax issues, sometime those that are complicated.

Did you live or work abroad or receive income from foreign sources in 2013? If you are a U.S. citizen or resident, you must report income from all sources within and outside of the U.S. The rules for filing income tax returns are generally the same whether you’re living in the U.S. or abroad. Here are seven tips from the IRS that U.S. taxpayers with foreign income should know:

1. Report Worldwide Income. By law, U.S. citizens and resident aliens must report their worldwide income. This includes income from foreign trusts, and foreign bank and securities accounts.

2. File Required Tax Forms. You may need to file Schedule B, Interest and Ordinary Dividends, with your U.S. tax return. You may also need to file Form 8938, Statement of Specified Foreign Financial Assets. In some cases, you may need to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts. See for more information.

3. Consider the Automatic Extension. If you’re living abroad and can’t file your return by the April 15 deadline, you may qualify for an automatic two-month filing extension. You’ll then have until June 16, 2014 to file your U.S. income tax return. This extension also applies to those serving in the military outside the U.S. You’ll need to attach a statement to your return to explain why you qualify for the extension.

4. Review the Foreign Earned Income Exclusion. If you live and work abroad, you may be able to claim the foreign earned income exclusion. If you qualify, you won’t pay tax on up to $97,600 of your wages and other foreign earned income in 2013. See Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, for more details.

5. Don’t Overlook Credits and Deductions. You may be able to take a tax credit or a deduction for income taxes you paid to a foreign country. These benefits can reduce the amount of taxes you have to pay if both countries tax the same income.

6. Use IRS Free File. Everyone can prepare and e-file their federal tax return for free by using IRS Free File. If you make $58,000 or less, you can use brand-name tax software. If you earn more, you can use Free File Fillable Forms, an electronic version of IRS paper forms. Free File is available only through the website. Some Free File software products and fillable forms also support foreign addresses for those who live abroad.

7. Get Tax Help Outside the U.S. The IRS has offices in Frankfurt, London, Paris and Beijing. IRS staff at these offices can help you with tax filing issues and answer your tax questions. Visit for more information.

You can get more on this topic in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. IRS forms and publications are available on or by calling 800-TAX-FORM (800-829-3676).
Additional IRS Resources:


IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.


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Healthcare Deadline: An (Un)necessary evil, or a Milestone in History? Either way it’s the Law

Health Care Law Considerations for 2014 and the March 31 Deadline

Here is some advice from the IRS that may help.

For most people, the Affordable Care Act has no effect on the 2013 income tax return they are filing in 2014. However, some people may need to make important decisions by the March 31, 2014 deadline for open enrollment.

Below are five things about the health care law you may need to consider soon.

• Currently Insured – No Change: If you already insured, you do not need to do anything more than continue your insurance.

• Uninsured – Enroll by March 31: The open enrollment period to purchase health care coverage through the Health Insurance Marketplace for 2014 runs through March 31, 2014. When you get health insurance through the marketplace, you may be able to get advance payments of the premium tax credit that will immediately help lower your monthly premium. Learn more at

• Premium Tax Credit To Lower Your Monthly Premium: If you get insurance through the Marketplace, you may be eligible to claim the premium tax credit. You can elect to have advance payments of the tax credit sent directly to your insurer during 2014 so that the monthly premium you pay is lower, or wait to claim the credit when you file your tax return in 2015. If you choose to have advance payments sent to your insurer, you will have to reconcile the payments on your 2014 tax return, which will be filed in 2015. If you’re already receiving advance payments of the credit, you need to do nothing at this time unless you have a change in circumstance like a change in income or family size. Learn More.

• Change in Circumstances: If you’re receiving advance payments of the premium tax credit to help pay for your insurance coverage, you should report life changes, such as income, marital status or family size changes, to the Marketplace. Reporting changes will help to make sure you have the right coverage and are getting the proper amount of advance payments of the premium tax credit.

• Individual Shared Responsibility Payment: Starting January 2014, you and your family have been required to have health care coverage or have an exemption from coverage.  Most people already have qualifying health care coverage.  These individuals will not need to do anything more than maintain that coverage throughout 2014. If you can afford coverage but decide not to buy it and remain uninsured, you may have to make an individual shared responsibility payment when you file your 2014 tax return in 2015. Learn More.

More Information

Find out more tax-related provisions of the health care law at

Find out more about the Health Insurance Marketplace at


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CPA Tax Tip: My Interview by The Freelance Strategist

Several times a year I am interviewed for articles and radio pod-casts.  (Nobody has had the guts (or fool-hardiness) to throw my face on the screen). During tax season, freelance writers are looking for the latest and greatest tax tips.  The article 5 Tips for Freelance Writers by Kylie Jane Wakefield, set out to give a few tips to freelance writers.  But frankly, the tips do not differ much to any other struggling entrepreneur who is trying to fulfill a dream while working a day job.

The main point only slightly stressed is that your tax planning starts at the completion of your last year’s tax return.  Don’t wait until March of the following year to tax plan for the previous year.  That is like trying to put in the drain plug in a speed boat after you have launched it into the ocean.  For example, when I clean out my garage, I lay everything out in the driveway that I am taking to Goodwill.  I then take multiple photographs.  I also usually list what I have to donate.  When I arrive at the Goodwill drop off, I copy the list onto the Goodwill receipt and get it signed.  At home, I print out the pictures (nothing special, just on regular paper) and staple the pictures to the receipt.  I stick the whole package in a big tax envelope and forget about it until I prepare my tax returns.  Simple planning, simple result.

You can use the same method for any business expense paid by cash.  Always take a receipt and throw it into the tax envelope to be resurrected again during the preparation of your tax return next year.

However, no financial decision should be made on the basis of tax savings.  The first concern for any decision should be whether it makes good business sense.  Remember, you are only getting about 1/3 benefit, from a tax deduction.  So, if you spend $100 solely on the basis that you will get “to write it off,” you may be making a bad business decision. The decision will ultimately cost you $70 ($100 less taxes returned into your pocket.)

Plan and understand you tax situation and you will be more informed and maybe more satisfied come April 15.


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CPA Tax Tip: Healthcare and Taxes

There is a lot of confusion about healthcare and taxes.

The IRS has provided some guidance that may help.

1. Employment Status

  • If you are employed your employer may report the value of the health insurance provided to you on your W-2 in Box 12 with Code DD.  However, it is not taxable.
  • If you are self-employed, you can deduct the cost of health insurance premiums, within limits, on your income tax return.

2. Tax Favored Health Plans

  • If you have a health flexible spending arrangement (FSA) at work, money you put into it normally reduces your taxable income.
  • If you have a health savings account (HSA) at work, money your employer puts into it for you, within limits, is not taxable.
  • Money you put into an HSA usually counts as a deduction and can lower your taxes.
  • Money you take from an HSA to use for qualified medical expenses is not taxable income; however, withdrawals for other purposes are taxable and can even be subject to an additional tax.
  • If you have a health reimbursement arrangement (HRA) at work, money you receive from it is generally not taxable.

3. Age

If you are age 65 or older, the threshold for itemized medical deductions remains at 7.5 percent of your Adjusted Gross Income (AGI) until 2017; for others the threshold increased to 10 percent of AGI in 2013. Your AGI is shown on your Form 1040 tax form.

More Information

Find out more about the tax-related provisions of the health care law at

Find out more about the health care law at


IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.


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CPA Tip: Are Your Social Security Benefits Taxable?

Some people that are retired do not have access to tax advice.  One question that arises is whether their social security benefits are taxable?  The answer is “maybe.”  Here are some guidelines from the IRS and a link to help you find the answer.

1. If you received social security benefits , you should have received a Form SSA-1099, Social Security Benefit Statement, showing the amount.

2. If Social Security was your only source of income, your benefits may not be taxable. You also may not need to file a federal income tax return.

3. If you get income from other sources, then you may have to pay taxes on some of your benefits.

4. Your income and filing status affect whether you must pay taxes on your Social Security.

5. The best, and free, way to find out if your benefits are taxable is to use IRS Free File to prepare and e-file your tax return. If you made $58,000 or less, you can use Free File tax software. The software will figure the taxable benefits for you. If your income was more than $58,000 and you feel comfortable doing your own taxes, use Free File Fillable Forms. Free File is available only at

6. If you file a paper return, visit and use the Interactive Tax Assistant tool to see if any of your benefits are taxable.

For more on this topic visit


IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.




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Sailing Strategic In Order to Avoid Mutiny or Running into the Rocks

At nine years old, my cousin Bill and I learn to sail and eight foot sailboat that his dad made.  The first thing  that intrigued me was that you usually don’t sail a boat in a straight line to your destination. No, you “tack” back and forth zigzagging so the the sail is always facing the wind.  Yet, you had one eye over the bow, and one eye on the distant horizon that may at 45 degrees to the boat’s bow.

The article in the McKinsey Quarterly, Building a forward-looking board by Casal and Caspar reminded me of the sailing because the article alert board members that they are spending too much time watching the direction of the boat, and the not the horizon that they should try to attain.  According to them, “ Directors still spend the bulk of their time on quarterly reports, audit reviews, budgets, and compliance—70 percent is not atypical—instead of on matters crucial to the future prosperity and direction of the business.”

Now this insight is not different than what I have written about small and medium-sized businesses and their inability to strategically plan for the future.  But the article did impress me with the future-minded chairman who must strategically create the board.  The article states:

“Too often, vacancies on a board are filled under pressure, without an explicit review of its overall composition. An incoming chairman should try to imagine what his or her board might look like, ideally, three years from now. What kinds of skills and experience not currently in place will help fulfill the company’s long-term strategy? What, in other words, is the winning team? A willingness to look ahead expands the number of candidates with appropriate skills and heightens the likelihood that they will sign up if and when they become available.”

This concept is very similar to a Jim Collin’s mantra of “to get the right people on the bus” before you start strategizing.  In other words, don’t focus on the future if you don’t have the personnel to help you envision it.

As a CPA firm, we have to look at the short term and historical aspects of a business in order to advise our clients from a managerial aspect.  However, once we are satisfied with the state of the “books,” we turn our eyes to the long-term and focus on the distant horizon.  Then once we assist the client in  developing the long-term strategy, we run our eyes along the path from today to the horizon and establish benchmarks.  As CPA’s we are in the proper position to monitor the company in light of these benchmarks to insure that the company is moving in the right strategic direction.

CPA firms usually don’t provide this service for small and medium-sized businesses because CPA firms usually only look historically at the financial statements and prospectively for only a few years.  The CPA industry has to understand that they are wasting a vital role on items that will only benefit clients in the short run, if at all.

The same is true for company boards.  Talent is wasted when focused on only short-term goals and endeavors.  With the quick-moving world of technology, today, CPA s and board members must not focus on only their shoe laces.  These types of businesses will be run over by those companies who include the horizon in their peripheral vision.

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CPA Tip:Check out the IRS Scam List and Protect Yourself

The IRS publishes a list of tax scams that they are focusing.  It is good to understand the basic premise of these in order to protect you, your family, and your business.

Identity Theft

Tax fraud through the use of identity theft tops this year’s Dirty Dozen list. Identity theft occurs when someone uses your personal information, such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes. In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.

Taxpayers who believe they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. Taxpayers can call the IRS Identity Protection Specialized Unit at 800-908-4490. More information can be found on the special identity protection page.

Pervasive Telephone Scams

People may call you pretending to be from the IRS in hopes of stealing money or identities from victims.

These phone scams include many variations, ranging from instances from where callers say the victims owe money or are entitled to a huge refund. Some calls can threaten arrest and threaten a driver’s license revocation. Sometimes these calls are paired with follow-up calls from people saying they are from the local police department or the state motor vehicle department.

Characteristics of these scams can include:

  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security Number.
  • Scammers “spoof” or imitate the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.

After threatening victims with jail time or a driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.


Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to

False Promises of “Free Money” from Inflated Refunds

Scam artists routinely pose as tax preparers during tax time, luring victims in by promising large federal tax refunds or refunds that people never dreamed they were due in the first place.

Scam artists use flyers, advertisements, phony store fronts and even word of mouth to throw out a wide net for victims. They may even spread the word through community groups or churches where trust is high. Scammers prey on people who do not have a filing requirement, such as low-income individuals or the elderly. They also prey on non-English speakers, who may or may not have a filing requirement.

Return Preparer Fraud

About 60 percent of taxpayers will use tax professionals this year to prepare their tax returns. Most return preparers provide honest service to their clients. But, some unscrupulous preparers prey on unsuspecting taxpayers, and the result can be refund fraud or identity theft.

It is important to choose carefully when hiring an individual or firm to prepare your return. This year, the IRS wants to remind all taxpayers that they should use only preparers who sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers (PTINs).

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice (DOJ) to prosecute tax evasion cases.

At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program(OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The IRS works on a wide range of international tax issues with DOJ to pursue criminal prosecution of international tax evasion. This program will be open for an indefinite period until otherwise announced.

The IRS has collected billions of dollars in back taxes, interest and penalties so far from people who participated in offshore voluntary disclosure programs since 2009. It is in the best long-term interest of taxpayers to come forward, catch up on their filing requirements and pay their fair share.

Impersonation of Charitable Organizations

Another long-standing type of abuse or fraud is scams that occur in the wake of significant natural disasters.

Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.

They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims. The IRS cautions both victims of natural disasters and people wishing to make charitable donations to avoid scam artists by following these tips:

  • To help disaster victims, donate to recognized charities.
  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible.
  • Don’t give out personal financial information, such as Social Security numbers or credit card and bank account numbers and passwords, to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.
  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

False Income, Expenses or Exemptions

Another scam involves inflating or including income on a tax return that was never earned, either as wages or as self-employment income in order to maximize refundable credits. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions. This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution.

Frivolous Arguments

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes.

Taxpayers who rely on frivolous arguments and schemes may also face criminal prosecution for attempting to evade or defeat tax. Similarly, taxpayers may be convicted of a felony for willfully making and signing under penalties of perjury any return, statement, or other document that the person does not believe to be true and correct as to every material matter.  Persons who promote frivolous arguments and those who assist taxpayers in claiming tax benefits based on frivolous arguments may be prosecuted for a criminal felony.

Falsely Claiming Zero Wages or Using False Form 1099

Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.

Abusive Tax Structures

Abusive tax schemes have evolved from simple structuring of abusive domestic and foreign trust arrangements into sophisticated strategies that take advantage of the financial secrecy laws of some foreign jurisdictions and the availability of credit/debit cards issued from offshore financial institutions.

IRS Criminal Investigation (CI) has developed a nationally coordinated program to combat these abusive tax schemes. CI’s primary focus is on the identification and investigation of the tax scheme promoters as well as those who play a substantial or integral role in facilitating, aiding, assisting, or furthering the abusive tax scheme (e.g., accountants, lawyers).  Secondarily, but equally important, is the investigation of investors who knowingly participate in abusive tax schemes.

Misuse of Trusts

Trusts also commonly show up in abusive tax structures. They are highlighted here because unscrupulous promoters continue to urge taxpayers to transfer large amounts of assets into trusts. These assets include not only cash and investments, but also successful on-going businesses. There are legitimate uses of trusts in tax and estate planning, but the IRS commonly sees highly questionable transactions. These transactions promise reduced taxable income, inflated deductions for personal expenses, the reduction or elimination of self-employment taxes and reduced estate or gift transfer taxes. These transactions commonly arise when taxpayers are transferring wealth from one generation to another. Questionable trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS.


IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.


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Strategic Planning Opportunities and Resurgence of US Manufacturing through 3-D Printing

My wife is a Sociology Professor at University of California, Irvine specializing in labor unions.  One of her books, Talking Union discussed the struggle between labor and management at the Ford River Rouge plant.  Back at that plant in early to mid 20th century, Henry Ford implemented a strategy to control the supply chain, not just to build cars, but to control the manufacturing of raw materials like steel, glass, and rubber.  Those days disappeared for a variety reasons, one being that US workers demand a descent wage and working condition as opposed to many of their contemporary global counterparts who didn’t have either.

But a US manufacturing boom may be on the horizon, and opportunities for businesses of all sizes should be included in their ten or twenty year horizons.  I came across an article on Motley Fool by Steve Heller who pushed investing in 3-D printer manufacturers.  The trend will be no more waiting, ordering, inventory management when many parts can be made on demand.  These parts can be custom clothes to body parts to airplane engine parts.  The article stated that the only limitation was the imagination of the end user.

Another article, The 4 Technology Trends That Could Bring Back US Manufacturing by Jessica Leber echoed the message but from a US manufacturing point of view.  She includes 3-D Printing as one of these trends writing, “It used to be that a company would have to invest hundreds of thousands of dollars in building a production line before making one single cheap widget. Now, with additive manufacturing (a term which includes 3-D printing technologies), companies can start to design distributed manufacturing operations that ‘scale with the market they serve,’ says Schmidt. Making things ‘at the point of use or point of need’ will help small companies that make products in the U.S. stay competitive.”

When you develop and implement a strategic plan, I always say to keep one eye on the path in front of you, and one eye on the horizon. Too many of our small business clients ignore the second part and only ask, “What are my sales today, and do I have enough cash to make payroll on Friday?”  They completely lack vision because they do not design a strategic plan, and worse off if they do, they don’t steadily implement it.

Almost every business that is supplying some product to their customer, should include these manufacturing technologies in their strategic plan.  Sure, it may not materialize for five years in their industry, but to position your company to be ready will label you as an industry leader, not follower.  Even now, your strategic plan can include tactics for you to purchase a small 3-D printer for smaller parts that are in high demand.

3-D printing is just one of many technologies that can assist small and medium-sized businesses in their strategy.  You can wait in the car as the technology train passes by, or you can wait at the train depot and jump on.  You just have to look down the tracks and position yourself.




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CPA Tax Tip: What is Taxable? Almost Everything.

“The only difference between death and taxes is that death doesn’t get worse every time Congress meets.” – Will Rogers

We get a number of calls throughout the year from individuals asking if certain types of income is taxable.  The fact is that all income is taxable unless the law specifically excludes it.

Taxable income includes money you receive, such as wages, tips, interest, dividends, and retirement. It can also include noncash income from property or services. For example, both parties in a barter exchange must include the fair market value of goods or services received as income on their tax return.   (From a business standpoint, I usually don’t recommend barters because it seems one party ultimately feels that they got cheated.)

Some types of income are not taxable except under certain conditions, including:

  • Life insurance proceeds paid to you are usually not taxable. But if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable. Be careful with your life insurance strategies so you don’t get an unpleasant surprise at the end of the year.
  • Income from a qualified scholarship is normally not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. However, amounts you use for room and board are taxable.  This is a little tricky.  It has changed somewhat from the days when my wife was in graduate school since the 1980′s.
  • If you got a state or local income tax refund, the amount may be taxable. You should have received a 2013 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.  One of the important facts as to its tax-ability is whether you itemized the previous year, and did the state tax deduction provide a tax benefit to you.

Here are some types of income that are usually not taxable:

  • Gifts and inheritances
  • Child support payments
  • Welfare benefits
  • Damage awards for physical injury or sickness
  • Cash rebates from a dealer or manufacturer for an item you buy
  • Reimbursements for qualified adoption expenses

IRS Sources:


IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.


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